and Trust Company,1 Mechanics' and Traders' Bank v. De Bolt, Knoup v. The Piqua Bank, and The Toledo Bank v. Bond. In two of these cases, as has already been mentioned, the court declared that bank charters are not contracts; but in all it held that the stipulation in regard to taxation was not binding on the state, was not a contract within the protection of the national Constitution. The reasoning which supported this conclusion was as follows: The states are absolutely sovereign so far as they have not parted with that sovereignty to the general government; they are absolutely sovereign over the subjects of taxation and eminent domain; being thus sovereign they cannot relinquish their sovereignty; one legislature cannot bind a subsequent legislature on these subjects, since the subsequent legislature as much represents the sovereign people and holds all its sovereign powers, as the former did. The court, therefore, pronounced the laws increasing the rate of taxation to be valid.

§ 581. From these decisions, as may well be supposed, an appeal was taken to the Supreme Court of the United States, which in 1853 heard and decided the case of Piqua Bank v. Knoup. The opinion was delivered by Mr. Justice McLean. The court overturn all the positions of the Ohio judges; declare the charter to be a contract; pronounce the express collateral stipulations contained in it to be contracts, although they restrain the legislative power of the state; and hold the statute of 1851 increasing the tax to be void as it impaired the obligation of the contract. From this judgment three members of the court, Catron, Daniel, and Campbell dissented; Mr. Justice Campbell delivering an elaborate opinion, in which he adopted the reasoning and the conclusions of the Ohio judges.

In the year 1855 other cases from Ohio, involving the same doctrines, were considered and determined by the Supreme Court, Dodge v. Woolsey, Mechanics' and Traders' Bank v. DeBolt, and Mechanics' and Traders' Bank v. Thomas.8 The

1 1 Ohio State R. 563.

4 Ibid. 622.

6 18 Howard's R. 331.

2 Ibid. 591.

5 16 Howard's R. 369.

7 Ibid. 380.

3 Ibid. 603.

8 Ibid. 384.

principle that these collateral stipulations in charters limiting the taxing power are contracts, was again affirmed in the most emphatic manner. The court also decided that the new constitution of Ohio authorizing and directing the increased tax, did not obviate the difficulty; holding that the people of a state in their organic capacity are as much bound by a contract made with their legislature, as the legislature itself.

§ 582. After these judgments of the national tribunal the same questions were again presented to the state judiciary in 1856, in Matheny v. Golden,1 The State v. Moore,2 and Ross County Bank v. Lewis, in which cases the Ohio court yielded to the authority of the decisions made by the Supreme Court of the United States. But in Sandusky City Bank v. Wilbor (1857), and Skelly v. The Jefferson Bank" (1859), the state court returned to its former position; declared the judgments of the Supreme Court not binding upon it; and sustained the validity of the second statute.

§ 583. This condition of resistance required another and formal utterance from the highest national tribunal for determining constitutional questions. The case of Skelly v. The Jefferson Bank (1861), was reviewed by the Supreme Court of the United States; the reasoning and conclusions adopted by them in the former cases were re-stated and re-established; and their judgments giving a construction to the Constitution were declared to be authoritative, not only upon individuals but upon the states.

Thus the right and power of a state to bind itself by a contract which shall limit its function of taxing, may be considered as finally and forever settled as a portion of the political law of the United States.

§ 584. But the Supreme Court has very recently reiterated its views upon the compulsive efficacy of all state contracts, in The Binghampton Bridge Case7 (1866), -a case which, if any case could, would have led the court to modify and relax its rule. In the year 1808, the legislature of New York in

1 5 Ohio State R. 361. 4 7 Ibid. 481.

2 Ibid. 444.

5 9 Ibid. 606.

7 3 Wallace's R. 51.

