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The first of these privileges is that which is conferred upon the incorporators collectively as natural persons to act in an artificial and corporate capacity. The extent and limitations

of this contract are determined by the common-law rules respecting corporate powers and ultra vires acts. Without this contract there can be no corporate existence; it may be also the only contract embodied in the charter, in which event the artificial person thus created is subject in all respects to the same control as natural persons,2 to the power of the State to regulate the public health and morals, to regulate property dedicated to a public use, to its power of eminent domain," and to its power to levy and collect taxes. There is no peculiar sanctity attaching to this artificial being or to its property which does not also attach to natural persons, except so far as the State may have entered into and bound itself by some other and additional contract expressly set forth either in the original act of incorporation or in some subsequent statute; such, for example, as that no other bridges shall be built within a certain distance of those which a corporation was authorized to erect; that the property of the corporation shall be exempt from taxation; that the corporation may levy tolls upon a

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1 The creation of a corporation is the bringing into being of an artificial person having the essential attributes of a corporation — the creation of the distinct and independent franchise called a corporation which, when created, has a capacity, among other things, by its corporate name, to receive and enjoy such other franchises, privileges, and immunities, property and rights, as the legislature itself, or other persons, with its permission, may grant to it. The right to be a corporation is a distinct, independent franchise, complete within itself, having no necessary connection with other distinct franchises, which are the subjects of legislative grant, and which may or may not be given to corporations once created, as well as to natural persons, as to the legislature may seem advisable. Southern Pacific

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R. Co. v. Orton, (1887) 32 Fed. Rep. 457.

2 Long's Appeal, 87 Pa. St. 114; McCurdy's Appeal, 65 Pa. St. 290; Hare's American Constitutional Law, 600, and cases cited infra, § 28 et seq.

3 Vide infra, § 28.

4 Vide infra, §§ 30 and 31.
5 Vide infra, § 33.

6 Vide infra, § 34.

7 Long's Appeal, 87 Pa. St. 114. 8 Bridge Proprietors v. Hoboken L. & I. Co., 1 Wall. 116, construing N. J. Act of 1790; where, however, it was held that a railway bridge might be erected within the prescribed limits without impairing the obligation of the contract.

9 Home of the Friendless v. Rouse, 8 Wall. 430; Wilmington & W. R. Co. v. Reid, 13 Wall. 264; Raleigh & G. R. Co. v. Reid, 13 Wall. 269.

navigable river;' or the charter, in addition to the contract that the incorporators shall be vested with corporate capacity, may contain a further contract that exclusive privileges therein granted shall not be subject to amendment and repeal by the legislature without the consent of the corporation. It is such express grants as these that, taken together with the grant of corporate entity, constitute the contract between the State and each corporation created by it; and the utmost care is necessary to guard against reliance upon general statements respecting the sanctity of vested corporate rights, uttered as dicta, in cases involving the construction of a particular charter.

§ 23. The contract between the incorporators themselves. The second class of contracts which the State may not impair is such as have been entered into jointly and severally between the members of the corporation themselves, or, as it is sometimes expressed, the contract between the members or stockholders and the corporation, whereby each subjects his interests, with certain restrictions, to the control of the corporate management, for the accomplishment of the ends for which the company was formed. Thus, where the act of in

1 Sinking Fund Commissioners v. Green & Barren River Nav. Co., (1883) 79 Ky. 73.

2 Thus a company organized under Act Mo. Feb. 20, 1865, entitled "An act to incorporate the Missouri Petroleum and Mining Company," which expressly exempts charters of companies formed thereunder from legislative alterations, is not subject to provisions of Rev. St. Mo. 1855, , c. 34, art. 1, § 7, declaring that the charter of every corporation thereafter granted shall be subject to alteration. Granby Mining and Smelting Co. v. Richards, (1888) 95 Mo. 106. Infra, CHAPTER III. So the act passed by the Legislature of Kentucky in 1869, granting exclusive privileges to the Louisville Gas Company, "plainly expresses," within the meaning of the Act of 1856, an

intent that the charter of the company should not be subject to amendment or repeal at the will of the Legislature, without the concurrence of the city council and the company's directors. Louisville Gas Co. v. Citizens' Gas Light Co., (1886) 115 U. S. 685.

