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Miller v. The State (82 U.S. 478)

ERROR to the Supreme Court of New York; the case being thus:

Section 1 of article 8 of the constitution of the State, just named, adopted by it A.D. 1826, ordains as follows:

'Corporations may be formed under general laws, but shall not be created by special act except in certain cases. All general laws and special acts passed pursuant to this section may be altered from time to time or repealed.'And title 3 of chapter 18 of the first part of the Revised Statutes of 1828, enacts thus:

'The charter of every corporation that shall hereafter be granted by the legislature shall be subject to alteration, suspension, and repeal, in the discretion of the legislature.'

With this provision of the constitution and this enactment of the Revised Statutes of the State in force, the legislature of New York passed in 1850 a general act for the formation of railroad companies and the regulation of the same. This act authorized any number of persons, not less than twenty-five, to form a company for the purpose of constructing, maintaining, and operating railroads for public use,. . . and for this purpose to make and sign articles of association in which the name of the company should be stated, the places from which and to which the road was to be constructed, the amount of the capital stock, which should not be less than $10,000 for every mile of road constructed, the number of shares of which the capital stock should consist, and the names and places of residence of thirteen directors of the company who should manage its affairs for the first year, and until others were chosen in their place. Each subscriber was to state what number of shares he would take; and the articles were to be filed in the office of the Secretary of State, and after certain formalities gone through with them, the persons who had subscribed the articles of association, and all who should become stockholders in the company, 'shall,' says the act 'be a corporation by the name specified in such articles of association, and shall possess the powers and privileges granted to corporations, and be subject to the provisions contained in title 3 of chapter 18 of the first part of the Revised Statutes.'

The formation of a railroad company to be styled the Rochester and Genesee Valley Railroad Company, and to run between the city of Rochester and the town of Portage, fifty miles south of it, being contemplated by a course which should run through the town of Avon, about eighteen miles south of Rochester, an act of the State just named amending the charter of that city was passed July 3d, 1851, by which its common council were authorized to borrow upon its credit $300,000, to be invested in the stock of the new company, and by virtue of the subscription thus authorized, the city was declared to acquire all the rights and privileges and be liable to the same responsibilities as other stockholders of the company, except as otherwise provided in the act. In case the railroad company elected to receive the subscription, the common council were authorized to nominate and appoint one director for every $75,000 of capital stock held by the city at the time of each election of directors, but the city could have no voice in the election of the remaining directors. On the 10th of July, 1851, the articles of association of the new company were filed in the office of the Secretary of State, organizing the corporation under the general railroad act of 1850, already in part quoted. The corporation was declared in the article to be created for the purpose of constructing, owning, and maintaining a railroad from the city of Rochester to the town of Portage, a distance, as already said, of fifty miles, with a capital stock of $800,000, divided into 8000 shares of $100 each. On the 15th of June, 1852, the mayor of Rochester subscribed for 3000 shares of the stock of the company, and, on the same day, at a meeting of the directors of the railroad, such subscription was unanimously accepted. Other parties subscribed for stock to the amount of $677,500, so that the whole amount subscribed, including the stock taken by the city, was $977,500. The whole amount of capital stock fully paid up was:

By the city of Rochester, $300,000

By all other parties, 255,200

Total amount, $555,200

The balance of the stock subscribed was extinguished or forfeited before March 9th, 1867. Before this time also the Rochester and Genesee Valley Railroad Company had abandoned the construction of their road south of Avon, and assigned all their rights and franchises beyond that point to another corporation.

On the 9th of May, 1867, an act was passed, amending the act of 1851 by giving the common council authority to appoint one director for every $42,855.57 of stock owned by the city; in other words, establishing the same ratio that existed among the subscribers for stock at the time the original subscription was made. The effect of this act was to give the city of Rochester power to appoint seven of the thirteen directors, and the other stockholders six. At the next annual election, however, the stockholders, other than the city, alleging that the act of July 3d, 1851, made a contract between the city and the other stockholders, that the city should elect but four directors out of the thirteen, and that the act of 1867, authorizing the election of seven, violated the obligation of that contract, proceeded to elect one Miller and eight others directors as the directors eligible by them; and on the same day the common council, in pursuance of the act of 1867, appointed seven other persons as directors eligible by them. Thereupon, the attorney-general of New York, on the relation of Powers and the six other directors appointed by the city, issued a quo warranto against Miller and his eight co-directors; and the case coming to the Court of Appeals that court held that the appointment by the city was valid, and the election of the nine directors by the other side irregular. Miller and his co-directors now brought the case here.

The only question involved was the constitutionality of the act of 1867. If that act was constitutional the decision of the State court was correct, and was to be affirmed. If the act was a violation of the Constitution of the United States, the decision was erroneous and was to be reversed.

Messrs. Theodore Bacon and H. R. Selden, for the plaintiff in error, argued the case orally, and submitted also the opinions of certain of the judges in the court below who dissented from the judgment there. A part of one follows: The act of July 3d, 1851, made it lawful for two corporations to enter into an arrangement by which one of them might become a stockholder in the other if both should consent, and declared what the rights of the parties to the arrangement should be as between each other if they availed themselves of this permission. There was no exercise of legislative will further than to confer this power; all beyond that depended upon the mutual consent of the parties.

The making and the acceptance of the subscription to the stock were acts of the parties, and they thereby adopted the conditions contained in the act of the legislature and mutually consented to be governed by them. The consent of each party must be deemed to have been given in consideration of the obligation thus assumed by the other, and a valid contract was thus made between the subscriber to the stock and the other stockholders of the railroad company, or the company representing the rights of such stockholders, unless it can be shown that the subject-matter of the arrangement was one concerning which a contract could not be made or authorized by the legislature to be made.

The city of Rochester, by this arrangement, secured to itself the right of appointing four out of the thirteen directors. This was a valuable right, for in its absence, if the stock of the company should all be paid up, the city holding but a minority of the stock might not have been able to obtain the election of any director of its selection. In consideration of this privilege the city surrendered to the other stockholders the right to elect the remaining nine directors. The railroad company, in consideration of that surrender, bound itself to admit the four city directors. Neither party can be presumed to have acted on the assumption that this arrangement could be changed without its consent. It may well be supposed that those interested in the company and who had embarked, or were about to embark, their capital in it, would not have consented to place so large an amount of stock in the hands of the city, had they not been secured against the possibility of the control of the affairs of the company becoming invested in so changing and uncertain a body as a municipal corporation, whose officers would have no personal interest in the road and no special inducement to manage it in the interest of its stockholders.

It will be argued, however, that the power reserved in the constitution and statutes of the State of New York, to alter, suspend or repeal the charters of all corporations, gives power to the legislature to change the terms upon which the subscription was received, and to enlarge the number of directors to be appointed by the city, and that the act of 1867, which purports to authorize the city to appoint seven directors instead of four, thus giving to the city the majority instead of a minority representation in the board, is valid as an amendment of the charter of the railroad company.

The purpose and object of this reservation of power is generally conceded to have been to prevent the alienation by the State of corporate franchises, in such form that they could be held as against the State free from that legislative control which the public interests might from time to time require. When it was settled by the Supreme Court of the United States that an unconditional charter to a private corporation was a contract between the State and the corporation, which could not be impaired by State laws, and that franchises thus granted could never be withdrawn, several of the States resolved to make no more such irrevocable contracts, and either by general laws or provisions in the charters themselves inserted the condition that such charters might be altered or repealed.

In New York the constitution has deprived the legislature of the power of granting irrepealable charters, and there is now no power to make a grant of this description which shall operate as an irrevocable contract on the part of the State. But this reservation is for the benefit of the State alone, and affects only the relations between it and the corporation. The exercise of this reserved power may, undoubtedly, indirectly affect private rights and interests which are dependent upon the powers and franchises of the corporation itself, but no others. The individual rights and interests of the members of the corporation, or of persons dealing with it, cannot be acted upon directly by the legislature even under the form of an amendment of the charter. A contract between individuals or between a corporation and individuals is not subjected to the action of the legislature by the mere fact that it is embraced in a charter or an amendment to a charter, or results from a dealing had with reference to such an enactment. The State has power to revoke its own contracts where it has in making them reserved such right. But it has no power to impair the lawful contracts of its citizens, or even of corporations created by it. When such contracts relate to the rights of individuals and not to the powers of the corporation, any attempt to reserve such a power would be ineffectual. And a State constitution is no more effectual for such purpose than a statute.

