A charter will not be held to grant a monopoly, for instance, unless the plain language requires that interpretation. Where a corporation, by its charter, is given the right to "take" propery for the construction of its works, upon making just compensation, this does not constitute a contract with the state such as to prevent the legislature from afterwards enacting that the company shall be liable for indirect or consequential injuries to the property of private persons caused by its constructions or operations.100 It should also be noticed that a statutory provision, merely authorizing the formation of a corporation in the future, cannot become a contract, in any such sense as to be protected by the federal Constitution, until it has become vested as a right by an actual organization under it, and then it takes effect as of that date, and subject to such laws as may then be in force.101 And an act of the legislature continuing the charter privileges and rights of a corporation. beyond the time fixed by the original act of incorporation does not have the effect of creating a new charter, but merely extends the life of the one already in existence.102 Rights or privileges granted to corporations by statute, after their incorporation, do not constitute any part of the contract embodied in the charter, and consequently they may be revoked or modified by the legislature at will, unless the statute itself amounts to a charter.103 And where two corporations are consolidated, under a state statute which has the effect of dissolving both of them and creating a new corporation, the charter of the new company may be subject to alteration or amendment by the legislature, although those of the old companies were not so liable.104

Reservation of Power to Alter or Amend

In granting a charter of incorporation, the state may reserve the right to repeal, alter, or amend it. And when this is done, the repeal or amendment of the charter is no impairment of the contract which it embodies, but it is rather the enforcement of one of its terms.105 This

100 Pennsylvania R. Co. v. Miller, 132 U. S. 75, 10 S. Ct. 34, 33 L. Ed. 267. 101 New York v. Cook, 148 U. S. 397, 13 S. Ct. 645, 37 L. Ed. 498.

102 Franklin County Court v. Deposit Bank of Frankfort, 87 Ky. 370, 9 S. W. 212.

103 South Carolina v. Gaillard, 101 U. S. 433, 25 L. Ed. 937. 104 Shields v. Ohio, 95 U. S. 319, 24 L. Ed. 357.

105 Sears v. City of Akron, 246 U. S. 242, 38 S. Ct. 245, 62 L. Ed. 688; District of Columbia v. Capital Traction Co., 41 App. D. C. 115; Avondale Land Co. v. Shook, 170 Ala. 379, 54 So. 268; Commonwealth v. Boston & N. St. Ry. Co., 212 Mass. 82, 98 N. E. 1075.

power may be reserved in the particular charter itself; but it is equally effective if the state constitution or a statute, in force when the charter is granted, reserves to the legislature the right to revoke or modify it. In the latter case, the reservation becomes a part of the contract.106 But the reservation of power to amend must be clear and unmistakable, and a general grant of authority to a city, in its charter, to make and repeal ordinances is not a reservation of a power to destroy contract rights vested under an existing ordinance.107 Moreover, the exercise of this power must be reasonable, and must have relation to the original nature and scope of the charter. It cannot be employed as a means of forcing the corporation into enterprises not contemplated by the charter, nor to take away the property of the corporation or destroy its value, nor to impose unjust burdens upon it, nor to deprive it of rights not granted by the charter, nor, generally, to withdraw from it the protection and benefit of any constitutional guaranties.108 Neither can the lawful rights of the stockholders as between themselves be thus altered,109 though the regulation of such internal affairs of the corporation as the election of directors or trustees is not beyond the scope of proper legis-, lative interference in these cases.110 Though no power is reserved to

106 Chesapeake & O. R. Co. v. Miller, 114 U. S. 176, 5 S. Ct. 813, 29 L. Ed. 121; Stone v. Wisconsin, 94 U. S. 181, 24 L. Ed. 102; Suydam v. Moore, 8 Barb. (N. Y.) 358; Hinckley v. Schwarzschild & Sulzberger Co., 107 App. Div. 470, 95 N. Y. S. 357; City of Covington v. Kentucky, 173 U. S. 231, 19 S. Ct. 383, 43 L. Ed. 679.

