Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Charters of other, does not impair any contract obligation between the citizens and taxpayers of the smaller city and the corporation itself. Hunter v. Pittsburgh, 207 U. S. 161. Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685. As affecting obligation of waterworks company.-Where an ordinance has granted the privilege to construct and maintain water supply works at a time when a statute imposed upon a waterworks company the obligation to furnish water for fire purposes to the city free of charge, a subsequent statute requiring such companies to furnish water for such purposes at reasonable rates does not deprive the city of any contract right. Boise Artesian, etc., Co. v. Boise City, 230 U. S. 84. School districts.-A statute changing the boundaries of a school district, giving to the new district the property within its limits which had belonged to the former district, and requiring the new district to assume and pay the debts and obligations of the old district, does not impair the obligation of contracts. Kies v. Lowrey, 199 U. S. 233. State banks.-A State by becoming interested with others in a banking corporation, or by owning all the capital stock, does not impart to that corporation any of its privileges or prerogatives; it lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege in respect to those transactions not derived from the charter. Curran v. Arkansas, 15 How. 309. A State statute requiring the managers of an insolvent bank belonging to the State to hold its assets appropriated to the payment of certain specified debts, which has the effect to appropriate the assets to pay the debts of the State to the prejudice of bill holders and other creditors of the bank, impairs the obligation of contracts and is void. Barings v. Dabney, 19 Wall. 1. Charters of Private Corporations as Contracts In general. If the foundation of a corporation is private, the corporation itself is private, notwithstanding it is under charter from the Government, and no matter how extensive its uses. Dartmouth College v. Woodward, 4 Wheat. 629. University v. Indiana, 14 How. 276. State Bank of Ohio v. Knoop, 16 How. 369. The right of a corporation to regulate its own charges and tolls may be given by charter in such terms as to constitute a contract which the legislature can not impair; but a claim of immunity from legislative control of tolls and charges to be exacted is subject to the same principles of construction as a grant of immunity from taxation, and will never be presumed. The power of the State to limit the amount of charges by quasi Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Charters of public corporations is a governmental power and can not be Los Angeles v. Los Angeles Water Co., 177 U. S. 580. Chicago, etc., R. Co. v. Minnesota, 134 U. S. 418. Stone v. Yazoo, etc., R. Co., 62 Miss. 607. Minneapolis, etc., R. Co. v. Minnesota, 134 U. S. 467. Peik v. Chicago, etc., R. Co., 94 U. S. 176. Chicago, etc., R. Co. v. Iowa, 94 U. S. 162. Beer Co. v. Massachusetts, 97 U. S. 25. The charter of a private corporation is a contract between the State and the incorporators and within the provision of the Constitution prohibiting legislation impairing the obligation of contracts. Whatever is granted is secured, subject only to the limitation and reservation in the charter or in the laws or constitution which govern it. Delaware Railroad Tax, 18 Wall. 225. Atlantic Coast Line v. Goldsboro, 232 U. S. 548. Chicago, etc., R. Co. v. Iowa, 94 U. S. 161. Wilmington, etc., R. Co. v. Reid, 13 Wall, 266. Raleigh, etc., R. Co. v. Reid, 13 Wall. 269. The Binghamton Bridge, 3 Wall. 73. Dartmouth College v. Woodward, 4 Wheat. 627. Any contract which a State actually enters into when granting a charter to a private corporation is within the protection of this clause. In this connection, however, it is to be kept in mind that it is not the charter which is protected, but only any contract the charter may contain. If there is no contract, there is nothing in the grant on which the Constitution can act. Stone v. Mississippi, 101 U. S. 816. As to requiring transfer of stock of corporation to be filed with secretary of state, see Henley v. Myers, 215 U. S. 373. A charter of a bank, giving ordinary powers which are supposed to be necessary for the usual objects of such association, is a contract. Providence Bank v. Billings, 4 Pet. 558. A grant to lay pipes and conduits in the streets of a municipality, dependent only upon acceptance, is not to be regarded as accepted foot by foot as pipes are laid, but in an entirety for Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Charters of all the streets of the municipality; and after acceptance and preparation for compliance with the offer the grant can not be withdrawn as to the streets in which pipes have not been laid. Such action would impair the contract. Russell v. Sebastian, 233 U. S. 195. Nature of corporate charter and extent of legislative power.- West River Brdg. Co. v. Dix, 6 How. 531. Miller v. State, 15 Wall. 488. Delaware Railroad Tax, 18 Wall. 225. Chicago, etc., R. Co. v. Iowa, 94 U. S. 161. Edwards v. Kearzey, 96 U. S. 607. Fletcher v. Peck, 6 Cranch 87. Terrett v. Taylor, 9 Cranch 43. Pawlet v. Clark, 9 Cranch 292. Dodge v. Woolsey, 18 How. 331. Mechanics', etc., Bank v. Debolt, 18 How. 380. A corporate franchise, granted to and accepted by a private corporation, is in the nature of a legal estate and a contract within the obligation clause of the Constitution. The grant of a franchise is not distinguishable from a grant of any other property, and an ordinance which amounts to a proposition to grant a franchise in consideration of the construction or operation of a street railroad, or to lay gas or water pipes in streets, is a contract unimpairable by the State; such a franchise having been granted to one railroad can not be in effect repealed by a subsequent grant of the same privilege to another corporation. Pennsylvania College Cases, 13 Wall. 212. Dartmouth College v. Woodward, 4 Wheat. 