S. 155; 1876, Peik v. C. & N. W. R., 94 U. S. 164; 1884, Laurel Fork R. Co. v. West Virginia, 25 W. Va. 324; 1886, Railroad Commission Cases, 116 U. S. 307; 1889, Chicago, M. & St. P. R. v. Minn., 134 U. S. 418; 1892, Budd v. New York, 143 U. S. 517; 1894, Reagan v. Farmers' L. & T. Co., 154 U. S. 362; 1894, Brass v. North Dakota, 153 U. S. 391; 1896, Covington & L. Turnp. R. Co. v. Sandford, 164 U. S. 578; 1898, Smyth v. Ames, 169 U. S. 466; s. c., 171 U. S. 361; 1898, Nebraska Tel. Co. v. State, 55 Neb. 627; 1899, Lake Shore & M. S. R. Co. v. Smith, 173 U. S. 684, reversing Smith v. L. S. R. Co., 114 Mich. 460; 1899, City of Danville v. Danville Water Co., 180 Ill. 235; 1899, San Diego L. & T. Co. v. National City, 174 U. S. 739; 1899, Toledo v. N. W. O. Natl. Gas Co., 6 Ohio N. P. 531; 1899, Gould v. Edison El. Ill. Co., 29 Misel. (N. Y.) 559; 1899, Bailey v. Fayette Gas-F. Co., 193 Pa. 175, 44 Atl. Rep. 251.

9. Bridge franchises. See Piscataqua Bridge v. New Hampshire Bridge, 7 N. H. 35, on 68, supra, p. 309, and note, p. 320.

10. As to police power, eminent domain and taxation and power to repeal, see infra, pp. 1344, 1337, 1370.

Sec. 199. 2. Contract between the state and the corporation.

YEATON v. BANK OF THE OLD DOMINION.1

1872. IN THE COURT OF APPEALS OF VIRGINIA. 21 Grattan's (Va.) Rep. 593-603.

[Action of assumpsit by the bank against Yeaton to recover the sum of $561.07, and interest; the defense was a tender of the amount in notes issued by the branch bank at Pearisburg. The mother bank was located at Alexandria, and the legislature reserved the "right to repeal, alter or modify the charter at its pleasure;" the branch bank was subject to the charter of the mother bank, and its notes were to "be received in payments of debts due the bank, whether contracted at the parent bank or at the branch bank." During the war, while Alexandria was in possession of the United States authorities, and Pearisburg not, the Virginia legislature authorized the branch bank to issue notes of smaller denomination than the original charter allowed; these notes became greatly depreciated, and were the ones tendered in payment of the debt. Neither the directors nor stockholders ever accepted any amendment of the charter. Judgment below was for the bank, and this is the error assigned.]

CHRISTIAN, J. * The power of the legislature "to repeal, alter or modify the charter of any bank at its pleasure,” must be held to be limited to this extent. It may certainly repeal the charter of any bank, but it can not compel a bank to accept an amendment or modification of its charter. Nor is any such amendment or modification of its charter binding upon the bank without its acceptance. Banks are private corporations, created by a charter or act of incorporation from the government, which is in the nature of a contract, and, therefore, in order to complete the creation of such corporations, something more than the mere grant of a charter is required; that is, in order to give to the charter the full force and effect of an executed contract, it must be accepted. It is clear that the government can not enforce the acceptance of a charter upon a private corporation with1 Statement abridged. Only part of opinion given.

out its consent.

* These well-settled principles are everywhere recognized as applicable to the original charters of incorporation, and upon principle and authority they apply with equal force to any amendment or modification of the charter as well as to the original charter. Though the legislature may have the reserved power to amend or modify a charter of incorporation, it can no more force the corporation to accept such amendment or modification than it could have forced upon them the acceptance of the original charter without their consent. Under the reservation they can repeal or destroy the charter, without any consent on the part of the corporators, but as long as they remain in existence as a corporate body, they necessarily have the power to reject an amendment or modification of their charter. The power reserved by the legislature gives the right certainly to repeal or destroy, but so far as the right to modify or alter is concerned, it is nothing more than the ordinary case of a stipulation that one of the parties to a contract may vary its terms with the consent of the other contracting party. These principles grow out of the nature of charters or acts of incorporation, which are regarded in the nature of contracts. The amendment or modification must be made by the parties to the contract, the legislature on the one hand and the corporation on the other, the former expressing its intention by means of a legislative act and the latter assenting thereto by a vote of the majority of the stockholders, according to the provisions of its charter, or by other acts showing its acceptance.

