654 CONSTITUTIONAL PROVISION THAT tax was clearly valid, because the Constitution of Pennsylvania, as amended in 1838, declared that every charter giving banking or discounting privileges should contain a clause authorizing the legislature to alter, revoke, or annul the same whenever it was in their opinion injurious to the Commonwealth. Although no such clause was inserted in the act incorporating the Iron City Bank, it referred to the general banking law, which conformed to the constitutional requirement. A contract growing out of the acceptance of a charter with banking and discounting privileges was moreover necessarily subordinate to the organic law and subject to an implied power of revocation which might be exercised for any sufficient cause. In the Railroad Co. v. Gaines,1 a proviso in the Constitution of Tennessee that "all taxation shall be equal and uniform,” was held on like grounds to preclude the legislature from exempting the plaintiffs in error from their share of the public burdens, and thereby occasioning the inequality which the Constitution meant to avoid. These decisions are simply an application of Mr. Webster's argument in the Dartmouth College Case, that the Constitution is as much a part of every statute as if it were set forth in the preamble, and that no one who claims under a legislative grant or contract can allege that he is ignorant of the organic law, or assert any right which it forbids. We may none the less infer that while the people of a State may inhibit the legislature from granting any right or privilege that will be beyond legislative control, the reservation of a power to alter or annul private contracts would presumably be invalid, as an attempt to evade the plain intent of the Federal Constitution and bring the entire field of contracts within the reach of retroactive legislation.2 In these instances the power of revocation was reserved in the organic law, and therefore necessarily inherent in every other; but a legislative declaration that all future charters shall be subject to modification or repeal, will enter into and qualify every subsequent act of incorporation which does not 1 97 U. S. 697. 2 See Miller v. The State, 15 Wallace, 478. CHARTERS SHALL BE REVOCABLE. 655 clearly indicate a different design. The question, nevertheless, in such cases is, What did the legislature intend? And if their purpose appears to have been to disregard the prior statute and enter into an irrevocable contract, the case will fall within the well-known rule, Leges posteriores priores contrarias abrogant.2 An enactment that all charters of incorporation thereafter granted may be altered, amended, or repealed by the legislature, does not necessarily apply to supplements to a pre-existing charter, nor will a clause which declares that "this supplement, and the charter to which it is a supplement, may be altered or amended by the legislature," apply to a contract with the corporation made in a supplement thereafter passed.3 Such statutory reservations of the right of repeal, unlike similar constitutional provisions, do not bind succeeding legislatures or preclude them from making an indefeasible contract. The question therefore is not as to the interpretation of the former statute, but was the latter meant to be irrevocable; and if such appears to have been the legislative intent, it should be upheld. In New Jersey v. Yard the statutory grant under consideration was held not to admit of such an implied qualification, because (1) it was a settlement or compromise of an existing controversy and for a valuable consideration; (2) the contract had been reduced formally to writing, in accordance with a legislative requirement; (3) the terms of the contract, that "this tax shall be in lieu of all other taxation or imposition whatsoever by or under the authority of this State or any law thereof," implied, in view of the whole transaction, that it was to be irrevocable.4 The presumption that a general law forbidding exemptions from taxation, or providing that charters shall be subject to repeal or alteration, qualifies subsequent statutory grants, is nevertheless one which should not lightly be disregarded, 1 Tomlinson v. Jessup, 15 Wallace, 454; Miller v. The State, 15 Id. 478; Atlantic & Gulf R. R. Co. v. Georgia, 98 U. S. 359; Shields v. Ohio, 95 Id. 319. 2 New Jersey v. Yard, 95 U. S. 104. New Jersey v. Yard, 95 U. S. 104. New Jersey v. Yard, 95 U. S. 104. 656 CHARTER MUST NOT BE and will prevail unless distinctly excluded by the words or tenor of the instrument which is alleged to be exempt from their operation.1 A declaration in an organic or general law that such charters as shall be thereafter conferred may be modified or revoked, does not authorize the abrogation of rights of property acquired under the operation of the charter while still in force, and such a deprivation would, on the contrary, be a taking without due process of law, and as such invalid.2 ... Agreeably to the language held in some instances, a charter cannot be repealed arbitrarily without cause assigned, or on manifestly insufficient grounds, even when the power of revocation is reserved in terms which might seem to leave the company at the mercy of the legislature. And in the case last cited such was said to be the rule, although the words of the Constitution were that "the legislature shall have power to revoke or annul any charter . . . whenever in their opinion it may be injurious to the citizens of the Commonwealth, in such manner, however, that no injustice shall be done to the corporators." Agreeably to this decision, "the power of the legislature over grants and contracts is not, even when reserved in terms, like the power of the English Parliament. It corresponds more properly to that of the English Crown, as to which it is certainly the established rule that the king cannot derogate from his own grant; and when an express power is reserved in a certain event or upon certain conditions, it must be proved affirmatively that the event has occurred or the conditions have been fulfilled. The legislature is not the final judge whether the casus fœderis upon which the authority to repeal depends has occurred." 