exercise by the State does not impair the obligation of the contract as prohibited by the constitution, but if such right is not reserved the franchise cannot be withdrawn without impairing the obligation of contract.82 So although a legislative grant to a corporation of special privileges may be a contract, when the language of the statute is so explicit as to require such a construction, yet if one of the conditions of the grant be that the legislature may alter or revoke it, a law altering or revoking the exclusive character of the granted privileges cannot be regarded as one impairing the obligation of the contract.83 Where, by a state statute, the charter of a street railroad company was repealed, and its franchises and tracks were transferred to another, and the company refused to seek a remedy, a stockholder who asked an injunction on the ground that the statute impaired the obligation of a contract was given a standing in a court of equity. Such a statute impairs the obligation of a contract, unless the legislature reserved the right to repeal the statute conferring the charter. In Massachusetts such a reservation becomes a part of every act of incorporation, by virtue of the General Statutes,84 which declare, "Every act of incorporation passed after the eleventh day of March, in the year one thousand eight hundred and thirty-one, shall be subject to amendment, alteration or repeal, at the pleasure of the legislature." Similar clauses of reservation exist in the statutes of various States. By the exercise of the repealing power reserved by such a clause the charter no longer exists, and whatever validity transactions entered into and authorized by it while it was in force may possess, there can be no new transactions dependent on the special power conferred by the charter. Such power is abrogated when the law granting it is repealed. Neither the rights of the shareholders to the real and personal property of the corporation, nor rights of contract, or choses in action, are destroyed by such repeal; and if the legislature has

82 Central Rd. & Banking Co. v. State of Georgia, 54 Ga. 401, 409. 83 Hamilton Gas Light & C. Co. v.

Hamilton, 146 U. S. 258, 36 L. ed. 963, 13 Sup. Ct. 90.

84 Sec. 41, chap. 68.

provided no specific mode of enforcing and protecting such rights, the courts will do so by the means within their power.

§ 319. Reservation of Power to Alter, etc., and Limitations Thereon.-Even though the power to amend or repeal may be properly exercised, yet such power is not without limit; the alterations must be reasonably made, in good faith, and consistent with the scope and object of the act of incorporation so that under the guise of amendment and alteration sheer oppression and wrong cannot be inflicted; and beyond the sphere of the reserved powers the vested rights of property in corporations in such cases is surrounded by the same sanction and are as unvoidable as in other cases. 86 So a power reserved by a statute of a State to its legislature, to alter, amend or repeal a charter of a railroad corporation, authorizes the legislature to make any alteration or amendment of a charter granted subject to that power, which will not defeat or substantially impair the object of the grant or any rights vested under it,87 and which the legislature may deem necessary

85 Greenwood v. Freight Co., 105 power to add to, alter, amend or reU. S. 13, 26 L. ed. 961.

86 Stanislaus County v. San Joaquin & Kings River Canal & Irrigation Co., 192 U. S. 201, 213, 24 Sup. Ct. 241, 48 L. ed. 406, per Peckham, J. (after reviewing a number of cases).

87 New York & N. E. R. Co. v. Bristol, 151 U. S. 556, 14 Sup. Ct. 437, 38 L. ed. 269; Holyoke Co. v. Lyman, 15 Wall. (82 U. S.) 500, 21 L. ed. 133. See also McKee v. Chautauqua Assembly, 130 Fed. 536, 124 Fed. 808; Smith v. Atchison, Topeka & Santa Fe R. Co. (C. C.), 64 Fed. 272; People v. O'Brien, 111 N. Y. 1, 19 N. Y. St. R. 173, 18 N. E. 692, 2 L. R. A. 255, 7 Am. St. Rep. 684. See next following section herein.

peal a charter authorizes the proper legislative body to make any addition, alteration or amendment which does not substantially impair vested rights or directly impede the accomplishment of the purposes of the grant, and which the legislative body deems proper to secure the best interests of the public." Union Pac. Rd. Co. v. Mason City & Ft. Dodge R. Co., 128 Fed. 230, 238, 64 C. C. A. 348 (case affirms 124 Fed. 409), citing New York & N. E. Rd. Co. v. Bristol, 151 U. S. 556, 14 Sup. Ct. 437, 38 L. ed. 269; Sinking Fund Cases (Union Pac. R. Co. v. United States and Central Pac. R. Co. v. Gallatin), 99 U. S. 700, 720, 721, 25 L. ed. 496. Principal case is aff'd 199 U. S. 160, 50 L. ed. 134, 26 Sup.