The reservation of the right to alter, amend or repeal the act by which the corporation is created may be prudent and salutary, but it seems to be a necessary implication that if the legislature should undertake to make what in their opinion is a legitimate alteration or amendment, the corporation has the power to reject or accept it whatever may be the consequences. One consequence undoubtedly is, that the corporation can not conduct its operations in defiance of the power that created it; and if it does not accept the modification or amendment proposed, must discontinue its operations as a corporate body. But such amendment or modification can not be forced upon the corporation without its consent. Sage, etc., v. Dillard, etc., 15 B. Mon. R. 349; Allen v. McKean, 1 Sumner's R. 277; Durfee v. Old Colony and Fall River R. Co., 5 Allen's R. 230. Every amendment or modification of a charter of incorporation is nothing more than a new contract, which is not binding upon the corporate body until accepted by them. Applying these doctrines, which seem to be well settled, to the case before us, it is manifest that the Bank of Old Dominion can not be held bound by the acts of 1862 as amendments of its charter.

It is no answer to this view that the branch bank at Pearisburg was within the territorial jurisdiction of the Richmond government, and subject to its authority. This bank was not an independent corporation. It had no charter; it was but a branch of its mother bank at Alexandria, subject to its charter. It was but the agent, the mother bank being its principal. It could do no act to bind its principal with

out the consent and authority of that principal. Nor could the legis lature authorize the branch bank which owed its existence to the charter of the mother bank to issue small notes, or to do any other act as a bank without the consent of the mother bank. The only authority which the legislature could exercise was that which it reserved under the power to repeal, modify or alter" the charter of the mother bank. I have already shown that this was not done by the acts of 1862, which could not operate upon the Bank of the Old Dominion as a change or modification of its charter.

Affirmed.

Note. See Commonwealth v. Cullen, supra, p. 417; Plank-Road v. Woodhull, supra, p. 398; Railway Co. v. Allerton, supra, p. 442; Ashton v. Burbank, supra, p. 87; and note to Dartmouth College v. Woodward, supra, p. 746; 1904, Newburyport Water Co. v. Newburyport, 193 U. S. 561.

Sec. 200. 3. Contract between the state and corporate creditors, and between stockholders and corporate creditors, in the case of statutory liability.

HAWTHORNE v. CALEF.'

1864. IN THE SUPREME COURT OF THE UNITED STATES. 2 Wall. (69 U. S.) 10-23.

The constitution of the United States ordains that "no state shall pass any law impairing the obligation of contracts." With this provision in force, the state of Maine, on the 1st of April, 1836, incorporated a railroad company, the charter providing that "the shares of individual stockholders should be liable for the debts of the corporation." "And in case of deficiency of attachable corporate property or estate," the provision went on to say, "the ndividual property, rights and credits of any stockholder shall be liable to the amount of his stock, for all debts of the corporation contracted prior to the transfer thereof, for the term of six months after judgment recovered against said corporation, and the same may be taken in execution on said judgment in the same manner as if said judgment and execution were against him individually, or said creditor, after said judgment, may have his action on the case against said individual stockholder; but in no case shall the property, rights and credits of said stockholder be taken in execution, or attached as aforesaid, beyond the amount of his said stock." Another section provides that if sufficient corporate property to satisfy the execution could not be found, the officer having the execution should certify the deficiency on the execution, and give notice thereof to the stockholder whose property he was about to take, and if such stockholder should show to the creditor or officer sufficient

attachable corporate property to satisfy the debt, "his individual prop1 Arguments and parts of opinion omitted.

erty, rights and credits shall thereupon be exempt from attachment and execution."

The plaintiff, Hawthorne, who had supplied the corporation, then embarrassed and insolvent, with materials to build its road, having obtained judgment as a creditor against it, and being unable to get from it satisfaction (the company having, in fact, no property), sued the defendant, Calef, who was a stockholder, both at the time when the debt was contracted and when judgment for it was rendered, and no transfer of whose stock had been made. A few months after the debt was contracted, the legislature of Maine passed a statute repealing the "individual liability” clause of the charter.

On a question before the supreme court of Maine-the highest court of law in that state-whether such repeal was or was not repugnant to the clause above cited of the constitution, that court held that it was not; that the original provision-not making the stockholder personally liable in any way-did not constitute a "contract" between the creditor and him, within the meaning of the constitution, and that while, but for the repealing act, the plaintiff would have been entitled to recover of the stockholder individually to the extent of his stock, this repealing act had taken away and destroyed such right.

