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would pretend, independently of any law on the subject, that there would be any justice or fairness in allowing that body alone to determine the price to be paid. There will always be, as I have said, a great pressure upon the board by the people electing it to regulate the price of water in their interest, without regard to that of the company. The influence thus exerted to warp the judgment of the members and change the character of the body from that of an impartial tribunal to one acting in the interest of its constituents, every practical man dealing with the corporation would appreciate and act upon. All the influences usually brought to bear at elections to secure the choice of those who will carry out the wishes of the voters, we should expect to see applied to secure the election of candidates thus empowered to tix the price of the article which the voters daily consume. And what we might thus expect has occurred at every election since the new constitution went into effect. A suit was recently brought by the plaintiff in the circuit court of the United States for the district of California against the mayor and supervisors of San Francisco to enjoin the passage of an ordinance, then proposed, to fix the price of its water under this new constitution. Among other reasons urged upon the consideration of the court was the fact that the mayor and supervisors, before the election, had pledged themselves to make a material reduction in the rates, which, if carried out, the company contended would be destructive of its interests. The fact that such pledges were made was not controverted, but the court answered that “if it be competent at all, under the provision in question, for the people of San Francisco through their representatives in the board of supervisors to pass the proposed ordinance, it is difficult to perceive why, in looking around for agents or representatives to carry out their will, it is unlawful to ask in advance whether those seeking to represent them will obey their command in these particulars, or to require a pledge to that effect before committing the trust to them."1 And in the same case the court referred to the clause in the new constitution declaring that any corporation collecting water rates in any city and county otherwise than as established by the board of supervisors of the district, should forfeit its franchises and water-works to the city and county for the use of the public, and said: “It would seem to be only necessary to make this brief statement of the case to enable one of ordinary intelligence, endowed with a reasonable share of moral sense, to perceive the monstrous injustice of thus placing the large investments of complainant, made under the stimulus of the inducement held out by the act of 1858, at the absolute mercy of an irresponsible public sentiment, or of public cupidity. This last provision would seem to offer a large premium for the perpetration of a wrong-a large inducement to the purchaser [the consumer] to fix the price at unremunerative rates, in order to secure the large property by*forfeiture and confiscation, or to so largely diminish its value as to force a sale to the city at a price far below its real value. It was alleged in the argument, and not denied to be a matter of public history and public notoriety, of which we are authorized to take notice, that such designs have been openly and publicly avowed and advocated by public speakers."?
It is difficult to understand how any just man, carefully considering what has been thus stated, can hold that the board constitutes an impartial tribunal such as the law of 1858 assured the plaintiff, as an inducement for its large expenditures, it should always have to determine what rates are reasonable. The great wrong and injustice done to the plaintiff by subjecting the determination of the rates it shall receive for its property to the judgment of a tribunal thus deeply interested against it, and impelled to reduce them by an exacting and constantly pressing constituency, are declared
See Spring Valley Water Works v. Bartlett, 16 Fed. Rep. 632. 'Id. 636.
by the court to be justified by the law and constitution of the state, and in no way forbidden by the contract clause of the federal constitution, which was designed to insure the observance of good faith in the stipulation of parties against state action. Authority to interfere with and destroy the contract rights of the plaintiff is claimed, as already stated, under the power reserved to the state by its constitution, in force at the time, to alter or repeal the law pursuant to which the plaintiff was incorporated. Such authority is also asserted from the public interest which the state is alleged to have acquired in the use of the water furnished by the plaintiff.
Upon each of these grounds I have a few words to say. The clause of the state constitution referred to in the first of them is in these words: “Corporations may be formed under general laws, but shall not be created by special act, except for municipal purposes. All general laws and special acts passed pursuant to this section may be altered from time to time or repealed.” It is contended that the right thus reserved to alter or repeal the general law, under which the plaintiff was incorporated, authorized the state to exercise greater control over the business and property of the company than it could have exercised over like business and property of natural persons; that as the repeal of the general law would put an end to the corporation, the state could prescribe the conditions of its continued existence, and, therefore, could legitimately impose any restrictions and limitations, however burdensome, upon the subsequent possession and use of its property, and require the corporation to comply with them. Indeed, there seems to be an impression in the minds of counsel, and, from the language not infrequently used by some judges, in their minds also, that the reservation in charters of corporations and in laws authorizing the formation of corporations, of a power to alter or repeal such charters or laws, operates as a gift to the state and to the legislature of uncontrolled authority over the business and property of the corporations. And yet no doctrine is more unfounded in principle or less supported by authority. When carried out in practice, it is utterly destructive of all rights of property of corporate bodies. Those who entertain it overlook the occasion which led to the adoption of the clause containing the reservation, and the object it was designed to accomplish.