3 Clearwater v. Meredith, 1 Wall. 25, where it is said:-"The relation between the corporation and the stockholder is one of contract. The stockholder subjects his interest to the control of the proper authorities to accomplish the object of the organization, but he does not agree that the purpose shall be changed in its character at the will of the directors, or a majority of the stockholders, even. The contract cannot be changed without the consent of both contracting parties."

corporation prescribes the mode of electing the president and directors, another mode cannot be substituted, with the effect of enabling a minority of the stockholders to choose the officers, and indirectly to control the affairs of the corporation;1 and an act taking a charitable institution out of the hands of the trustees designated by the charter, and subjecting it to the control of third persons, is within the same principle.2

§ 24. The contract between the incorporators and third parties. The third class of corporate contracts which the State may not impair is such as are entered into between the members or stockholders and persons dealing with the corporation; as, for example, a statement in the charter that the capital stock shall be of a certain amount, is a contract that the amount named shall either be actually paid in or shall constitute a trust fund for the security of corporate creditors. So, also, a general statute, or provisions in charters, imposing an additional liability upon stockholders of insolvent corporations, enter into and become a part of all contracts between the corporation and its creditors; and the repeal of such a statute or the amendment of a charter in that respect is void as to existing obligations. And again, a provision in the charter of a bank that its bills and notes shall be receivable in pay

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2 Brown v. Hummel, 6 Pa. St. 86; Hare's American Constitutional Law, 600.

This point will be treated in Chapter VIII. See, also, "Retroactive Laws Affecting Individual Liability of Stockholders," 9 Cent. L. J. 143. But contracts for scholarship between one of two colleges and individuals, before the colleges were united, would not inhibit the legislature from altering, modifying, or amending the charter of the corporation by virtue of a right reserved to that effect, or with the assent of the corporation. Pennsylvania College Cases, 13 Wall. 190.

Hawthorne v. Calef, (1864) 2 Wall. 10; Conant v. Van Schaick,

(1857) 24 Barb. 87; Norris v. Wrenschall, (1871) 34 Md. 492; Provident Savings Institution v. Jackson Place &c. Co., (1873) 52 Mo. 552; St. Louis R. &c. Co. v. Harbine, 2 Mo. App. 134; Central Agricultural & Mechanical Assoc. v. Alabama Gold Life Ins. Co., (1881) 70 Ala. 120, where the court refused to consider whether the former act was modified or repealed by the subsequent enactment, the liability in point having been incurred before the passage of the later act; Woodruff v. Trapnall, 10 How. 190; Story v. Furman, (1862) 25 N. Y. 214; Rochester v. Barnes, (1858) 26 Barb. 657; Sinking Fund Cases, (1878) 99 U. S. 700. Cf. Jerman's Admr. v. Benton, 79 Mo. 148; Woodhouse v. Commonwealth Ins. Co., (1867) 54 Pa. St. 307.

ment of debts due the State, is a contract with the holders of all notes issued prior to the repeal of the provision, which is not impaired by the repeal.1

25. Of the construction of the charter contract.- Contracts embodied in corporate charters are not construed according to the principles which govern ordinary contracts.2 Although what is fairly implied therein is as much granted as what is expressed, the charter is the measure of the powers of the corporation, and the enumeration of those powers implies the exclusion of all others. When the words of a charter of incorporation are plain and interpret themselves, extrinsic facts will not be considered as bearing on their meaning.'

1 Woodruff v. Trapnall, 10 How. 190; Paup v. Drew, 10 How. 218. But where the State sold lands which were held in trust for the benefit of a cemetery, and the terms of the sale were that the debtor should pay in specie or its equivalent, such debtor was not at liberty to tender the notes of the bank in payment; the right to pay in such notes was defeated by the fact that the fund belonged to the State only as a trustee, as well as by the terms of the sale. Paup v. Drew, 10 How. 218; Trigg v. Drew, 10 How. 224.

