lieu of all others, is accordingly obligatory on succeeding legislatures, and a statute imposing a greater burden will be invalid, whether the tax is laid on the stockholders or directly on the corporation.1 The judgment in Tucker v. Ferguson seems irreconcilable with the language held in The Home of the Friendless v. Rouse,2 where it is clearly shown that a statutory grant or contract requires no other consideration than the public good, which every legislative act is presumably designed to promote, and that the inquiry should be, Did the legislature intend to enter into an irrevocable agreement, and were the circumstances such as to justify the concession? To employ public means for private ends is contrary to the first principles of government; and it is immaterial whether the wrong is done through an appropriation of money in the treasury, or takes the form of a contract not to replenish the treasury, by requiring a company or an individual not to bear their share of the common burden. The question would therefore seem to be not so much one of consideration as of cause. A gratuitous exemption from taxation is inoperative, for reasons akin to those which prevail in the case of agreements in restraint of trade. A naked covenant not to exercise a trade or calling imposes an injurious restraint on one party without benefiting the other, and is therefore contrary to public policy and void. If, however, the transaction is shown to be a sale of the goodwill of the covenantor's business, the objection is obviated and the contract may be enforced. So a contract not to tax is prima facie invalid, as depriving the State of a source of revenue and increasing the burdens of other tax-payers, unless it is made in furtherance of some useful purpose that will compensate the community for the loss. In like manner, the grant of an exclusive right to construct a bridge or railway may be valid as an inducement to the 1 95 U. S. 685. 2 8 Wallace, 435. Mitchell v. Reynolds, 1 P. Williams, 181; 1 Smith's Leading Cases (8th Am. ed.), 769, 777; Hare on Contracts, 187; 2 Wharton on Contracts, sect. 1061. FOR SOME PUBLIC PURPOSE. 595 expenditure of capital for public use; because, as in the case of a similar grant of a ferry, it is better to have a single means of crossing a river than none.1 The grant of such a monopoly, after the road or bridge has been built, is a restraint on trade without an equivalent, and therefore void. What the authorities as a whole may be regarded as establishing, is, that as private property cannot be taken except for public purposes, so public rights cannot be surrendered for merely private purposes; where there is no public use, the grant will be void. "The object for which The Home of the Friendless was incorporated," said Davis, J., "was to enable those persons of the female sex who were desirous of establishing a charitable institution in St. Louis for the relief of destitute and suffering females, to carry out their laudable undertaking. It can readily be seen that a charity of this kind would be of great benefit to the people of St. Louis, and that the legislature of the State would naturally be desirous of using all proper means to promote it. The purposes to be attained by such a charity are usually beyond the ability of individual effort, and require an association of persons who will themselves contribute pecuniary aid, and are willing to become solicitors for the contributions of others. Usually the initiation of such an enterprise is in the hands of a few persons, who need to be clothed with more than ordinary powers in order to obtain the successful co-operation of others. In no way could this co-operation be better secured than by conferring on the corporators the authority to say to the benevolent people of St. Louis that their donations in money or lands for the relief of the suffering female poor of the city would be held by the institution undiminished by taxation. . . . "There is no necessity for looking for the consideration of a legislative contract outside of the objects for which the corporation was created. These objects were deemed by the legislature to be beneficial to the community, and this benefit 1 The Binghamton Bridge, 3 Wallace, 51. 2 See Johnson v. Crow, 87 Pa. 184; Gordon v. Winchester, 12 Bush, 111. constitutes the consideration for the contract, and no other is required to support it. This has been the well-settled doctrine of this court on this subject since the case of Dartmouth College v. Woodward. This case is so far unlike Lord v. Litchfield that the privilege was conferred in the one by the charter of incorporation, and arose in the other from a statute which had been enacted long before, and embraced all charitable and learned institutions; but large sums had been contributed in both instances in the belief that the exemption was irrevocable, and it could not therefore be repealed in either, consistently with justice or the guaranty afforded by the Constitution of the United States. Where a license or other declaration of the grantor's purpose is so worded as to induce the grantee or third persons to give value in the belief that it will not be recalled, an obligation arises by estoppel which no subsequent legislation can impair." 1 1 See Branson v. Philadelphia, 47 Pa. 329; 2 American Leading Cases, 340, 555 Rerick v. Kern, 14 S. & R. 267. LECTURE XXVII. --- A Charter of Incorporation is a Contract which may not be impaired. The Effect of the Police Power in modifying this Rule. - The Legislature may regulate Bodies Corporate as well as Natural Persons, and prohibit the Exercise of a Franchise which proves Injurious. — Existing Remedies may be varied, and new Remedies given to and against Corporations. Rule in Pennsylvania. — Irrevocable Exemptions from Taxation. Exclusive Right to supply Gas or Water, or to build a Bridge or Railroad. — What Sovereign Powers may be irrevocably conferred on Corporations. - The Legislature cannot alienate the Police Power or the Right of Eminent Domain. - Incorporated Companies subject to Prohibitory Legislation even when the Effect is to preclude them from pursuing the Business for which they were chartered. — A Cemetery Company may be prevented from interring, or a Manufacturing Company from working, in the Way or Place designated in their Charter. - Police power must not be exercised without sufficient Cause. AGREEABLY to the uniform course of decision in the United States, a legislative grant of a franchise, as, for instance, a bridge, a ferry, or the right to be a body corporate, — is as strongly fenced by the safeguard of the Constitution as a grant of land or other corporeal hereditament. The point arose in the leading case of the Dartmouth College v. Woodward.1 Dartmouth College had been incorporated by a charter from the Crown before the Revolution. In the year 1816 the legislature passed a law by which the corporate property and franchises were virtually taken from the persons in whom they were vested under the charter, and conferred on other persons designated by the act. The validity of this law was upheld by the Supreme Court of New Hampshire, and a writ of error taken from their decision to the Supreme Court of the United States. The case was argued with great ability by Mr. Webster. He contended that a grant of corporate powers and privileges was as much a con 1 4 Wheaton, 518. tract as a grant of land. What proved all charters of this sort to be contracts, was that they must be accepted to give them force and effect: if not accepted, they were void; and if a new charter was given to an existing corporation, it might even accept part and reject the rest. In the King v. Dr. Askew1 it was said that "the Crown cannot oblige a man to be a corporator against his will. He shall not be subject to the inconveniences of it without accepting it or assenting to it." These terms, "acceptance" and "assent," were the very language of contract. In Ellis v. Marshall 2 it had been expressly adjudged that naming the defendant among others in an act of incorporation did not of itself make him a corporator, and that his assent was necessary to that end. Charters of incorporation partook therefore of the nature of contracts, and could not be altered or varied without the consent of the original parties. This argument was sustained by another of equal weight. If there was no consideration between the legislature and the corporators, there would still be one among the corporators. Where a number of persons agree to act together, the promise of each one is a consideration for the promise of each of the others. They are all, consequently, bound to the opposite party to the contract, and he to them. An agreement by two or more creditors to release the debtor upon certain terms, is obligatory as between themselves, and may be enforced by the debtor, although no consideration moves from him. In like manner, if a number of persons agree to place money in the hands of a trustee for the endowment of a school, church, or other public institution, the trustee may enforce the performance of the agreement, and the contributors will have a corresponding remedy against him. This principle is obviously applicable to corporators engaged in a common enterprise on the faith of a charter granted by the legislature. The argument of Mr. Webster was adopted and enforced by Chief-Justice Marshall. The Constitution did not intend to restrain the legislatures of the States in the exercise of the powers necessary to government. When the act of incorpo 1 4 Burr, 2200. * 2 Mass. 279. |