the law as it had before existed, and by the words public service" they meant some substantial benefit arising from special agreement, and not a mere abstract public accommodation or convenience, and that such intention should control its construction.

§ 1042. Grant of exclusive right to control rates never implied. A grant to a corporation in general terms of authority to fix rates is not a renunciation of the right of legislative control so as to secure reasonable rates. Such a grant evinces merely a purpose to confer power to exact compensation which shall be just and reasonable. It is only where the purpose to place the unrestricted right in the corporation to determine rates of compensation is clearly manifested that the power of subsequent legislative interference can be denied.1

§ 1043. Changes of charter not binding upon members.No radical change in the charter by the legislature or in the general law affecting the particular corporation without a member's consent is binding upon him. It is obvious that any amendment or re-organization which creates a different corporation from that with which the member has identified himself and by whose constating instruments he became bound is not by any stretch of construction within the contemplation or terms of his contract.

Misconception of the effect of legislative enactments on the status of corporations often leads to erroneous statements concerning the resulting relations of members in the corporation in whose charter the change is sought to be made to it, and a new corporation constructed from it. To say, as do the courts in some of

1 Chicago M. & St. P. Ry. Co. v. Minnesota, 10 Sup. Ct. Rep. 462.

the cases, that such laws operate to release members from their contracts is certainly overstating their effect, to say the least.

The destruction of a contract of membership by releasing the members is clearly within the constitutional prohibition against the impairment of contracts. And yet some excellent authorities have blindly adopted or misquoted the language of the courts by naming such legislation as one of the means by which contracts of membership in corporations are released.

It is true that since the decision of the Dartmouth College Case,' there have been made by legislatures and courts numerous and important innovations of the principle therein declared, but in no case has the right to nullify and destroy contracts been claimed or conceded except as a police regulation, and as between the state and corporations themselves.

Under the frequent and almost universal reservation of the right of control contained in state constitutions and general and special statutes under which corporations are created the most ordinary rights and powers of corporations are frequently curtailed or withdrawn altogether. But such statutes, where upheld by the courts, have generally been prospective as regards the contracts among members, and between members and outsiders with respect to the corporation.

And when an act of the legislature ostensibly changes an existing corporation but virtually creates a new one, the members of the former are in nowise discharged from their obligation to it, for the legislature lacked the power to effect that object.

And when it is said in such case that the member is released from his contract of membership by reason of the change in the corporate entity to which and to

1 4 Wheat. 518.

whose other owners it bound him, the answer is that he never was bound to it or to them in that altered capacity.

It is not denied that the reserved right to regulate corporations is often exercised in such a way as to impair the contract of membership indirectly. A general law of this nature often has the effect of depreciating and of sometimes destroying the value of the shares ; and in one instance,' a legislative act was sustained as constitutional which put an end to the existence of an earlier corporation and granted to another corporation the right to operate a railroad over the same route, leaving the first to dispose of its existing property and contracts at great loss.

The ground upon which such legislation is usually upheld is that it only goes to the extent of impairing or taking away the remedy, as is often done in laws changing the rules of evidence, and the methods of judicial proceedings, the frequent effect of which is to render existing contracts of no value.2

§ 1044. General laws contained in charters subject to repeal.—It is unimportant, as respects the power of the state to enact general legislation and alter or repeal the laws that an existing law governing the relations of a company to the community is contained in its charter. Such law forms no part of the contract between it and the state, or between the members with each other. Thus the charter of a railroad company contained a clause providing for subscriptions for its stock by any county through which the road might pass, and an issue of its bonds by such company in payment of such subscriptions. It was held that such provision

1 Greenwood v. The Marginal, etc., R. R. Co., 105 U. S. 13. 2 Infra, § 1946.

might be repealed, it being a municipal regulation merely.1

§ 1045. Construction of authority to consolidate mortgages, etc.-Whether a charter containing an enabling act authorizing the corporation to transfer or mortgage its franchises is revocable before being executed is a question devolving upon the court a task of construction. If it appears that the intention of the legislature was to confer upon the grantees of the charter a power of appointing other persons to enjoy similar franchises to those conferred upon themselves without a reservation of power or revocation expressed or clearly implied, it would seem that an act attempting to revoke it would be an impairment of the contract and hence invalid. A right to mortgage its other property has been held to be irrevocable, and as corporate franchises are in one sense a species of property the same principle should govern. But the right given in a charter to the grantees of forming a new corporation is in effect no more than a mere offer by the state of an additional franchise, and revocable at any time before being accepted and acted upon.2

