tions of the present day, therefore, hold, in a charter thus obtained, what has lost, by these gradual but almost radical changes in the law, its chief element of value, viz., the franchise to be a corporation, so granted as to secure to it what others could not afterwards acquire at all or except with difficulty, and this franchise was often accompanied by exclusive privileges, which it is no longer possible to obtain.

The right to be a corporation is a franchise, because it is a grant from the sovereign authority of a special privilege to do what otherwise would be unlawful. It is also everywhere recognized that all powers and privileges which corporations possess are derived from their charters; 1 whether specified in the charter, or raised by judicial construction out of its terms, or read into the charter as powers which the law implies from the mere grant to a corporation of the right to exist, the charter of a corporation is still the measure of its powers.' 2 If the charter constituting a corporation is itself the grant of a franchise, and all the powers which the corporation may exercise are derived therefrom, it follows that all the lawfully exercised powers of a corporation are likewise within the meaning of this term.3 This principle, although sufficiently obvious, and sometimes important, has seldom been clearly stated, but will be found to have been impliedly recognized in a large number of cases. However vague an idea

favor of the public and against the private corporation?

We have to consider, when such articles become the subject of construction, that they are in a sense ex parte; their formation and execution-what shall be put into them, as well as what shall be left out-do not take place under the supervision of any official authority whatever. They are the production of private citizens, gotten up in the interest of the parties who propose to become corporators, and stimulated by their zeal for the personal advantage of the parties concerned, rather than the general good. "These articles, when signed by the corporators, acknowledged before any justice of the peace or notary public, and filed in the office of the secretary of state and the clerk of the proper county, become complete and operative. Neither the officer who takes such acknowledgment, nor those who file the articles, have any power of criticism or rejection. The duty of the first is to certify to the fact, and of the second to simply mark them filed as public documents, in their respective offices.

"These articles, which necessarily assume by the sole action of the corporators enormous powers, many of which have been heretofore considered of a public character, sometimes affecting the

interests of the public very largely and very seriously, do not commend themselves to the judicial mind as a class of instruments requiring or justifying any very liberal construction. Where the question is whether they conform to the authority given by statute in regard to corporate organizations, it is always to be determined upon just construction of the powers granted therein, with a due regard for all the other laws of the State upon that subject, and the rule stated above."

1. Davis v. Old Colony R. Co., 131 Mass. 259; Mobile, etc., R. Co. V. Franks. 41 Miss. 511; Thomas v. Railroad Co., 101 U. S. 71; Diligent Fire Co. v. Commonwealth, 75 Pa. St. 291.

2. See CORPORATIONS, 4 Am. & Eng. Encyc. of Law, 207.

3. All the functions of a corporation are, in one sense, franchises. The right to hold property in the corporate name, to sue and be sued in that capacity, to have and use a corporate seal, and by that to contract, and some others perhaps, are franchises, which constitute the very definition of a corporation." State v. Boston, etc., R. Co., 25 Vt. 442.

"The different powers of a private corporation, like the right to hold and dispose of property, are its franchises." Pierce v. Emery, 32 N. H. 507.

may thereby be conveyed, the commonest use of the word "franchises," as applied to corporations, is in reference, first, to the right given by law to be a corporation, and, second, to the numerous and often ill-defined powers derived from the same source. For reasons already explained, the first-named franchise is now. usually of little or no value; and for similar reasons many powers of corporations which depended upon it, not only for their value but also for their existence, are no longer franchises of consequence. There are, however, powers or privileges which may be granted to corporations, and which constitute franchises that have been but little affected by changes in the law. It is unnecessary to repeat in this connection and in detail, what has been elsewhere said of the ordinary powers or franchises which belong to private corporations as a class. But certain extraordinary privileges sometimes granted, as already mentioned to those corporations which stand in a peculiar relation of duty to the public, are of such recognized prominence and importance as franchises that they have obscured all other franchises.

2. Eminent Domain as a Franchise. The right of eminent domain could never be a franchise of value to any corporation except one formed for public purposes, because it is a prerogative of government which could not otherwise be delegated. In every grant of franchises there is an implied reservation of a State right of eminent domain. It is regarded as so important and essential an element of sovereignty that no legislation can bind the State to an agreement that it shall not be exercised.2 Franchises. of corporations, like other contracts or property, are subject to appropriation by right of eminent domain, and with no further restrictions than apply in all cases, viz., that the condemnation shall be for public use, and is only authorized upon making just compensation.3

1. West River Bridge Co. v. Dix, 6 How. (U. S.) 531; EMINENT DOMAIN, 6 Am. & Eng. Encyc. of Law, 512 et seq., and authorities cited in succeeding notes.

2. Commonwealth v. Essex Co., 13 Gray (Mass.), 239; Eastern R. Co. v. Boston, etc., R. Co., III Mass. 125; Hyde Park v. Oak Woods Cemetery Co., 119 Ill. 141; s. c., 14 Am. & Eng. Corp. Cas.

417.

