police power, can not fairly be applied, then the power is not exercised, and the enactment is merely an attempt to alter the charter." It is often difficult to determine how far, and in what cases, an interference is unreasonable. The question is primarily addressed to the legislative discretion, and the courts have been wisely disposed to leave much to legislative judgment; but nevertheless, it is ultimately judicial. 17 Until it is judicially established that the legislative provision is an unreasonable and unnecessary interference, the statute has in its favor every presumption of constitutionality, and its binding force is not affected by showing that the action of the corporation is reasonable, or more reasonable than that of the legislature.

We will now discuss further the second proposition, viz., that the legislature may grant rights or powers to a corporation, even in the form of a contract, which are not protected by the Federal Constitution. In Chicago R. Co. v. Iowa, 18 and in several other cases, it has been observed, though obiter dictum in each case, that if the company had required the legislature to fix permanently in the charter the amount of compensation, the rate so established might have operated as a contract which would preclude further interference. It is obvious that there are certain powers possessed by the State which are inalienable, and can not be renounced by the legislature in favor of any corporation or person, even though under the form of a contract. These include those essential powers possessed by government, and are important to the well-being of organized society.19 A corporation can not, by grant, rise above, and be entirely exempt from, the control of the sovereign power to which it owes its existence. If it were otherwise, the legislature could invest a person or corporation with an irresponsible character, exempt from all control. It will need no argument to show that the State can no more renounce, in favor of a corporation, its control over one branch or subject of the police power, than over all; and no line of distinction in law can be drawn, permitting the renunciation of one police power, and not another. The same principle which calls for and warrants the

17 Thorp v. R. R., 27 Vt. 140.

18 94 U. S. 161.

19 Thorp v. R. R., 27 Vt. 140.

22

exercise of one, applies to all. This power in the State, says Judge Cooley,20 in a comprehensive sense, embraces its system of internal regulation, by which it is sought, not only to preserve the public order and prevent offenses against the State, but also to establish, for the intercourse of citizen with citizen, those rules of good manners and good neighborhood, which are calculated to prevent conflict of rights, and to insure to each the uninterrupted enjoyment of his own, so far as is reasonably consistent with the like enjoyment of the rights of others." Attempts to define this power with greater certainty have been fruitless; it is always easier to determine whether a given case comes within the scope of the power, than to define with accuracy its limits.21 Rights of property, like all other social and conventional rights, are subject to this power.2 In the License Cases,23 it was held that the State may, under this power, prohibit the sale of intoxicating liquors, even though it thereby prevents the fulfilment of contracts made prior to the passage of the law. It has also been held competent to provide process for condemnation and destruction of the liquor itself. 24 In the Dartmouth College Case,25 it was argued that the word "contract," in its broadest sense, might comprehend the yielding up or renunciation of the police power. But Chief Justice Marshall said: "Taken in this broad, unlimited sense, the clause would be an unprofitable and vexatious interference with the internal concerns of a State; would unnecessarily and unwisely embarrass its legislation, and render immutable those civil institutions which are established for the purposes of internal government, and which, to subserve those purposes, ought to vary with varying circumstances. * * That the framers of the Constitution did not intend to restrain the States in the regulations of their civil institutions, adopted for internal government, and the instrument they have given us is not to be so construed, may be admitted." The Supreme Court of the United States has therefore held, 26 that though a right is secured by char

*

ter-contract, it is not protected by the Federal Constitution in the presence of a police regulation of the State. The charter, in this respect, confers no greater or more sacred right than any citizen had; nor does it exempt the corporation from ary control to which the citizen would be subject, if the interests of the community should require it. In this case, the franchise granted to the corporation in 1828, was for "manufacturing malt liquors in all their varieties in the City of Boston.” Under the "Prohibitory Liquor Laws" of 1869, certain liquors of the company were seized, and it was contended that the act of 1869 was in derogation of the charter rights. But, say the court, per Mr. Justice Bradley: "The legislature can not, by any contract, divest itself of the power to provide for these objects-[of police control]. They belong emphatically to that class of objects which demand the application of the maxim,, salus populi suprema lex; and they are to be attained and provided for by such appropriate means as the legislative discretion may devise. That discretion can no more be bargained away than the power itself." The same doctrine was announced in other cases." "All agree," says Chief Justice Waite, "that the legislature can not bargain away the police power of the State." It has been held that the power to regulate freight, etc., on railways, and compensation in other like public employments, come within the police power of the State.28 Indeed, we can not see how the decisions in the "Granger Cases," and especially Winona R. R. v. Blake,29 and Chicago R. R. v. Ackley, 30 as already shown, can be justified except under this theory. The ground upon which these decisions rested, was that when private property is affected with a public interest, it ceases to be juris privati only; "that it becomes clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large." "In their exercise (police powers), it has been customary in England, from time immemorial, and in this

2 66

27 Stone v. Mississippi, 101 U. S. 817; Boyd v. Alabama, 94 U. S. 645 (Lottery franchises); Commonwealth v. Bird, 12 Mass. 443; Metropolitan Board v. Barrie, 34 N. Y. 657.