3 Ibid. 447.

6 1 Black's R. 436.

corporated a company to build and maintain a toll-bridge over the Chenango River, near its confluence with the Susquehanna. In a prior part of the same statute, the legislature incorporated another company to build and maintain a similar bridge over the Delaware River. In respect to this Delaware Bridge Company the statute provided as follows: "It shall not be lawful for any person or persons to erect any bridge or establish any ferry across the Delaware within two miles either above or below the bridge to be erected and maintained in pursuance of this act." Those provisions of the statute which relate to the Chenango Company, provided that such company "shall be and hereby are invested with all and singular the powers, rights, privileges, immunities, and advantages

which are contained in the foregoing incorporation of the Delaware Bridge Company; and all and singular the provisions, sections, and clauses thereof, not inconsistent with the provisions herein contained shall be and hereby are fully extended to" the Chenango Bridge Company. The latter company erected and have since maintained a toll-bridge. When this bridge was erected, there was a small hamlet at the place; the city of Binghampton now covers the spot on both sides of the Chenango River, and this bridge is utterly inadequate to the wants of its inhabitants. In 1855 the legislature of New York granted a charter to a new company authorizing them to place a bridge a few rods from the old one. This suit was brought by the Chenango Bridge Company to restrain the erection of the new structure. It will be noticed that two points were involved: did the restrictive clause in favor of the Delaware bridge in the original charter apply also to the Chenango bridge; and if so, was this clause a contract binding upon the state? The court answered both these questions in the affirmative, and held that the clause was a contract between the state and the Chenango Bridge Company; that it restrained the state from authorizing another bridge to be erected within the specified limits; and that the new charter was void as it impaired the obligation of the contract. From this decision, Chase, C. J., and Grier and Field, JJ., dissented, not denying, however, the general doctrines of the court, but insisting that, from a proper construc

tion of the language of the charter, the Chenango Bridge Company did not acquire any rights under this restrictive clause passed in favor of the Delaware Bridge Company.

§ 585. (3.) It having been settled that if the charter contains any express collateral stipulations, they are contracts, and binding upon the state, we now inquire whether such collateral agreements will be implied in favor of the corporation, from its general nature, design, and objects. The answer is, they will not. The rule has been firmly established, both in the national and in the state courts, that the charter must be construed more strongly against the grantees; that no rights as against the state will arise under it by mere implication; that only such stipulations as are plainly and expressly favorable to the corporation, upon a reasonable construction of the charter, are to be regarded as contracts binding upon the state. These propositions are sustained by many cases. I shall only refer to two, decided by the Supreme Court of the United States, which have been regarded as leading, and which have been followed without a dissent both by the national and the state judiciary.

§ 586. In the Providence Bank v. Billings,' the bank had been incorporated by a charter entirely silent on the subject of taxation. At the time of incorporation, a certain rate of tax prevailed; the rate was subsequently increased; the bank resisted payment of the additional tax. The court held the subsequent statute valid, deciding that, as the charter contained no stipulations on the subject, none should be implied.

ex

Again, in the great case of The Charles River Bridge v. The Warren Bridge, the subject was examined in an haustive manner, and the rule was established beyond a doubt. The Charles River Bridge Company had been incorporated by the legislature of Massachusetts, with power to erect and maintain a toll-bridge. Their charter contained no restrictive clauses, and no express limitations upon the legislative action. Another company was subsequently chartered and authorized to place a free bridge at a very short distance from the former structure. The effect of this free bridge would plainly be to

lessen, if not to entirely destroy, the value of the franchises held by the Charles River Bridge Company. The action was brought to restrain all proceedings under the second charter. The Supreme Court, in a most elaborate opinion by Chief Justice Taney, held that there was no contract between the state and the Charles River Bridge Company to the effect that another viaduct should not be constructed; that there being no express contract, none should be implied; and that the later charter was valid, as it did not impair the obligation of a contract. The principle of these cases has never been departed from, either by the national or the state judiciary; indeed, the tendency among many state judges has been to extend it to an unwarrantable length. The Supreme Court of the United States has very recently reaffirmed this principle of construction in Turnpike Company v. The State.1

The conclusions from the preceding analysis are, that charters of private corporations are contracts; that all express collateral stipulations contained in such charters are also contracts; but that no collateral agreements, limitations, and restrictions, by or upon the state, will be implied from the nature and objects of the corporation.

6. Municipal Corporations.

§ 587. The charters of municipal corporations are not contracts, and may therefore be altered or repealed at pleasure, so far as the state legislature is not restrained by the local constitution. The law regards these public territorial bodies as agents and instruments of the state for the exercise of a portion of its governmental functions in a certain district; as clothed with a public trust analogous to that conferred upon. officers; which agency or trust may be revoked, changed, lessened, or increased, whenever the legislature in its discretion shall think best.

To this principle there has been an universal assent. No case of authority, either in the national or the state courts, has thrown a doubt upon the correctness of these propositions. It is unnecessary, therefore, to make any extended reference

1 3 Wallace's R. 210.