Grant County herald. [volume] (Lancaster, Wis.) 1850-1968, 1874-05-28

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der this unlimited power of alteration
the Legislature may certainly enac
anything which could original,
have been included in the charter
And who will be bold enough to sa,
that the Legislature, in granting
privilege, may not prescribe the ex
tent to which it might be enjoyed
In granting monopoly of the car
rylng business from A to B, may no
the Legislature prescribe the mod
and manner of its exercise? Ate
a franchise has been granted upor
conditions, can the company claim
the franchise freed from the condi
tons All this would be absurd
yet it is precisely what results from
the above quotation.
Fnt the proposition l am contend
ing for does not rest upon reason
merely; it has been twice declared
by the Supreme Court of the United
States, in well-considered cases, and
no opinion OF counsel can shake it.
La Sherman .. Smith, / Black, 587
the case was this: A bank had
been organized under the general
banking law, which provided that
the stockholders should not be indi.
vidually liable, unless by their own
agreement, bat reserved to the State
the right to "alter or repeal'' the act.
Subsequently an act was passed, SO
altering the law as to make stock
holders personally liable. A more
radical change, one more completely
changing the character of the cor
poration, cannot be imagined Bat
the court held the subsequent act
valid. The court by Nelson, j., say:
Now the SD section, which reserved to the
Legislature the power to alter or repeal the
act, 0y necessary construction, reserved the
posoer to alter or repeal all or any enc of these
terms and conditions, or rules of liability, pre-
scri6ed in the act The articles of association
are dependent upon, and become part of, the
law under which the bank was organized ana
subject to alteration or rspeel, tie same as any
OTHER part Of the general system.
This decision was made in 1861.
In 1872 tho subject came again be-
fore the Supreme Court, in Miller v.
The State, Is Wallace, 478, and was
fully argued by very able counsel.
The court, after reviewing all the
authorities, from the Dartmouth Col
lege case down, affirmed the doctrine
of Sherman v. Smith, in very long
opinion, which settles the question,
for this generation, at least.
In the Dartmouth College case, 4
Wheaton, 712, G. j. Marshall, speak
ing of the power of the Legislature to
alter the charter of corporation,
says: 'Lf the Legislature mean to
claim such an authority, it must be re-
Serped in the grant," clearly implying
that where the reservation is made,
such power may be exercised.
In Miller v. The State, Is Wallace,
497, the court say that "the reserva-
ton is equally valid and effectual, if
it exists in the constitution ofthe state,
or in prior general law" as it is
when embodied in the charter itself.
Again, in Olcott's case, before re-
ferred to, 16 Wallace, 694, in which
the court held that railroads in Wis
consin are public highways, the
court, in stating the grounds upon
which that conclusion rested, employ
the following emphatic language:
That thrLegislature of Wisconsin may al.
ter or repeal the charter granted to the She
boygan & Fond du Lac Railroad Company is
certain. This is power reserved by the con-
stitution. The railroad can therefore Be con-
troAed and regulated by The State. rs use can
Be defined; is tolls and rates for transportation
may Be liputs3 Is work, made by the au-
thorith of the state. subject to its regulations,
and having for its object an increase of public
convenience, TO be regarded as ordinary pri-
yate property
This is not the language of retain
ed counsei. 1t is the deliberate
Judgment of the highest and last
court having jurisdiction to deter
mine this question.
But again, Mr.. Curtis says: =
But there is another objection TO this law,
which, to my mind, is of itself decisive. Un-
der the power to alter, amend or repeal
charter, legislature may change, or, in
some instances, perhaps, destroy, contracts
into which the state has entered by the grant
ing of charters. But this must be limited 10
the modification or destruction Tof the con.
tracts Of the state. 1t has never been sx-
tended, and consistently with the Constitu-
ton of the United States ii cannot be extend
ed TO contract made by the corporation un-
der authority oflaw with bona fde creditors
who have lent their money to construct and
equip the railroad and take a security by
mortgage thereon. Any law of state which
takes away property relied on by creditors
when they loan their money or the security
on which they gave credit. or which serious
ly impairs the remedy which such creditors
have had, impairs the obligation of their con-
tracts.
And again, after saying that this
company had executed a mortgage,
and that bonds secured thereby had
been sold, he adds:
When they took these mortgages
they had right to presume, and I'M
questionsbly did presume, that the
property mortgaged would be en-
ployed by the railway corporation
for reasonable rates of compensation
IN tFdusacLihg tneir uueinees' MS
Just and reasonable expectation can
not, in my opinion, be disappointed
and the rights acquired by the mort
cages disregarded. through an act of
the Legislature, in effect command
ing the road to transact it's business
on such terms that the bondholders
cannot receive any part, either of
the interest or principal of the bonds.
This is the most remarkable doc
trine ever maintained by eminent
counsel. 1t is, in substance, that the
railroad company, by executing q
mortgage, has clothed its mortgage
with powers it never possessed itself,
powers denied to it by the constitu-
ton of the state which created the
corporation mortgagor. 1t is well
settled that any person dealing with
a corporation must take notice OF its
creation, and al constitutional and
statutory provisions which limit and