28 Thorp v. R. R., 27 Vt. 149; Munn v. Illinois, 94 U. S. 123; People v. Railway, 70 N. Y. 599.

29 94 U. S. 180.

30 94 U. S. 179.

country from its first colonization, to regulate ferries, common carrier, hackman, bakers, millers, wharfingers, inn-keepers, etc., and in so doing to fix a maximum of charge to be made for services rendered, accommodations furnished and articles sold." Such regulations do not come within the constitutional prohibition against interference with private property.31

According to the Supreme Courtof Michigan,32 corporations are divided into three classes: 1. Political or municipal corporations; for purposes of government, such as counties, cities, etc. 2. Those which are created for public benefit and to which the government delegates a portion of its sovereign power, to be exercised for public utility, though effecting incidentally private advantage; such as turnpikes, bridges, canals and railroads. 3. Those which are strictly private, when the private interests of the corporators the primary object of the association; such as banking, insurance, manufacturing, trading companies. A corporation, say the court, which comes under the second division "is essentially the trustee for the government for the promotion of the objects desired—a mere agent to which authority is delegated to work out the public interest through the means provided for that purpose. To

secure these, the right of pre-eminent sovereignty is exercised by the condemnation of land to their use-a right which can never be exercised for private purposes." Other courts have announced the same doctrine.33 If we turn to the history of railroads, we find that the early legislators regarded them as improved turnpikes. "Thus in England, the earlier charters granted, followed as closely as possible, the provisions which had been, previously applied to canal companies. In their capacity as owners of the road, the new companies were not intended to have any monopoly or preferential use of the means of communication on their own lines of railway; but, on the contrary, provision was uniform¡y made in the charters to enable all persons

31 Munn v. Illinois, 94 U. S. 125; Governor, etc. v. Meredith, 4 T. R. 790; Dillon Munic. Corp., §§ 93 & 291, 313-340.

32 Swan v. Williams, 2 Mich. 434.

33 Railway v. People, 10 Am. Law Reg. (N. S.) 589; Marsh v. R. Co., 12 Am. Law Reg. (N. S.) 390.

In

on payment of a certain toll and under certain limitations to enjoy the use of the road; and it was only when the anticipated improvement had developed into a general revolution, that the railway companies, in order to make their undertakings remunerative, were compelled to embark in the business of common carrier, and to conduct the whole operations of their lines of road themselves."34 While there is no obligation to accept the franchise, and when accepted, the courts have regarded the language as merely permissive, to construct the road, yet when the corporation has once constructed it, obligations spring up in favor of the public, and it can not be abandoned in whole or in part by the corporation. Recognizing this duty devolving upon the corporation, the King's Bench in England compelled, by mandamus, the company to restore the rails and to keep them in proper condition for travel.35 many instances they have been rendered exempt from a large share of the burdens of taxation. The public have a large and substantial interest in the management of railroads; and the reasons why they should be subjected to the full scope of the State's police powers, in view of the great public necessity they have become, and their ability to do injury, are even more pressing than those presented in other public employments, over which the power has been exercised from the earliest times. In view, therefore, of the purpose of the grant, as well as the public nature of the business of railway corporations we think that there can be no doubt that the legislature has the power to provide, as a police regulation, a reasonable maximum rate of charges for freight, fare, or toll, without regard to any provision in the charter, or in the statute law in force at the time it was granted, and that that power is a continuing one, and may be exercised toties quoties, and when exercised will be binding on the corporation. That the legislature can not, by granting the right to ask and receive a specific sum, tie the hands of its successors, for the reason, as we have said, that in the matter of regulating charges it is a police power and therefore can not be alienated. We think

34 Railroad Legislation," 2 Am. L. Rev., p. 25. 85 King v. Railway, 2 B. & Ald. 646. See also People v. Thompson, 21 Wend. 235.

that this is the conclusion, in effect, reached by the court in Winona v. Blake,36 already alluded to. The corporation was secured by its charter the right to demand reasonable compensation, by the grant of all the rights incident to common carriers, and if the legislature could determine conclusively what a reasonable compensation is, it has also the power to alter a sum specifically stated in the charter; there can be no difference in principle, and the practical results are the same. While in Chicago v. Iowa 37 the company had pledged its income as security for the payment of obligations incurred upon the faith of the charter. But the court held that nevertheless the legislature might limit the amount of charges. Now even though the charter contained a reservation of power in the legislature to alter, amend, or repeal the charter, the contract rights of the State could not have furnished a warrant for this; for, in the language of a writer in the American Law Review:38 "The legislature can make no alteration or amendment to any charter, under its reserved power therefor, which shall impair the obligation of any contract legally entered into by the corporation." The truth is the principle was laid down without reference to any "reserved" power.

