is not to be considered a special privilege conferred by the state, but is a common right regulated by general laws, no legislative act relating to incorporation can be considered a "contract." "contract." It is only with reference to special powers, not possessed by all citizens in common, that the "contract" claim is made. But if we conclude that the mere right to exist as a corporation is a franchise or special privilege, and if we admit that sovereign states have authority to grant special privileges to individuals, such a grant must of necessity be only temporary. That a special privilege, once granted, cannot be withdrawn, is a contradiction of the original powers of sovereignty and is abhorrent to the intellectual perceptions as well as to moral principle. If a state is to grant privileges to some, it must have the power to do so by withdrawing privileges from others. The result of any "contract, therefore, which makes a special privilege irrevocable is to subtract a portion of sovereignty from the state and confer it upon individuals. But sovereignty, in its very nature, is continuous and indestructible. If a part of it may be lost, the whole may be lost by successive losses of different parts, a result absurd and unthinkable. This principle is well stated by Chief Justice Doe: "The agents' authority to make law does not enable them to suspend their own duty, and bind their principals, by agreeing with a third party that law shall not be made." 1 The prohibition in the federal constitution against "impairing the obligation of contracts" was never intended, could not in logic or reason have been intended, to prevent a state from preserving its own integrity, from retaining the power to legislate as fully and completely next year as it can legislate this year, from withdrawing any special privilege which it has granted.

If the mere right to be a corporation is a special privilege which a present legislature cannot guarantee against repeal or change by a future legislature, much more is this true of those immensely valuable privileges, so often granted in corporate charters or elsewhere, by which the most important powers of sovereignty are claimed to have been "contracted" away to private parties. These powers vary from the most trifling up to some of the very highest and most essential, among which are the power of maintaining the existence of the government by taxation and the power of protecting citizens from the extortions of monopoly.

The chief precedents for the decision in the Dartmouth College case were two cases in which Marshall had delivered the opinion of the court. In one of them, Fletcher vs. Peck (1810), the court extended the "contract" clause of the federal constitution to prevent an act of alleged confiscation by the legislature of Georgia. There are few lawyers who will not admit that this was a judicial amendment of the Constitution by means of a clever legal fiction. This case is 1 67 N.H. 46. 26 Cranch 87.

generally regarded as having been coliusive, a mere sham battle in which both parties desired to obtain the same decision. The evidences of collusion were so plain, upon the face of the record, that they were remarked by Justice Johnson in his opinion. In New Jersey vs. Wilson (1812) Marshall had held that the State of New Jersey had contracted away forever the right to tax certain private lands and that this "contract" was protected by the United States Constitution. This case also is open to grave suspicion of collusion, and practically no lawyer now defends the decision on any ground.

The principle assumed to have been established in the Dartmouth College case has been refuted and repudiated many times by the federal supreme court. The case still has the force of law within a narrowed scope, and it is often referred to in terms of great politeness. But when the court musters up the courage to overrule it, few arguments will be needed in addition to its own opinions. Certain of the state supreme courts, notably that of Ohio, long and persistently stood out against a recognition of the doctrine of this case.

Before Marshall's death in 1835, he and Story were sharply overruled by a majority of the court in Ogden vs. Saunders, in which it was decided that the prohibition against laws impairing the obligation of contracts does not apply to contracts made subsequent to the enactment of the law in question.2 Mr. Cotton, referring to Marshall's dissenting opinion in this case, says: "It is hard to see that it is anything more than ingenious and fantastic." 3

In the Charles River Bridge case (1837) the court, under the leadership of Chief Justice Taney, decided that though legislative "contracts" may be protected by the Constitution, such alleged contracts must be construed according to a rule directly opposite to the rule applicable to private contracts; in other words, grants of privileges by the state are to be construed strongly in favor of the granting party, while private grants are construed strongly in favor of the grantee. This doctrine, that nothing can be taken from the state unless it is expressly granted, led the court to hold that no exclusive franchise had been granted to the bridge company. Justice Story dissented earnestly, and logically if the doctrine of the college case was sound.

In West River Bridge Company vs. Dix5 (1848) it was settled that a state may, by the power of eminent domain, take back any property, franchise or privilege which it has bargained away in a corporate charter or otherwise, making compensation for the value of what it takes. This doctrine is directly inconsistent with the college case decision, as Justice McLean forcibly pointed out in his opinion in the

17 Cranch 164.

212 Wheaton 213, decided in 1827.

Op. cit. Vol. II, p. 176. 4 II Peters 420.

56 Howard 507.

Charles River Bridge case. A violation of contract does not become less a violation by reason of the fact that the protesting privilegeholder is given money on being deprived of what he contracted for. In the "Granger cases" (1876) it was decided that though a railway corporation is authorized by its charter to make "reasonable charges, the state may by law say what charges are reasonable; and that when property, corporate or otherwise, is devoted to a use which affects "the community at large," such as transportation or storing grain, the conduct of the enterprise, and the charges to be paid by the public are matters for legislative regulation. The sacredness of corporate charters was quietly ignored. By rejecting the logic of the Dartmouth College decision, Chief Justice Waite made it possible to control public utility monopolies, such as transportation, telegraphs, telephones, electric and gas lighting, etc., in cases where the charter does not definitely fix the rates that may be charged.

In repeated decisions the supreme court has held that the "police power" of the state is held in trust by the legislature and cannot be contracted away, even by the most solemn and formal agreement ever put in a corporate charter. The police power "extends to the protection of the lives, health and property of the citizens, and to the preservation of good order and the public morals." Under this doctrine, the legislature may prohibit lotteries, the manufacture and sale of liquor, the carrying on of noxious trades in populous centers, etc., in spite of charters which expressly authorize the doing of the things prohibited. Yet Justice Strong spoke truly when, in his dissenting opinion in the case of the Northwestern Fertilizing Company, he said: "The police power of a state is no more sacred than its taxing power." He might safely have said, "than any other legislative power." 3 The majority of the court overruled the Dartmouth College case in principle, though not in name.

