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Subject Area: Law
Topic: The American Revolution and Constitution

§ 210.: Freedom from State control, as a franchise.— - Christopher G. Tiedeman, A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint, vol. 2 [1900]

Edition used:

A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint (St. Louis: The F.H. Thomas Law Book Co., 1900). Vol. 2.

Part of: A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint, 2 vols.

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§ 210.

Freedom from State control, as a franchise.—

The claim has often been made that, if it is stipulated in the charter of a corporation that it shall not be subjected to a specific police regulation, such a contract is binding upon all the subsequent legislatures, and they are powerless to prevent an injury to the public by instituting this regulation. In other words, it is claimed, that the State may, by contract irrevocably preclude itself from the exercise of its ordinary police power, it matters not what evil consequences to the public may thereby be prevented. The recognition of this doctrine would, if often acted upon, certainly hamper the government in its effort to protect its citizens from threatening dangers. The dangerous character of the doctrine is particularly noticeable in its application to the police control of corporations. The franchise of the corporation, even if it consists only in the privilege of acting and doing business in a corporate capacity, enables it, as against the private individual, to occupy a vantage ground; its power for harming and controlling the rights and interests of individuals is thereby greatly increased, and the necessity for police control, in order that the rights of individuals may not be exposed to the danger of trespass, is proportionately increased. To recognize in a legislature the power by a contract to tie the hands of all future legislatures, and deprive them of the power to interpose regulations that may become needful as a protection to the public against the aggressions or other unlawful acts of the corporation, would be a specimen of political suicide. It has, therefore, been often decided, in the American courts, Federal and State, that the State cannot barter away, or in any way curtail its exercise of any of those powers, which are essential attributes of sovereignty, and particularly the police power, by which the actions of individuals are so regulated as not to injure others; and any contract, by which the State undertakes to do this, is void, and does not come within the constitutional protection.1

In a late case, it has been definitely settled that the power to regulate the actions of individuals and corporations, for the promotion of the public health and the public morals, can never be restricted or suppressed by any contract or agreement of the State. In delivering the opinion of the court, ——, J. says: “The appellant insists that, so far as the act of 1869 partakes of the nature of an irrepealable contract, the legislature exceeded its authority, and it had no power to tie the hands of the legislature in the future from legislating on that subject without being bound by the terms of the statute then enacted. This proposition presents the real point in the case. Let us see clearly what it is. It does not deny the power of that legislature to create a corporation, with power to do the business of landing live stock and providing a place for slaughtering them in the city. It does not deny the power to locate the place where this shall be done exclusively. It does not deny even the power to give an exclusive right, for the time being, to particular persons or to a corporation to provide this stock landing, and to establish this slaughter-house. But it does deny the power of that legislature to continue this right so that no future legislature, not even the same body, can repeal or modify it, or grant similar privileges to others. It concedes that such a law, so long as it remains on the statute book as the latest expression of the legislative will, is a valid law, and must be obeyed, which is all that was decided by this court in the Slaughter-house cases. But it asserts the right of the legislature to repeal such a statute, or to make a new one inconsistent with it, whenever, in the wisdom of such legislature, it is for the good of the public it should be done. Nor does this proposition contravene the established principle that the legislature of a State may make contracts on many subjects which will bind it, and will bind succeeding legislatures for the time the contract has to run, so that its provisions can neither be repealed, nor its obligations impaired. The examples are numerous where this has been done, and the contract upheld. The denial of this power, in the present instance, rests upon the ground that the power of the legislature intended to be suspended is one so indispensable to the public welfare that it cannot be bargained away by contract. It is that well known but undefined power, called the police power. * * * While we are not prepared to say that the legislature can make valid contracts on no subject embraced in the largest definition of police power, we think, that in regard to two subjects so embraced, it cannot by any contract, limit the exercise of those powers to the prejudice of the general welfare. These are the public health and the public morals. The preservation of those is so necessary to the best interests of the social organization, that a wise policy forbids the legislative body to divest itself of the power to enact laws for the preservation of health and the repression of crime.”1

The same conclusion is reached in respect to the legislalative control over contracts which a corporation may make with individuals. Such contracts are ever subject to the future exercise of the police power, in the promotion of the public welfare. This is particularly true in the case of quasi-public corporations, such as railroads.1

On the principle, that the State cannot barter away its police power, it has been held lawful for the State to prohibit all lotteries, and to apply the law to existing lottery companies.2 So, also, is it possible for the State to prohibit the sale and manufacture of liquor, although it has previously issued licenses, authorizing the prosecution of these trades,3 and such prohibitory laws may be enforced against existing corporations, whose charters empower them to carry on the prohibited trade.4 In like manner, may laws, incorporated in the charter for the government of a corporation, in its relation to the public, be repealed or amended.5

It has thus been held to be constitutional for the legislature to prohibit the consolidation of connecting or competing railroad lines, although their charters may contain an express authorization of consolidation with other companies. Such authorization may be taken away or limited by subsequent legislation, as a police regulation, without impairing vested rights; as long as the regulation does not undertake to undo a consolidation which has been already accomplished.1 And so, likewise, may a subsequent statute change the conditions, under which a consolidation may be effected. Thus, where the existing law, under which the charter was obtained, provided that consolidation with another railway cannot be made, unless assented to by all of the stockholders, these conditions may be changed by subsequent legislation, so that consolidation may be legally made, if the consent to it of the holders of three-fourths in value of the stock is obtained.2 So, also, street railways may by consequent statute be compelled to pave the roadbed between the tracks.3

But it has been held in Illinois that, while the State may regulate the interment of the dead, and in the first instance prescribe the localities in which burial will be permitted, yet it is not possible for the legislature to prohibit burial upon lands purchased and laid out as a cemetery at great expense, by a corporation, which has been chartered for that purpose.4

In accordance with the general proposition of constitutional law, that an exemption from taxation cannot be impaired by subsequent legislation, where such exemption enters as a component into a valid contract, it has been held that, where a corporate charter contains a stipulation for such an exemption, the exemption cannot be taken away by subsequent legislation,1 unless the right to withdraw it is expressly reserved by the statute which grants the exemption.2 And the same ruling would obtain, where the charter was issued under a statutory or constitutional provision, which reserved the power to amend or repeal the charter.

