27 Vt. 140 (Vt. 1855), Thorpe v. Rutland & B.R. Co.

Citation:27 Vt. 140
Opinion Judge:REDFIELD, CH. J.
Attorney:D. A. Smalley for the defendants, J. Maeck, for the plaintiff.
Court:Supreme Court of Vermont

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27 Vt. 140 (Vt. 1855)




Supreme Court of Vermont.

September, 1855

December Term, 1854.

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ACTION ON THE CASE to recover damages for sheep of the plaintiff killed by one of the defendants' locomotives, upon their railroad track, where said sheep had escaped in consequence of there being no cattle-guard at a farm crossing, across the defendants' railroad on the plaintiff's land in Charlotte. The only question reserved at the trial in the county court was, whether the defendants were bound by the provision in the general railroad act of 1849, requiring railroad companies to construct and maintain cattle-guards; a1 there being no such obligation imposed upon the defendants by their charter, which was granted in 1843.

The county court, November Term, 1854,--PECK, J., presiding,--decided and instructed the jury that the defendants were bound by said provision, to which the defendants excepted.

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D. A. Smalley for the defendants, argued that the defendant's charter was a contract conferring certain rights and imposing certain obligations, which could not be added to or varied without the defendants' consent; that the act of 1849, or general railroad law, if allowed to act retrospectively, would impair and alter the defendants' rights under their contract, and impose obligations upon them which they never assumed, and that it should therefore be held inoperative as to the defendants, and cited 2 Kent 272, 306-7. 2 Pet. Con. 321. 4 Do. 559, 566. 5 Do. 386. 2 Howard, 672. 6 Do. 320. 2 Mass. 143. 10 Do. 439. 10 Barb. 89.

J. Maeck, for the plaintiff.

The defendants are bound by the provisions of the general law. (Comp. Stat. 200, §41.) These provisions are mere police regulations, which the legislature had a right to make, and they in no way impair the grant to the defendant. Lyman v. Boston & Wor. R. Co., 4 Cush. 288. Galena & Chicago R. Co. v. Loomis, 13 Ill. 548. State v. Bosworth, 13 Vt. 402. Nelson v. Vt. & C. R. Co. 26 Vt. 717.

The opinion of the court was delivered, at the circuit session, in September, 1855, by REDFIELD, CH. J.

I. The present case involves the question of the right of the legislature to require existing railways to respond in damages for all cattle killed or injured by their trains until they erect suitable cattle-guards at farm-crossings. No question could be made where such a requisition was contained in the charter of the corporation, or in the general laws of the state at the date of the charter. But where neither is the case, it is claimed that it is incompetent for the legislature to impose such an obligation by statute, subsequent to the date of the charter.

It has never been questioned, so far as I know, that the American legislatures have the same unlimited power in regard to legislation which resides in the British parliament, except where they are restrained by written constitutions. That must be conceded, I think, to be a fundamental principle in the political organizations of the American states. We cannot well comprehend how, upon principle, it should be otherwise. The people must of course, possess

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all legislative power originally. They have committed this in the most general and unlimited manner to the several state lgislatures, saving only such restrictions as are imposed by the constitution of the United States, or of the particular state in question. I am not aware that the constitution of this state contains any restriction upon the legislature in regard to corporations, unless it be that where " any person's property is taken for the use of the public, the owner ought to receive an equivalent in money; " or that there is any such restriction in the United States constitution, except that prohibiting the states from " passing any law impairing the obligation of contracts."

It is a conceded point, upon all hands, that the parliament of Great Britain is competent to make any law binding upon corporations, however much it may increase their burdens or restrict their powers, whether general or organic, even to the repeal of their charters.

This extent of power is recognized in the case of Dartmouth College v. Woodward, 4 Wheaton 518, and the leading authorities are there referred to. Any requisite amount of authority, giving this unlimited power over corporations to the British parliament, may readily be found. And if, as we have shown, the several state legislatures have the same extent of legislative power, with the limitations named, the inviolability of these artificial bodies rests upon the same basis in the American states with that of natural persons, and there are, no doubt, many of the rights, powers, and functions of natural persons which do not come within legislative control. Such, for instance, as are purely and exclusively of private concern, and in which the body politic, as such, have no special interest.

II. It being assumed then, that the legislature may control the action, prescribe the functions and duties of corporations, and impose restraints upon them to the same extent as upon natural persons, that is, in all matters coming within the general range of legislative authority, subject to the limitation of not impairing the obligation of contracts, provided the essential franchise is not taken without compensation, it becomes of primary importance to determine the extent to which the charter of a corporation may fairly be regarded as a contract within the meaning of the United States constitution.

Upon this subject, the decisions of the United States supreme

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court must be regarded as of paramout authority. And the case of Dartmouth College v. Woodward, being so much upon the very point now under consideration, and the leading case, and authoritative exposition of the court of last resort upon that subject, must be considered as the common starting point, the point of divergence, so to speak, of all the contrariety of opinion in regard to it.

Mr. Chief Justice MARSHALL there says, " a corporation is an atificial being-- the mere creature of the law--it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence." The decision throughout treats this as the fundamental idea, the pivot upon which the case turns. The charter of a corporation is thus regarded as a contract, inasmuch as it is an implied undertaking on the part of the state, that the corporation, as such, and for the purposes therein named or implied, shall enjoy the powers and franchises by it charter conferred. And any statute essentially modifying these corporate franchises is there regarded as a violation of the charter. But when we come to inquire what is meant by the franchises of a corporation, the principal difficulty arises. Certain things, it is agreed are essential to the beneficial existence and successful operation of a corporation, such as individuality and perpetuity, when the grant is unlimited; the power to sue and to be sued, to have a common seal and to contract; and in the case of a railroad, to have a common stock to construct and maintain its road, and to operate the same for the common benefit of the corporators. Certain other things, as incident to the beneficial use of these franchises, are necessarily implied. But there is a wide field of debateable ground outside of all these. It is conceded that the powers expressly, or by necessary implication, conferred by the charter, and which are essential to the successful operation of the corporations are inviolable.a1

But is has sometimes been supposed that corporations possess a kind of immunity and exemption from legislative control, extending

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to everything materially affecting their interest, and where there is no express reservation in their charters. It was upon this ground that a perpetual exemption from taxation was claimed in Providence Bank v. Billings, 4 Peters 514, their charter being general, and no power of taxation reserved to the state. The argument was, that the right to tax either their property or their stock was not only an abridgment of the beneficial use of the franchise, but if it existed, was capable of being so exercised as virtually to destroy it. This was certainly plausible, and the court do not deny the liability to so exercise the power of taxation as to absorb the entire profits of the institution. But still they deny the exemption claimed Chief Justice MARSHALL there says: " The great object of an incorporation is, to bestow the character and properties of individuality on a collected and changing body of men. Any privileges which may exempt it from the burdens common to individuals, do not flow necessarily from the charter, but must be expressed in it, or they do not exist. "

This is sufficiently explicit, and upon examination will be found, I think, to have placed the matter upon its true basis. In reason, it would seem that no fault could be found with the rule here laid down by the great expounder of American constitutional law. As to the general liability to legislative control, it places natural persons and corporations precisely upon the same ground. And it is the true ground, and the only one upon which equal rights and just liabilities and duties can be fairly based.

To apply this rule to the present case, it must be conceded that all which goes to the constitution of the corporation and its beneficial operation is granted by the legislature, and can not be revoked, either directly or indirectly, without a violation of the grant, which is regarded as impairing the contract, and so prohibited by the United States constitution. And if we suppose the legislature to have made the same grant to a...

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