The State Lottery Co. v. Fitzpatrick.

ation. But, applying this rule practically, it is necessary to consider how far, and to what subjects, this contract extends. It is clearly a stipulation on the part of the government that the corporation shall be and continue a corporation for an indefinite time, or for a term limited in the act, unless sooner forfeited for some cause recognized by existing laws as a cause of forfeiture; that their constitution, organization and mode of action, as prescribed by the charter, shall not be annulled or changed by the legislature; that members shall not be added or removed; that modes of election, expulsion or suspension of members shall not be altered; and that whatever belongs to their organic constitution and action, ast bodies politic, shall continue and be determined by the terms of the charter. In addition to which the powers specially granted to them are not to be withdrawn or diminished."

In Calder v. Kurby, 5 Gray (Mass.), 597, a permission had been given to an individual to sell spirituous liquors for one year for the sum of one dollar as a license fee. The court held that this was a mere license and therefore revocable by the state. The court, at page 598, say:

"The whole argument of the counsel of the plaintiff is founded on a fallacy. A license authorizing A license authorizing a person to retail spirituous and intoxicating liquors does not create any contract between him and the government. It bears no resemblance to an act of incorporation by which, in consideration of a supposed benefit to the public, certain rights and privileges are granted by the legislature to individuals, under which they embark their skill, enterprise and capital."

Cooley, in his Constitutional Limitations, page 279, says: "Those charters of incorporation, however, which are granted, not as a part of the machinery of the government, but for the private benefit or purpose of the corporators, are held to be contracts between the legislature and the corporators, based for their consideration on the liabilities and duties which the corporators assume by accepting them, and the grant of a franchise can no more be resumed by the legislature, or its benefits diminished or impaired, without the consent of the grantees, than any other grant of property or val

The State Lottery Co. v. Fitzpatrick.

uable thing, unless the right to do so is reserved in the charter itself."

Again, at page 577, he says:

"The limit to the exercise of the police power in these cases must be this: The regulations must have reference to the comfort, safety or welfare of society; they must not be in conflict with any of the provisions of the charter, and they must not, under the pretense of regulations, take from the corporation any of the essential rights and privileges which the charter confers. In short, they must be police regulations in fact, and not amendments of the charter in curtailment of the corporate franchise."

If now we turn to the averments of the bill, we find that the franchise which was granted for twenty-five years has been acquiesced in by every department of the state government for eleven' years; that a corporation has been formed whose stock, in shares of one hundred dollars, exceeds one hundred thousand dollars; that upon the faith of this grant, for this period of twenty-five years, the complainants' corporation has already paid into the state treasury $400,000, and has, furthermore, expended upwards of one million dollars, and that the co-complainants claim, by assignment, an interest in the grant.

Here, then, are rights of an extraordinary magnitude, which are completely vested, and which, according to the authorities which announce the settled law, and have been cited above, were beyond the reach of legislative withdrawal, and which remain vested in the corporation, notwithstanding the repealing law.

It remains further for me to consider the rights held by the Louisiana state lottery company, viewed as a corporation, and to ascertain how far the rights which are asserted in the bill are a corporate franchise, and as such absolutely irrevocable.

The determination of the nature and extent of the stipu lations and their operation and effect, must be derived from the language of the act of incorporation. If the concessions in the charter do not convey an interest-a property in the

The State Lottery Co. v. Fitzpatrick.

privileges or franchises, but amount to only a license in fact and confer only a revocable authority, then independently of the rights which had become vested-the plaintiffs have not established a ground for a suit.

A license at common law was revocable if a certain time was not fixed, or if no interest in the property passed. But in this act of incorporation the corporate faculties and privileges, by express words and necessary implication, are vested for a term of twenty-five years. The quarterly payments are to be paid and secured for all that time. The corporation must collect a capital of not less than $100,000 within a limited period, and might enlarge it so as to amount to $1,000,000. The powers to make rules and regulations are liberal, and the corporation might do whatever individuals might for its convenience and safety. The conditions impose burdens without any reference to the emoluments to be received, and compel the possession and use of capital.

