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§ 191. Police regalation of corporations in general. — But the corporation is no more subject to arbitrary regulations than is the individual. In order that the regulation of a corporation may be within the constitutional limitations of police power, it must have reference to the welfare of society by the prevention or control of those actions which are calculated to inflict injury upon the public or the individual. As in all other cases of the exercise of the police power, the police regulations of corporations must be confined to the enforcement of the maxim, sic ulere tuo, ut alienum non ladas, subject to the observance of which every corporate charter must be supposed to have been granted. Any attempt, under the guise of police regulations, to repeal or amend the charter, or to abridge any of the corporate rights and privileges, would of course be unconstitutional and void. The property of the corporation cannot be confiscated, under pretense of being a police regulation, without payment of compensation. Thus, it was held unconstitutional for a law to require an existing turnpike company to set back its first gate two miles from the corporate limits of a town, which had grown up at the original gate, under penalty of forfeiting all right to tolls.? The two miles of road, included within the existing turnpike, might have been confiscated in the exercise of the power of eminent domain, but compensation for the loss would have been required. So, also, would it be unlawful to compel a railroad or turnpike to permit certain persons to make use of the road without paying the cus
1 State o. Noyes, 47 Me. 189; Washington Bridge Co. 0. State, 18 Conn. 53; Benson v. Mayor, etc., of N. Y. 10 Barb. 223; Hegeman .. Western R. R. Co., 13 N. Y. 9; Commonwealth v. Pennsylvania Canal Co., 66 Pa. St. 41; Bailey v. Philadelphia, etc., R. R. Co., 4 Harr. 389; People v. Jackson, etc., Plank Road Co., 9 Mich. 285; Attorney-General 0. Chicago, etc., R. R. Co., 35 Wis. 425; Sioan o. Pacific R. R. Co., 61 Mo. 24.
2 White's Creek Turnpike Co. v. Davidson Co., 3 Tenn. Ch. 396. See Detroit v. Plankroad Co., 13 Mich. 140.
tomary toll. And while it is permissible to prohibit a corporation from doing the thing, or engaging in the business, for which it was created, no law can make the corporation responsible for the damages suffered by the public, as a consequenee of what the corporation was authorized to do. Thus, for example, where the legislature authorized the construction of a bridge over a navigable stream, of such dimensions that it would necessarily become an obstruction to the navigation of the river, the bridge company could not be made responsible to those whose navigation of the stream was impeded, for that would in effect be a deprivation of the corporate rights. So, also, would it be
, unlawful for the legislature to provide by a subsequent law for the complete forfeiture of the charter as a penalty for a prohibited act which under the existing law was a cause for only a partial forfeiture, because the enforcement of the new penalty against a corporation for acts already done would operate to impair the obligation of contracts. But there is no constitutional objection to the application to existing corporations of new remedies for the attainment of justice, and to secure a performance of the corporate duties to the public. For example, it is lawful for a legislature to extend the individual liability of the stockholders of a bank for any debt thereafter incurred. A law is valid, also, which provides that existing corporations shall maintain their corporate organizations for a limited period after their dissolution, and continue their capacity for being sued, for the purpose of winding up its affairs.S
1 Pingry o.
Washburn, 1 Aiken, 264. 2 Bailey o.
Philadelphia, etc., R. R. Co., 4 Harr. 389. 8 People v. Jackson, etc., Plankroad Co., 9 Mich. 285.
4 Crawford v Branch Bank, 7 How. 279; Gowen v. Penobscot R. R. Co., 44 Me. 140; Commonwealth v. Cochituate Bank, 3 Allen, 42.
6 Stanley o. Stanley, 26 Me. 196; Coffin v. Rich, 45 Me. 507; Hathorne 0. Calef, 53 Me, 471; Child o. Coffin, 17 Mass. 64; Gray o. Coffin, 9 Cush. 200. & Lincoln, etc., Bank o. Richardson, 1 Greenl. 79. Franklin Bank o. Cooper, 36 Me. 179; Foster o. Essex Bank, 10 Mass. 245; Nevitt o. Bank of Port Gibson, 6 Smedes & M. 513. And a State law of this kind may be made to apply to foreign corporations, in the endeavor to secure a just distribution of their assets lying within the jurisdiction of the State, which enacted the law. McGoon o. Scales, 9 Wall. 31; Stetson e. City Bank, 2 Ohio St. 114; Lewis v. Bank of Kentucky, 12 Ohio St. 132.