In Zabriskie v. Hackensack and New York Railroad Co., the doctrine is stated, that the reservation in a charter that the State may at any time alter, amend, or repeal it, is a reservation of the State for its own benefit and is not intended to affect the rights of corporators as between each other; that it does not empower the State to authorize one part of the stockholders for their own benefit and at their mere option to change their contract with the other part, but is confined to the powers and franchises granted to the corporation by the charter. And although in the case cited the doctrine was applied in a manner inconsistent with some of our own adjudications, none of the latter will be found to conflict with the doctrine itself.

In Oldtown and Lincoln Railroad Co. v. Veazie the charter required that not less than 11,000 shares should be subscribed before the subscriptions could be enforced by calls. The defendant subscribed for 1000 shares. Only 9500 shares were subscribed in all. A supplemental act was then passed, reducing the limit to 8000 shares. It was held that the reserved power to amend the charter did not authorize a change in the liability of the stockholders as between themselves.

The cases of Sherman v. Smith and The Reciprocity Bank, which will probably be relied upon by the other side, are in strict accordance with these views. The alterations in charters there, related to the franchises. One of the chief privileges which may be granted by an act of incorporation is that of doing business as an aggregate body without that individual liability of the members which, but for the incorporation, would necessarily attach. By the amendatory acts the prospective enjoyment of that privilege was taken away from corporations there. No attempt was made to impose on the members liability for existing contracts of the corporation. The amendment affected the whole body alike, and declared that for all contracts the corporation should make after January, 1850, the members should be liable. This was clearly within the scope of the power reserved, and essentially different from the present case. In all the adjudications to be found in which the exercise of this power has been maintained the amendment has related to the corporate franchises and only incidentally affected the rights of the stockholders, through the interest which they had in the tranchises of the corporation itself, and affected the interests of all the stockholders alike. The cases which have gone the greatest length in support of this power are within this limit. They are those in which the corporate powers have been enlarged after subscriptions to the stock, and the subscribers held not to be discharged by this enlargement of the corporate enterprise. In these and kindred cases the alteration affected purely the powers and duties of the corporation in its relations to the State and to the public, and the subscriber to stock as well as the purchaser of stock must be deemed to have contracted with reference to the conceded power of the legislature over those subjects.

There are other acknowledged limits to the exercise of the reserved power of amendment where it trenches upon vested rights or rights of property of the corporation. In Commonwealth v. Essex Company the doctrine is maintained that, 'when under power in a charter rights have been acquired and become vested, no amendment of the charter can take away the property or rights which have become vested under the legitimate exercise of the powers granted.' See also Durfee v. Old Colony Railroad and Roxbury v. Boston and Providence Railroad.

It will be argued, however, that, conceding the principle that contracts between the corporation and its stockholders, though resulting from provisions of the charter, may be protected by the Constitution of the United States when they do not relate to the franchises of the corporation, yet the right of stockholders to vote on their stock or to appoint the directors or managers of the company is a chartered right and subject to the reservation in the State constitution.

This position necessarily leads to the result that the right of stockholders in private business corporations to vote upon their stock is wholly under the control of the legislature; that it cannot be secured by any contract; and that whether claimed under the provisions of the charter or under a contract made in pursuance of legislative authority, it may at any time be taken away in toto from the stockholders by a mere exercise of the will of the legislature; or it may be taken from a portion and vested in the residue.

This result is inevitable, for if the right of voting and the extent of the voice which each stockholder shall have in the management of the property and the affairs of the corporation are mere charter rights or franchises created by the act of incorporation, and within the scope of the power to suspend, alter, and repeal reserved in the constitution, they cannot, even by authority of the legislature, be withdrawn from the exercise of that power, and they can at any time be taken away entirely from the stockholders without their consent.

The most essential element of a right of property is the right to manage or control the management of the object which is in common parlance designated as property.

Is it argued that by investing property in a corporate enterprise, the owner consents to subject its management to the control of the legislature?

This is true to a certain extent; but the fallacy of this argument as applicable to the point now in question consists in the omission to qualify the extent to which the owner has, by thus investing his property, parted with his own power over it.

He has doubtless restricted himself to the use of the property while so invested, in such business as the State may sanction, and through such agencies as the State may permit him to appoint; but he has not consented to part with his control over its management within those limits.

The legislature which creates the artificial body must necessarily have power to prescribe the organs through which it shall act. But this is a different thing from arbitrarily taking possession of the corporation itself, and through it of the property of the parties for whose benefit the corporation was created. They cannot be presumed to have anticipated that a charter giving them the privilege of managing their property for their own benefit, in a certain way, could be transformed by this reserved power of amendment into a vehicle which should transfer from them to the State, or its appointees, all control over the property which they have invested in the corporate enterprise. To hold such a doctrine would be to place all property invested in corporate enterprises beyond the pale of the protection of the Federal Constitution. Such an act would approach nearer to one of confiscation than of legislation.

It is no answer to say that the act of 1867 works so as to secure an equitable result. If the arrangement which it assumes to change was a contract, it makes no difference whether it was unduly beneficial to one party or another. The legislature has no power over it.

It is a misnomer to call the act of 1867 an amendment of the charter of the railroad company. It affects no corporate right or franchise of the company. Its more appropriate description would be 'An act to enlarge the rights of one of the stockholders of the company.'

Mr. J. C. Cochrane, contra.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Miller v. The State (82 U.S. 478)


text: Talk:Miller v. The State (82 U.S. 478)

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title: Talk:Miller v. The State (82 U.S. 478)


text:
Miller v. The State (82 U.S. 478)/Opinion of the Court

Corporate franchises, granted to private corporations, if duly accepted by the corporators, partake of the nature of legal estates, and the grant, under such circumstances, if it be absolute in its terms, and without any condition or reservation, importing a different intent, becomes a contract within the protection of that clause of the Constitution which ordains that no State shall pass any law impairing the obligation of contracts. Charters of private corporations are regarded as executed contracts between the State and the corporators, and the rule is well settled that the legislature, if the charter does not contain any reservation or other provision modifying or limiting the nature of the contract, cannot repeal, impair, or alter such a charter against the consent or without the default of the corporation, judicially ascertained and declared. Subsequent legislation, altering or modifying such a charter, where there is no such reservation, is plainly unauthorized, if it is prejudicial to the rights of the corporators, and was passed without their assent. Where such a provision is incorporated in the charter, it is clear that it qualifies the grant, and that the subsequent exercise of that reserved power cannot be regarded as an act within the prohibition of the Constitution. Such power also, that is the power to alter, modify, or repeal an act of incorporation, is frequently reserved to the State by a general law applicable to all acts of incorporation, or to certain classes of the same, as the case may be; in which case it is equally clear that the power may be exercised whenever it appears that the act of incorporation is one which falls within the reservation, and that the charter was granted subsequent to the passage of the general law, even though the charter contains no such condition, nor any allusion to such a reservation.

