The Emporia news. [volume] (Emporia, Kan.) 1859-1881, 1874-05-29

I AtLGA - II Ah4ASAAAoG AAalo DCGh al I
: ed upon conditions, can the com
: pany claim the franchise freed
, from the conditions? All thi:
would be absurd, yet it is precise
~ what results from the above
quotation.
But the proposition | am con
tending for does not rest upon
reason merely. 1t has been twice
declared by the Supreme Court oil
the United States in we'll consid.
cred eases. and no opinion OF
counsel can shake il. In Sherman
VS.. Smith { Black, $50, the case
was this: a bank had been or
ganized under the general banking
flaw, which provided that the
stockholders should net be indi-
virtually liable unless by their own
agreement, but reserved 10 the
State the right to alter or repeal
the act. Subsequently an act was
passed so altering the law as to
make stockholders personally liza
Bile. A more radical change, one
more completely changing the
character OF the corporation, can
not he imagined, but the court
held the subsequent act valid.
The court, by Nelson, j.. says:
I" Now the sd section, which re-
served to the Legislature the pow
er TO alter or repeal the act by
necessary construction reserved
the power to alter or repeal all or
any one of those terms and condi-
tions or rules of liability prescrib-
ed in the act. The articles of as
ISOLATION are dependent upon, and
become q part of, the law under
which the bank was organized,
and subject TO alteration or repeal
the same as any other part of the
general system" The decision
was made in 1861.
In 1872 the subject came again
before the Supreme Court in Mil
Ter VS.. the State 10 Wallace, 47S)
and was fully argued by very able
counsel. The Court, after review
ing all the authorities from the
Dartmouth College case down, af-
firmed the doctrine OF Sherman
VS.. Smith in very long opinion,
which settles the question for this
generation at least. In the Dart
mouth College case q Wheaton,
712), Chief Justice Marshall,
speaking of the power of Il legis-
lature to alter the charter of n
corporation, says: ''If the legis-
lature mean to claim such an au-
thority, it must be reserved in the
grant, clearly implying that
where the reservation is made
such power may be exercised. In
Miller vs.. the State, Us Wallace,
1917 The court say that the
reservation is equally valid and
eftectual if it exists in the Consti-
tuition of the State. or in 4 prior
general law, as it is when en-
bodied in the charter itself
Again, in Olcott's case, before
referred to C16 Wallace, 694), in
which the court held that railways
in WicOnsin arc public highways,
the court, in stating the grounds
upon which the conclusion rested,
employ the following emphatic
language: .'And that the Legisla-
ture of Wisconsin may alter or
repeal the charter granted to the
Sheboygan and Fond du Lac Rail
way company is certain. This is
a power reserved by the constitu-
ton. The railway eau therefore
be controlled and regulated by
the State, its use can be defined,
its tolls and rates for transporta-
ton may be limited.
" Is work made by the authority of
the State subject to its regulations,
and haYing for its object an increase of
public convenience, to be regarded as
ordinary private property ?"
This is not tho language of re-
tanned counsel. 1t is the deliber-
ate judgment of the highest and
last court having jurisdiction to
determine this question.
But again, Mr.. Curtis says:
But there is another objection to
this law, which to my mind Is of itself
decisive. Under the power to alter,
amend, or repeal a charter, Legisla-
ture may change, or In some instances
the State has entered by the granting
of charters. But this must be limited
to the modification or destruction of
the contracts of the State. 1t has new
err been extended, and consistently
with the constitution OF the United
States it cannot be extended to con-
tracts made by the corporation under
authority of law with bona fide cred
itors who have lent their money to
construct and equip this railway and
take security by mortgage thereon.
Any law of a State which takes away
property relied on by creditors when
they loaned their meney or the securi-
ty on which they gave credit or which
seriously impairs the remedy which
such creditors have had impairs the
obligation of their contracts"
And sgain, after saying that
this company had executed
mortgage, and that bonds secured
thereby had been sold, he adds:
When they took these mortgages
they had 4 right to presume, and I'M
questionably did presume, that the
property mortgagcd would be employ
ed by the railway corporation for rea-
sonab;e rates of compensation in
transacting their business. This Just
and reasonable expectation cannot in
my opinion be disappointed, and the
rights acquired by the mortgages dis
regard through all act of the Legisla-
ture, in effect commanding the road to
transact its business on such terms
that the bondholders cannot possibly
receive any part either of the interest
or prineip al of the bonds"
This is the most remarkable
doctrine ever maintained by emf
nent counsel. 1t is in substance
that the railway company by ex-
ecutiDg a mortgage has clothed
its mortgage with powers it never
possessed itself-powers denied to
it by the constitution of the State
which created the corporation
mortgager. It is well settled that
any person dealing with corpo-
ration must take notice of the law
of its creation, and all constitu-
tional and statutory provisions
which limit and restrict the pow
ers of the corporation, and that
no one can be bona fide holder
/ of what the corporation is incapa-
, BILE of granting. Angel and
Ames, on corporations, say per-
/ sons ont of the State, as well as
: in it, are bound to take notice o.
: public laws limiting the power o.
5 corporations. The State author
q lied the railway company TO mort
d gage its property and franchises
e Yhatever they were, and as they
we're With sill the privileges anC
: all the inirmities belonging tC
f them. When the mortgages &C
cepted their mortgage and pur
chased the bonds secured by it
they knew they were dealing will