When this court, in the Dartmouth College Case, decided that the charter of a private corporation was a contract between the state and the corporators, and therefore within the protection of the inhibition of the federal constitution against impairment of contracts by state legislation, it was suggested by Judge STORY, who concurred in the decision, that this unalterable and irrepealable character of the contract might be avoided by a reservation of power in the original charter. “In my judgment,” he said, “it is perfectly clear that any act of a legislature which takes away any powers or franchises vested by its charter in a private corporation or its corporate officers, or which restrains or controls the legitimate exercise of them, or transfers them to other persons without its assent, is a violation of the obligation of that charter. If the legislature mean to claim such an authority it must be reserved in the grant. The charter of Dartmouth College contains no such reservation, and I am, therefore, bound to declare that the acts of the legislature of New Hampshire now in question do impair the obligation of that charter, and are consequently unconstitutional and void." 4 Wheat. 712. In another part of his opinion he refers to an early decision of the supreme court of Massachusetts, which had declared that the rights legally vested in a corporation could not be controlled or destroyed by a subsequent statute, “unless a power for that purpose be reserved to the legislature in the act of incorporation.” Id. 708.
When the general character of the decision in the Dartmouth College Case became known, the states acted very generally upon the suggestion of Judge STORY, and few charters were subsequently granted without a clause reserving to the legislature the power to alter or repeal them. In some in
stances a general law was enacted, declaring that all corporations subsequently created should be subject to this reserved power; and in some cases, where a new constitution was adopted by a state, a clause of similar import was inserted. The object of the reservation, in whatever form expressed, was to preserve to the state control over the corporate franchises, rights, and privileges which, in her sovereign or legislative capacity, she had called into existence; in other words, to enable her to annul or modify that which she had created. It was not its object to interfere with contracts which the corporation, when once created, might make, nor with the property which it might acquire.
Such is the purport of our language in Tomlinson v. Jessup, 15 Wall. 458, where we stated the object of the reservation to be “to prevent a grant of corporate rights and privileges in a form which will preclude legislative interference with their exercise, if the public interest should, at any time, require such interference;" and that “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."
*In Railroad Co. v. Maine, 96 U. S. 510, where a law containing a similar reservation was under consideration, we expressed substantially the same thing; that by the reservation the state retains the power to alter the act of incorporation in all particulars constituting the grant to it of "corporate rights, privileges, and immunities;” and that “the existence of the corporation and its franchises and immunities, derived directly from the state," thus kept under her control, adding, however, “that rights and interests acquired by the company, not constituting a part of the contract of incorporation, stand upon a different footing.”
As thus seen, the reservation applies only to the contract of incorporation, to the corporate existence, franchises, and privileges granted by the state. With respect to everything else it gives no power that the state would not have had without it. Necessarily, it cannot apply to that which the state never possessed or created, and therefore could not grant. It leaves the corporation, its business, and property, exactly where they would have been had the supreme court held, in the Dartmouth College Case, that charters are not contracts within the constitutional prohibition against legislative impairment. It accomplished nothing more; and any doctrine going beyond this would be subversive of the security by which the property of corporations is held, and in the end would destroy the security of all private rights. Behind the artificial body created by the legislature stand the corporators, natural persons, who have united their means to accomplish an object beyond their individual resources, and who are as much entitled, under the guaranties of the consti. tution, to be secured in the possession and use of their property thus held as before they had associated themselves together. Whatever power the state may possess over corporations in their creation or in passing or amending the laws under which they are formed and altered, it cannot withdraw them from the guaranties of the federal constitution. As I said on another occasion: "The state cannot impose the condition that the corporation shall not resort to the courts of law for the redress of injuries or*the protection of its property; (or when in court, that it shall be subjected to different rules of evidence and be required to prove by two witnesses what individuals may establish by one;] that it shall make no complaint if its goods are plundered and its premises invaded; that it shall ask no indemnity if its lands be seized for public use, or be taken without due process of law, or that it shall submit without objection to unequal and oppressive burdens arbitrarily imposed upon it; that, in other words, towards it and its property the state may exercise unlimited and irresponsible power. Whatever the state may do even with the creations of its own will, it must do in subordination to the inhibitions of the federal consti.
lation. It may confer by its general laws upon corporations certain capacities of doing business, and of having perpetual succession in its members. It may make its grant in these respects revocable at pleasure; it may make it subject to modifications; it may impose conditions upon its use, and reserve the right to change these at will. But whatever property the corporation acquires in the exercise of the capacities conferred, it holds under the same guaranties which protect the property of individuals from spoliation. It cannot be taken for public use without compensation; it cannot be taken without due process of law; nor can it be subjected to burdens different from those laid upon the property of individuals under like circumstances.”
