The Supreme Court of the United States, in another case,11 held:

"All agree that it cannot be used (referring to the power to alter, amend, or repeal) to take away property already acquired under the operation of the charter or to deprive the corporation of the fruits actually reduced to possession of contracts lawfully made."

And again this court said, in another case:

"The power reserved to the legislature to alter, amend, or repeal a charter authorizes it to make any alteration or amendment of a charter granted subject to it which will not defeat or substantially impair the object of the grant or any rights vested under it and which the legislature may deem necessary to secure either that object or any public right."

The term law as used in the contract obligation clause of the Federal Constitution has already been defined as including the act of any law-making body of a State. Municipal corporations are frequently created by State authority and a portion of its legislative power delegated to subordinate legislative bodies known as municipal councils, or some equivalent term. The protection of the Federal Constitution applies to the legislative acts of these subordinate law-making bodies equally with the action of a State legislature, and the principles in respect to the protection. of property and vested rights, briefly stated in this and the preceding paragraph, also refer to the legislative acts of municipalities.

§ 38. The Charter of a Corporation: Its Construction. The charter of a corporation is the source of its powers; the fountain of its legal authority to act in its corporate capacity. The charter, as will be remembered, includes not only the articles of incorporation, as executed by the incorporators, but also general laws and constitutional provisions referring to the particular class or kind of corporation. Owing to the diverse character and qualifications of 11 Union Pacific R. R. Co. v. United States, 99 U. S. 700.

the members of the legislative bodies, it is natural that at times, language ambiguous and indefinite in its character may be found in grants to corporations, or laws under which they may be created and corporate powers exercised. The occasion, therefore, frequently arises for a construction and interpretation of the charter of the corporation. Rights and privileges may be claimed and their existence denied. It is then the duty of the courts to pass upon conflicting claims. What rules of interpretation are adopted by them in the determination of these issues? It might be said that generally the courts, where the question is raised of the meaning of a word or phrase, the existence of alleged conditions or the application of particular laws, follow either the rule of strict or of liberal interpretation or construction. Where the former is adopted, the existence of the right or the application of the law is decided in favor of the doubt. If the rule of strict interpretation is adhered to, the doubt is resolved against the existence of the right or condition or the application of the law.

The organization of corporations and the conduct of their business is not only made legal by the State but is encouraged as a matter of public policy because of the resulting benefit and advantage to the community. The grant of corporate power may be either the authorization to transact a business or to carry on an occupation under corporate form which natural persons as a matter of common right could engage in or carry on. On the other hand, powers or capacities may be granted to a private corporation which are exclusive in their character, 12 or exemptions and special privileges may be granted to them to possess and to enjoy which the citizens of the country, as a matter of common right, are not entitled to possess or enjoy. Stating the proposition more concisely, corporations may enjoy and possess either rights of an ordinary and natural character, or special privileges and exemptions not existing as a matter of common right, nor without a special grant of the State. Because of the favorable attitude of the State to12 Close v. Glenwood Cemetery, 107 U. S. 466.

wards corporations, the courts generally adopt, in the interpretation of a charter, the liberal rule in respect to the exercise of all the ordinary and usual powers of the corporation. That rule of construction is also followed which tends to facilitate the carrying on of the corporate business and the success of the enterprise, if there is not involved a doubt as to the existence of a special privilege or exemption. The rule of strict construction, on the other hand, is universally applied in connection with the exercise of exclusive privileges, franchises, and exemptions. Where a grant to a corporation is made in derogation of the common right, as the phrase is sometimes stated, if any doubt exists as to its existence, or the extent of its application, or the manner in which it can be exercised, that doubt is resolved most strongly against the corporation and in favor of the State.