Matters of fact, though not in dispute, must be first ascertained, in order that the questions involved in the case may be properly presented for decision. Briefly stated the material facts are as follows, as appears by the finding of the court of original jurisdiction, and from the concessions of the parties:

That the railroad company is a corporation duly organized under the general railroad act of the State, passed on the 2d of April, 1850, and that the articles of association were, on the 10th of July, of the succeeding year, filed in the office of the secretary of state; that the articles of association provided for the construction of a railroad from Rochester to Portage, a distance of fifty miles, with a capital of eight hundred thousand dollars, to be divided into shares each for one hundred dollars, as therein specified; that the stock subscribed for the corporation, paid and unpaid, amounted to nine thousand seven hundred and seventy-five shares, of which only five thousand five hundred and fifty-two shares were ever fully paid, and for which certificates have been issued. Authority was conferred upon the city of Rochester, by an act to amend the charter of the city, to subscribe for or purchase stock of that railroad company to the amount of three hundred thousand dollars, and the provision was that by virtue of that subscription or purchase the city should acquire all the rights and privileges, and be liable to the same responsibilities as other stockholders of said company, except in certain particulars not necessary to be mentioned. Pursuant to that authority the proper officers of the city subscribed for that amount of the stock of the railroad company, and it appears that the proper officers of the railroad company elected to receive the subscription, and that the full amount of the subscription was paid, and that the certificates of the shares were duly issued to the city, and that the city has ever since been the holder and owner of the whole number of said shares. Power was also conferred upon the city, in case the company 'elected to receive their subscription,' to nominate and appoint one director for every seventy-five thousand dollars of capital stock held by the municipality, at the time of each election of directors, but the further provision was that the city should have no voice in the election of the remaining directors; consequently the common council of the city, at the time of each annual election of directors, elected four-the number being limited by law to thirteen-and the other stockholders elected nine, without any interference from the city authorities. Complaints arose from the fact that four hundred and fifty-two thousand and three hundred dollars of the stock, subscribed by parties other than the city, had never been paid in, nor had certificates ever been issued for any part of that unpaid subscription. On the contrary, the same was not in existence as stock, having long before been extinguished and forfeited for non-payment, in consequence of which the railroad company had abandoned the construction of their road south of Avon, and assigned all their right of way, property, and franchises beyond that point to another corporation, so that their railroad as constructed and operated terminates at Avon, and is only eighteen and three-fourth miles in length. Control of the railroad, by a change of circumstances not contemplated when the plan was organized, being in the hands of stockholders owning a minority of the stock, the legislature of the State, on the 9th of March, 1861, enacted that the common council of the city should 'have the power to nominate and appoint one director of the company for every forty-two thousand eight hundred and fifty-five dollars and five-sevenths of a dollar of capital stock of the said railroad company held by the said city, at the time of each election of directors of said company.' Thereafter the common council of the city, as the plaintiffs claim, became entitled at each annual election of directors to elect seven of the number allowed by law, and that the other stockholders were entitled to elect the remaining six only, as authorized by the apportionment prescribed by the amendatory act of the legislatute. Accordingly the common council of the city, at the annual election held in June of the succeeding year, elected seven directors, but the other stockholders, denying the validity of the amendatory act, elected nine directors under the old law, and the persons so chosen immediately entered upon, used, and exercised the said offices as directors of said corporation, and without any warrant or authority, as insisted by the plaintiffs. Deprived of their rights as defined by the amendatory act the plaintiffs brought the present action, in the nature of a writ of quo warranto, in the Supreme Court of the State, alleging that the nine directors elected by the other stockholders have usurped the offices of directors of the railroad company. Service was made and the defendants appeared and filed an answer. Hearing was had, and the Supreme Court rendered judgment for the plaintiffs, and the defendants transferred the cause to the Court of Appeals, where the judgment was affirmed; thereupon the losing party sued out a writ of error and removed the record into this court. They seek to reverse the judgment of the State courts upon the ground that the act of the State legislature, authorizing the common council of the city to elect seven of the thirteen directors in the railroad company, is unconstitutional and void as repugnant to their act of incorporation, and in support of that theory they submit the following propositions: (1.) That the signers of the before-mentioned articles of association, when the articles were filed in the office of the secretary of state, became a corporation by the name specified in those articles, with all the powers and privileges granted by the general law of the State upon that subject. (2.) That the powers and privileges thus conferred were granted by the State, and that the grant, as an act of incorporation, became and was an executed contract. (3.) That the powers and privileges of the charter are prescribed and defined in the general railroad law of the State. (4.) That the persons named as corporators in a charter cannot be compelled to accept the act of incorporation, nor any modification or extension of the powers and privileges granted, whether conferred or modified or extended, by a special act or by virtue of a general law. (5.) That a contract created by an act of incorporation, when once complete, is unalterable by either party without the consent of the other.

Undoubtedly the powers and privileges of the railroad company in this case are the same as they would have been if the company had been incorporated by a special act, and it may also be conceded that the charter, when the articles of association were filed in the office of the secretary of state, became an executed contract, subject to the restrictions ordained by the constitution of the State, and to the reservations contained in the general law of the State relating to corporations, and also in the general railroad act, which it is admitted prescribes and defines the powers and privileges of the railroad company.

Section one of article eight of the constitution of the State ordains as follows: Corporations may be formed under general laws, but shall not be created by special act except in certain cases. All general laws and special acts passed pursuant to this section may be altered from time to time or repealed.

Provision is also made by the eighth section of the act defining the powers, privileges, and liabilities of corporations, that the charter of every corporation that shall hereafter be granted by the legislature shall be subject to alteration, suspension, and repeal, in the discretion of the legislature.

Articles of association for the incorporation of railroad companies cannot be filed and recorded in the office of the secretary of state until at least one thousand dollars of stock for every mile of railroad proposed to be made is subscribed thereto, nor without complying with the other conditions specified in the second section of the general railroad act; and the first section of the act provides that such corporation shall be subject to the provisions (except those enacted in the seventh section) contained in title three of chapter eighteen of the first part of the revised statutes, which includes section eight, containing the reservation that the charter of every corporation that shall hereafter be granted shall be subject to alteration, suspension, and repeal, in the discretion of the legislature. Such a reservation, therefore, is not only ordained by the constitution of the State but it has been twice enacted by the legislature, and it is conceded that both of those statutes are in full force. Superadded to those reservations is the further one, contained in the forty-eighth section of the general railroad act, which provides that the legislature may at any time annul or dissolve any corporation formed under this act, the effect of which, it is admitted by the defendants, is to incorporate into the grant a power of revocation, which seems to supersede all necessity for any further remark upon the subject.

Much consideration was given to the question under consideration in the case of Dartmouth College v. Woodward, in which the right of the State was denied to amend the charter granted to the college by the Crown before the Revolution, and to modify and restrict the same without the consent of the trustees under the charter. Four propositions were decided by the court in that case, the opinion being given by the Chief Justice: (1.) That the charter was a contract within the meaning of that clause of the Constitution which ordains that no State shall pass any law impairing the obligation of contracts. (2.) That the charter was not dissolved by the Revolution. (3.) That the acts of the State legislature altering the charter, in a material respect, without the consent of the corporation, was an act impairing the obligation of the charter, and was unconstitutional and void. (4.) That the college, under its charter, was a private and not a public corporation.

Concurring opinions were also given by two of the associate justices, and Judge Story, in enforcing his views, remarked that where a private corporation is thus created by the charter of the Crown, it is subject to no other control on the part of the Crown than what is expressly or implicitly reserved by the charter itself. Unless a power be reserved for this purpose the Crown cannot, in virtue of its prerogative, alter or amend the charter or divest the corporation of any of its franchises, or add to them, or augment or diminish the number of trustees, or remove any of the members, or change or control the administration of the funds, or compel the corporators to receive a new charter.

Prior to that adjudication the Supreme Court of Massachusetts had decided that rights legally vested in a corporation cannot be controlled or destroyed by any subsequent statute, unless a power for that purpose be reserved to the legislature in the act of incorporation; and the learned judge having referred to that case remarked that the principles there laid down are so consonant with justice, sound policy, and legal reasoning, that it is difficult to resist the impression of their perfect correctness, showing very plainly that such legislation would be valid if the power for that purpose is reserved in the act incorporating the company. Conclusive evidence that such was the opinion of that learned judge is also derived from his subsequent remarks in that same case, in which he says that any act of a legislature which takes away any powers or franchises vested by its charter in a private corporation or its corporate officers, or which restrains or controls the legitimate exercise of them, or transfers them to other persons, without its assent, is a violation of the obligations of the charter, adding: 'If the legislature mean to claim such an authority it must be reserved in the grant.'

Where such a provision is incorporated in the charter, it is clear that it qualifies the grant, and that the subsequent exercise of that reserved power cannot be regarded as an act within the prohibition of the Constitution.

Members of banking associations, it was enacted by the general banking law of New York, should not be individually liable for the debts of the association, unless it was so provided in the articles of organization, but this court held, in the case of Sherman v. Smith, that a subsequent statute imposing such a liability upon the shareholders of the association was a valid law, as the charter reserved to the legislature the power to alter or repeal the act of incorporation. Such a conclusion was earnestly resisted at the bar, as the conditional exemption from such liability was embodied in the articles of association, but the court overruled the defence upon the ground that the reservation in the charter of the right to alter or repeal the act was paramount and controlling.

