adjudicata; and even though prior to such decision a statute of earlier date reserved to the legislature the power to alter, suspend or repeal subsequent charters, and although under subsequent state decisions this statute was held to be read into every subsequent charter, nevertheless a legislature cannot bind its successors and prohibit its granting an irrepealable contract if it should so elect; and unless an intention can fairly be drawn from the terms of a contract of exemption from taxation to reserve to the State a right to repeal such contract at will without the consent of the company, there can be no departure from it.35

"Hancock, Comptroller, v. Singer Mfg. Co., 62 N. J. L. 289, 328, 329, 42 L. R. A. 852, 41 Atl. 846.

CHAPTER XXV.

ALIENATION AND FORFEITURE.

Abuse, Misuser or Nonuser of Corporate Powers.

§ 486. Forfeiture of Franchise-Ju-
dicial Determination of—

Quo Warranto-State Of- § 489. Nature and Extent of Mis-
ficials-Ipso Facto For-
user or Nonuser Justifying
Forfeiture.

feiture.

487. Courts Reluctant to Adjudge Forfeitures and Will Proceed with Caution.

488. Forfeiture of Franchise

490. When Franchise Will Be For

feiture-Instances.

491. When Franchise Will not Be Forfeited-Instances.

§ 462. Power to Alienate Franchises-Nature of Franchise as Affecting.-We have elsewhere considered such distinction as exists between what are designated as primary and secondary franchises, and have also seen that a marked distinction exists between franchises which are essential to the creation and continued existence of a corporation, to its right to exist as an artificial being and which are inseparable from it, and other franchises and privileges subsidiary in their nature which it possesses and may exercise under and by virtue of the franchise to be and to the enjoyment of which, corporate existence is not a prerequisite. We have further specially considered: "essentially corporate franchises;" the non-inclusion in that term of "corporate powers or privileges;" the sale and assignability of the latter and their liability to loss or forfeiture; the distinction between franchises and powers and of franchises to be and property or franchises which a corporation may acquire; the distinction between the general creative franchise and a special franchise; also other distinctions of importance, with those above mentioned; these distinctions are pertinent to the question of the power to alienate franchises.1

$ 463. Power to Alienate Franchises-General Rule.It is a general rule, in the case of public service corporations, that the franchise to be a corporation is not a subject of sale and transfer unless made so by a statute which provides a mode of exercising it. So a corporation, in the absence of

1 See §§ 8, 30 et seq., herein.

2 Memphis & L. R. Ry. Co. v. Railroad Commissioners, 112 U. S. 609,

5 Sup. Ct. 299, 28 L. ed. 837; Branch v. Jesup, 106 U. S. 468, 27 L. ed. 279, 1 Sup. Ct. 495. Other authori

statutory authority, has no right to sell or transfer its franchise, or any property essential to its exercise, which it has acquired under the law of eminent domain.3 Nor can a corporation sell or transfer franchises from which it has been forever ousted by quo warranto proceedings. A strictly private corporation, however, may alienate its property or part with it in its entirety with the consent of its stockholders, where it is under no obligation to render public services or to perform public duties. And it is held that a corporation's power to alienate its property exists in the absence of a statutory restriction; that the power to convey is limited to the accomplishment of the objects for which the corporation was created;" that all of a corporation's property may be sold to another corporation; that franchise interests which are independent are transferable, as is also an easement or right of way upon a public street; 10 and a ferry franchise is held to be transferable the same as other property.11 Nor does the rule apply to a sale or transfer to the public, as where a municipality, under a contract condition upon acceptance of a franchise by a gas company, has the right reserved to purchase its property.12

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8

ties supporting this rule appear under subsequent sections in this chap

ter.

Insurance company doing losing business, but still solvent; right of to alienate. See Raymond v. Security Trust & Life Ins. Co., 89 N. Y. Supp. 753, 44 Misc. 31, rev'd 111 App. Div. 191, 97 N. Y. Supp. 557.

Kit Carter Cattle Co. v. McGillin, 10 Ohio S. & C. P. Dec. 146, 7 Ohio N. P. 575.

8 Warfield V. Marshall County Canning Co., 72 Iowa, 666, 34 N. W. 467. See Marvin v. Anderson, 111 Wis. 387, 87 N. W. 226.

'Long Acre Electric Light & Power Co., In re, 101 N. Y. Supp. 460, 51 Misc. 407, aff'd 102 N. Y. Supp. 242, 117 App. Div. 80, aff'd 188 N. Y. 361, 80 N. E. 1101.