Since the charter of a corporation consists largely of the acts of law-making bodies, the rules or canons of construction usually applying to legislative acts will also be applied to that legislation referring to and affecting private corporations. One canon or rule of construction is that the intent of the legislature is to be ascertained if possible in cases of doubt as to the meaning of words or phrases or the existence of a right. General words, followed by specific enumeration, are limited in their meaning to the rights or powers conveyed or included in the words of narrower or restricted meaning. The doctrine of exclusion, so-called, is also frequently applied and followed by the courts in determining the extent of corporate powers.

§ 39. Construction of Charters: Strict and Liberal Rules. From an examination of the authorities it will be easily ascertained that corporations exercise, under their charters, two classes or kinds of corporate power, viz, those which might be termed as the usual and ordinary acts essential to the transaction of their business as corporations and others involving the exercise of the rights granted by the State of an extraordinary or exclusive nature. The liberal rule is undoubtedly adopted by the courts in construing and applying the former, while, with

out exception, the strict rule is followed in determining corporate rights of the latter class. Phrases and decisions are constantly found to the effect that the charter of a corporation is to be strictly construed as against it and in favor of the public; that nothing can pass by implication and that no corporate capacities can be exercised unless they are clearly and unequivocally expressed. Upon examination of the cases, it will be found that these principles, in their severity, apply to special privileges, powers, or exemptions claimed by the corporation. There will be fcund also decisions holding that the strict rule of construction applies to all the powers or capacities claimed by the corporation, but the weight of authority as gathered from the more recent decisions without doubt holds along the lines suggested. This modern rule is, clearly, the correct one, and is well stated in Thompson on Corporations:18

"Ordinarily the interpretation is not to be opposed to the general purposes of the grant, except where the restrictive language of the charter itself is such that it cannot be overlooked or disregarded. On this theory of interpretation, statutes, and charters are permitted to include devices, instrumentalities and methods of conducting business unknown and not in use at the time of the adoption of such charter. This rule of progressive construction permits corporations to keep pace with the progress made in inventions and appliances, and extends jurisdiction to protect plans and methods of transacting business which were not known and could not have been stated in the charter at the time it was granted."

In a Pennsylvania case it was stated:14

"It is doubtless true that such charters are to be construed most beneficially for the public and most strictly against the company, but the construction must be a reasonable one. The charters of most private corporations are for purposes of private gain, and many of them grant exclusive privileges in abridgement of individual rights, 13 Thompson on Corporations, 2d ed., § 309.

14 Brown v. Susquehanna Boom Co. 109 Pa. St. 57.

but as they are intended to subserve public interests they should be so construed as not to defeat the purpose of their creation. Whilst, therefore, the words of the charter should be construed with some degree of strictness for public protection, it should not be construed to require the performance of what, in the nature of the case, cannot be performed."

The liberal rule of construction, it will be found also, upon an examination of the cases, to be applied with less frequency in the case of quasi-public corporations. This principle further illustrates the distinction attempted to be made above in the nature or character of the powers exercised by the corporation. The liberal rule is also used where the corporation is seeking to avoid a liability through a strict or technical construction of its charter. The subject of the construction of the charter is so intimately connected with the exercise of its powers that a further discussion will be had of the principles followed in the chapter on corporate powers. Thompson on Corporations15 states as a few fundamental rules, which apply to the interpretation of charters, the following:

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'(a) Charters are to be construed as contracts between the government and the corporation and not as mere laws; (b) Charters are to receive a reasonable construction, and if the intent can be satisfactorily made out from the express words, and from the just and plain inference from the terms used, it is to prevail and to be carried into effect; (c) If the language of the charter be ambiguous, or the intent cannot be satisfactorily made out from the terms used, then it is to be taken most strongly against the corporation and most beneficially to the public; (d) A right not given in express words by the charter may be deduced by interpretation, if it is clearly inferable from some of its provisions."

And another rule was given by Lord Coke:16

"The best exposition of the king's charter is, upon the consideration of whole charter, to expound the charter by 15 Thompson on Corporations, 2d ed., § 297.

16 Sutton Hospital Case, 10 Coke 1.