compose the direction or are proprietors of the stock of the corporation. These notes pass currently, on the ground that the corporation have authority to issue them, and that they are obligatory on all their funds; the right claimed is one, therefore, of a public nature, and, as I conceive, deeply interesting to the community; and if the defendants can not exercise these rights without a grant from the legislature; if they do exercise them as though they had a grant, they are, in my judgment, usurping an authority and privilege of a public kind; and we perceive that it is not necessary that the right assumed should be a prior franchise of the crown, or of the people of the state.

Had the defendants claimed and exercised the right of banking as private individuals, I agree that an information would not lie against them; they would have been subject only to the penalties inflicted by the act; but they claim the privilege as a corporation, and under a grant from the legislature. If they have not that grant, they have exercised and usurped a franchise, and the remedy pursued is well adapted to the case.

Judgment of ouster.

*

Note. See 1896, Meadowcroft v. People, 163 Ill. 56, 54 Am. St. 447; State v. Woodmansee, 1 N. Dak. 246. But see 1892, State v. Scougal, 3 S. Dak. 55, 44 Am. St. R. 756, holding that "Banking was not a franchise at common law, and except as to the privilege of issuing notes to circulate as money, can not be made such by the legislature. See also 1885, In Matter of Jacobs, 98 N. Y. 98, 50 Am. Rep. 636 (act forbidding manufacture of cigars in certain ways and places held unconstitutional); 1885, People v. Marx, 99 N. Y. 377, 52 Am. Rep. 34 (prohibiting sale of oleomargarine). Also 1893, Braceville Coal Co. v. People, 147 Ill. 66, 37 Am. S. R. 206, as to the constitutional restrictions upon the police power of the legislature. As to corporate franchises particularly see cases in addition to those given in text: 1838, Regents v. Williams, 9 Gill & J. (Md.) 365, 31 Am. D. 72; 1886, Appeal of Pittsburgh, etc., R. R. Co., 122 Pa. St. 511, 9 Am. St. 128; infra, p. 1342; 1846, Enfield Toll Bridge Co. v. Hart ford, etc., R. R. Co., 17 Conn. 454, 44 Am. Dec. 556; 1892, Mayor, etc., v.. Houston, etc., Ry. Co., 83 Tex. 548, 29 Am. St. R. 679; 1890, Macon, etc., R. R. Co. v. Gibson, 85 Ga. 1, 21 Am. St. R. 135; 1846, Miners' Bank v. United States, Morris (Iowa) 482, 43 Am. D. 115.

Sec. 23. Same.

SPRING VALLEY WATER-WORKS v. SCHOTTLER ET AL.1 1882. IN THE SUPREME COURT OF CALIFORNIA. 62 Cal. 69-119.*

[Appeal by plaintiff from judgment of the superior court of the city and county of San Francisco, denying a writ of review, and confirming the action of the board of equalization of that city and county, in raising the assessment of the franchise of the water-works company from $5,000 to $5,000,000. The state constitution (art. 13, § 1) provided: "All property in the state shall be taxed in proportion to its value, to be ascertained as provided by law. The word 'property,' as used in this article and section, is hereby declared to in1 Statement of facts condensed. Parts of arguments and opinion omitted. 2 Affirmed by U. S. Sup. Ct., Spring Valley W. W. v. Schottler, 110 U. S. 347.

*

clude moneys, credits, bonds, stocks, dues, franchises and all other matters and things, real, personal and mixed, capable of private ownership." The water-works company was organized under general acts of 1850, 1853, 1858, etc., giving it the power of perpetual succession for fifty years, to sue and be sued, to make and use a seal, hold, purchase and convey necessary real and personal property, appoint necessary officers and agents, divide its stock into shares, make by-laws to regulate its management and regulate the transfer of stock; to exercise power of eminent domain, to use streets, alleys, ways, etc., necessary for laying its pipes, to furnish water to the inhabitants at rates fixed in a prescribed way, and the further right to "all the privileges, immunities and franchises that might be thereafter granted to any individual or corporation relating to the introduction of fresh water into any city or town of the state for the use of the inhabitants thereof." The state constitution also provided (art. xi, § 19): "In cities where there are no public works owned by the municipality any individual or company duly incorporated for that purpose shall (subject to certain provisions as to damages) have the privilege of using the streets for laying down pipes, etc."]

