power to repeal, alter or amend, the incorporators in the act of accepting it agree to the condition thus expressed upon which it is granted and the reservation thus becomes one of its terms.

In a strict legal sense it may well be doubted whether there exists any contractual relation between the state and the corporation under such circumstances. A grant of authority from A to B to enjoy certain privileges and exercise certain authority of benefit to one or both of them, but revocable at the pleasure of A, does not constitute a contract between them other than the contract that there shall not exist the usual contract between the grantor and the grantee of a power coupled with an interest.

The only contract between the state and the corporators under such charter or general law or constitutional provision is that there shall not be any contract upon the impairment of which the federal constitution can operate.

If a contract is created by the charter granted in this way, then the constitutional provision operates to render it impervious to state legislation. If the state cannot suspend it or nullify it as to contracts in general it cannot as to its own contracts.'

1 See Close v. Glenwood Cemetery, 107 U. S. 466, 476. See also Holyoke Co. v. Lyman, 15 Wall. 500, 522; Zabriskie v. Hackensack, etc., R. R. Co., 18 N. J. Eq. 178; State v. Comr. of Railroad Taxation, 37 N. J. Law, 228; Sprigg v. Western Tel. Co., 46 Md. 77; West Wis. R. Co. v. Supervisors, 35 Wis. 257; Atty.-Gen. v. Railroad Companies, 35 Wis. 569. The Chicago & Grand Trunk Railway Company cannot complain that the act violates the contract made between it and the state when it became incorporated under the general railway laws, since it was so incorporated after the adoption of the constitutional amendment, which was consequently a part of the general law at that time. Wellman v. Chicago & G. T. Ry. Co. (Mich.), 47 N. W. 489.

66

2 In Commonwealth v. The Proprietors of New Bedford Bridge, 2 Gray, 350, the supreme court of Massachusetts said: 'By becoming a party to a contract with its citizens the government divests itself of its sovereignty in respect to the terms and conditions of the contract and its construction and interpretation, and stands in the same position as a private individual. If it were otherwise, the

§ 1058. When consolidation effects a repeal.—Where a charter was granted to a railroad company exempting it from interference by the state in the matter of fixing rates, and it consolidated with another company after an act had been passed fixing rates on all railroads. within the state, it was held the new company formed by the consolidation could not claim the benefit of the exemption as to the portion of the line owned formerly by the company enjoying the benefit of the exemption. If the consolidation has taken place under a general law authorizing consolidations, the act and the consolidation under it taken together operate as a repeal of the original charter, and the acceptance by the company of a new one in place of the old one, the original corporation thereby becoming dissolved.1

§ 1059. The extent of the power of alteration.-The provision reserving power "to alter, amend and modify" as regards the corporation itself and the management of its affairs would be meaningless if a limit could be constructively placed upon it. The reservation of this

rights of parties contracting with the government would be held at the caprice of the sovereign, and exposed to all the risks arising from the corrupt or illjudged use of misguided power. The interpretation and construction of contracts when drawn in question belong exclusively to the judicial department of the government. The legislature has no more power to construe their own contracts with their citizens than those which individuals make with each other. They can do neither without exercising judicial powers which would be contrary to the elementary principles of our government, as set forth in the Declaration of Rights." A charter having been granted to a street railway company conferring upon it valuable rights and franchises it was held the state could not afterwards make their exercise conditional upon the consent of the authorities of the city upon whose streets the tracks were to be laid and cars run. Appeal of Williamsport Pass. Ry. Co., 120 Pa. St. 1; 13 A. 496. Compare People v. Newton, 1 N. Y. S. 197. An amendment to the charter of a railroad company changing its name and giving it new powers held to create a new corporation. Snook v. Ga. Imp. Co., 83 Ga. 61; 9 S. E. 1104. See also In re Kings County El. R. R. Co., 112 N. Y. 47; 19 N. E. 654.