In Detroit v. Detroit Howell Plank Road Co. the supreme court of Michigan, in considering this subject, uses similar language. Speaking by Mr. Justice COOLEY, it said: “But for the provision of the constitution of the United States, which forbids impairing the obligation of contracts, the power to amend and repeal corporate charters would be ample without being expressly reserved. Thə reservation of the right leaves the state where any sovereignty would be, if unrestrained by express constitutional limitations and with the powers it would then possess. It might, therefore, do what it would be admissible for any constitutional government to do when not thus restrained, but it could not do what would be inconsistent with constitutional principles. And it cannot be necessary at this day to enter upon a discussion in denials of the right of the government to take from*either individuals or corporations any property which they may rightfully have acquired. In the most arbitrary times such an act was recognized as pure tyranny, and it has been forbidden in England ever since Magna Charta, and in this country always. It is immaterial in what way the property was lawfully acquired, whether by labor in the ordinary vocations of life, by gift or descent, or by making profitable use of a franchise granted by the state; it is enough that it has become pri. vate property, and it is then protected by the law of the land.' " 43 Mich. 140–147; [S. C. 5 N. W. Rep. 275.]
Applying these views to the case before us, it will be seen that the right asserted by the state, with respect to the property of the Spring Valley Water Company, cannot be upheld. The state gave to certain parties the right to form themselves into that corporation for the purpose of conveying pure and fresh water to the city and county of San Francisco. It did not grant to them the reservoirs by which that water is accumulated; it did not grant to them the aqueducts by which the water is carried to the city and county; it did not grant to them the pipes by which the water is distributed through the city; it only gave facilities for the conveyance of the water to the city and for its distribution. It could not, therefore, under its reserved power over the corporation, appropriate these reservoirs, aqueducts, and mains without making compensation for them; nor could it divert them, except upon like terms, from the purposes for which they were constructed, to the supplying of the city and county with salt instead of fresh water, or with gas or oil, or devote them to other uses, The water itself is the property of the company. It was not taken from a running stream; nor from any lake; nor from any source where the government could assert that it alone had the right to control and use it. It was collected by the company as it descended from the heavens. Whatever may be the differences of opinion as to the ownership of running waters, or of waters of navigable streams, or of lakes, it has never been doubted that water collected by individual agency, from the roof of one's house, or in hogsheads, barrels, or reservoirs, as it descends from the clouds, is as much private property*us anything else that is reduced to possession which otherwise would be lost to the uses of man. Indeed, it is a general principle of law, both natural and positive, that where a subject, animate or inanimate, which otherwise could not be brought under the control or use of man, is reduced to such control or use by individual labor, a
right of property in it is acquired by such labor. The wild bird in the air belongs to no one, but when the fowler brings it to the earth and takes it into his possession, it is his property. He has reduced it to his control by his own labor, and the law of nature and the law of society recognize his exclusive right to it. The pearl at the bottom of the sea belongs to no one, but the diver who enters the waters and brings it to light has property in the gem. He has, by his own labor, reduced it to possession, and in all communities and by all law his right to it is recognized. So the trapper on the plains and the hunter in the north have a property in the furs they have gathered, though the animals from which they were taken roamed at large and belonged to no one. They have added by their labor to the uses of man an article promoting his comfort which, without that labor, would have been lost to him. They have a right, therefore, to the furs, and every court in christendom would maintain it. So, when the fisherman drags by his net fish from the sea, he has a property in them, of which no one is permitted to despoil him. It was in conformity with this principle that this court, in Atchison v. Peterson, 20 Wall. 512, in speaking of the general occupation of the public lands made free for mining, and the rights of the first appropriator of lands containing mines, said that “he who first connects his own labor with property thus situated, and open to general exploration, does, in natural justice, acquire a better right to its use and enjoyment than others who have not given such labor. So the miners on the public lands throughout the Pacific states and territories by their customs, usages, and regulations, everywhere recognize the inherent justice of this principle, and the principle itself was, at an early day, recognized by legislation and enforced by the courts of those states and territories."
*When the plaintiff brought water to the city of San Francisco it had a right to sell the property at such reasonable prices as it could obtain, as it might have sold grain, or fruit, or coal, had it brought those articles to market. If the state could interfere and insist that such reasonable prices should be determined by other authority than the company, that authority must also have been other than that of the consumers or of their agents. Of the limitations upon the power of the state in this respect, independently of its contract, and for what compensation it can compel the company to sell its property, I shall hereafter speak. It is sufficient at present to say that the power reserved over the act of incorporation gave the state no control over such compensation which it did not possess without the reservation. Its control here is limited by the stipulations of the contract with the company. The legislature can, of course, repeal the act under which the plaintiff was incorporated, and thus put an end to its corporate existence, but so long as the corporation remains, the contract remains, with all its binding force.
The contract between the state and the corporators, by which the plaintiff became a corporation, is not to be confounded with the contract between the state and the corporation when created. Although the two contracts are contained in the same law, they are to be treated as separate and distinct from each other as if they were embraced in different statutes. Private corporations, by the constitution of California, can be formed only under general laws, but all that is embraced by a general law of that character may not necessarily be a part of the contract of incorporation of parties forming themselves into a corporate body under it. It may refer to matters having no relation to corporate bodies, such as rules of evidence, forms of procedure, or descent of property; and it may contain contracts for specific work by the corporation created. No greater legislative control over such matters would result from their association in the same law which authorized the formation of the corporation than if they were contained in separate acts. If, for example, the plaintiff had been incorporated to bring to the city and