2 Johnson v. Philadelphia, 60 Pa. St. 440.

3 Thomas v. West Jersey R. Co., 101 U. S. 71; Nicholson's Succession, (1886) 37 La. Ann. 346. "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 corporation." Sedgwick on Statute and Constitutional Law, 339; Lees v. Canal Co., 11 East, 652; Holyoke Co. v. Lyman, 15 Wall. 511. Where the charter of a turnpike company authorized the company to levy a tax upon adjoining property owners to aid in constructing the

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road, it was decided that the company had no right, in the absence of an express charter provision authorizing them to do so, to borrow money in order to complete the road at an earlier date, and charge the interest paid on the loan to the tax-payer, and fnclude it in the tax levied. Lewis & Mason Turnpike Road Co. v. Thomas, (Ky. 1887) 3 S. W. Rep. 907. The legislative grant of the franchise of a ferry gives the right to maintain a ferry and take tolls; not the right to make a landing upon the property of a private person, nor upon a highway. Pittsburgh & L. E. R. Co. v. Jones, 111 Pa. St. 204.

4 Ruggles v. Illinois, 108 U. S. 536. The charter of the Charles River Bridge Company is a written instrument which must speak for itself and be interpreted by its own terms. The fact that any rights or privileges were formerly granted to Harvard College, with reference to a ferry which has been superseded by the bridge, on payment of a large sum by the company to the college, cannot be used to extend the privileges of the bridge company beyond what the words of the charter naturally and legally import. Charles River

Any ambiguity or doubt arising out of the terms used by the legislature must be resolved in favor of the public. If the meaning of the words be doubtful, they are taken most strongly against the grantee and in favor of the State. The words are not to be extended by implication beyond their natural and obvious meaning, and any claim by the corporation which depends upon a strained or unusual meaning of the words of grant, must fail. Accordingly, where a right or privilege is claimed under the charter of a corporation, nothing is to be taken as conceded to it but what is given in unmistakable terms, or by an implication equally clear. Thus a provision in a railroad charter that the directors of the corporation shall have power to make all needful rules, regulations, and by-laws touching "the rates of toll, and the manner of collecting the same," does not constitute an irrepealable contract with the corporation, exempting it from all future legislative control in the matter of regulating and collecting tolls. Upon the same principle it is decided that the enumeration of particular burdens or restrictions in a charter, as those to which the company is or may be subjected, will not Bridge v. Warren Bridge, 11 Pet. Black, 380; Charles River Bridge v. 420. Warren Bridge, 11 Pet. 544.

Minturn v. Larue, 23 How. 435; St. Clair County Turnpike Co. v. Illinois, 96 U. S. 63. "Charters of private corporations duly accepted, it must be admitted, are executed contracts, but the different provisions, unless they are clear, unambiguous, and free from 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 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." Rice v. Minnesota & N. R. Co., 1

2 Northwestern Fertilizing Co. v. Hyde Park, 97 U. S. 659; Minturn v. Larue, 23 How. 435; Rice v. Minnesota & N. R. Co., 1 Black, 358; Chenango Bridge Co. v. Binghamton Bridge Co. ("The Binghamton Bridge "), 3 Wall. 51; Minot v. Philadelphia, W. & B. R. Co. ("The Delaware R. R. Tax"), 18 Wall. 206. The principle that grants to corporations are not to be extended by construction, but are to be construed strictly against the grantees, has been steadily applied where corporations have invoked the protection of the rule in the Dartmouth College Case. "The Dartmouth College Case and Private Corporations," by William P. Wells, (1886) 9 Am. Bar Assoc. Rep. 242.

3 Chicago, M. & St. P. R'y Co. v. State, (1890) 10 Sup. Ct. Rep. 462.

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