1 Shields v. Ohio, 95 U. S. 319; Clearwater v. Meredith, 1 Wall. 25; McMahan v. Morrison, 16 Ind. 172; State v. Sherman, 22 Ohio St. 411,

power places the state in a radically different attitude from that which it would otherwise hold. In saying that no material change can be made in the charter without the consent of the stockholders, there is nothing contradictory to the proposition that the state may alter it without limit. The legal effect of a substantial alteration is to set aside the authority previously conferred upon the corporators and make a new offer which they may either accept or reject. accept or reject. The state The state may make an immaterial change without their consent and without any reservation; it may with their consent make fundamental and sweeping changes with or without a reservation. To say that the corporators are bound to accept alterations is saying that the state may compel them to make new contracts among themselves. "The power of the legislature has its limits. It can repeal or suspend the charter; it can alter or modify it; it can take away the charter; but it cannot impose a new one and oblige the stockholders to accept it.”1

1 Zabriskie v. Hackensack, etc., R. R. Co., 18 N. J. Eq. 192. The state of New York established a general banking law containing a provision that members of an association organized under it should not be individually liable for its debts unless by their own agreement, but reserved to the state the right to repeal or change the law.

Afterwards an amendment to the state constitution and an act of the legisla ture declared that the shareholders of all banks which should continue to issue notes after a certain time must be individually responsible. It was held that the articles of association between the stockholders of a bank organized under the general banking law, before the amendment of the constitution were liable for the debts of the association in their individual capacity; and that the articles of association made by the stockholders at the time of organization were not a contract with the state. Sherman v. Smith, 1 Black. (U. S.) 587.

Under a general reservation of power to amend, repeal, etc., the legislature may vary the measure and thus enlarge the proportion of the profits which a mutual insurance company is required by the terms of its charter to pay to a charitable institution. Mass., etc., Hospital v. State Assurance Company, 4 Gray, 227. See also, Holyoke Co. v. Lyman, 15 Wall. 500; Tomlinson v. Branch, Id. 460; Miller v. State, Ib. 478; Suydam v. Moore, 8 Barb. 358; Griffin v. Ky. Ins. Co., 3 Bush. 392; State v. Pearson, 32 N. J. 134.

§ 1060. Effect of a reservation of power to "alter.”— Acts making an entirely new charter under a reserved power "to alter" have been held valid.1 In many of the cases, however, it has been held that within certain limits alterations could be made without the consent of the stockholders, and yet be binding upon them.2 To give effect to this view, which may be said to be the settled view upon the authorities, it becomes important in each case to consider the class to which the corporation belongs, whether semi-public or strictly private, and the objects for the accomplishment of which it was formed.

1 Sprigg v. Western Tel. Co., 46 Md. 78. And see County of Callaway v. Foster, 93 U. S. 571, 572.

2 In Close v. Glenwood Cemetery, 105 U. S. 400, Justice GRAY, delivering the opinion, said: "A power reserved to the legislature to alter, amend or repeal a charter, authorizes it to make any alterations or amendments of a charter granted subject to it which will defeat or substantially impair the object of the grant or any rights vested under it, and which the legislature may deem necessary to secure either that object or any public right. See also Commrs. on Inland Fisheries v. Holyoke Water Power Co., 104 Mass. 446; Holyoke Co. v. Lyman, 15 Wall. 500. 3 The provision in the Missouri statutes, that every corporation may have succession for the period limited in its charter, and when no period is limited for, twenty years was held not to apply to a purely charitable corporation whose charter reserved the right in the legislature to amend or repeal it at any time hereafter; and showed an intention on the part of the legislature to make it perfect and complete as a charter without reference to the general law. The court considered that the objects and purposes of its creation were such as to negative the presumption that the legislature intended to limit its duration to twenty years. State v. Ladies of the Sacred Heart, 99 Mo. 533; 6 L. R. An. 84. Under the circumstances the following have been held to be immaterial: Changes in the route of a railroad; Wilson v. Willis Valley R. R. Co., 33 Ga. 466; Johnson v. Pensacola & Ga. R. R. Co., 9 Fla. 299; Peoria & Oquawka R. R. Co. v. Elting, 17 Ill. 429; Bauet v. Sanganan R. R. Co., 13 Ill. 504; change of corporate name; Bucksport Bangor R. R. Co. v. Buck, 68 Me. 81; Clark v. Monongahela Nav. Co., 10 Watts. 364; changing the terminus; Pac. R. R. Co. v. Renshaw, 18 Mo. 210; changing the route requiring company to build its road through an intermediate town on payment of additional cost by the citizens thereof; Macon & B. R. Co. v. Stamps (Ga.), 11 S. E. 442; Ross v. Chicago R. R. Co., 77 Ill. 134; reduction of capital stock and shortening of the road; Troy & Rutland R. R. Co. v. Kerr, 17 Barb. 588; enlarging the capital stock and extending the road when such changes did not appear on the record to be detrimental; Peoria, etc., R. R. Co. v. Elting supra; Rice v. Rock Island R. R. Co., 21 Ill. 93; Un. Agr. & Stock Ass'n v. Mill, 31 Ia. 95. See also Ill. Riv. R. R. Co. v. Zimmer,

