Numerous authorities have firmly established the doctrine that every consolidation is a fundamental alteration, and that while under a reservation of power to amend, etc., a majority may be authorized to effect a consolidation, yet no dissenting stockholder can be compelled to accept an interest in the new corporation then formed.1

§ 1061. In matters of public concern. Much is elsewhere said concerning the power of the legislature to control and regulate the affairs of corporations in matters of public concern." It becomes necessary to briefly refer to the subject under this head. If such a reservation enlarges the power of the state to regulate the exercise of franchises of a public character, it would be difficult to specify wherein it

under the circumstances of each case been held a material alteration. To shorten or vary the route; Winter v. Muscogee R. R. Co., 11 Ga. 438; Middlesex Turnp. Corp. v. Locke, 8 Mass. 268; Same v. Swan, 10 Mass. 384; Hester v. M. & C. R. R. Co., 32; Miss., etc., R. R. Co., 20 Ark. 463; Champion v. Memphis, etc., R. R. Co., 35 Miss. 692; Simpson v. Dennison, 10 Hare, 54; to change a terminus; Manheim, etc., Co. v. Arndt, 31 Pa. St. 317; Marietta, etc., R. R. Co. v. Elliot, 10 O. St. 57; Middlesex, etc., Co. v. Locke, 8 Mass. 267; Thompson v. Guion, 5 Jones Eq. 113; to permit a railroad corporation to engage in water transportation; Hartford & N. H. R. R. Co. v. Crosswell, 5 Hill. 383; Marietta & Cin. R. R. Co. v. Elliott, 10 O. St. 57; to shorten the line of railroad; Bank v. City of Charlotte, 85 N. C. 433; to allow business to be commenced before the full capital stock is subscribed; Memphis, etc., R. R. Co. v. Sullivan, 57 Ga. 240; dividing the line and forming two or more corporations; Leed & Evensburg Turnp. R. Co. v. Phillips, 2 P. & W. (Pa.) 184; Carlisle v. Terre Haute & Richland R. R. Co., 6 Ind. 316; extending the line; Stevens v. Rutland, etc., R. R. Co., 29 Vt. 545; increasing the par value of the stock; Mahon v. Wood, 44 Cal. 462; transferring a subscription to a railroad from one railroad to another; Pittsburg etc., R. R. Co. v. Gazzan, 32 Pa. St. 340; making the charter perpetual and increasing power to hold property; Propr. Un. Lock & Canals v. Towne, 1 N. H. 44; allowing a life insurance company to insure against fire and marine loss; Ashton v. Burbank, 2 Dill. 435.

1 Ill. G. T. R. R. Co. v. Cook, 29 Ill. 237; Shelbyville & R. Turnp. Co. v. Barnes, 42 Ind. 498; N. O. J. & Gt. North R. R. Co. v. Harris, 27 Miss. 517; Clearwater v. Meredith, 1 Wall. 25; Knoxville v. R. R. Co., 22 Fed. Rep. 758; Kean v. Johnson, 9 N. J. Eq. 401; Launan v. Lebanon Val. R. R. Co., 30 Pa. St. 42; Del., etc., R. R. Co. v. Irick, 23 N. J. L. 321.

2 Infra, Ch. XXXIX.

has that effect. A leading authority involving a consideration of the nature and effect of a reservation of power to repeal, alter and amend in an act of congress granting corporate franchises is the Sinking Fund Cases.1

Two distinct grounds were stated in support of the decision upholding the validity of the act: 1. That it was an exercise of the general power of congress to legislate in the interest of the public, further justified by the fact that the corporations were institutions whose management and operations were matters of great public concern. 2. That the express reservation contained in the charters authorized the legislation.

The fact that the United States was a principal creditor whose debt was among those secured under the act in question was declared to have no bearing upon the issue. Accepting the doctrine that such a reservation preserves the power in the sovereign to make all alterations required for the public good, and that no act of congress any more than an act of a state legis

1 99 U. S. 700. The important question before the court was whether an act of congress requiring the Pacific railroad companies to set aside a percentage of their net earnings to meet a large bonded indebtedness to mature in the future and deposit the same in the United States treasury was valid and enforceable. In the act of congress incorporating these companies there was an express reservation of power "to alter, amend or repeal this act," qualified by the words "having due regard for the rights of said companies." An amendatory act was passed subsequently and accepted by the companies, which contained the same reservation without the qualifying words. The act creating the sinking fund the validity of which was under consideration in that case was passed more than fourteen years later, and after bonds to the amount of many million of dollars had been issued by the companies and the roads had been completed for several years. The sinking fund act of 1878 also directed a different disposition of certain funds payable to the companies from time to time for services performed for the government than that provided in the act of incorporation and the act amendatory thereto, and required said funds to be invested in United States bonds as they accumulated, which were to be held, and as the bonds of the government issued to the companies should mature the bonds in which the investment had been made should be cancelled and the indebtedness of the companies credited with their accumulated value. Twentyfive per cent. of their annual net earnings was also required to be paid into the treasury to be placed in the sinking fund to meet the future indebtedness.

lature may go beyond this and impair the obligation of contracts, the court sanctioned the act as a proper legislative discretion and control of the administrative affairs of the companies on matters concerning the public. The general principle stated by the court is undoubtedly sound as a legal proposition, and it would be so in the absence of a reservation in the charter. If such a reservation means no more than that the granting of a charter does not forestall future legislation of a general nature, it is useless. But whether the application made of it in that case was proper is another matter. It would be difficult to reconcile it with the established views of the courts on constitutional questions in any state in the Union or with prior and subsequent decisions in that court.