In conclusion we will lay down the following propositions, which we think are supported by the highest authorities, State and Federal. 1. That the legislature has the power to prescribe reasonable maximum charges of railway companies, even though the charter, statute law and constitution contains no reservation of power in the legislature to alter, amend, or repeal the charter, and even though the charter expressly provides that the company may demand reasonable compensation. 2. That a charter-contract, which renounces any portion of the police power of the State, may, to that extent, be resumed at the will of the legislature; and is not protected in that respect by the Federal Constitution. 3. That the right to prescribe a reasonable maximum rate of charges belongs to the police power, and if the maximum is fixed by the charter, it falls within the second division, and may be re

36 94 U. S. 180.

37 94 U. S. 161.

28 Legislative Control over Railway Charters, 1 Am. Law Rev. 469.

sumed by the legislature without coming within the obligatory clause of the Federal Constitution.

It is not within the scope of this article to discuss whether Congress has or has not the power to legislate on the subject of freight or fare, by virtue of the clause in the Constitution conferring power to regulate commerce. Judge Curtis seems to deny it. We will, however, quote the language of Mr. Justice Miller in Gray v. Clinton Bridge Co.,39 who, adopting with approbation the rule laid down in Cooley v. Board of Wardens, 40 that the power to regulate commerce is a power to regulate the instruments of commerce, proceeds: "For myself, I must say, that I have no doubt of the right of Congress to prescribe all needful and proper regulations for the conduct of this immense traffic over any railroad which has voluntarily become a part of one of these lines of inter-State communication; or to authorize the creation of such roads when the purposes of inter-State transportation of persons or property justify or require it." The power to regulate does not extend over water communication less than over land. Judge Redfield," who may be regarded as an authority on all subjects relating to railroads, has declared in favor of the legality and wisdom of such a power in most emphatie terms, and advocates it as a means by which questions, involving the inviolability of charter-contracts, can be avoided; for, said he, they are contracts of the States and not of Congress, and are not protected from the supervision and control of Congress, even though binding on States granting them. GIDEON D. BANTZ.

those who take certificates of stock as security. In most of the States the transfer of stock is regulated by statute, or by the charter or by laws of the company, which in most cases provide that a transfer of stock can only be made on the books of the corporation. The statutes generally declare that stocks in incorporated companies shall be considered personal property, and may be levied on by attachment or execution, and sold as goods and chattels, and that levy may be made with or without the officer having possession of the certificates or other evidence of the ownership of the stock. It is also made the duty of the officer who is the custodian of the books of the corporation, to give to the officer making the levy a list signed by him in his official capacity, containing a statement of the number of shares or amount of interest held in the company by the defendant in execution. In the transfer of stock as between the immediate parties, it is universally held that all that is necessary to pass the title, is to make a formal or blank assignment of the certificates, and deliver them to the assignee. Fisher v. Essex Bank, 1 American Railway Cases, 127.

The main inquiry therefore is, can the pledgee of certificates of stock safely hold the same as against the creditors of the pledgor, without having the transfer actually entered upon the books of the company? Upon this question there is considerable conflict of authority. The courts of New York, New Jersey, Louisiana and South Carolina, hold that a transfer by the delivery of the certificates is good against an attaching creditor of the transferrer, when the attachment is made after such transfer, but prior to any transfer having been made and entered upon the books of the company. Broadway Bank v. McElrath, 13 N. J. Eq. 24; Hunterdon County Bank v. Nassau Rank, 17 N. J. Eq. 496; MeNeil v. Tenth National Bank, 46 N. Y. 325; N. Y. & N. H. R R. Co. v. Schuyler, 34 N. Y. 30; Commercial. Bank of Buffalo v. Kortright, 22 Wend. 348; Bluin v. Hart, 30 La. Ann. 714; State Bank of South Carolina v. Cox, 11 Rich, (S. C.) Eq. 344. In Broadway Bank v. McElrath, supra, the court, in support of this view, says: "To require a transfer of the stock to the lender as security for the loan against the right of attaching or execution creditors, will at once destroy the value of the security, or compel the borrower to divest himself of his character as corporator, to forfeit his control of the business of the corporation, of his right to dividends, and of all his other rights as a stockholder in the corporation. Why should the owner of stocks be deprived of the privilege of mortgaging or pledging his stock for the security of a loan, without stripping himself of all his rights of ownership, more than the owner of any other property?"