3. In Village of Hyde Park v. Oak Woods Cemetery, 119 Ill. 141; s. c., 14 Am. & Eng. Corp. Cas. 417, the court say: "It is claimed that the acts of the legislature creating the cemetery association, when accepted, and the purchase of the land under such acts, and the dedication of the same to public use, constituted a contract between the State and the corporators of the association within the provision of section 10 of article I of the Constitution of the United States,

which prohibits legislation impairing the obligation of contracts. If this position were correct, it is plain that any future legislation authorizing the taking of the lands could not be sustained, as the legislature has not authority to enact a law impairing the obligation of a contract. But the rule involved has no application to a case of this character. The right of eminent domain is an element of sovereignty; and a contract in restraint of a free exercise of this right is not obligatory on the State, and does not fall within the inhibition of the Constitution of the United States. Cooley, in his work on Constitutional Limitations' (5th Ed., 281, 525), in the discussion of this question, says that any legislative bargain in restraint of the complete, continuous, and repeated exercise of the right of eminent domain is unwarranted and void,- -see Enfield Toll

3. Franchise of Exemption from Taxation.-In like manner, grants of franchises are ordinarily made subject to the State's reserved power of taxation, a right necessary to every government, and only limited to strictly public purposes. Neither corporations as such, nor because their franchises may constitute a contract, are exempt from taxation unless by clear, unequivocal, and valid contract.1

Where a grant of the franchise to be exempt from taxation is lawfully made, however, it becomes a contract the obligation of which cannot be impaired by future legislation.2

It has several times been said that an exemption of a corporation from taxation is not a corporate franchise.3 Taken literally,

such statements involve a serious contradiction of all authoritative definitions of a franchise. If such a grant does not constitute a franchise it is not easy to see what would come within the terms of the accepted definitions. It is evident that these decisions were not intended to be thus construed,1 but should be confined to the doctrine that, upon an authorized transfer of the franchises of a corporation, the strict rule of construction applied to all grants in derogation of common rights demands that only those franchises should be held to be included in such a transfer as are essential to the existence and purposes of the corporation.2

4. Municipal Aid as a Franchise.-Municipal aid to corporations, chiefly railroad companies, has been frequently given, sometimes in the form of a donation of property, but usually by authorizing subscriptions to their stock and bonds by the State, or the counties, cities, and towns to be directly benefited by the construction of the road. The only principle upon which such franchises can be held to be constitutional is that the taxation by which the money is raised is for a public purpose because appropriated to instrumentalities or agencies for the purpose of accomplishing public ends.3

merely by a conveyance of the property
and franchises of a railroad company,
although such company may hold its
property exempt from taxation. . .
It is true there are some cases where the
term 'privileges' has been held to in-
clude immunity from taxation, but that
has generally been where other pro-
visions of the act have given such mean-
ing to it. The later and, we think, the
better opinion is that, unless other pro-
visions remove all doubt of the intention
of the legislature to include the immunity
in the term 'privileges,' it will not be so
construed. It can have its full force by
confining it to other grants to the cor-
poration."

1. The right to hold, exempt from taxation lands, granted to a railroad corporation in aid of its principal enterprise is a franchise, but ancillary and subordinate; and the right to exercise such franchise, and to continue its corporate existence for such purposes only, cannot lawfully survive after a sale of its railroad and the abandonment of its principal business as a railroad corporation, unless by authority of the legislature, expressed or clearly implied. The rights of the State are not lost by delay merely, nor can they be waived by its executive officers. State v. Minn. Cent. R. Co., 36 Minn. 246.

In Given v. Wright, 117 U. S. 648; s. c., 12 Am. & Eng. Corp. Cas. 606. the court observes: "If an exemption from taxation can be lost in any case by a long acquiescence under the imposition

of taxes, it would seem that an acquies-
cence of sixty years, and indeed a much
shorter period, would be amply sufficient
for this purpose, by raising a conclusive
presumption of a surrender of the privi-
lege. An easement may be lost by non-
user in twenty years, and even in a less
time if it is affected by positive acts of
invasion. A franchise may be lost in the
same way, non-user being one of the
common grounds assigned as a cause of
forfeiture. 3 Bl. Com. 262. Exemption
from taxation being a special privilege
granted by the government to an indi-
vidual, either in gross or as an appurte-
nant to his freehold, is a franchise.
user for sixty, or even thirty, years may
well be regarded as presumptive proof
of its abandonment or surrender."

Non

2. Morgan v. Louisiana, 93 U. S. 217; Chesapeake, etc., R. Co. v. Miller, 114 U. S. 185; Pickard v. East Tennessee, etc., R. Co., quoted supra, note. See also infra, this title, MORTGAGE, TRANSFER, AND SALE OF FRANCHISES.

3. Loan Association v. Topeka, 20 Wall. (U.S.) 655; Parkersburg v. Brown, 106 U. S. 487; Rogers Locomotive Works v. Erie R. Co., 20 N. J. Eq. 379; Messenger v. Pennsylvania R. Co., 36 N. J. Law, 407: 37 N. J. Law, 531; Buncombe Co. Comm'rs v. Tommey, 115 U. S.

122.

Accordingly, in Loan Association v. Topeka, 20 Wall. (U. S.) 655, authority to a town to issue bonds in aid of a manufacturing company was held void, distinction being made between such private

The constitutions of several of the States now expressly prohibit such grants.

5. Monopolies as Franchises.-The most valuable of modern franchises are the various kinds of lawful exclusive privileges, or monopolies. While constitutional limitations in many of the States prohibit the grant of such franchises except for strictly public purposes, even subject to this qualification of legislative power they are not uncommon. There are many matters of such importance to the development, comfort, and general welfare of communities that no sufficient objection appears to the grant, to corporations formed for public purposes, of privileges at least sufficiently exclusive to encourage their organization. Of this character are gas and water companies, given the exclusive right to