Neither the power to legislate for the general welfare, to enact police regulations, nor any reservation of power to alter or repeal a charter, authorizes the legislature to attack collateral contracts, entered into in carrying out the objects for which a corporation is incorporated. A recent decision of the same court has sanctioned the power of congress in the exercise of the reserved power to disturb contractual and vested rights not only beyond all precedent, but to an extent which should cause alarm.2

1 One of the unanswerable objections to the act, and which carries with it a sound general rule on this subject, is contained in the dissenting opinion of Justice STRONG: "The power thus reserved is one over the act itself, not over anything that may have lawfully been done under the act, before its repeal or alteration. It is only by great confusion of things essentially distinct that this power can be construed as applicable to a contract made after the corporation came into existence. Besides, the act of 1878 does not attempt to repeal or alter or amend the acts of 1862 and 1864. It changes no franchise granted by those acts, nor does it interfere with its existence. The right to possess and enjoy the income of the company is not a franchise. It interferes only with the fruits of the franchise. It is an incident of the ownership of the company's property, though the property may be accumulated by the use of the franchise." Justices BRADLEY and FIELD also delivered able dissenting opinion.

2 Church of Latter Day Saints v. United States, 136 U. S. The case grew

The alteration made by the act the validity of which was under consideration in the case of Spring Valley Water Works v. Schottler1 was clearly a legitimate exercise of legislative power to alter and amend. It interfered with no contract between the corporation and third parties or between it and its stockholders. It took away from it the power to appoint some of the commissioners to fix rates at which water should be supplied to the citizens of San Francisco, and was valid both as a regulation in a matter of public interest and as an exercise of the power reserved in the constitution of California to repeal, alter or amend. It affected the control, the administrative affairs of the corporation, and nothing more.

§ 1062. Alterations for public convenience and safety.— A distinction is made in some of the cases between the effect of such a reservation in semi-public corporations and those that are strictly private.

But aside from the right to regulate in such matters of public concern which exists independent of the res

out of the Edmunds' Anti-polygamy Law, passed by the forty-ninth congress affecting the Mormon Church, a corporation incorporated under an act of the legislative assembly of Utah. Under the authority of congress to repeal territorial enactments, it dissolved the corporation, annulled its charter, directed the appointment of a receiver to wind up its affairs, and escheated to the United States all the real estate owned by the church in excess of fifty thousand dollars, which was not, at the date of the passage of the act, held for purposes of worship or burial. Upon the institution of proceedings under the terms of the act, to confiscate several hundred thousand dollars' worth of property belonging to the church, the Mormons immediately entered suit to have the Edmunds' act declared unconstitutional. But the court came to the conclusion that the United States, under the act of congress, had the right to sell this property. Chief Justice FULLER and Justices FIELD and LAMAR, in able dissenting opinions, admitted that congress has power to suppress polygamy, but advanced unanswerable arguments in support of the position that it had not the power to seize and confiscate the property of corporations, because they have been guilty of crime, and that the diversion of the fund contemplated by congress was in contravention of the specific limitations of the constitution.

1 110 U. S. 347.

ervation, the same rules apply to both. The objects of both are private emolument, and the obligation or contracts of the one are as sacred as those of the other and are equally protected by the constitutional inhibition, except in so far as the contracts of corporations, whose business greatly concerns the public, are liable to be incidentally impaired by general legislation, which would affect them if they were the contracts of individuals instead of corporations engaged in like occupations.1 Any such duties may be imposed upon corporations of this character as the public welfare and safety demand, subject always to the qualification that no radical changes shall be made to defeat or essentially impair the object of the grant or take away any property or rights which have become vested, under a legitimate exercise of the powers granted."

But, under the reservation, the consolidation with another company cannot be required unless it appears that no radical change would be produced in the enterprises of the several companies. Such an alteration would be so far foreign to any purpose contemplated

1 This power to legislate for public safety and convenience has been held to have been properly exercised to compel a railroad company to lengthen its road so as to connect with another road in the same town; Mayor of Worcester v. Norwich, etc., R. R. Co., 109 Mass. 113; Shields v. Ohio, 95 U. S. 325; to build an extension to the main line; Buffalo, etc., R. R. Co. v. Dudley, 14 N. Y. 348, 354; to construct a double track, change its grade, reconstruct its bridges and build station houses; Commissioners v. Holyoke Water Power Co.. 104 Mass. 452; Zabriskie v. Hackensack, etc., R. R. Co., 18 N. J. Eq. 186; Fitchburgh R. R. Co. v. Grand Junction R. R. Co., etc., 4 Allen; 198, and fence its road; Durand v. New Haven, etc., Co., 42 Conn. 211.

2 Parker v. Metropolitan R. R. Co., 109 Mass. 508. Acts of the legislature imposing an additional liability for future debts upon shareholders in a bank; Bailey v. Hollister, 26 N. Y. 112; Sherman v. Smith, 1 Black, 587; Re Oliver Lee & Co.'s Bank, 21 N. Y. 9; 3 Re Empire City Bank; 18 N. Y. 199; making it the duty of a manufacturing corporation to build fishways in a dam constructed by them across a river; Holyoke Co. v. Lyman, 15 Wall. 500; Commissioners v. Holyoke Water Power Co., 104 Mass. 452; giving a remedy against a mill dam corporation for injuries by flood; Monongahela Nav. Co. v. Coon, 6 Pa. St. 379 have been held valid exercises of the reserved power.