Fox & Kellogg, for appellant, argued:

In making up the assessment, the revenue officers seem to have taken it for granted that because franchises may be property, they are ex necessitate liable to assessment; and to have overlooked the provision of the constitution and the statute, that they can only be property and subject to taxation when "capable of private ownership. According to their theory, the elective franchise, the freedom of speech, the freedom of the press, the most valuable of all franchises, are liable to assessment and subject to taxation. But these and a hundred other franchises are not "capable of private ownership," and therefore not. "property," and, not being property, are not subject to taxation.

We submit that nothing but "property" is subject to assessment and taxation, in the form now under consideration, under the constitution or laws of this state. Only those "franchises" can be classed as "property capable of private ownership," which are defined by the supreme court of the United States, in Bank of Augusta v. Earle, 13 Pet. 519, as being "special privileges conferred by government on individuals, which do not belong to the citizens of the country generally, or by common right." Wherever we find a franchise held to be property, we find it to be of the class thus clearly defined by the highest tribunal in the land. Of these are street railroads, turnpike roads, bridges, ferries, wharves and the like.

There

But the appellant in this case possesses no such franchise. is no right or privilege which it can name, or upon which it can place its hand and say, "This is mine;" none that is or can be held by it in private ownership." It owns no franchise; it simply enjoys the privileges conferred by law. Its privileges are these and these only: (1) The right of corporate existence. This is a privilege granted by the legislature to all the people of the state, and any five of its inhabitants may enjoy that franchise at any time, when they see

fit to incorporate for any purpose for which men may contract or associate themselves together. (Civil Code, § 286.) (2) The right to acquire property, when it is absolutely necessary, and can not otherwise be acquired for certain of its corporate uses, by condemnation. This is a right which can never be exercised without enormous cost, proportioned to the value of the thing acquired, and which is not, and can not be held in private ownership.

It is a right held in common by all corporations organized for the purpose of supplying cities and towns with water as well as many others, and there is no limit to the number of corporations which may organize and actually engage in the business of supplying the same city or town. (See Statute, 1858, p. 218; Code of Civil Procedure, § 1237.) (3) The right to lay and maintain pipes in the streets and to collect water rates. Like the two preceding, so of this. It is not a right which is or can be held "in private ownership." By the statute of 1858, above cited, and under which the appellant is organized, it is a right guaranteed to every corporation organized for the purpose of supplying water in cities and towns, with no limitation upon the number that may engage in the same business in the same city or town. By the codes the same right is also guaranteed to any corporation organized for such purpose; but under them it could only be exercised when thereunto authorized by ordinance of the city. But by the same section of the code, the city authorities were prohibited from granting any exclusive privilege of the kind. (See Civil Code, $$ 548, 549.) But since the passage of both the statute and the code, the people, in the majesty of their power, have taken away even the limitations of those laws, by which the right to exercise the privilege was limited to corporations, and now it is a right common to every person in the state whether incorporated or not.

[After quoting provisions of art. xi, § 19, of the constitution above given:] Thus it will be seen that under the constitution of the state it is impossible that there should be a franchise of this kind-that is "capable of private ownership." It is one which belongs to everybody, and whoever sees fit to use it need not even say to the municipal authorities, "by your leave." All they have to do is to be subject to general regulations for damages and indemnity for damages, and to supervision of the street superintendent, as to the mode and manner of using the street. It is true that article xiv of the constitution declares the right to collect water rates to be a franchise which can only be exercised by authority and in the manner prescribed by law. But that does not militate against the proposition that it is a privilege common to all, and not "capable of private ownership." It is declared to be a franchise solely for the purpose of making it subject to regulation by law, and without giving it the character of property or private ownership. These are all the franchises, if they can be called such, enjoyed by the appellant. They are all franchises which are enjoyed by every inhabitant of the state, which are not "capable of private ownership," and therefore not liable to assessment under the law.