Decisions of the State courts, in repeated instances, both before and since that time, have been made to the same effect. When that case was before the Court of Appeals. before the record was removed here for revision, the Court of Appeals decided that the provision reserving to the legislature the power to alter or repeal the general banking law became a part of the contract with every association formed under it, and that the State might modify it prospectively or retrospectively without infringing the article of the Federal Constitution, which ordains that no State shall pass any law impairing the obligation of contracts, and this court affirmed the judgment in that case.

Laws could not be enacted under the constitution in force when the general banking law was passed, to create, alter, continue, or renew any body politic or corporate, without the assent of two-thirds of the members in each branch of the legislature. Consequently it was contended that the members of such associations, subsequently created, could not be affected by the statute declaring that shareholders should be liable individually for the debts of the association, but the Court of Appeals reaffirmed the decision in the preceding case, and determined that the statute imposing that liability was a valid exercise of the power reserved in that act, and that its effect was that the franchises and privileges granted were at all times subject to abrogation or change by the legislative power of the State; that the power reserved was one to be exercised at any time by the existing legislative authority, however constituted, and in any mode conforming to the organic law of the State for the time being.

Exactly the same principle was adopted in the case of Railroad v. Dudley, where it was held that an alteration of the charter of the company, made by the legislature, in pursuance of the power reserved to alter or repeal the act, by changing its name, increasing its capital, and extending its road, did not discharge a subscriber to the stock from liability for his subscription, whether such alteration was or was not beneficial to him, the alteration having been duly made and without fraud on the part of the company.

Under such a reservation it is also held by the same court, that a member of the corporation holds his stock subject to such liability as may attach to him in consequence of an extension or renewal of the charter, made without his application or consent, and that the estate of an intestate succeeds to the individual liability imposed on the owner in his lifetime as a stockholder, in a corporation whose charter would have expired if it had not been renewed, but was extended after his death; and that his administrator was liable for debts of the corporation contracted after the death of the intestate.

Even the defendants admit that the exact question presented for decision in this case was decided by the Supreme Court of the State in the case between these same parties, or some of them, and which was subsequently transferred to the Court of Appeals, and was there reversed upon an exception involving a question of local law.

Nearly forty years earlier the same question substantially was decided in the same way by the chancellor of that State, in which he held that where a State legislature reserves to itself, in the very charter it grants to a private corporation, the right of altering, amending, or repealing the act of incorporation, a subsequent repeal of the charter is valid and constitutional; that such a reservation in the charter of a corporation, upon common law principles, is not repugnant to the grant, but a constitutional limitation of the powers granted. Few or none, it is presumed, will question the correctness of that rule, but the court here is of the opinion that the reservation is equally valid and effectual if it exists in the constitution of the State, or in a prior general law. So where the legislature in granting a charter to an insurance company reserved the right to alter it, and they subsequently exercised that right by declaring that if the assets of such corporation should pass into the hands of a receiver he might make assessments upon the premium notes, it was held that this was a legitimate exercise of the reserved power, and that it fully authorized the receiver to make assessments whenever it became necessary to carry the intention of the legislature into effect. Power to legislate, founded upon such a reservation in a charter to a private corporation, is certainly not without limit, and it may well be admitted that it cannot be exercised to take away or destroy rights acquired by virtue of such a charter, and which by a legitimate use of the powers granted have become vested in the corporation, but it may be safely affirmed that the reserved power may be exercised, and to almost any extent, to carry into effect the original purposes of the grant or to secure the due administration of its affairs so as to protect the rights of the stockholders and of creditors, and for the proper disposition of the assets. Such a reservation, it is held, will not warrant the legislature in passing laws to change the control of an institution from one religious sect to another, or to divert the fund of the donors to any new use inconsistent with the intent and purpose of the charter, or to compel subscribers to the stock, whose subscription is conditional, to waive any of the conditions of their contract.

Attempt is made in this case to show that the right to elect all of the directors except four had become vested in the stockholders owning a minority of the shares, and that the amendatory act giving to the city the power to elect seven impairs that vested right, but the court is entirely of a different opinion, as the legislature in conceding that right made the concession subject to the reserved power to alter or repeal the charter, as ordained in the constitution of the State, and also in the several statutes mentioned, which clearly give to the legislature the power to augment or diminish the number or to change the apportionment as the ends of justice or the best interest of all concerned may require.

All parties supposed, when the charter was formed, and when the subscriptions to the stock were paid, that the capital stock would be eight hundred thousand dollars, and that the right conceded to the city to elect four out of the thirteen directors would give the city a fair proportion of the whole number, but circumstances have changed in consequence of the failure of a large class of the subscribers to the stock to make good their subscriptions. Payments being refused, the corporation found it necessary to reduce the capital stock, and to shorten the route, as before explained.

These changes from the original design made new legislation necessary to the ends of justice, and the amendatory act was passed to effect that object, and the court is of the opinion that the amendatory act is a valid law and that the judgment should be

AFFIRMED.

Mr. Justice BRADLEY, with whom concurred Mr. Justice FIELD, dissenting.


text: Talk:Miller v. The State (82 U.S. 478)/Opinion of the Court


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Miller v. The State (82 U.S. 478)/Dissent Bradley

Mr. Justice BRADLEY, with whom concurred Mr. Justice FIELD, dissenting.

I dissent from the opinion of the court in this case, on the ground that the agreement with respect to the number of directors which the city of Rochester should elect, was not a part of the charter of the company, but an agreement outside of and collateral to it. Whilst the legislature may reserve the right to revoke or change its own grant of chartered rights, it cannot reserve a right to invalidate contracts between third parties; as that would enable it to reserve the right to impair the validity of all contracts, and thus evade the inhibition of the Constitution of the United States.

[See the next case.]


text: Talk:Miller v. The State (82 U.S. 478)/Dissent Bradley


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Page:Haiti- Her History and Her Detractors.djvu/328

For the purpose of showing that the Haitians are reverting to barbarism, their detractors affect to praise the prosperity of the island at the time of the French domination; they are especially fond of alluding to the agricultural products which, according to them, have not only never been surpassed, but have not even been equalled since the independence of Haiti. Instead of finding out from trustworthy sources the exact truth of the matter, they hasten to draw the conclusion that the Haitians are lazy and unworthy of possessing such a rich and beautiful island. But they present no evidence in support of their assertions. As it is not my intention to follow the same plan, I will here furnish my reader with a few figures which will enable him to make his own deductions; figures which for obvious reasons the detractors of Haiti, as a rule, omit to mention in their works.

In 1790, at the time when Saint-Domingue was at the height of its prosperity, the products of the island were as follows: White sugar, 70,000,000 lbs.; brown sugar, 93,000,000 lbs.; coffee, 68,000,000 lbs.; cotton, 6,000,000 lbs.; indigo, 1,000,000 lbs.; cocoa, 150,000 lbs.; lignum vitæ and mahogany, 150,000 lbs.


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Holyoke Company v. Lyman

ERROR to the Supreme Judicial Court of Massachusetts; the case being this:

The 'General Laws' of the State just named, provide that every act of incorporation passed since the 11th of March, 1831,

'Shall at all times be subject to amendment, alteration, or repeal at the pleasure of the legislature.'

This general law being on the statute-book the legislature of the State in 1848 passed an act to incorporate the Hadley Falls Company, for the purpose of constructing and maintaining a dam across the Connecticut River, and of creating a water-power to be used by the corporation. The capital stock was fixed at $5,000,000, and it could hold $500,000 worth of real estate. The corporation was authorized and empowered 'to construct and maintain a dam across the river' at a point named, sufficient to raise the water to a height not exceeding one specified. The act in its fourth section read thus:

'The said corporation shall pay such damages to the owners of the present fishing rights existing above the dam which the said company is herein empowered to construct, as may be awarded by the county commissioners of the counties in which said rights exist.'

And a mode was provided by which either the company 'or any owners of the said fishing rights' might at any time proceed to determine the damages done to them. Nothing was said about damages done to fishing rights below the dam, nor about making or maintaining, or not making and maintaining any 'fishway.' No power was given to condemn the land of others for the site of the dam or for any other purpose.