Marshall's doctrine that the taxing power can be bartered away by special contracts of private parties with the legislature, has not escaped violent assault in the supreme court, though its undoing has been thus far delayed by the fact that it rests on a definite precedent which cannot be dodged, but must be followed or overruled. In State Bank of Ohio vs. Knoop (1853) Justice Catron, dissenting, said: "The soverign political power is not the subject of contract so as to be vested in an irrepealable charter of incorporation, and taken away from, and placed beyond the reach of, future legislatures. . . . The taxing power is a political power of the highest class, and each succeeding legislature having vested in it, unimpaired, all the political

111 Peters 577-578. Justice McLean concurred in the West River Bridge case on the theory that it was the property of the Bridge Company that was taken, not its franchise. 2 94 U.S. 113-187.

3 97 U.S. 679.

powers previous legislatures had, is authorized to impose taxes on all property in the state that its Constitution does not exempt.'

In Washington University vs. Rouse (1869) Chief Justice Chase and Justices Miller and Field, dissenting, said, through Justice Miller, that to hold that a legislature "can, by contract, deprive the state forever of the power of taxation, is to hold that they can destroy the government which they are appointed to serve." In the words of Justice Miller, the doctrine of irrepealable tax exemptions "must finally be abandoned," but no more certainly than the entire doctrine of irrepealable special privileges to individuals or corporations must be abandoned.2

In the Chicago Lake Front case (1892) it appeared that in 1869 the legislature granted to the Illinois Central Railroad Company a tract of more than one thousand acres under Lake Michigan, the principal part of Chicago's harbor, extending a mile into the lake. The grant having been repealed in 1873, this suit was brought to see if the repealing law was void, as "impairing the obligation" of the original grant. It was decided, four against three, that the repealing law was valid on the ground that the legislature held the title to submerged land under navigable waters in trust for the people and could not alienate it except in such small parcels, or in such reasonable and √ limited ways, as might serve the public purposes of navigation, commerce, etc. Justice Field, giving the opinion of the court, said: "The power to resume the trust whenever the state judges best, is, we think, incontrovertible. The position advanced by the railroad company . . . would place every harbor in the country at the mercy of a majority of the legislature of the state." " True as this is, it is no less true that the legislature holds in trust for the people other public property and privileges, and that the Dartmouth College decision, in utter disregard of this principle, has placed, for example, the streets of every city at the mercy of a majority of the state legislature or of the municipal body to which legislative power has been delegated. By acts passed in 1856 and 1865, the Minnesota legislature incorporated a railroad which later became the Great Northern, and gave it almost unlimited authority to consolidate with other railroads; but it was provided that the charter could be amended "in any manner not destroying or impairing vested rights." In 1874 a law was passed prohibiting the consolidation of parallel and competing railroads. In 1895 the federal circuit court in Minnesota was called on to decide whether the act of 1874 impaired the contract contained in the charter, the Great Northern having attempted, after 1874, a consolidation with the Northern Pacific. It was claimed that the right to consolidate did not become "vested" until it was exercised, and therefore the act did not "destroy or impair" any "vested right." The circuit * 146 U.S. 455.

1 16 Howard 404.

28 Wallace 443-444.

judge held that "there is no distinction, in reason or in the authorities, between the right to a franchise that has been and the right to one that has not been used," unless there has been a forfeiture for nonuser; and that "the franchise to consolidate with another railroad corporation was a vested right of this defendant from the time of the acceptance of its grant." i

The circuit judge was right if there is any virtue in the Dartmouth College decision. But the supreme court of the United States, only two dissenting, decided that he was wrong, that the right to consolidate did not become "vested" until used. That they did not do the logical thing and overrule the college case decision, is to be regretted; but that they refused to apply it, even though using a distinction that does not distinguish, is cause for satisfaction and hope. Justice Brown, giving the opinion of the court, said: "We think it was competent for the legislature, out of due regard for the public welfare, to declare that its charter should not be used for the purpose of stifling competition and building up monopolies. In short, we cannot recognize a vested right to do a manifest wrong.' 13 These are brave and just words. When courageously and consistently applied to the whole field of constitutional law, they will destroy the last vestige of the doctrine resting on the Dartmouth College decision and will restore to the people of the states that complete and continuous control of legislation which the Constitution gave them.

In his dissenting opinion in the Charles River Bridge case, Justice Story expressed the opinion that an exclusive franchise to build and maintain a bridge across a river between two cities, did not constitute "a monopoly."4 His definition of monopoly was, "An exclusive right granted to a few, of something which was before of common right," such as, for example, an exclusive right to navigate a river. Because special legislative authority was necessary for individuals who would build a bridge, an exclusive franchise to build one would not deprive any citizen of an already existing right. By the same test, an exclusive franchise to run a street railway or lay gas pipes or string electric wires, would not establish a monopoly. From judges so utterly incapable of economic reasoning or of taking a long look ahead, we should not expect very good law on economic subjects. We should not judge them too harshly, for they were trained and lived in a different age. But that we should allow their mistakes of fact, their legal misconceptions, their economic obtuseness, their partisan passions and prejudices, to reach down through the decades and make law for us in regard to some of our most vital interests - this is hard to explain on the theory that we are an intelligent, self-governing people.5

1 73 Fed. Rep. 944-945. 2 161 U.S. 646. 3 Ibid. p. 675. 4 11 Peters 606. The point has frequently been made by members of the legal profession that the Dartmouth College decision has ceased to be of practical importance on account of the general