107 City of Owensboro v. Cumberland Tel. & Tel. Co., 230 U. S. 58, 33 S. Ct. 988, 57 L. Ed. 1389.

108 City of Vicksburg v. Vicksburg Waterworks Co., 202 U. S. 453, 26 S. Ct. 660, 50 L. Ed. 1102; Stearns v. Minnesota, 179 U. S. 223, 21 S. Ct. 73, 45 L. Ed. 162; Duluth & I. R. R. Co. v. St. Louis County, 179 U. S. 302, 21 S. Ct. 124, 45 L. Ed. 201; New York & N. E. R. Co. v. Bristol, 151 U. S. 556, 14 S. Ct. 437, 38 L. Ed. 269; Delaware, L. & W. R. Co. v. Board of Public Utilities Com'rs, 85 N. J. Law, 28, 88 A..849; State v. Bancroft, 148 Wis. 124, 134 N. W. 330, 38 L. R. A. (N. S.) 526; People v. Peakes Dairy Co., 222 N. Y. 416, 119 N. E. 115, 3 A. L. R. 1260; McKee v. Chautauqua Assembly, 130 F. 536, 65 C. C. A. 8; Southern Pac. Co. v. Board of Railroad Com'rs (C. C.) 78 F. 236; City of Detroit v. Detroit & H. P. Road Co., 43 Mich. 140, 5 N. W. 275; Lewis v. Northern Pac. R. Co., 36 Mont. 207, 92 P. 469.

109 In re Newark Library Ass'n, 64 N. J. Law, 217, 43 A. 435; Garey v. St. Joe Mining Co., 32 Utah, 497, 91 P. 369, 12 L. R. A. (N. S.) 554. But see Somerville v. St. Louis Min. & Mill Co., 46 Mont. 268, 127 P. 464, L. R. A. 1915B, 811. 110 Looker v. Maynard, 179 U. S. 46, 21 S. Ct. 21, 45 L. Ed. 79; McKee v. Chautauqua Assembly, 130 F. 536, 65 C. C. A. 8.

alter or amend a charter, the state may lawfully do so where the corporation accepts the amendment.111

Reserved Right of Eminent Domain and Police Power

Rights, privileges, or franchises granted to a corporation by its charter may be resumed by the state, when the exigencies of the public require it, under the power of eminent domain, upon the payment of due compensation.112 And notwithstanding the protection afforded to charter rights and privileges by the doctrine under consideration, a corporation, like any individual, is subject to regulation, by legislative authority, to the end that the use of its franchises or property may not endanger the public health, safety, or comfort, or be made the means of oppression or fraud. That is, it is subject to regulation under the police pow

er. 113

Regulation of Tolls and Charges

Where the state or a municipal corporation, by a charter or a general law or ordinance, has granted to a railroad company, or a gas or water company or other public-service corporation, the right to fix its own. rates of toll or charges, or to maintain certain fixed rates, this constitutes a contract, which cannot lawfully be impaired by any subsequent attempt on the part of the public authorities to regulate or reduce the rates,114 unless power to do so has been reserved or unless the charter

111 Phinney v. Trustees of Sheppard & Enoch Pratt Hospital, 88 Md. 633, 42 A. 58.

112 West River Bridge Co. v. Dix, 6 How. 507, 12 L. Ed. 535.

113 Boston Beer Co. v. Massachusetts, 97 U. S. 25, 24 L. Ed. 989; MUNN v. ILLINOIS, 94 U. S. 113, 24 L. Ed. 77, Black Cas. Constitutional Law, 271; NEW ORLEANS GASLIGHT CO. v. LOUISIANA LIGHT & HEAT PRODUCING & MFG. CO., 115 U. S. 650, 6 S. Ct. 252, 29 L. Ed. 516, Black Cas. Constitutional Law, 546; Stone v. Farmers' Loan & Trust Co., 116 U. S. 307, 6 S. Ct. 334, 29 L. Ed. 639; People v. Illinois Cent. R. Co., 235 Ill. 374, 85 N. E. 606, 18 L. R. A. (N. S.) 915; McCarter v. Hudson County Water Co., 70 N. J. Eq. 525, 61 A. 710. See Texas & N. O. R. Co. v. Miller, 221 U. S. 408, 31 S. Ct. 534, 55 L. Ed. 789; Southern Pac. Co. v. City of Portland, 227 U. S. 559, 33 S. Ct. 308, 57 L. Ed. 642.

