pike company is a contract, and protected by the Constitution of the United States. The Supreme Court of Vermont assented to the doctrine in Grammar-School v. Burt1 (1839). In Michigan State Bank v. Hastings 2 (1844), the Supreme Court of Michigan held that the charter of a bank is a contract, and that where such charter contains no reservation of the power to repeal, a repealing statute is void. The court say: "If there is any one question more firmly settled than another, it is that a private corporation, whether civil or eleemosynary, is a contract between the government and the corporators; and the legislature cannot repeal, impair, or alter the rights and privileges conferred by the charter, against the consent and without the default of the corporation judicially declared and ascertained." In Bruffitt v. The Great Western Railroad Company 3 (1861), the Supreme Court of Illinois gave their assent to the doctrine as applied to a railway corporation. They say: "This rule has been uniformly adhered to by the Supreme Court of the United States, and is recognized by the supreme judicial tribunals of the various states of the Union as undoubted law, and it may be regarded as the settled law of the country." In The Commonwealth v. The New Bedford Bridge Company 4 (1854), the Supreme Court of Massachusetts applied the principle to the charter of a bridge company.

§ 567. In the Matter of Oliver Lee and Company's Bank 5 (1860), the Court of Appeals of New York said, by Mr. Justice Denio: "Certain principles have been established by the Federal Supreme Court, and are no longer subjects of controversy. Thus it has been adjudged that an executed grant is as fully within the constitutional protection as an executory agreement. Then the provision is not limited to dealings between individuals, but extends equally to contracts between the states and private persons; nor, in respect to contracts to which the state is a party, is it confined to such as relate to definite pecuniary obligations, or to specific real or personal property. It embraces charters and grants of corporate powers 2 1 Douglas' R. 225.

1 11 Vermont R. 632. 8 25 Illinois R. 353.

and privileges when conferred for private and pecuniary objects. And it also applies to corporations created under general laws. Such statutes are considered as propositions extended to private citizens; and when they have been accepted, and a corporation has been organized pursuant to their provisions, a contract between the state and the private adventurers is created, which is equally inviolable as the terms of a charter granted by special statute.'

In Bank of Pennsylvania v. The Commonwealth1 (1852), Mr. Justice Black, certainly no advocate of ultra national views, used the following expressive language: "That an act of incorporation is a contract between the state and the stockholders, is held for settled law by the Federal courts and by every state court in the Union. All the cases on the subject are saturated with this doctrine. It is sustained, not by a current, but by a torrent of authorities. No judge who has a decent respect for the principle of stare decisis, that great principle which is the sheet-anchor of our jurisprudence, can deny that it is immovably established."

§ 568. Notwithstanding the current, or, as Mr. Justice Black calls it, the torrent of authorities, a persistent attempt was made a few years since by the Supreme Court of Ohio to undo all this work, and to establish the doctrine that charters are not contracts. Certain banks had been organized in Ohio under a general statute. The legislature subsequently made some important changes in their charters. The question was raised for judicial decision, whether these latter acts of the state were valid or void. The Supreme Court of Ohio held them all valid in the cases of De Bolt v. The Ohio Life Insurance Company,2 Mechanics' and Traders' Bank v. De Bolt, Knoup v. The Piqua Bank, and the Toledo Bank v. Bond.5 In some of these cases the Ohio judges made a very elaborate argument to show that Chief Justice Marshall and all the other judges of the Supreme Court of the United States had been wrong; that a charter had never been directly decided to be a contract; that a charter is not a contract, because 21 Ohio State R. 563. 3 Ibid. 591. 5 Ibid. 622.

17 Harris' R. 144.

4 Ibid. 603.

there is no consideration, and there are no parties until the corporation has been called into being by the very charter; that a charter is an act of the state's sovereignty conferring certain privileges which the same sovereign state may at any time withdraw. These decisions were made in 1853. Some of the cases, however, were carried to the Supreme Court of the United States, where the sophistry of the Ohio judges was brushed away, and the rule as originally laid down in Dartmouth College v. Woodward was affirmed.1

§ 569. (2.) It being settled that the charter itself— the grant of franchises by the state to the corporation, by means of which the latter is enabled to pursue and accomplish the general objects of its creation is a contract, the second question remains to be considered, are all the collateral stipulations which may have been inserted in this charter, which are not necessary to the existence and objects of the corporation, but may aid in promoting its success, and which are restrictions upon the legislative powers of the state, are they also contracts? This question has given rise to a vast amount of judicial conflict; and although it is now settled, as I think, it was not put to rest without great discussion and much opposition of opinion. Still, the decided preponderance of authority among the state courts, and an uniform course of decision in the national Supreme Court, have pronounced an affirmative answer to this question, and have placed these collateral stipulations upon the same footing as the general grant of franchises in the charter.