From illustrations given in the notes it is easily seen how utterly impossible it is to state as a general proposition of law what alterations may be made by the legislature, under a reserved power, to alter, amend or repeal with the consent of the majority without disturbing contractual rights of dissenting stockholders. Each case may well be said to be a law unto itself, to be passed upon by the court upon ascertained facts.1 The authorities are almost uniform in holding that the reserved power does not authorize the legislature to confer upon the majority power to make material alterations or to accept the same when made, so as to bind a single dissenting stockholder. And in some cases the distinction between material and immaterial changes is repudiated, and all changes held to be equally an impairment of the original contract among the members.

20 Ill. 654; where extensive changes were held valid. Extending the road; Cross v. Peach Bot. R. R. Co., 90 Pa. St. 392; purchasing another railroad; Venner v. Atchison, etc., Co., 328 Fed. Rep. 581, increasing the number of directors Mower v. Staples, 32 Minn. 284. See also, Gray v. Coffin, 9 Cush. 192; Langley v. Little, 26 Me. 162; Payson v. Withers, 5 Biss. 269; Joy v. Jackson, etc., Co., 11 Mich. 155; Greenville, etc., R. R. Co. v. Johnson, 8 Baxt. 332; Fall River Iron Wks. v. Old Colony R. R. Co., 51 Allen, 221. Authorizing the purchase of the stock of another railroad corporation and guaranty of its bonds; Atchison, etc., R. R. Co. v. Fletcher, 35 Kan. 236; 10 Pac. Rep. 596; building branch lines; Peoria & Rock Island R. R. Co. v. Preston, 35 Ia. 115; Greenville & Columbia R. R. Co. v. Coleman, 5 Rich. L. (S. C.) 118; issuing preferred stock Everhart v. West Chester, etc., R. R. Co., 28 Pa. St. 339; Rutland & Burlington R. R. Co. v. Thrall, 35 Vt. 536; Curry v. Scott, 54 Pa. St. 270; or more common stock; City of Covington v. C. & C. Bridge Co., 10 Bush. 69; Buffalo, etc., R. R. Co. v. Dudley, 14 N. Y. 336; Joslyn v. Pac., etc., Co., 12 Abb. Pr. N. S. 329; extending the time for completing the road; Agr. Br. R. R. Co. v. Winchester, 13 Allen, 29; Poughkeepsie, etc., Co. v. Griffin, 24 N. Y. 150; Bailey v. Hollister, 26 N. Y. 112; consolidating to take the place of the lines as laid out Sprague v. Ill. Riv. R. R. Co., 19 Ill. 174; Hanna v. Cin. & Fl. Wayne R. R. Co., 20 Ind. See Supervisors of Fulton County v. Miss. Wabash R. R. Co., 21 Ill. 338; Delaware R. R. Co. v. Thorp, 1 Hous. (Del.) 149; Ill. Riv. R. R. Co. v. Zimmer, 20 Ill. 654; Sprague v. Ill. Riv. R. R. Co., 19 Ill. 174. See Hester v. Mann. & Ch. R. R. Co., 32 Miss. 378; Wilter v. Miss., etc., R. R. Co., 20 Ark. 463.

1 Zabriskie v. Hackensack, etc., R. R. Co., 18 N. J. Eq. 178; Dayton & Cin. R. R. Co. v. Hatch, 1 Dis. 84; Central R. R. Co. v. Collins, 40 Ga. 611. It has