700. New Orleans, etc., R. Co. v. Delamore, 114 U. S. 510. Admission of foreign corporation. When a State has induced a corporation to enter it by the granting of a franchise, which is in the nature of a contract, then it is protected in the enjoyment thereof by this clause. Chicago, etc., R. Co. v. Ludwig, 156 Fed. 152; appeal dismissed per American Smelting Co. v. Colorado, 204 U. S. 103. National Council v. State Council, 203 U. S. 151. When a foreign railroad corporation is permitted to construct and operate its road through territory in another State upon prescribed terms and conditions the right of the company to enjoy the privileges so obtained can not subsequently be burdened with other conditions except such as the State, in the exercise of its police powers for purposes of taxation and for other public objects, may legally impose in respect to business carried on and property situated within its limits. New York, etc., R. Co. v. Pennsylvania, 153 U. S. 643. A Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Charters of The issuance of a certificate of stock to a member of a foreign loan association, and his application for a loan, made before the passage of a statute restricting the right of the association to do business in the State, constitute a contract the obligation of which can not be impaired by such statute; and therefore a loan made on that application, after the statute was passed, and to which his contract gave him a right, is valid, notwithstanding the statute. Bedford v. Eastern B. & L. Assn., 181 U. S. 227. As to personal liability of stockholders of foreign corporation, see Pinney v. Nelson, 183 U. S. 144. Organized under general law.-A charter of a private corporation organized under a general law is as inviolable as that of a corporation organized under a special charter. Miller v. State, 15 Wall. 478. A company, although organized under a general statute, may nevertheless thereby enter into and obtain a contract from the State which may be of such a nature that it can only be altered in case power to alter was, prior thereto, provided for in the constitution or legislation of the State. Stanislaus County v. San Joaquin, etc., Co., 192 U. S. 206. A general railroad law making provision for the creation of a new corporation upon the reorganization of a railroad by the purchaser at a foreclosure sale does not constitute a contract protected by the Constitution. Grand Rapids, etc., R. Co. v. Osborn, 193 U. S. 28. Dissolution of corporation.--A private corporation may be dissolved by the legislature or by judicial sentence, and such dissolution does not impair the obligation of contracts with creditors any more than the death of an individual impairs the obligation of his contracts. The obligation survives, and the creditors may enforce their claims against any property belonging to the corporation, and every creditor is presumed to contract with reference to the possibility of dissolution of the corporate body. Mumma v. Potomac Co., 8 Pet. 281. Dartmouth College charter not dissolved by the Revolution.—In the Dartmouth College Case (4 Wheat. 651) it was held that the charter was not dissolved by the Revolution. The court said: By the Revolution the duties, as well as the powers, of Government devolved on the people of New Hampshire. The obligations then which were created by the charter to Dartmouth College were the same in the new that they had been in the old government. The power of the Government was also the same. A repeal of this charter at any time prior to the adoption of the present Constitution of the United States would have been an extraordinary and unprecedented act of power, but one which could have been contested only by the restrictions upon the legislature, to be found in the constitution of the State. Sec. 10.-Powers Denied to States Cl. 1.-Contracts-Charters of Amendment or alteration of charter-In general.-The legislature is precluded from altering or amending a corporate charter unless such power be reserved by the act of incorporation or by some prior general law. Such a reservation enters into and becomes a part of the charter of every corporation organized subject to it, and no question of the impairment of contract obligations can arise where a corporation has accepted its charter subject to the State's power to alter or amend it. Holyoke Co. v. Lyman, 15 Wall. 511. Miller v. State, 15 Wall. 495. Sioux City, etc., R. Co. v. Sioux City, 138 U. S. 108. New Jersey v. Yard, 95 U. S. 113. Chicago, etc., R. Co. v. Minnesota, 134 U. S. 455. Hamilton Gaslight Co. v. Hamilton City, 146 U. S. 270. Pennsylvania R. Co. v. Miller, 132 U. S. 83. Bienville, etc., Water Co. v. Mobile, 186 U. S. 222. The reservation of this power in the State constitution or in general laws on the subject of corporations or in the special act of incorporation relieves amendatory legislation from the operation of this clause of the Constitution. Sherman v. Smith, 1 Black 592. Pennsylvania College Cases, 13 Wall. 212. Stone v. Wisconsin, 94 U. S. 182. Railway Co. v. Philadelphia, 101 U. S. 539. Close v. Glenwood Cemetery, 107 U. S. 476. Spring Valley Waterworks v. Schottler, 110 U. S. 348. Beer Company v. Massachusetts, 97 U. S. 25. Sinking Fund Cases, 99 U. S. 721. Jefferson College v. Washington & J. College, 13 Wall. 190. Missouri Pac. R. Co. v. Kansas, 216 U. S. 262. Head v. University, 19 Wall. 530. Covington v. Kentucky, 173 U. S. 231. Los Angeles v. Los Angeles City Water Co., 177 U. S. 558. Educational and charitable institutions.-An eleemosynary institution was "incorporated for the purpose of perpetuating the application of the bounty of the donors to the specified objects of that bounty, and its trustees or governors were originally named by the founder and invested with the power of perpetuating themselves." The charter was granted by the Crown, and the corporation was created, capable of receiving and distributing forever, according to the will of the donors, the donations which should be made to it. The consideration for which they stipulated was the perpetual application of the fund to its object in the mode prescribed by themselves. This was plainly a contract to which the donors, the trustees, and the Crown, to whose rights and obligations the State succeeded, were the original parties. It was a contract made on a valuable consideration for the security and disposition of property on the faith of which real and personal estate had been conveyed |