F. G. Newland, for appellant, argued:

The term "franchise," in its broad sense, means "exemption from constraint or oppression, liberty, freedom." (Webster.) In this sense the right to vote is termed a "franchise;" so also the right of trial by jury, freedom of speech and freedom of the press are termed "franchises. The declaration of the constitution that the word "property" includes "franchises," certainly was not intended to apply to those general privileges and rights which society has guaranteed and secured to individuals. The "franchises" declared by the constitution to be property, must be those special privileges, exclusive in their nature, conferred by the gov ernment on individuals, and having the incidents and attributes of property; that is to say, they must be capable of private ownership, of assignment and of being inherited. In this sense they are included in that division of property called "incorporeal hereditaments;" they are things without body, capable of being inherited, such as the right of "ferry," or the right of "fishery," or the right to maintain a "toll" road, conferred upon the grantee, his heirs or assigns. It is evidently in this sense that the word is used in the constitution, for in it the word "property" is declared to include "moneys, credits, franchises and all other matters and things real, personal and mixed, capable of private ownership." The last words attach to and qualify all the taxable things referred to in the above quotation.

[After quoting the provisions of the constitution and general laws relating to the formation of the corporations:]

Under these acts the petitioner has the following rights and privileges: 1. The right to be a corporation-that is to say, the right as an artificial being, to act under an artificial name, and to exercise certain powers and duties of a natural person, among others, to sue and be sued, and to purchase, hold, sell and convey real and personal property. Under the act of 1853, any three or more persons could associate themselves together and form a water-company, by signing and filing the proper certificate. This was a privilege made by the laws of common right and general enjoyment. All persons could exercise it. Under the civil code, section 286, "Private corporations may be formed for any purpose for which individuals may lawfully associate themselves," and any five persons may associate themselves together and form such corporation.

It appears, then, that the right to be a corporation is simply a privilege conferred by the general law upon any number of persons, not less than three in the one case or five in the other, whoever they may be, who may wish to associate themselves together, to exercise, as an associated body, under an artificial name, certain powers and perform certain duties of a natural person. In other words, a corporation is a bundle of faculties. Could the faculty of a natural person to sue and be sued, or his faculty to acquire and possess property, be assessed as property? The right to the things sued for, which constitute choses in action, or the property acquired and possessed could be assessed both to natural and artificial beings, but not mere faculties or powThe right to be a corporation is simply the right to exist at the

ers.

will of the creator.

Can the right to exist either as a natural or artificial being be valued as property?

2. Under the act of 1858 water companies are granted the privilege of exercising the power of eminent domain; but they exercise this privilege simply as the agents of the state, for the purpose of serving a public use, to which their powers and property are delegated. This agency may be revoked at any time. It is a naked power-not a power coupled with an interest. Can the agency of the agent, whether natural or artificial, be assessed as property?

3. The only other right or privilege conferred by the general law of 1858, upon water companies, is the right of laying down pipes in the streets of the city, and supplying the inhabitants with water at rates fixed by law; but this right is not only common to all water companies, but is also conferred by art. xi, § 19, and art. xiv, of the new constitution, on all individuals, so that this right which, if granted absolutely and exclusively to a single individual or a single corporation, and his or its assigns, might be regarded as property, has been by the fundamental law of the state made a matter of common right and general enjoyment. It is true that everybody does not exercise this right or privilege, just as everybody does not exercise the right to vote, but everybody has the right to exercise it, and it is even more unlimited and general than the right to vote, for the latter right is conferred only upon native-born inhabitants over twenty-one years of age, and upon naturalized citizens, whilst the former right can be exercised by anybody, whether adult or minor, citizen or alien. This right or privilege has none of the incidents of ownership; no one can sell it, for every body has it, and no person can gain by the accession of the right of another.

We have thus classified all the rights and privileges of water companies under the general law, and the constitution of the state, and we find that they are all subject to alteration and entire revocation by the state; they are privileges enjoyed, not property owned. Webster defines property to be: "4. The exclusive right of possessing, enjoying and disposing of a thing, ownership. 6. An estate, whether in lands, goods or money." Blackstone, book 1, page 138, speaks of property as an absolute right "which consists in the free use, enjoyment and disposal of all his acquisitions without any control or diminution save only by the laws of the land," and in another place, book 2, page 2, speaks of the right of property as "that sole and despotic dominion which one man claims and exercises over the external things of the world in total exclusion of the right of any other individual in the universe." Bouvier, in his Law Dictionary, in defining the word property, says: "It is the right to enjoy and to dispose of certain things in the most absolute manner,

that property, considered as an exclusive right to things contains not only a right to use those things, but a right to dispose of them, either by exchanging them for other things, or by giving them away to any other person without any consideration, or even throwing them away." Can it be said that any of the rights or privileges conferred on the