The Hadley Falls Company built at great expense a dam, but without any fishway in it. Before this dam was built shad were accustomed to pass up the river beyond the dam, and were of value to the private owners of riparian fishing rights for sale as food, and a source of income to such proprietors both above and below the dam. The dam, however, by preventing the passage of the fish up the river, destroyed the fishing rights above. And compensation to a large amount was made to the owners of fisheries above the dam for the injuries done to their said rights.

After the dam was built, and owing to it, the number of shad in the river below decreased in a small but appreciable degree; the dam preventing them from passing to their former spawning-grounds above; and to some extent causing them not to return to the river after their annual passage to the sea. No owners of fishing rights below the dam had, however, ever claimed damages on this account.

On the 31st of January, 1859, the Hadley Company having failed, the same legislature passed an act incorporating the Holyoke Water-power Company, 'for the purpose of upholding and maintaining the dam across the Connecticut River, heretofore constructed by the Hadley Falls Company,' and gave to the new corporation full power 'to purchase, take, hold, receive, sell, lease, and dispose of all and any part of the estate, with all the water-power, water-courses, water-privileges, dams, rights, easements, and appurtenances thereto belonging, or therewith connected, which have at any time heretofore belonged to the Hadley Falls Company.'

The part of the Connecticut River where this dam was constructed runs through the State of Massachusetts, and is not navigable.

In this state of things the legislature passed in 1866 and subsequently, certain statutes, which authorized the commissioners of fisheries of the State to examine the several dams on the rivers of Massachusetts, and after notice to the owners thereof, to determine and define the mode and plan upon which suitable and sufficient fishways should be constructed. The statute regulated the plans, methods, &c., and provided that if any proprietor of any dam should refuse or neglect to agree with the commissioners to build the fishways for thirty days after a plan was duly furnished to him, the commissioners might build the same at his expense. Under and in pursuance of this legislation, the Holyoke Company was required to build a fishway in their dam. The fishway required was one that would cost about $30,000; and, as appeared, would not diminish the water-power of the company, except when they desired to add to it by what are known as 'flash boards.' The company refused to comply with the requirement, contending that the acts of incorporation to the two companies constituted contracts, that by the payment of damages to the owners of fishing rights above the dam the Holyoke Company had the right to maintain 'the dam,' theretofore constructed by the Hadley Company, and that the acts of 1866, &c., were laws impairing the obligations of contracts, and so in violation of the Federal Constitution. The court below, on a proceeding authorized by the statute to make them do so, adjudged otherwise, and its judgment was now here for review.

Mr. F. Chamberlin, for the plaintiff in error:

1. Where an absolute right to do an act is given, a contract is made that the State will do no act to impair that absolute right. Thus if an absolute grant of land is made, the State cannot thereafter annex a condition restricting its use; or if power is given to erect a bridge of a certain character, the State cannot cause the owner to make an alteration in it. The same rule will apply to a right given without any reservation to make a dam.

In The People v. Platt, the State of New York had granted lands on both sides of the Saranac River, without any reservation of the river, or any restriction on the use of it expressed in the grant. By a statute subsequently passed, owners of all dams were required to make fishways, and it was held that such a requirement was unconstitutional as to the defendants, because the unrestricted use of the land and river was given, and it could not be afterwards restricted.

In Commonwealth v. New Bedford Bridge, a charter was granted to erect a bridge, with draws of a certain width, and it was held that a statute ordering draws of an increased width to be built was void. The court say:

'Nor can the legislature, without the assent of the defendants, in any way impair the original terms of the charter by annexing new conditions or imposing additional burdens, onerous in their nature or inconsistent with a reasonable construction of the compact.'

In West River Bridge Company v. Dix, this court gives the same construction of the clause of the Constitution about contracts on which we rely, and say:

'The language and meaning of the inhibition were designed to embrace proceedings attempting the interpolation of some new term or condition foreign to the original agreement, and therefore inconsistent with and violative thereof.'

Now in our case, we find an unreserved and unconditional right to erect and maintain a dam across the Connecticut River. Does not a statute that we shall erect a fishway at any cost which the State sees fit to require, interfere with our 'perfect use and enjoyment of the thing granted?'

It is evident, also, that in granting these charters the legislature had this principle in mind; for it made a provision which was intended to reach the very matter of fishways. It provided that damages should be paid to certain persons supposed to be affected.

Will it be said that although there is no express reservation at all in the grant, yet that in Massachusetts, in all charters authorizing the erection of dams, there is an implied reservation, of a right to require the grantees to make any fishways in those dams which the legislature may think desirable? The position is not tenable; for the courts of that State have laid down no such general principle. They have only declared that owners of lands or privileges on streams, if they erect dams on them, do so subject to the usual rule that they must so manage them as not to interfere with the right of persons above or below, either to have the water flow, or to have fish pass. But it follows not that when no reservation of power to cause fishways to be built has been made in the original contract, the State has power to 'interpolate such term or condition foreign to the original agreement.'

2. Even if in the State of Massachusetts there were an implied condition annexed to grants of power to build dams, the State, in the case at bar, has, by providing in our charter for this very right of fish passage, made another contract, which, upon our accepting it and paying damages, as we have done, exempts us from any further requirement. This right to have fish pass up and down rivers is a public right solely. No owner of land above or below a dam can maintain any action against the builder of a dam which injures his fishery, nor proceed against the dam as a nuisance, nor is the owner liable to indictment. If, however, a provision for damages is inserted in a charter, it is clear that this additional consideration is paid for the relinquishment by the State of the right to thereafter demand fishways, or payment of other or further damages than those required; and a contract to that effect arises by necessary implication, as clearly as if it was expressed in terms. For how unjust it would be, where only an implied condition of building a fishway existed, to put in an express condition that all damages should be paid, and then force the plaintiff, by building fishways, to give back to the owners what he had already paid them for the loss of. Our view does not leave the State withour remedy. It may in the exercise of its right of eminent domain take back this right, by paying for it, as in all other similar cases.

3. Then will it be said that there is a general statute of Massachusetts, existing when this charter was made, which reserves the right to alter, modify, or repeal any charter theretofore granted, and that the State has the power under this statute to take back any right it has given even for a valuable consideration? If this construction can be maintained all that a State has to do, in order to avoid the provision of the Constitution against the passage of laws impairing the obligation of contracts, is to pass a law saying in substance: 'In all contracts I may hereafter make I reserve the right to break them if I see fit.' The constitutional provision cannot be evaded in such a manner. But no such construction can be given to this statute. The distinction is this: The legislature may, under certain circumstances, alter the charter, but they cannot do anything to affect or destroy any rights of property acquired under the charter; and if under such reservation they attempt to violate any contract they have made, they are met by a higher power than their own, which forbids it.

Mr. C. R. Train, Attorney-General of Massachusetts, contra.

Mr. Justice CLIFFORD delivered the opinion of the court.

title: Holyoke Company v. Lyman


text: Talk:Holyoke Company v. Lyman

title: Talk:Holyoke Company v. Lyman


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Holyoke Company v. Lyman/Opinion of the Court