Judgment being given accordingly by the said court in favor of the state statutes, the correctness of such judgment was now on error before this court.

NELSON, J. The question upon the provisions of the charter of the railroad company-in connection with the sale of the property by the plaintiff to the corporation out of which this debt accrued-is whether a contract, express or implied, existed between him and the stockholder?

It is asserted in behalf of the latter that a contract existed only between the creditors and the corporation; and that the obligation of the stockholder rests entirely upon a statutory liability, destitute of any of the elements of a contract.

Without stopping to discuss the question upon the clause of the statute, we think that the case falls within the principle of Woodruff v. Trapnal, 10 How. 190; and Curran v. State of Arkansas, 15 How. 304, heretofore decided in this court.

In the first of these cases the charter of the bank provided that the bills and notes of the institution should be received in all payment of debts due to the state. The bank was chartered 2d November, 1836. On the 10th January, 1845, this provision was repealed, and the question was whether or not, after this repeal, the bills and notes of the bank outstanding at the time were receivable for debts due to the state. The court held, after a very full examination, that the clause in the charter constituted a contract with the holders of the bills and notes on the part of the state, and that the repealing act was void as impairing the obligation of the contract.

In the second case the charter of the bank contained a pledge or assurance that certain funds deposited therein should be devoted to 48-WIL. CASES.

the payment of its debts. It was held by the court that this constituted a contract with the creditors, and that the acts of the legislature withdrawing these funds were void, as impairing the obligation of the

contract.

Now, it is quite clear that the personal liability clause in the charter in the present case pledges the liability or guarantee of the stockholders to the extent of their stock to the creditors of the company, and to which pledge or guarantee the stockholders, by subscribing for stock and becoming members of it, have assented. They thereby virtually agree to become security to the creditors for the payment of the debts of the company, which have been contracted upon the faith of this liability.

By the clause in the charter subjecting the property of the stockholder he becomes liable to the creditor, in case of the inability or insolvency of the company for its debts, to the extent of his stock. The creditor had this security when the debt was contracted with the company over and above its responsibility. This remedy the repealing act has not merely modified to the prejudice of the creditor, but has altogether abolished, and thereby impaired the obligation of his contract with the company.

Reversed.

Note. See generally: 1845, Freeland v. McCullough, 1 Denio (N. Y.) 414, 43 Am. D. 685, note, 694; 1847, Corning v. McCullough, 1 N. Y. 47, 49 Am. D. 287, note, 308; 1857, Conant v. Van Shaick, 24 Barb. (N. Y.) 87; 1862, Story v. Furman, 25 N. Y. 214; 1870, In re Telegraph C. Co., L. R. 10 Eq. Cas. 384; 1871, Norris v. Wrenschall, 34 Md. 492; 1871, Lowry v. Inman, 46 N. Y. 119; 1873, Provident Sav. Inst. v. Jackson, etc., 52 Mo. 552; 1878. Sinking Fund Cases, 99 U. S. 700; 1881, Aultman's Appeal, 98 Pa. Stat. 505; 1883, Jerman v. Benton, 79 Mo. 148; 1884, Ninnick v. Iron Works, 25 W. Va. 184; 1887, Fourth National Bank v. Francklyn, 120 U. S. 747; 1888, Leavitt v. Lovering, 64 N. H. 607, 1 L. R. A. 58; 1888, McDonnell v. Alabama, etc., 85 Ala. 401; 1892, Kennedy v. Bank, 97 Cal. 93; 1896, McGowan v. McDonald, 111 Cal. 57, 52 Am. Stat. Rep. 149. But see, contra, 1858, Coffin v. Rich, 45 Maine 507, 71 Am. D. 559; 1867, Woodhouse v. Commw. Ins. Co., 54 Pa. Stat. 307.

Sec. 201. 4. Contract between the state and the corporators or members.

TOMLINSON v. JESSUP.'

1872. IN THE SUPREME COURT OF THE UNITED STATES. 15. Wallace (S2 U. S.) 454-459.

[Bill in equity by Jessup, a stockholder of the Northeastern Railroad Company against Tomlinson and other officers of South Carolina to enjoin them from levying a tax on the property of the road. Lower court granted the injunction, and appeal taken.]

FIELD, J. The constitution of South Carolina, adopted in 1868, declares that the property of corporations then existing or thereafter 'Statement except as given in opinion omitted.