§ 1046. Laws regulating legal procedure and altering remedies.—It is clear that laws providing new remedies for existing rights and prescribing and altering the rules of procedure in the administration of justice are not amenable to the constitutional objection that they impair the obligation of contracts. Such laws are none the less valid because applicable to corporations

1 Aspinwall v. County of Davidson, 22 How. 377; Covington, etc., R. R. Co. v. Kenton County Cort., 12 B. Mon. 144; Town of Concord v. Portsmouth Savings Bank, 92 U. S. 625; Compare Sala v. City of New Orleans, 2 Woods,

2 See Memphis, etc., Railroad Co. v. Commissioners, 112 U. S. 609.

already in existence.1 It has been held that a state may impose penalties for the non-performance of duties which a corporation owes to the public. So the state may take away the equitable remedies by injunction against the collection of taxes.3 The case is not altered if the remedial law happens to be contained in a company's charter.+

§ 1047. Protection from recklessness and dishonesty.— Laws providing safeguards to the public against losses resulting from the improvidence, recklessness or dis

1 Crawford v. Branch Bank, 7 How. 297; Railroad Company v. Hecht, 95 U. S. 170; Commonwealth v. Cochitate Bank, 3 Allen, 42; New Albany, etc., R. R. Co. v. McNamara, 11 Ind. 543; State v. N. O. C. & L. Co. (La.), 7 So. 606; Davies, etc., L. Co. v. Gottschalk, 81 Cal. 641; Gowen v. Penobscot R. R. Co., 44 Me. 140; Penn. R. Co. v. Bowers, 124 Pa. St. 183; 16 A. 836; Wallace v. Western N. C. R. Co., 104 N. C. 442.

An act which provided that, when work in the construction of a railway has ceased and has not in good faith been resumed for a period of eight years, the land on which the railway is being built shall revert to the owner of the tract from which it was taken, was held not to operate retrospectively and hence to be unconstitutional though construed to apply to roads abandoned before its enactment, because it did not create the suspension of work but simply prescribed its effect. Skillman v. C. M. & St. P. R. Co., 78 Ia. 404; 43 N. W. 275. See also, Baeder v. Jennings, 40 F. 199. An act providing that every railroad company shall be liable to its employes for all damages occasioned by the negligence of its agents or by any mismanagement of its engineers or other employes is reme dial and constitutional. Mo. Pac. R. Co. v. Mackey, 127 U. S. 205; M. & St. L. R. Co. v. Herrick, Id. 210. An act including contributory negligence as a defence to an action for damages occasioned to a person or animal by want of a fence to a railroad right of way is a valid exercise of the police power. Quackenbush v. Wis. & M. R. Co., 71 Wis. 472; 37 N. W. 834.

An act providing that when any live stock shall be killed by the engines or cars on any of the railroads mentioned and such killing is proved, it shall be prima facie evidence of negligence in any indictment therefor, was held to subvert the presumption of innocence and to deprive the defendant of the equal protection of the laws. State v. Divine, 98 N. C. 778; 4 S. E. 477.

2 Mobile, etc., Ry. Co. v. Steiner, 61 Ala. 559.

3 L. S. S. C. R. & I. Co. v. School Dist. (Mich.), 44 N. W. 616.

Railroad Co. v. Hecht, 95 U. S. 170; Chattaroi Ry. Co. v. Kinner, 81 Ky. 221; Howard v. Kentucky, etc., Ins. Co., 13 B. Monr. 282; affirming Cairo, etc., R. R. Co. v. Hecht, 29 Ark. 661. See also, Gowen v. Penobscot R. R. Co. 44 Me. 140; Ex parte Northeastern, etc., R. R. Co., 37 Ala. 679; Bank of Columbia v. Okely, 4 Wheat. 235; Mississippi Ry. Co. v. McDonald, 12 Heisk. (Tenn.), 54; Baltimore, etc., R. R. Co. v. Nesbit, 10 How. 395.