The courts of Massachusetts, Connecticut, Pennsylvania, Vermont, New Hampshire, Maine, Illinois, California and Tennessee are of the contrary opinion, and hold that the only way in which to transfer stock, so that it will not be liable to be

levied upon by attaching or execution creditors of the transferrer, is to leave it transferred on the books of the company in the manner designated by its charter or by-laws. Fisher v. Essex Bank, 5 Gray, 373; I American Railway Cases, 127; Williams v. Mechanics' Bank, etc., 5 Blatchf. 59; Brown v. Adams, 5 Bissell, 181; People's Bank v. Gridley, Supreme Court of Illinois, 9 Cent. L. J. 249; Bank of Commerce's Appeal, 73 Pa. St. 59; Naglee v. Pacific Wharf Co., 20 Cal. 529; Shipman v. Ætna Ins. Co. 29 Conn. 245; State Ins. Co. v. Sax, 2 Tenn. Ch. 507; Sabin v. Bank of Woodstock, 21 Vt. 553; Pinkerton v. Manchester R. Co., 42 N. H. 424; Skowhegan Bank v. Cutter, 49 Maine, 315.

The Supreme Court of Illinois, in People's Bank v. Gridley, 9 Cent. L. J. 249, held, that where the by-laws of a corporation make it necessary that its stock be transferred on the books of the company, a transfer by assignment and delivery only will not be effective even as against a subsequent judgment creditor of the transferrer. The statutes of Illinois, R. S. 1874, chapter 77, which are similar to the statutes of most of the other States, regulate the manner of levying upon stock in incorporated companies. Section 53 provides that the sheriff shall leave an attested copy of the execution with the clerk, treasurer or cashier of the company, and the property shall be considered as seized on execution when the copy is so left, and shall be sold in like manner as goods and chattels. The court, in People's Bank v. Gridley, supra, held, that unless the books of the company show who are the owners of its shares, the provisions of the statute would be utterly unavailing and use.ess. Under this rule, is ascertainable at once, on reference to the books of a corporation, who are the owners of its shares; and it also prevents fraudulent claims to stock from being preferred, based on assignment of certificates made in fraud of creditors. It would seem that the cases lastcited are the best considered, and founded on sounder principles of policy. They are in perfect consonance with the English rule and the highest authorities in this country.

2. The statute of Iowa, providing that no action for the recovery of real property sold for non-payment of taxes shall lie, unless brought within five years after the treasurer's deed has been recorded, applies as well to suits brought for possession by the purchaser at such tax sale, as those brought by the original owner. 3. This statute is not unconstitutional on the ground that it deprives the purchaser of his property without due process of law, or impairs the obligation of contracts.

4. The statute begins to run, from the period fixed, against the tax purchaser, although the land be not then adversely holden, or actually in possession at all.

In error to the Supreme Court of the State of Iowa.

Mr. Justice WOODS delivered the opinion of the

court:

This was an action for the recovery of real property, brought by the plaintiff in error August 28, 1874, in the Circuit Court of Mills County, in the State of Iowa. He relied on a tax title based on the deed of the county treasurer to one Meads, dated January 6, 1868, and recorded on the 28th of the same month; a deed from Meads to one Callanan, dated February 1, and recorded March 12, 1873 and a deed from Callanan to himself, dated July 25, and recorded August 3, 1874. The defendant claimed under a bond for a deed, given by those who held the patent to the land. This bond was dated February 12, 1872. The law of Iowa prescribes how the deed of the treasurer or tax-collector for lands sold for taxes shall be executed, and its effect as follows: The deed shall be signed by the treasurer in his official capacity, and acknowledged by him before some officer authorized to take acknowledgments of deeds, and when substantially thus executed and recorded in the proper record of titles for real estate, shall vest in the purchaser all the right, title, interest and estate of the former owner in and to the land conveyed, and all the right, title, interest and claim of the State and county thereto, and shall be presumptive evidence in all the courts of this State, in all controversies and suits in relation to the rights of the purchaser, his heirs and assigns, to the land thereby conveyed, of the following facts: that the real property conveyed was subject to taxation for the years stated in the deed, etc., and shall be conclusive evidence of the following facts: that all things whatever, required by law to make a good and valid sale, and to vest the title in the purchaser, were done," etc. Iowa Rev., 784; Code, 807.

The following statute of limitation was in force in Iowa when the tax deed, under which the plaintiff in error claimed, bore date, and when the suit was brought: "No action for the recovery of real property sold for the non-payment of taxes shall lie, unless the same be brought within five years after the treasurer's deed is executed and recorded as above provided (Rev., 784; Code. 807), provided, that where the owner of such real estate sold as aforesaid, shall, at the time of such sale, be a minor, or insane, or convict in