Corporations may also be required to submit to an inspection of their affairs by a public official, in order to asCortain any breaches of duty to the public. And the legislature may lawfully provide the extreme remedy of dissolving the bank or other corporation, whenever, upon eximination by the public inspector, it should be found in an insolvent condition. In the case last cited, it was held that a law was constitutional, which provided for the judicial dissolution of an insurance company, chartered under the laws of the State, whenever the auditor upon examination of its affairs, should be of the opinion that its financial condition is such as to render its further continuance hazardous to those who are insured in the company. In pronouncing the law to be constitutional the court says:
“ With certain constitutional limitations, the rights of all persons, whether natural or artificial, are subject to such legislative control as the legislature may deem necessary for the general welfare, and it is a fundamental error to suppose there is any difference in this respect between the rights of natural and artificial persons. They both stand precisely upon the same footing. While personal liberty is guaranteed by the constitution to every citizen, yet, by disregarding the rights of others, one may forfeit not only his liberty, but even life itself. So a corporation, by refusing to conform its business affairs as to defeat the ob
Hunter v. Burnsville Pike Co., 56 Ind. 213; Commonwealth o. Far. mers' and Mechanics' Bank, 21 Pick. 542. See Planters' Bank o. Sharp, 5 How. 340.
2 Commonwealth o. Farmers' & Mechanics' Bank, 21 Pick. 542; Nevitt 0. Bank of Port Gibson, 6 Smedes & M. 513; Ward 0. Farwell, 97 Ni. 693. 3 Ward v. Farwell, supra.
jects and purposes of its promoters, and the design of the legislature in creating it, may forfeit the right to further carry on its business, and also its existence as an artificial being. The fact that the stockholders may be personally injured by declaring a forfeiture of the company's franchises, and causing its affairs to be wound up in a case of this kind, is not a sufficient reason why it should not be done, if the further continuance of its business would be dangerous to the community. In the proper exercise of the police power, laws are often enacted by the legislature for the common good which materially affect the value of certain kinds of property, by which a particular class of persons are injured ; yet such consequences do not at all affect the validity of the legislation, and to such losses the maxim damnum absque injuria applies. It is generally said one may do as he pleases with his own property, but this is subject to the important qualification - he must please to do with it as the law requires.
The maxim sic utere tuo, ut alienum non lædas, applies to all such cases.
“ These general principles would seem to warrant the conclusion that the legislature is authorized, in the proper exercise of the police power, to adopt such necessary legislation and regulations as will effectually protect the community from losses incident to a public business, conducted by a corporation under a charter from the State, where such business has become hazardous, and will probably result in financial distress and disappointed hopes to those who, ignorant of its condition, do business with it."
§ 192. Laws regulating rates and charges of corporations. — The right of the legislature to regulate the rates and charges of a corporation has frequently been the subject of litigation in the courts of this country. The estab
1 Ward 0. Farwell, 97 IIl. 608, 609
lishment of extensive and rich corporations, which are often enabled by their combined capital and by the possession of special franchises to make a practical monopoly of the business in which they are engaged, and consequently to demand of those, who are compelled by circumstances to have business dealings with the corporations, extortionate and unequal charges. For these reasons, there is a general popular demand for legislative regulation of the rates and charges of the corporations.
The general power of the government to regulate prices has already been fully explained, and the constitutional limitations discussed. It will not be necessary to repeat
. here what has been stated there. It was ascertained by a study of the cases that where the government by the grant of a more or less exclusive franchise increases the economic powers of a person or persons, so as to create a monopoly against those to whom the franchise is denied, it had the power to regulate the charges of such person or persons, so that the public may obtain that reasonable enjoyment of the benefits arising out of the monopoly, which indeed was the consideration or inducement of the grant of the franchise. The Supreme Court of the United States has even gone further in the recognition of the legislative power to regulate prices, and asserted that, when circumstances make of a particular business “a virtual monopoly,” the legislature may prevent extortion by the regulation of prices. But in order to justify the legislative regulation of the charges of corporations, it will not be necessary to go to the length of this decision. In the first place, if the power to repeal or amend the charter is reserved to the State, no question can arise ; for in the exercise of the power to amend, the legislature may require,
1 See ante, $ 93.
See ante, $ 93. 3 Waite, Ch. J., in Munn o. Illinois, 94 U. S. 113. See the criticism of this decision in § 93.