A license for trading purposes is commonly given to any who comply with the conditions and the term of time as limited, and there are no obligations imposed to perform acts under it. So the ordinary statutes respecting lotteries confer an authority not coupled with any estate or interest for the purpose of raising certain sums of money by the sale of tickets, or of the lottery scheme for some favored object of legislative or public patronage. The act of 1868, on the other hand, constitutes a corporation to continue in being for a prescribed term and then to be dissolved and liquidated. There is a grant of sole and exclusive privileges of an unusual character for the whole term and the precise object is expressed to make of the business a source of revenue for the state, and the corporation is required to pay quarterly, in advance, a sum of money to the auditor. The corporation must collect capital and may issue shares of stock, and is controlled by directors to be chosen under the charter. These are qualities and attributes which do not belong to a corporate body holding by a legislative contract: State v. Phalen, 3 Harr., 441; Gregory ». The Trustees of Shelby College, 2 Met. (Ky.), 589; State v. Stirling, 8 Mo., 697; Calder v. Kurby, 5 Gray, 597; Freleigh v. The State, 8 Mo., 606.

The State Lottery Co. v. Fitzpatrick.

A grant having these characteristics cannot be repealed by the legislature: Bank of Pennsylvania v. Commonwealth, 19 Pa. St., 144; State Bank of Ohio v. Knoop, 16 How., 369.

The repealing act of 1879, then, is not operative to take away the privileges and rights of the Louisiana state company. The American authorities are adverse to the legisla ture having any such right.

Not only do the qualities which are impressed upon the corporation by its charter and the faculties given to it under that charter make that instrument when construed by admitted principles a contract, but a succeeding legislature has in terms expressly declared it to be such.

In act No. 17, approved April 3, 1875, at page 44, the legislature of Louisiana says:

"An appropriation to the board of administrators of the charity hospital of $100,000 for the support and maintenance of the said institution, payable as follows: From the annual revenues received from the Louisiana state lottery company, which are hereby transferred to the charity hospital-$40,000 -provided that the contract made betwen the state and the Louisiana State Lottery Company shall not in any manner be affected or impaired by the transfer."

The question of right having been established as well as that of the wrong committed by the enactment, the question remains to be considered whether the existence and enjoyment of these franchises and rights of the plaintiffs can be protected by the use of the writ of injunction.

It is urged by the attorney-general that the prohibition of the Revised Statutes, section 720, which is section 5 of the act of 1793 (1 Stat., 334), which prohibits courts of the United States from staying by injunction proceedings in any court of a state should prevent this court from granting an injunction in this cause. The case of The Supervisors v. Durant, 9 Wall., 415, is cited. In that case all that was decided was that "it (the question presented in that case) was not a question as to which court first obtained possession of the case." Because, the effort having been in that case to restrain, as a proceeding in a state court, a mandamus to levy a tax to satisfy a

The State Lottery Co. v. Fitzpatrick.

judgment obtained in a United States court, it was held that the circuit court having already rendered judgment could not be restrained from collecting it, that the question, therefore, did not turn upon priority of jurisdiction.

In Live Stock Association v. Crescent City Co., 1 Abb. U. S., 388, Mr. Justice Bradley, after quoting this section, and giving it as a reason for refusing an injunction so far as related to suits already instituted, granted an injunction against "commencing or prosecuting any other suits than such as were then pending," and against "suing for any fine or penalty imposed," etc.

In Fisk v. The Union Pacific Railroad Co., 10 Blatch., 518, Judge Blatchford holds that the provision that "a writ of injunction shall not be granted to stay proceedings in any court of the state," has application only to such proceedings in the state court as had been commenced before the federal jurisdiction attached. He gives two reasons for this conclusion. (1) That this restriction must be construed along with the provision of section 14 of the act of 1789 (1 Stat., 83); that "the federal courts shall have power to issue all writs which may be necessary for the exercise of their respective jurisdictions;" and (2) that if the federal courts had not power to restrain parties from thereafter instituting proceedings in a state court, a defendant could in many ways defeat the jurisdiction and action of the federal court after it had obtained full jurisdiction of the person and of the subject matter. I see no answer to this reasoning.

This prohibition of the statute does not stand in the way of complainants obtaining this writ if their case entitles them to it. The question becomes the broad one whether, according to the established principles of equity jurisdiction, they can lay claim to the writ.

A large capital exists for employment and was collected under terms of the contract. Without protection from the strong hand of their antagonists this capital cannot be longer employed and those rights must be abandoned. The purpose of the state is to destroy the corporation and to resume its corporate franchises. The combination, strength and per