§ 570. The collateral stipulations of this character which have been generally inserted in charters, may be grouped into two classes: those which limit the state's power of taxation, and those which limit the state's right of eminent domain. To illustrate: if a state should incorporate a bank with ordinary banking franchises, and should add in the charter that the rate of taxation imposed upon the institution should never exceed a certain specified amount; or if a state should incorporate a

1 Piqua Bank v. Knoup, 16 Howard's R. 369; Ohio Life Insurance and Trust Company v. De Bolt, 16 Howard's R. 416; Dodge v. Woolsey, 18 Howard's R. 331.

toll-bridge company with the ordinary franchises necessary to enable the corporation to erect and maintain a bridge at a certain place, and to take tolls thereon, and should add a clause in the charter, declaring that no other bridge should be erected within certain distances up and down the stream; it is plain that neither of these stipulations would be necessary to the existence and the accomplishment of the objects of these respective corporations. The bank might carry on all legitimate banking business without any limitation upon the rate of taxation applicable to it; the bridge company might build and maintain their structure, and collect tolls from all who cross, although there were a dozen rival bridges. But it is plain that these and similar provisions in charters might be, and probably would be, very advantageous to the particular corporations. At the same time they would have the effect, if operative, to limit and restrain two important functions of the state government, that of taxation, and that of eminent domain. Can a state legislature thus bind itself and all future legislatures; or, in other words, are these and similar clauses contracts between the state and the corporation, and thus within the protection of the United States Constitution? To answer this question satisfactorily, we must refer to decided cases, and especially to those in the highest court of the nation.

§ 571. In Gordon v. The Appeal Tax Court1 (1845), the Supreme Court of the United States gave effect to a statute of Maryland restricting the legislative power of taxing particular banks. Certain banks had been incorporated. In 1821 a law was passed continuing their charters to 1845, upon condition that they would construct a certain road, and pay a school tax. This statute also declared that if any of the banks accepted and complied with the terms and conditions of the act, the faith of the state was pledged not to impose any further tax or burden upon them. The stipulation was held by the court to be a contract and within the constitutional protection. A subsequent law of the state imposing a tax was adjudged invalid.

§ 572. The question was directly presented in Woodruff v.

13 Howard's R. 133.

Trapnall1 (1850). The legislature of Arkansas had, in 1836, chartered a bank whose whole capital belonged to the state. One clause of the charter provided "that the bills and notes of the said institution shall be received in payment of all debts due to the State of Arkansas." In 1845 this clause was repealed. The Supreme Court of the United States held that this stipulation in the original charter constituted a contract between the state and the holders of these notes, and that the repealing statute was void as to all notes issued prior to its passage. The opinion of the court was delivered by Mr. Justice McLean, and Taney, C. J., Wayne, McKinley, and Woodbury, JJ., concurred. Nelson, Grier, Catron, and Daniel, JJ., dissented. The prevailing opinion took the broad ground that states are bound by all their contracts, and gave no force whatever to the claim that a state cannot bargain away its sovereign capacities and functions.

§ 573. In The Richmond Railroad Company v. The Louisa Railroad Company 2 (1851), the Supreme Court again considered the question, without directly passing upon it. The legislature of Virginia had incorporated the Richmond, Fredericksburg and Potomac Railroad Company, whose track and route ran northwardly from Richmond to the Potomac River. The charter contained a clause to the effect that the legislature would not allow any other railroad to be constructed between those places or any portion of that distance, the probable effect of which would be to diminish the number of passengers travelling on the first named road, or to compel said company to reduce the rates of fare in order to retain its passenger traffic. The legislature afterwards incorporated the Louisa Railroad Company, whose track and route ran in a general easterly and westerly direction, and, coming from the west, struck the track of the Richmond road at right angles at some distance from Richmond, crossed said track, turned and ran into that city. The two roads were, therefore, parallel for a short distance, while their general direction was at right angles, and there could be no competition as to any through travel, and none as to way traffic except for a small portion of the route. The

1 10 Howard's R. 190.

2 13 Howard's R. 71.