114 Georgia Ry. & Power Co. v. Town of Decatur, 262 U. S. 432, 43 S. Ct. 613, 67 L. Ed. 1065; Detroit United Ry. Co. v. Detroit, 248 U. S. 429, 39 S. Ct. 151, 63 L. Ed. 341; Detroit United Ry. Co. v. Michigan, 242 U. S. 238, 37 S. Ct. 87, 61 L. Ed. 268; Birmingham Waterworks Co. v. City of Birmingham (D. C. Ala.) 211 F. 497; City of Cleveland v. Cleveland City Ry. Co., 194 U. S. 517, 24 S. Ct. 756, 48 L. Ed. 1102; City of Detroit v. Detroit Citizens' St. R. Co., 184 U. S. 368, 22 S. Ct. 410, 46 L. Ed. 592; City of Los Angeles v. Los Angeles City Water Co., 177 U. S. 558, 20 S. Ct. 736, 44 L. Ed. 886; Omaha

is taken subject to a statute which expressly reserves such power of regulation.115 But unless a grant in the nature of an irrevocable contract can be clearly made out (and even, according to some of the authorities, where such a grant is shown) it is a part of the police power of the state to regulate the rates and charges of public utilities, which power cannot be surrendered, and hence its exercise cannot be regarded as a violation of contract rights.116 And where a city, without any express delegation of power to it, has fixed public service rates which have been accepted, a change in the rates by the state public srvice commission does not impair the obligation of a contract.117 But even where no specific contract has been entered into, it is implied in the company's charter that it shall be allowed to conduct its business at a fair profit,

Water Co. v. Omaha, 147 F. 1, 77 C. C. A. 267, 12 L. R. A. (N. S.) 736; Ball v. Rutland R. Co. (C. C.) 93 F. 513; City of Indianapolis v. Central Trust Co., 83 F. 529, 27 C. C. A. 580; City of Rushville v. Rushville Natural Gas Co., 164 Ind. 162, 73 N. E. 87; Shreveport Traction Co. v. Shreveport, 122 La. 1, 47 So. 40; Opinion of Justices, 190 Mass. 605, 77 N. E. 1038; Pingree v. Michigan Cent. R. Co., 118 Mich. 314, 76 N. W. 635, 53 L. R. A. 274; Gulf & S. I. R. Co. v. Adams, 90 Miss. 559, 45 So. 91.

115 Milwaukee Electric Ry. & Light Co. v. Railroad Com'n of Wisconsin, 153 Wis. 592, 142 N. W. 491, L. R. A. 1915F, 744, Ann. Cas. 1915A, 911; State v. Eastin, 270 Mo. 193, 192 S. W. 1006, L. R. A. 1917D, 802; East Providence Water Co. v. Public Utilities Com'n, 46 R. I. 458, 128 A. 556; State v. Superior Court of King County, 67 Wash. 37, 120 P. 861, L. R. A. 1915C, 287, Ann. Cas. 1913D, 78.