1 Greenwood v. The Freight Co., 105 U. S. 13. 2 See the Sinking-Fund Cases, 99 U. S. 718; Lothrop v. Stedman, 41 Conn. 583; Orr v. Backen County, 81 Ky. 593. The Sinking-Fund Cases, 99 U. S. 718; Flint Plank Road Co. v. Woodhull, 25 Mich. 99; Shields v. Ohio, 95 U. S. 324; The Commonwealth v. The Pittsburg & Connellsville R. R. Co., 58 Pa. 26, 46. 4 The Eastern Archipelago Co. v. Queen, 2 Ex. B. 856; Crease v. Babcock, 23 Pickering, 334; The Commonwealth v. Essex Co., 13 Gray, 239; The Erie R. R. Co. v. Northwestern R. R. Co., 26 Pa. 287. REPEALED ARBITRARILY. 657 Agreeably to the Louisiana Code of 1825, "corporations may be dissolved when the legislature deem it expedient for the public interest, provided that when an act of incorporation imports a contract, on the faith of which individuals. have advanced money or engaged their property, it cannot be repealed without providing for the reimbursement of the advances, or making full indemnity to such individuals." A charitable institution was incorporated subsequently to this enactment, with a stipulation that it should be perpetually exempt from taxation, and received large donations in aid of its beneficent design; and it was held that the exemption could not be abrogated by an amendment to the State Constitution without an indemnity for the sums so advanced, which, as the charter had not been revoked, would be payable to the corporation and constitute an offset to the tax. In Tucker v. Ferguson, and The West Wisconsin R. R. Co. v. The Supervisors, which were relied on as sustaining the right of revocation, the exemption was purely gratuitous, and formed no part of the act of incorporation; while in the case in hand it was embodied in the charter and held forth as an inducement for its acceptance by the corporators and to third persons to contribute the necessary funds. It did not matter whether the gifts were before or after the amendment, because all the corporate property, present or future, was to be exempt.3 It results from this decision that a legislative assurance or stipulation which is manifestly intended as a contract or to influence the conduct of third persons who have purchased stock or made donations on the faith of the expectation so created, will be within the constitutional safeguard, notwithstanding a previous enactment that every such grant shall be revocable.* The decisions on this head were reviewed by the Supreme Court in giving judgment in the Sinking-Fund Cases. It 1 22 Wallace, 527. 2 93 U. S. 595. The Asylum v. New Orleans, 105 U. S. 362. See Miller v. The State, 15 Wallace, 478, 499. 5 99 U. S. 718. 658 WHAT CAUSE IS SUFFICIENT, was there said: "In granting the charter, Congress not only retained but gave special notice of its intention to retain full and complete power to make such alterations and amendments of the charter as come within the just scope of legislative power. That this power has a limit, no one can doubt. All agree that it cannot be used to take away property already acquired under the operation of the charter, or to deprive the corporation of the fruits actually reduced to possession of contracts lawfully made; but as was said by this court through Mr. Justice Clifford in Miller v. The State, It may safely be affirmed that the reserved power may be exercised, and to almost any extent, to carry into effect the original purposes of the grant or to secure the due administration of its affairs so as to protect the rights of stockholders and of creditors, and for the proper distribution of its assets,' and again in Holyoke Co. v. Lyman,2 to protect the rights of the public and of the corporators, or to promote the due administration of the affairs of the corporation.' Mr. Justice Field, also speaking for the court, was even more explicit when, in Tomlinson v. Jessup," he said: The reservation affects the entire relation between the State and the corporation, and places under legislative control all rights, privileges, and immunities derived by its charter directly from the State;' and again, as late as Railroad Co. v. Maine, by the reservation the State retained the power to alter it [the charter] in all particulars constituting the grant to the new company formed under it, of corporate rights, privileges, and immunities.' Mr. Justice Swaine, in Shields v. Ohio,5 says, by way of limitation,' the alterations must be reasonable, they must be made in good faith, and be consistent with the object and scope of the act of incorporation. Sheer oppression and wrong cannot be inflicted under the guise of amendment or alteration."" 6 1 15 Wallace, 498. 2 15 Wallace, 519. 315 Wallace, 459. 4 96 U. S. 510. 5 95 U. S. 324. • See Zabriskie v. The Railroad Co., 18 N. J. Eq. 178; Ames v. The Railroad Co., 21 Minn. 255. |