Rivers, though not navigable even for boats or rafts, and even smaller streams of water, may be and often are regarded as public rights, subject to legislative control, as the means for creating power for operating mills and machinery, or as the source for furnishing a valuable supply of fish, suitable for food and sustenance. Such water-power is everywhere regarded as a public right, and fisheries of the kind, even in waters not navigable, are also so far public rights that the legislature of the State may ordain and establish regulations to prevent obstructions to the passage of the fish, and to promote the usual and uninterrupted enjoyment of the right by the riparian owners. Proprietors of the kind, if they own both banks of the water-course and the whole soil over which the water of the stream flows, may erect dams extending from bank to bank to create power to operate mills and machinery, subject to certain limitations and conditions, and may also claim the exclusive right of fishery within their territorial limits, subject to such regulations as the legislature may, from time to time, ordain and establish. Persons owning the whole of the soil constituting the bed and banks of the stream are entitled to the whole use and profits of the water opposite their land, whether the water is used as power to operate mills and machinery or as a fishery, subject to the implied condition that they shall so use their own right as not to injure the concomitant right of another riparian owner, and to such regulations as the legislature of the State shall prescribe Where such a proprietor owns the land on one side only of the stream, his right to the land and to the use of the water, whether used as power to operate mills and machinery or merely as a fishery, extends only to the middle thread of the stream, as at common law, and is subject to the same conditions and regulations as when the ownership includes the whole soil over which the water of the stream flows. Authority to erect dams across such streams for mill purposes results from the ownership of the bed and the banks of the stream, or the right to construct the same may be acquired by legislative grant, in cases where the legislature is of the opinion that the benefit to the public will be of sufficient importance to render it expedient for them to exercise the right of eminent domain and to authorize such an interference with private rights for that purpose. Lands belonging to individuals have often been condemned for such purposes, in the exercise of the right of eminent domain, in cases where, from the nature of the country, mill-sites sufficient in number could not otherwise be obtained, and that right is, even more frequently, exercised to enable mill-owners to flow the water back beyond their own limits, in order to create sufficient power or head and fall to operate their mills. Concomitant with the authority to erect such dams for such purposes over the beds of water-courses, as resulting from the title to the banks and bed of the stream, is also the exclusive right of fishery, which also has its source in the same ownership of the soil, and the better opinion is that it is not divested or extinguished by any legislative act condemning the land to the use of another for mill purposes, unless the words of the grant conferring the authority to construct the dam plainly indicate that such was the intention of the legislature. Water rights of the kind, whether the streams are used for mill purposes or merely as fisheries, are justly entitled to public protection, as they are in many cases of great value to the community where they exist, but they are the source of many conflicting interests which the State legislatures as well as the courts have found it difficult to adjust, as appears from the countless efforts which have been made in that behalf without complete success.

Certain persons, their associates and successors, on the twenty-eighth of April, 1848, were incorporated by the name of the Hadley Falls Company, for the purpose of constructing a dam across the Connecticut River, and one or more locks and canals, in connection with the said dam, to create a water-power to be used for manufacturing and mechanical purposes, and also for the purpose of navigation, with all the powers and privileges and subject to all the duties, liabilities, and restrictions set forth in the thirty-eighth and forty-fourth chapters of the revised statutes of the State. Power and authority are given to said corporation to construct and maintain a dam across said river at South Hadley, at any point between the present dam of the proprietors of the locks and canals and the lower locks of the said proprietors, of a height sufficient to raise the water to a point not exceeding the present level of the water above the dam of the said proprietors; and the farther provision is that the corporation shall pay such damages to the owners of the present fish rights above the dam to be erected as shall be awarded by the county commissioner. Pursuant to the act of incorporation the stockholders accepted the charter, constructed the dam, paid certain damages to the owners of fish rights above the dam as constructed, and expended, as the respondents allege, more than two millions of dollars, including the cost of the dam and the damages paid to parties adversely interested, in constructing their improvements, and failed in business. New parties acquired the title to the dam and the other improvements, and on the thirty-first of January, 1859, the respondents in this case, as such new proprietors, their associates and successors, were incorporated by the name of the Holyoke Water-power Company, and they were empowered to uphold and maintain the dam and other improvements constructed by the prior company, and to erect and maintain a water-power to be used for the same purposes as those described in the prior charter, with the same powers and privileges and subject to the same liabilities and restrictions. Special power was conferred upon the governor, by and with the advice and consent of the council, by the act of the fifteenth of May, 1866, to appoint commissioners of fisheries in the said river and one other river, to hold their offices for five years unless sooner removed, and it was made their duty by the same act forthwith to examine the several dams on said rivers in said State, and after notice to the owners of the dams, to determine and define the mode and plan by which fishways shall be constructed, suitable and sufficient to secure the free passage of salmon and shad up said rivers during their accustomed seasons. Said commissioners are also authorized to agree with the proprietors of such dams to construct at their own expense said fishways according to the plans adopted, if the proprietors consent so to do, and if they fulfil the agreement and the fact is duly certified to the secretary of state, the provision is that the same, for the period of five years, shall be taken and deemed as in lieu of the fishways which such a proprietor is now required by law to keep and maintain for that purpose. Unless the proprietor of such a dam shall agree with the commissioners within thirty days from the time he is so furnished with the plan to build such fishway in the manner prescribed, the commissioners are authorized to construct the same in behalf of the State, and in that event the provision is that the expense shall be a charge against the owner of such dam, and the same may be recovered of the proprietor in an action of contract in the name of the State, or the commissioners may enforce the construction of such a fishway, by a bill in equity, to compel a specific performance. Due notice having been given by the complainants, as such commissioners, to the respondents as the owners of said dam, of their intention to examine the dam pursuant to the provisions of the aforesaid acts of the legislature, they proceeded to perform that duty and determined and defined the mode and plan in which the fishway should be constructed therein, suitable and sufficient to secure the free passage of salmon and shad over the dam and up the river during their accustomed seasons. They also furnished the respondents with the plan and specifications of such fishway, and filed a copy of the same in the office of the secretary of state, and requested the respondents to construct such a fishway or to agree with them as such commissioners to comply with that requirement, but it appears that the respondents refused and neglected so to do, insisting that the State had no power or right to require them to build such a fishway. Entirely different views were entertained by the complainants, and they instituted the present suit to compel the corporation respondents to comply with that requirement, and the State court entered a decree for the complainants. Dissatisfied with that decree the respondents sued out the present writ of error and removed the cause into this court.

Ample power was vested in the first company to hold real estate, not exceeding five hundred thousand dollars in value, but their act of incorporation did not give the company any authority to condemn the real estate of another to any extent or for any purpose. They were required to 'pay such damages to the owners of present fish rights existing above the dam' as should be awarded by the county commissioners of the counties in which said rights existed, and they might at any time apply to said commissioners to proceed, ascertain, and determine the damages to said fish rights, subject, however, to an appeal to a jury from such assessment, as in cases of assessment of damages for land taken for highways. Damages for injuries to fish rights above the dam were to be ascertained and assessed, but no authority was conferred to condemn the land of another for the site of the dam or for any other purpose, nor was any provision made to ascertain and assess the damages to fish rights below the dam, nor does either charter contain a provision exempting the builders and owners of the dam from the obligation to construct suitable and sufficient fishways for the free passage of fish up the river during their accustomed seasons.

None of these propositions are controverted, but the respondents insist that the acts of the legislature under which they have been required to make the fishways in question, impair the obligation of the contract contained in the charter incorporating their grantors, and that those acts are inoperative and void as contravening the article of the Constitution which prohibits the States from passing any law impairing the obligation of contracts.

Such a charter, when accepted by the corporators, is undoubtedly a contract that the powers, privileges, and franchises granted shall not be restrained, controlled, or destroyed without their consent, unless a power for that purpose is reserved to the legislature in the act of incorporation or in some prior general law, in operation at the time the act of incorporation was passed. Private charters of the kind are held to be contracts, because they are based for their consideration on the liabilities and duties which the corporators assume by accepting the terms therein specified, and the general rule is that the grant of the franchise on that account can no more be resumed by the legislature or its benefits diminished or impaired, without the assent of the corporators, than any other grant of property or legal estate, unless the right to do so is reserved in the act of incorporation or by some immemorial usage or general law of the State, which was in operation at the time the charter was granted. Charters of private corporations duly accepted, it must be admitted, are executed contracts, but the different provisions, unless they are clear, unambiguous, and free of doubt, are subject to construction, and their true intent and meaning must be ascertained by the same rules of interpretation as other legislative grants. Repeated decisions of this court have established the rule, that whenever privileges are granted to a corporation, and the grant comes under revision in the courts, such privileges are to be strictly construed against the corporation and in favor of the public, and that nothing passes but what is granted in clear and explicit terms. Whatever is not unequivocally granted in such acts is taken to have been withheld, as all acts of incorporation and acts extending the privileges of corporate bodies are to be taken most strongly against the corporations.

Evidently the right of fishery, as well as the right to use the water of a stream for mill purposes, is the subject of private ownership, and when held by a good title, the one as much as the other is a vested right, and both alike are entitled to public protection, and are subject, in a certain sense, to legislative regulation and control. Difficulties, in every case, attend the proper adjustment of such rights, as the complete enjoyment of the one may interfere with the corresponding enjoyment of the other, but the presumption is, in construing any regulation upon the subject, that the framers of the regulation did not intend to allow either party to disregard the rule that he should so use his own property as not to injure the property of the owner of the other right.

