Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1874-06-04
THE RAILWAY QUESTION.
ACKNOWLEDGEMENT sIOan's Opinion of
the Wisconsin Railroad Law.

furnished by Attorney General Sloan to Gov.
Taylor, of Wisconsin, upon the question of
the constitutionality Of the railway legislation
Of last winter:
The Constitution of the State provides, Art
II, Sec. 1, that corporations may be formed
aIuder general laws, but shall not be created by
u special act, except for municipal purposes
and in cases where, in the Judgment of the
Legislature, the objects of the corporations
cannOtbe attained under the general laws. All
general laws or special acts enacted under the
provisions of this section, may be altered or
repealed by the Legislature at any time after
their passage.
1t seems to be conceded on all sides that the
railroads of this State take and hold their
franchises subject to this reserved power of
alteration or repeal, but the precise meaning
of the reservation, and what, if any, limits
shall be applied to it, have led to some dis
cussiOn and difference of opinion. Since the
decision of the Dartmouth College case, in
which the Supreme Court of the United States
held that a charter of incorporation was in the
nature Of grant, creating contract beyond
the power Of the Legislature to impair, many
Of the States have, by general statutes, special
clauses in corporate charters, or by constitu-
liOnal provision, sought to re-estabIsh over
corporations the legislative control which,
previous to that decision, was supposed to eX-
ist, and any construction which SO limits this
reservation Of power as to deprive the Legisla-
Eure Of all supervision over or right TO regu-
late the exercise of the franchise would fall
Ear short Of the evident intention of its enact
znent and OF the remedy which it was designed
10 afford against the Entertainments of power
full corporations. This intent is well ex-
pressed in the case of Tomlinson as. Jesup-
Is Wall, p. 454
Mr.. Sloan refers at some length to certain
FcII-knOwr decisions of the Wisconsin Su-
preEse Court, which he says showed that the
Constitution reserved to the Legislature the
right to alter or repeal the charter of corpora
tons created by it, and insists that these de-
cisions sufficiently show the 'opinions enter
famed by the courts of our own State as to the
design and extent of the reservation, and seem
to warrant the conclusion that there can be no
such limitation Of the power as is now claimed
under it, or that can affect the validity of the
law under consideration, and the adjudication
in the courts Of other States and Of the Su-
preme Court Of the United States is in entire
harmony with our own, and abundantly sus-
tain the legislation of the last session and It's
constitutional validity"
In the case in l Paige, p. lO2, where the
Legislature OF New Jersey had incorporated
bank to continue not exceeding twenty-One
wears, with Droviso that it should be lawful
for the Legislature at any time to repeal the
charter, as a consideration for the charter the
sum of S25 900 was to be paid by the bank to
the Treasurer Of the State. The bank was
organized in June, and it paid into the Treas
zIry of the State the S25, 900 and commenced
operations In the November following the
Legislature repealed the act of incorporation,
and the court held, Chancellor WaIworth de-
Iivering the opinion, not only that the power
10 repeal existed under the reservation, but
Ghat the court would not presume it to have
been improperly exercised.
Reference is also made TO numerous decs-
ions in other States where it had been held
fhat, when q reservation similar to the rescr-
vation il the Wisconsin law existed, it quail
ned the franchise, and that the subsequent
exercise of the reservation was within the
provision of the Constitution in relation to the
inyioability of contract
In the ease of TomlinsOn against JGsup the
Northeastern Railroad Company was incorpo-
rated in 1851 by the Legislature of the State
OF North Carolina. At that time there was q
general law of the State, passed III 1911, pro-
.tiding that the charter of every corporation
should be subject to amendment, alteration,
or repeal Dy Jne IIeSk55lSIdGIlIe III 1000 an dCI
WAS passed by which the stock of the cOmpa-
nv and its real estate should be exempted
from taxation during the continuance of the
charter, which was for the term of fifty years.
Ia 1865 Constitution was adopted in which it
vas provided that the property of all corpora
ti0ns should be subject to taxation. JeSup, a
stOckholder i'll the road, filed bill to restrain
the State officers from leyying tax on the
property of the road. The court held that
Ehe reservation of power contained in the law
of 1871 affected the entire relation between the
state and the corporation, and placed under
legislative control all rights, privileges and
immunities derived by The charter from the
state and Mr.. Justice Field, in delivering the
opinion of the court, uses this language
1t is true that the charter of the company,
when accepted by the corporators, constituted
a contract between them and the State, and
that the amendment, when accepted, formed
part of the contract from that date, and was of
Jhe same obligatory character; and it may be
equally true, as stated by counsel, that the
exemption from taxation added greatly to the
value of the stock of the company, and in
<iuced the plaintiff to purchase the shares
held by him; but these considerations cannot
.ae allowed any weight in determining
1he validity of the subsequent taxa
Sion. The power reserved TO the
state by the law of 1871 authorized
any change in the contract as it originally eX-
listed OF as subsequently modified, or its entire
revocation. The original cOrpOratOrs or sub
sequent stockholders took their interests with
Che knowledge of the existence of this power
and of the possibility of its exercise at any
time in the discretion of the Legislature"
Mr.. Sloan concludes: 1t is, l understand,
conceded by all who have given opinions hos
tile to this legislation that by virtue of the
constitutional reservation all acts of incor-
1toration may be absolutely repealed and the
corporations created by them dissolved. If
the Legislature can thus wholly destroy every
corporation 1t has created and compel total
surrender of all franchises and privileges, and
of all power to transact business except such
As may be necessary to convert its property
into money and wind up its affairs, it seems
difficult to urge any valid reason against leg
7Slallon which merely limits the corporate
power and restricts the privilege of charging
higher rates for transportation than the Legis-
lature may deem just and equitable. But it
Is now claimed by those who propose to disre-
gard the law of 1874 that, although the power
reserved in the Constitution to alter all acts
creating corporations is in terms unlimited
this reserved power is still subject to certain
latent limitations which it is the duty of the
courts to recognize and define. That among
the latent limitations one is to be found or
created which prevents the Legislature from re-
ducing the charges for transporting passengers
and freightS below reasonable compensation.
The result of this doctrine would be practi-
.cally 10 repeal the Constitution of the State so
far rs this cluuse is concerned, and to restore
TO corporations in this State that exemption
from legislative control secured to them by
the Dartmouth College decision, and to guard
against which the clause was incorporated into
The Constitution Of the State. The power to
alter is given by the Constitution justas clear.
iy as the power TO repeal, and 1t is difficult tC
see why limitation cannot as well be applied