The reservation in a charter "of a Ct. 19.

to secure either that object or other public or private rights.8 So the reservation, in a charter of a railroad company, of the power to add to, alter, amend or repeal includes the reservation of power to condition the title to a bridge and to terminal facilities with the provision that the joint use of them shall be allowed to other railroad companies for reasonable compensation, provided that this use does not deprive the holder of the property of the use of it requisite to the handling of its own engines and trains, to the conduct of its own business, and to the discharge of its corporate duty to the government and to the public. If the constitution of a State forbids the passage of any law impairing the obligation of contracts such provision is held to limit the power reserved in the same constitution to alter or repeal general laws for the organization of corporations, so that the legislature cannot impair or destroy contract obligations of third parties with a corporation.90

§ 320. Reservation of Power to Alter, etc.-Fourteenth Amendment Equal Protection of the Law-Deprivation of Property Railroad Employees.-An act of a state legislature entitled "An act to provide for the protection of servants and employees of railroads," is not in conflict with the provisions of the Constitution of the United States. "The contention is that as to railroad corporations organized prior to its passage, the act was void because in violation of the Fourteenth Amendment. Corporations are the creations of the State, endowed with such faculties as the State bestows and subject to such conditions as the State imposes, and if the power to modify their charters is reserved, that reservation is a part of the contract, and no change within the legitimate exercise of the power can be said to impair its obligations; and as this amendment rested on reasons deduced from the peculiar character of the business of the corporations affected and the public nature of

Holyoke Co. v. Lyman, 15 Wall. (82 U. S.) 500, 21 L. ed. 133.

Union Pac. Rd. Co. v. Mason City & Fort Dodge R. Co., 128 Fed. 230, 64 C. C. A. 348, aff'g 124 Fed.

409, and aff'd in 199 U. S. 160, 50 L. ed. 134, 26 Sup. Ct. 19.

90 Omaha Water Co. v. City of Omaha, 147 Fed. 1, 77 C. C. A. 267.

their functions, and applied to all alike, the equal protection of the law was not denied. The question, then, is whether the amendment should have been held unauthorized because amounting to a deprivation of property forbidden by the Federal Constitution. The power to amend 'cannot be used to take away property already acquired under the operation of the charter, or to deprive the corporation of the fruits actually reduced to possession of contracts lawfully made,'" but any alteration or amendment may be made 'that will not defeat or substantially impair the object of the grant, or any rights which have vested under it, and that the legislature may deem necessary to secure either that object or other public or private rights.' 93 This act was purely prospective in its operation. It did not interfere with vested rights or existing contracts, or destroy or sensibly encroach upon, the right to contract, although it did impose a duty in reference to the payment of wages actually earned, which restricted future contracts in the particular named. In view of the fact that these corporations were clothed with a public trust, and discharged duties of public consequence, affecting the community at large, the Supreme Court held the regulation, as promoting the public interest in the protection of employees to the limited extent stated, to be properly within the power to amend reserved under the state constitution. Inasmuch as the right to contract is not absolute, but may be subjected to the restraints demanded by the safety and welfare of the State, we do not think that conclusion in its application to the power to amend can be disputed on the ground of infraction of the Fourteenth Amendment." 94

91 Citing Missouri Pacific Ry. v. Mackey, 127 U. S. 205, 32 L. ed. 107, 8 Sup. Ct. 1161.

2 Citing Sinking Fund Cases (Union Pacific R. Co. v. United States), 99 U. S. 700, 25 L. ed. 496, per Waite, C. J.

93 Citing Commissioners v. Holyoke Water Power Co., 104 Mass. 446, 451,

per Gray, J.; Greenwood v. Freight Co., 105 U. S. 13, 26 L. ed. 961; Spring Valley Water Works v. Schottler, 110 U. S. 347, 28 L. ed. 173, 4 Sup. Ct. 48.

94 St. Louis, Iron Mountain, etc., Ry. Co. v. Paul, 173 U. S. 404, 408, 19 Sup. Ct. 419, 43 L. ed. 746, per Fuller, C. J.

CHAPTER XX.

OBLIGATION OF CONTRACTS CONTINUED.

321. Reserved Powers of Congress § 330. Obligation

-Amendment of Charter

of Subsidized Railroad-
Railroad and Telegraph
Company Cemetery Com-