Ownership of the banks and bed of the stream, as before remarked, gives to the proprietor the exclusive right of fishery, opposite his land, as well as the right to use the water to create power to operate mills, but neither the one nor the other right nor both combined confer any right to erect obstructions in the river to prevent the free passage of the fish up and down the river at their accustomed seasons, as such obstructions would impair and ultimately destroy all such rights owned by other proprietors both above and below the obstruction on the same stream. Authoritative support to these views is found in the judicial decisions and legislative enactments of the State throughout her history, commencing even before the Revolution, and continued in an unbroken series to the present time.

Undoubtedly each proprietor of the land adjoining such a river or stream has in that State a several or exclusive right of fishery in the river immediately before his land, to the middle of the river, and may prevent all others from participating in it, and will have a right of action against any who shall usurp the exercise of it without his consent, but the Provincial Statute of 8 Anne, ch. 3 (A.D. 1709), prohibited all persons, 'without approbation or allowance,' from placing in or across rivers or streams any weir, hedge, or other incumbrance to obstruct the free passage of fish in the proper seasons of the year. Persons who erect or build a dam across any river or stream where the salmon, shad, alewives, or other fish usually pass up into the natural ponds to cast their spawn, were required by the Provincial Statute of 15 George II, ch. 6 (A.D. 1741), to make a sufficient passageway for the fish to pass up such river or stream, and the owners of dams, so constructed that such fish could not conveniently pass up the river or stream, were required to make such a passageway and keep it open for a certain period in each year, as therein prescribed. Laws of the kind, requiring the owners of dams across the rivers and streams of the State, to build fishways and keep them in repair, have been passed, in numerous instances, since the State constitution was adopted, many of which are still in full force. Such laws usually require the owners of the dam to build the fishway at their own expense, and subject their doings in that behalf to the approval of some supervisory board or committee. Reference was made at the argument to some thirty-five or forty statutes of the kind, passed at different periods, commencing the year the constitution of the State was adopted (1780) and coming down to the present time, covering a period of more than ninety years.

Statutes also encouraging mills by authorizing their owners or occupants to overflow the lands of other persons, by paying such damages as may be assessed in the mode prescribed, are also of very ancient origin, and have received the sanction of the courts of the State throughout the whole period of her history.

Public rights, in all jurisdictions, are subject to legislative control, and it is settled law in Massachusetts, and has been for a century and a half, including her colonial history, that the right of fishery in such rivers as the Connecticut and Merrimac, even above the point where they are navigable for boats or rafts, and the right to erect and maintain dams to create water-power for mill purposes, are public rights, and that the owners of such rights are bound by such reasonable regulations as the State may make andy ordain for may make and ordain for

All persons, say the Supreme Court of that State, in the case of Stoughton v. Baker, who may build a dam for mill purposes, on a stream annually frequented by fish, do it under an implied obligation to keep open sufficient sluices and fishways for the passage of fish at the proper seasons, and that the grant of the right to erect a dam, if made by the legislature, is to be construed to be under the same implied condition to keep open the fishways, unless such implication is excluded by an express provision exempting the grantees from such an obligation. By the statement of facts in that case it appears that the defendants' dam was an ancient dam; that they deraigned their title from the original proprietor, who acquired his right thereto in 1633 by a grant from the town within whose limits the mill-site was then situated; that the grant included the mill privilege and a weir adjoining the mill, and the exclusive right of fishery; that the grant was subsequently confirmed by the legislature, and that no fishway was ever made through the dam until the year 1789, when one was constructed at the expense of third parties, pursuant to a resolution passed by the legislature of the State; that on the fifteenth of March, 1805, the legislature appointed a committee to examine the dams on that river and to order such alterations to be made in the fishways as in their opinion would be sufficient for the convenient passage of the fish at said dam. Three-fourths of the expenses were to be borne by the owners of the dams and one-fourth by the towns interested in the fisheries. Suitable fishways were accordingly constructed, and the towns having paid the whole expense instituted a suit to recover one-fourth of the expense of the owners of the dam. Able counsel appeared on both sides, and the opinion of the court was delivered by Chief Justice Parsons, all of the other justices concurring. Based on these facts it was contended for the defendants that the original grant was a bar to the claim, but the court, conceding that the grant as confirmed amounted to a franchise of a several fishery, nevertheless held that the franchise could not be construed to include the right of excluding all fish from passing above the weir, the court giving as a reason for the conclusion that the value of a fishery in such a stream depends upon the shoals of fish that enter the river and pass to the ponds above to cast their spawn, adding that if none were allowed to pass, the public would lose their supply, and that the fishery would become of little or no value. Evidence was introduced tending to show that the franchise of the exclusive fishery was lost by non-user, but the court held that the said franchise, if it was not lost, would be no objection to the right of the public to have a convenient passageway for the fish to ascend the river to the ponds. They also held that the original proprietor took a fee in the mill-privilege, and that he had the right to erect the dam to raise water sufficient to operate his mill, but that the right to build a dam for the use of a mill was subject to the following limitations: (1.) That the proprietor must make compensation to the owners of the lands above the dam for damages occasioned by overflowing their lands. (2.) That he must so construct the dam that the fish will not be interrupted in their passage up the river to cast their spawn, adding that every owner of a water mill or dam holds it on the condition that a sufficient and reasonable passageway shall be allowed for the fish.

Substantially the same questions were presented to the Supreme Court of the State in the case of Vinton v. Welsh, in which the opinion of the court was delivered by Chief Justice Parker, and the decision was in the same way and to the same effect. He decided that the owners of dams across such rivers, as well as the owners of such fisheries, hold their property subject to such regulations as the legislature from time to time shall prescribe for the preservation of the fish, basing his conclusion chiefly upon the fact that the colonial and provincial governments, as well as the government of the State under the State constitution had exercised the right of prescribing such regulations from the first settlement of the country to the date of the decision in that case.

Litigations upon the subject ceased for a time, but the same questions thirty years later were again presented to the Supreme Court of the State in the case of Commonwealth v. Essex Company, in which the opinion of the court was delivered by Chief Justice Shaw, as the organ of the whole court. Special reference is made in that opinion to the prior decisions of the court upon that subject, and all the leading cases here referred to are approved and the propositions decided are reaffirmed, the court announcing the following conclusions: That from the earliest times the right of the public to the passage of fish in rivers and the private rights of riparian proprietors, incident to and dependent on the public right, have been subject to the regulation of the legislature; that the mode adopted by the legislature, whether by public or private acts, to secure and preserve such rights, has been by requiring, in the erection of dams, such sluices and fishways as would enable these migratory fish, according to their known habits and instincts, to pass from the lower to the higher level of the water occasioned by such dam, so that, although their passage might be somewhat impeded, it would not be thereby essentially obstructed. It appears in that case that the company was duly incorporated with power to construct a dam across the Merrimac River at Lawrence, subject to the condition, among other things, that they should construct suitable fishways in their dam for the passage of migratory fish; that they applied to the county commissioners, requesting them, after due notice, to prescribe the mode in which they should construct such fishways in their dam; that such notice was given and a hearing had, and that the commissioners did prescribe the mode in which the company should comply with that requirement, and that the company did construct such fishways in their said dam according to the mode and plan so prescribed; that the fishways, however, as constructed, proved to be unsuitable and insufficient to provide as convenient passageway for the fish. Circumstances occurring subsequently made it necessary for the company to ask for leave to increase their capital stock, and the legislature, in granting their application, also provided that the company should be liable for all damages occasioned to the owners of fish rights above the dam by the stopping or impeding the passage of the fish up and down the river by the said dam, and that such damages should be assessed by the county commissioners of the county in which such fish rights existed, saving to the respective parties the right to apply for a jury to make such assessment in the manner provided for the recovery of damages from laying out highways. Having accepted the amendatory act, the company availed themselves of that provision and caused the damages to the fish rights existing above the dam to be assessed, and they paid the several assessments to the owners of the same, amounting to the sum of twenty-six thousand dollars, 'as damages for hindering or impeding the passage of fish by their said dam, with the aforesaid fishways therein, as previously constructed.' Such fishways did not admit of the usual and unobstructed passage of the fish, as required by the law of the State and the seventh section of their act of incorporation. Complaints subsequently arose and the company was indicted for such neglect and the case came to trial, and the jury, under the rulings and instructions of the court, found the defendants guilty, and they excepted to the rulings and instructions of the court and the case was heard before the full court. Unquestionably the case was fully considered, and the court in the first place reaffirmed all of their previous decisions upon the subject, which hold that persons who build a dam for mill purposes on a stream frequented by migratory fish, do it under an implied obligation to keep open sufficient sluices and fishways for the passage of the fish in their accustomed seasons, and that every grant to erect such a dam is to be construed as under the same implied condition, unless such implication is excluded by an express provision to that effect. Still the court held that the legislature had the power to regulate the public right, and in view of the fact that the amended charter substituted a new proceeding for the recovery of damages by the owners of the fish rights, and that the same, as assumed by the court, had been executed, the court also held that the amended charter had in it all the elements of a contract executed by one party and binding on the other, and that it was not competent for the legislature, even under the power reserved in a prior general law, to amend, alter, or repeal any such charter to require the proprietors of the dam, without any change of circumstances, to construct the fishways, which by the terms of the amended charter they had been exempted from any obligation to construct, basing their opinion upon the ground that the right acquired under that provision had become vested by a legitimate exercise of the power granted.