A similar ruling is held as to the inviolability of charter stipulations of the rate of compensation which a corporation might charge for services which it renders to the public. But the discussion of these cases is reserved for a subsequent section,3 in which the whole subject of laws, regulating the rates and charges of corporations, is fully treated.

Where a corporation is given the power to conduct dams and sluices in certain streams, it does not follow that it has the power to completely withdraw the water from other uses in the stream below the dams; and a statute is constitutional which restrains the use of the dams and sluices.4

But it is different where, by charter or by general statute, specific property rights are granted to a corporation, such as the grant of lands to a railroad. These cannot be taken away by subsequent statute.5

[1]See Beer Company v. Massachusetts, 97 U. S. 25; Fertilizing Company v. Hyde Park, 97 U. S. 659; Stone v. Mississippi, 101 U. S. 814; Thorpe v. Rutland, etc., R. R. Co., 27 Vt. 140, 149; People v. Commissioners, 59 N. Y. 92; Hammett v. Philadelphia, 65 Pa. St. 146 (3 Am. Rep. 615); Hirn v. State, 1 Ohio St. 15; Bradley v. McAtee, 7 Bush, 667 (3 Am. Rep. 309); Indianapolis, etc., R. R. Co. v. Kercheval, 16 Ind. 84; Toledo, etc., R. R. Co. v. Jacksonville, 67 Ill. 37; Chicago Packing Co. v. Chicago, 88 Ill. 221.

[1]Butchers’ Union Slaughter-house, etc., Co. v. Crescent City Live Stock, etc., Co., 111 U. S. 746.

[1]Chicago B. & C. Ry. Co. v. State, 170 U. S. 57.

[2]Stone v. Mississippi, 101 U. S. 814; State v. Morris, 77 N. C. 512; Bass v. Nashville, Meigs, 421 (33 Am. Dec. 154); Mississippi Soc. of Arts v. Musgrove, 44 Miss. 820; Moore v. State, 48 Miss. 147 (12 Am. Rep. 367); State v. Woodward, 89 Ind. 110 (46 Am. Rep. 160); Commonwealth v. Douglass (Ky.), 24 S. W. 233; Douglass v. Commonwealth (Ky.), 24 S. W. 233; s. c. 168 U. S. 488. See, contra, Broadbent v. Tuscaloosa, etc., Association, 45 Ala. 170; Kellum v. State, 66 Ind. 588.

[3]Calder v. Kurby, 5 Gray, 597; Commonwealth v. Brennan, 103 Mass. 70; La Croix v. County Comrs., 50 Conn. 321 (47 Am. Rep. 648); Met. Board of Excise v. Barrie, 34 N. Y. 657; Baltimore v. Clunity, 23 Md. 449; Fell v. State, 42 Md. 71 (20 Am. Rep. 83); McKinney v. Salem, 77 Ind. 213. Contra, Adams v. Hatchett, 27 N. H. 289; State v. Phalen, 3 Harr. 441; Boyd v. State, 36 Ala. 329. A license for the prosecution of any trade, which tends to be injurious to the public, may be revoked by a subsequent prohibitory law. State v. Burgoyne, 7 Lea, 173. See, generally, State v. Cook, 24 Minn. 247; Pleuler v. State, 11 Neb. 547. See ante, §§ 119-125.

[4]Beer Company v. Massachusetts, 91 U. S. 25; Commonwealth v. Intoxicating Liquors, 115 Mass. 153.

[5]Bank of Columbia v. Okely, 4 Wheat. 235; Baltimore, etc., R. R. Co. v. Nesbit, 10 How. 395; Railroad v. Hecht, 95 U. S. 170; s. c. 29 Ark. 661; Gowen v. Penobscot R. R. Co., 45 Me. 140; Ex parte N. E. & S. W. R. R. Co., 37 Ala. (n. s.) 679; Howard v. Kentucky, etc., Ins. Co., 13 B. Mon. 282.

[1]Pearsall v. Great Northern Ry. Co., 161 U. S. 646; Louisville & N. Ry. Co. v. Kentucky, 161 U. S. 677.

[2]Market St. Ry. Co. v. Hellman, 109 Cal. 571.

[3]Storrie v. Houston City Street Ry. Co. (Tex.), 46 S. W. 796.

[4]Lakeview v. Rose Hill Cemetery Co., 70 Ill. 192. But see, contra, Brick Presbyterian Church v. Mayor, etc., 5 Cowen, 538; Coates v. Mayor, etc., 7 Cow. 585; Kincaid’s Appeal, 66 Pa. St. 423; City Council v. Wentworth Street Baptist Church, 4 Strobh. 310. See, also, ante, § 149.

[1]Barnes v. Kornegay, 62 Fed. 671.

[2]Deposit Bank v. Davies County (Ky.), 39 S. W. 1030.

[3]§ 212.

[4]St. Anthony Falls Water Co. v. St. Paul, 168 U. S. 349; Minneapolis Mill Co. v. St. Paul, 168 U. S. 349.

[5]Houston & T. C. Ry. Co. v. State of Texas, 170 U. S. 243; reversing s. c. 90 Tex. 607.