3 Fietsam v. Hay, 122 Ill. 293, 13 N. E. 501, 3 Am. St. Rep. 492. Citing Freeman on Executions, §§ 179, 180; Pierce on Railroads, §§ 196-201; Jones10 Knoxville v. Africa, 77 Fed. 501, on Mortgages, § 161; Rorer on Ju- 47 U. S. App. 74, 246, 23 C. C. A. 252. dicial Sales (2d ed.), 222. 11 Evans v. Kroutinger (Idaho), 72 Pac. 882.

Wilmington Water Power Co. v. Evans, 166 Ill. 548, 46 N. E. 1083. Morrisette v. Howard (Kan.), 63

Pac. 756.

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12 Indianapolis, City of, v. Consumers' Gas Trust Co., 144 Fed. 640. See s. c., 206 U. S. 592. Examine

* Fitch v. Lewiston Steam Mill Co., Joyce on Electric Law (2d ed.),

§ 464. Same Subject-Basis of Rule.-The franchises and powers of a public service corporation are in a large measure designed to be exercised for the public good, and this exercise of them is the consideration for granting them; and any transfer or contract by which the company renders itself incapable of performing its duties to the public or attempts to absolve itself from its obligations without the consent of the State is forbidden by public policy, violates its charter, and is, therefore, void.13 So a railroad company cannot, by a lease of 13 United States: Central Transp. ance of public duties which it has Co. v. Pullman's Palace Car Co., undertaken, and thereby make pub139 U. S. 24, 11 Sup. Ct. 478, 35 L. lic accommodation or convenience ed. 55, 45 Am. & Eng. R. Cas. 607, subservient to its private interests. 9 Ry. & Corp. L. J. 342, 43 Alb. L. J. Gibbs v. Consolidated Gas Co. of Bal328; Thomas v. Railroad Co., 101 timore, 130 U. S. 396, 397, 32 L. ed. U. S. 71, 83, 84, 25 L. ed. 950; New 788, 9 Sup. Ct. 389, 6 R. R. & Corp. York, etc., Rd. Co. v. Winans, 17 L. J. 22. How. (58 U. S.) 30, 15 L. ed. 27.

Illinois: Balsley v. St. Louis, Alton & Terre Haute Rd. Co., 119 Ill. 68, 72, 73, 8 N. E. 859.

Kentucky: Anderson v. Cincinnati S. R. Co., 86 Ky. 44, 5 S. W. 49.

New Jersey: State, Bridgeton, v. Bridgeton & M. Traction Co., 62 N. J. L. 592, 43 Atl. 715, 45 L. R. A. 837. Texas: International & G. N. R. Co. v. Eckford, 71 Tex. 274, 8 S. W. 679; International & G. N. R. Co. v. Kuehn, 70 Tex. 582, 8 S. W. 484; East Line & R. R. Co. v. Rushing, 69 Tex. 306, 6 S. W. 834.

Virginia: Acker v. Alexandria & F. R. Co., 84 Va. 648, 5 S. E. 688; Naglee v. Alexandria & F. R. Co., 83 Va. 707, 3 S. E. 369.

Examine State, Grinsfelder, v. Spokane St. R. Co., 19 Wash. 518, 53 Pac. 719, 41 L. R. A. 515, 11 Am. & Eng. R. Cas. (N. S.) 62; Connor v. City of Marshfield (Wis., 1906), 107 N. W. 639, under Rev. Stat. 1898, § 959-51.

A corporation cannot disable itself by contract from the perform

Courts will not allow corporations to escape from their proper responsibility, by means of any disguise. New York, etc., Rd. Co. v. Winans, 17 How. (58 U. S.) 30, 15 L. ed. 27.

"The State is presumed to grant corporate franchises in the public interest, and to intend that they shall be exercised through the proper officers and agencies of the corporation, and does not contemplate that corporate powers will be delegated to others. Any conduct which destroys their functions, or maims or cripples their separate activity, by taking away the right to freely and independently exercise the functions of their franchise, is contrary to a sound public policy. Central Transp. Co. v. Pullman's Palace Car Co., 139 U. S. 24, 11 Sup. Ct. 478, 35 L. ed. 55; Thomas v. Railroad Co., 101 U. S. 71, 25 L. ed. 950; People v. North River Sugar Refining Co., 121 N. Y. 582-625, 24 N. E. 834; Mallory v. Oil Works, 86 Tenn. 598, 8 S. W. 396." McCutcheon v. Merz Capsule Co., 71 Fed. 787, 793, per Lurton, C. J.

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