Vested rights, it is conceded, cannot be destroyed or impaired under such a reserved power, but it is clear that the power may be exercised, and to almost any extent, to carry into effect the original purposes of the grant and to protect the rights of the public and of the corporators, or to promote the due administration of the affairs of the corporation.

Had it appeared in that case that the amended charter contemplated the assessment of damages for fish rights owned below the dam as well as those owned above the dam, the opinion would certainly be more satisfactory, as in that event the theory assumed by the court that all the parties damaged in their fisheries had been indemnified by the owners of the structure would be correct. Fish rights below a dam, constructed without passageways for the fish, are liable to be injured by such a structure as well as those owned above the dam, as the migratory fish, if they cannot ascend to the head waters of the stream at their accustomed seasons will soon cease to frequent the stream at all, or in greatly diminished numbers.

Suppose the rule, however, to be correct, still it is quite clear that it does not control the case before the court for the reasons given by the same court in rendering the decree brought here for re-examination by the present writ of error. Passageways for the fish had been constructed in that case under the act passed incorporating the company, but they proved to be unsuitable and insufficient, and the court in sustaining the views of the defendants, rested their decision upon the ground that the amended charter discharged them from the obligation to reconstruct such fishways, as the amended charter required them to make compensation for the injuries to the fish rights in the place of the prior obligation arising from the rules of the common law of the State and the terms of their original charter, the court holding that the government could not, without any change of circumstances, require the defendants to do the very acts which, by the terms of the amended charter, they had been exempted from doing, but the court declined to decide whether, if the fishways provided should prove to be wholly unfit and inadequate to their purpose the legislature could not by further legislation require the company to fulfil the original obligation. Sufficient appears to warrant the conclusion that no evidence was introduced in that case to show that the fish rights below the dam suffered any injury whatever, nor does it appear that the attention of the court was drawn to the fact that the river across which the dam was built runs through more than one State. Different rules perhaps may be applied in ascertaining the power of a State legislature to authorize permanent obstructions to the free passage of fish in a river flowing through two or more States, like the Connecticut or Merrimac, from the rules which should be applied in a case where the river across which the dam is constructed is wholly within the State which authorizes the structure, but it is not necessary to consider that question in this case, as it was not raised in the State court nor was it presented here by either party.

Fishways have never been constructed by the respondents in their dam, and they contend that they are not obliged to make any such provision for the passage of the fish, as their charter does not create any such obligation; but the answer which the complainants make to that suggestion is decisive, that the charter does not contain any provision exempting them from that implied obligation, which arises in every such case by the common law of that State, unless the charter contains some provision which expressly negatives that implication. Even suppose that is so, still they contend that the fourth section of the charter of their grantors should be construed as negativing any such implied condition, but the court is entirely of a different opinion, as that section makes no provision for any conpensation to the owners of the fish rights below the dam, and the record shows that such fish rights, as well as those above the dam, are injured by the obstruction to the free passage of the fish in their accustomed seasons to the head waters of the river. Authority to construct and maintain a dam without a fishway, it is conceded, is not granted in terms in the charter, and it may be added that the charter does not contain any words to warrant any such implication. On the contrary, the terms and provisions of the charter are consistent with the theory that the legislature contemplated the construction of a dam with a convenient passageway for fish, so as not to impair unnecessarily the rights of the riparian owners either above or below the dam, and that the legislature, if the company failed to fulfil that obligation, may 'compel them to do so by more specific legislation.' Damages, it is true, were to be paid to 'the owners of present fish rights existing above the dam,' but the court here, in respect to that matter, concurs with the State court that the meaning of the sentence is satisfied by regarding it as providing for a partial interruption and injury of those rights and not as contemplating their utter destruction; that the legislature which granted the charter may well have supposed that a dam across the river at that place, with the best fishway that could be constructed, would, to some extent, obstruct the free passage of the fish, and may have intended by that provision to require the owners of the dam to make compensation for such injuries.

Viewed in any reasonable light it is quite clear that the charters of the respondents do not contain any stipulation or contract exempting them from the implied condition annexed to such a grant, not qualified by such a contract, that the corporation in erecting such a dam shall construct suitable and convenient fishways for the free passage of the fish to the headwaters of the river in their accustomed seasons; and that the charter, in view of the fact that it contains no such exemption, is subject to the power reserved to the legislature by the general law, in operation when the charters were granted, that all acts of incorporation shall at all times hereafter be liable to be amended, altered, or repealed at the pleasure of the legislature. Such charters being subject to the implied condition to construct suitable fishways for the free passage of the fish, it follows that the corporations are not exempt from that burden, and that the legislature under the reserved power to amend, alter, or repeal the charter, may pass laws to enforce that duty, as such a law does not impair any contract created by the charter or infringe any right vested in the corporation. Charters subsequently granted must be understood as standing just as they would if that reservation of the power to amend, alter, or repeal the same had been incorporated into each charter. Power to legislate, founded upon such a reservation, is certainly not without limit, but it may safely be affirmed that it reserves to the legislature the authority to make any alteration or amendment in a charter granted, subject to it, that will not defeat or substantially impair the object of the grant, or any rights which have vested under it, which the legislature may deem necessary to secure either the object of the grant or any other public right not expressly granted away by the charter.

Such a charter may doubtless be granted to build a dam across a river whose whole course is within the State granting the franchise, with a provision exempting the corporation from all obligation to construct such fishway for the free passage of the fish, as the enterprise of erecting a dam to create power to operate mills is so far public in its nature that it is competent for the legislature to exercise the power of eminent domain to accomplish the purpose, if suitable provision is made to compensate the owners of the property or rights condemned under that power, but it may be more doubtful whether the legislature of a State can make a contract with such a corporation authorizing them to construct a dam across a river flowing through two or more States, which shall permanently exempt the grantees from all such obligation and destroy forever the rights of fishery in the river throughout its whole course from its source to its confluence with tide waters.

Concede, however, that the power to make such a contract exists, and that it is as boundless as the theory of the respondents assumes it to be, still the court here is of the opinion that the decree of the State court is correct and that it should be affirmed, as the charters under which the dam in this case was erected and is maintained do not contain any such exemption from the implied obligation to construct fishways for the free passage of the fish, nor any provision which prohibits the legislature from imposing that obligation under the power reserved to amend, alter, or repeal the charter.

Properly construed neither of the charters affords any support whatever to the theory of the respondents, as they do not contain any semblance of a grant to take and subvert the fish rights below the dam, nor is there anything in the provision requiring compensation to be made to the owners of the fish rights above the dam, which is not perfectly consistent with the theory that it was incorporated into the charter merely to compensate the owners of such fish rights for injuries which they would suffer from the obstruction, even if the customary fishways were constructed as required by immemorial usage and the express enactment of the legislature.

DECREE AFFIRMED.


text: Talk:Holyoke Company v. Lyman/Opinion of the Court