Green v. Knife Falls Boom Co.

• Decision Date: 16 April 1886
• Citation: 27 N.W. 924,35 Minn. 155
• Parties: GREEN v KNIFE FALLS BOOM CO.
• Court: Minnesota Supreme Court

35 Minn. 155

27 N.W. 924

GREENvKNIFE FALLS BOOM CO.

Supreme Court of Minnesota.

Filed April 16, 1886.

Appeal from a judgment of the district court, St. Louis county.

W. W. Billson, for respondent, George Green.

Warner, Stevens & Lawrence, for appellant, Knife Falls Boom Co.

VANDERBURGH, J.

The defendant, it appears, first organized as a boom corporation under the general law. The original articles of incorporation are not disclosed by the record, but it is manifest (and it is not disputed) that the organization must have been made under Gen. St. c. 34, tit. 21, and that the powers and privileges thereby acquired could not include either the right to exercise the power of eminent domain, or to take tolls, or to obstruct the navigable portion of the St. Louis river, where the defendant's boom and works are located, so as to prevent the free passage of the logs of other owners. Stevens Pt. Boom Co. v. Reilly, 44 Wis. 305;S. C. 46 Wis. 242. It was, by virtue of its original articles of incorporation, entitled only to the same rights in the river as other riparian owners, and to erect and maintain booms in connection with the navigation of the stream, for its own use, and the use of others who might contract for its services. It was merely a private boom corporation. Soon after such organization under the general laws, the legislature passed an act entitled “An act in relation to the Knife Falls Boom Corporation,” (Sp. Laws 1872, c. 106,) which purports to confer new and independent franchises and enlarged powers upon the defendant corporation, within the St. Louis river, and over the navigation and use thereof, as respects the passage of logs, including the right of eminent domain, the right to charge compensation for boomage, in the nature of tolls, prescribed by the act, upon all logs passing through their works, and to receive and take the entire charge and control of all logs and timber which might run, come, or be driven within the same, and to boom, scale, and deliver them as provided in such act. Osborne v. Knife Falls Boom Co., 32 Minn. 415;S. C. 21 N. W. Rep. 704. And the corporation is also thereby granted a lien upon all such logs or timber for their compensation, which may be enforced by a sale.

The detention of the plaintiff's logs, taken and held in invitum by defendant under a claim of lien for the boomage allowed by this act, brings up the question of its constitutionality in this case. This question was not suggested or mooted in the case of Osborn against the defendants, just cited, but the question there determined was as respects the power of the legislature to authorize such improvements in and use of a navigable river. The question which is raised here, and which has been elaborately argue by counsel, is the constitutional power of the legislature to so amend the charter, and to confer upon an existing corporation additional special powers and privileges of the character described, under the provisions of article 10, § 2, of the constitution, forbidding the formation of corporations by special acts. The discussion by counsel at the bar embraced the question of the proper original construction of this clause, and the intention of the framers of the constitution in inserting it, and also the question of the construction thereof which has in fact prevailed and been acted on in this state, and the effect which the court ought to give to such construction in considering this case.

1. The charter of a corporation represents a twofold contract: (a) The executed grant by the state of a portion of its sovereignty, irrevocable in its nature, when once accepted and acted on; (b) the mutual compact between the corporators or stockholders among themselves. And, in the absence of constitutional restraints, a corporation might be endowed with new and enlarged powers by legislative grant, and its original character, object, and business might thereby be changed, with the consent of the stockholders, for any lawful purpose. If the clause under consideration was intended simply to prohibit special acts establishing corporate entities or granting original charters, then it is clear that an existing corporation may receive the grant of new and extended privileges and franchises, and the amendment to the defendant's charter by the act in question may undoubtedly be upheld as a valid exercise of legislative power. But the respondent contends that this provision of the constitution has a wider significance, and was intended to restrain all grants of corporate privileges and franchises by special acts of the legislature; and this is, in the opinion of the writer, the proper construction. A corporation, created or formed by special acts, could only be so formed by means of the grant of a charter conferring essential corporate powers or franchises. “Franchises” are defined to be special privileges conferred by government upon individuals, and which do not belong to the citizens of the country, generally, of common right. Bank v. Earle, 13 Pet. 519. The grant of such a franchise is the essential thing in a charter, and whether given to new corporators, or those already organized, or in an original or amended charter, the grant of a corporate franchise is, as between the sovereign and the corporators, so far the grant of a charter, or the grant of a “franchise by act of incorporation.” Attorney General v. Railroad Co., 35 Wis. 560. Such grants, I think, it was clearly the purpose of the framers of the constitution to prohibit by special acts.

It is true, the right to be a corporation is itself a franchise, but all franchises granted to a corporation become corporate franchises, and essential portions of its charter or act of incorporation, and the chief value of the charter, in order to accomplish the purposes of the corporate organization. The constitutional provision requires that corporations, except for municipal purposes, shall be formed under general laws, and not under or by special acts. This cannot, I think, mean that a portion of the franchises or privileges in a proposed charter might be obtained under a general law, and the remainder by special enactments; or, in other words, that a general law might be a mere enabling act to confer corporate existence, leaving the door open to the corporation thereafter to apply to the legislature for additional franchises. Such construction must be given to the provision in question as will manifestly be in harmony with its spirit, and give effect to the intent and purpose of its framers. The object being to restrict the granting of charters to general laws, the courts cannot sanction an evasion by limiting the application of the principle to the case of original charters or corporate organizations. The object of this constitutional restriction was, as it is well understood, to correct an existing evil, and prevent favoritism and abuses in securing grants of special charters, and to establish uniform rules for the endowment of corporations with chartered privileges. Any special legislation affecting the charters of corporations should therefore be strictly construed, so as to give full effect to the leading object of the provision. 1 Dill. Mun. Corp. § 17; Atkinson v. Railroad Co., 15 Ohio St. 35.

Charters, then, since the adoption of the constitution, are to be acquired under general...