116 Ft. Smith Spelter Co. v. Clear Creek Oil & Gas Co., 267 U. S. 231, 45 S. Ct. 263, 69 L. Ed. 588; Southern Pac. Co. v. Campbell, 230 U. S. 537, 33 S. Ct. 1027, 57 L. Ed. 1610; Cedar Rapids Gas Light Co. v. City of Cedar Rapids, 223 U. S. 655, 32 S. Ct. 389, 56 L. Ed. 594; Sumter Gas & Power Co. v. City of Sumter (C. C. A. S. C.) 283 F. 931; Portland Ry., Light & Power Co. v. City of Portland (D. C. Or.) 210 F. 667; District of Columbia v. Capital Traction Co., 41 App. D. C. 115; American Brake Shoe & Foundry Co. v. Pitts burgh Rys. Co. (D. C. Pa.) 270 F. 812; Public Utilities Com'n of Kansas v. Wichita R. & Light Co. (C. C. A. Kan.) 268 F. 37; Central Union Telephone Co. v. Indianapolis Telephone Co., 189 Ind. 210, 126 N. E. 628; City of Mobile v. Mobile Electric Co., 203 Ala. 574, 84 So. 816; In re Guilford Water Co.'s Service, 118 Me. 367, 108 A. 446; People v. Public Service Com'n, 225 N. Y. 216, 121 N. E. 777; Laurel Fork & S. H. R. Co., v. West Virginia Transp. Co., 25 W. Va. 324; Dillon v. Erie R. Co., 19 Misc. Rep. 116, 43 N. Y. S. 320; City of Knoxville v. Knoxville Water Co., 107 Tenn. 647, 64 S. W. 1075, 61 L. R. A. 888.

117 City of Benwood v. Public Service Com'n, 75 W. Va. 127, 83 S. E. 295, L. R. A. 1915C, 261.

and hence a law or ordinance reducing its charges to an unreasonably low figure, so as to be in effect confiscatory, is unconstitutional.118 Regulation of Foreign Corporations

Where a state offers to foreign corporations the privilege of doing business within its limits on certain conditions, as to taxation or otherwise, and on complying with certain requisites, a foreign corporation which accepts the conditions and complies with the requirements of the law acquires a contract right to engage in and continue its business within the state, of which it cannot be arbitrarily deprived,119 though it appears that this will not prevent the state from imposing additional burdens or conditions on the right to continue the busi

CHARTERS OF MUNICIPAL CORPORATIONS

281. The charter of a municipal corporation is not a contract within the meaning of the federal Constitution.

Charters of Municipal Corporations

The charter of a municipal corporation is not a contract within the meaning of this clause of the Constitution. It is a grant or delegation of governmental powers, for public purposes, to a subordinate agency of government. All rights, powers, privileges, and franchises granted to such corporations are held subject to legislative modification or recall. And therefore a statute revoking or changing the public powers or rights of a municipality, altering its boundaries, or modifying its government, does not impair the obligation of any contract.121 The

118 People's Gaslight & Coke Co. v. Chicago (C. C.) 114 F. 384 (affirmed 194 U. S. 1, 24 S. Ct. 520, 48 L. Ed. 851); Beardsley v. New York, L. E. & W. R. Co., 162 N. Y. 230, 56 N. E. 488; Richman v. Consolidated Gas Co., 114 App. Div. 216, 100 N. Y. S. 81; Dallas Ry. Co. v. Geller, 114 Tex. 484, 271 S. W. 1106; City of Dallas v. Dallas Telephone Co. (C. C. A. Tex.) 272 F. 410.

119 American Smelting Co. v. Colorado, 204 U. S. 103, 27 S. Ct. 198, 51 L. Ed. 393; Chicago, R. I. & P. R. Co. v. Swanger (C. C.) 157 F. 783; Chicago, R. I. & P. R. Co. v. Ludwig (C. C.) 156 F. 152; Seaboard Air Line R. Co. v. Railroad Commission of Alabama (C. C.) 155 F. 792.

120 British American Mortg. Co. v. Jones, 77 S. C. 443, 58 S. E. 417; Connecticut Mut. Life Ins. Co. v. Spratley, 172 U. S. 602, 19 S. Ct. 308, 43 L. Ed. 569; Sandel v. Atlanta Life Ins. Co., 53 S. C. 241, 31 S. E. 230; Blue Jacket Consol. Copper Co. v. Scherr, 50 W. Va. 533, 40 S. E. 514; Ivy v. Western Union Tel. Co. (C. C.) 165 F. 371.

121 CITY OF TRENTON v. NEW JERSEY, 262 U. S. 182, 43 S. Ct. 534, 67 L. Ed. 937, 29 A. L. R. 1471, Black Cas. Constitutional Law, 444; City of