44

the legislature may direct and levy compulsory taxes upon a corporation when necessary to perform its duties or discharge its valid obligations. Likewise the state may compel the assessment and disbursement of public revenue for the erection and support of schoolhouses and schools, public highways,16 bridges, and canals, or any other matters which are state concerns as distinguished from municipal.

45

FRANCHISES.

66. Public franchises held by a municipal corporation under legislative grant may be altered or revoked at the legislative will.

The franchise to be a corporation, which is held to belong to the corporators of a private corporation, and to be protected by the contract clause of the federal Constitution, is obviously as to municipalities a matter of merely public concern, and therefore under the legislative control in all particulars and at all times, as we have heretofore seen in considering the subject

44 Memphis v. Brown, 97 U. S. 300, 24 L. Ed. 924; Vance v. Little Rock, 30 Ark. 435, 439; CITY OF NEW ORLEANS v. CLARK, 95 U. S. 644, 24 L. Ed. 521; LAYTON v. NEW ORLEANS, 12 La. Ann. 515; Eschenburg v. Commissioners, 129 Ind. 398, 28 N. E. 865; Maltby v. Tautges, 50 Minn. 248, 52 N. W. 858; Hawkins v. Jonesboro, 63 Ga. 527; Little v. Commissioners, 40 N. J. Law, 397; City of San Francisco v. Canavan, 42 Cal. 541; Carpenter v. People, 8 Colo. 116, 5 Pac. 828; MT. PLEASANT v. BECKWITH, 100 U. S. 514, 25 L. Ed. 699.

45 State v. Blue, 122 Ind. 600, 23 N. E. 963; State Board of Education v. Aberdeen, 56 Miss. 518; School Dist. No. 1 v. Weber, 75 Mo. 558.

46 People v. Supervisors, 50 Cal. 561; People v. Flagg, 46 N. Y. 401; Jensen v. Supervisors, 47 Wis. 298, 2 N. W. 320.

47 Guilder v. Otsego, 20 Minn. 74 (Gil. 59); City of Philadelphia V. Field, 58 Pa. 320; Simon v. Northup, 27 Or. 487, 40 Pac. 560, 30 L. R. A. 171; Thomas v. Leland, 24 Wend. (N. Y.) 65; Pumphrey v. Baltimore, 47 Md. 145, 28 Am. Rep. 446; CITY OF PHILADEL PHIA v. FOX, 64 Pa. 169.

of the charter. All municipal franchises are subjects of legislative grant, and, whether granted to third persons or to the corporation itself, may be revoked before the grantee has performed the public service imposed as a condition of the grant.49 For example, the right to construct waterworks, gasworks, or electric plants, and to supply the city and its citizens with these public utilities necessary for an urban population in modern times, may be granted either to the municipality or to a private corporation organized for that purpose. Before the work has been done to construct these public utilities, the state may repeal the law by which they were granted, and thus revoke the franchises; 50 but with regard to private corporations these franchises, as soon as the works are completed, become contracts, protected by the rule in the Dartmouth College Case, and no law can be passed by the state to impair the obligations of this contract.51 The same rule, it is believed, should apply in case these franchises are granted to the municipality and exercised by it; but here arises a conflict between this contractual right to the franchises so granted and the undoubted power of the legislature to dissolve the corporation, and the subject becomes one of complication and difficulty. Suffice it to say for the present that the legislative control of such franchises as supply these public utilities is not absolute and unlimited.52 Limitations upon this power will be considered here

48 LAYTON v. NEW ORLEANS, 12 La. Ann. 515; GIRARD v. PHILADELPHIA, 7 Wall. (U. S.) 1, 19 L. Ed. 53; Smith v. Inge, 80 Ala. 283; 1 Dill. Mun. Corp. §§ 63-68; Elliott, Mun. Corp. § 2.

49 As indicative of the lack of power of a municipality to grant a franchise, in Cain v. Wyoming, 104 Ill. App. 538, it was held that a city ordinance granting the privilege of constructing and operating a system of waterworks is a mere license. A franchise must be granted by the legislature; a municipal body cannot confer it.

50 Trustees of Schools v. Tatman, 13 Ill. 28, 30; DARLINGTON v. MAYOR, 31 N. Y. 164, 88 Am. Dec. 248; HARTFORD BRIDGE CO. v. EAST HARTFORD, 16 Conn. 149.

51 DARTMOUTH COLLEGE v. WOODWARD, 4 Wheat. (U. S.) 518, 4 L. Ed. 629.

521 Dill. Mun. Corp. § 68, note. The dissolution of the corpora

It

after under the head of "Quasi Public Corporations." 53
has been held with regard to similar franchises that the legis-
lature has unqualified right of revocation; for example, a
public corporation has no property right in a ferry franchise
acquired under a legislative grant, nor in a wharf franchise
to maintain wharves and charge wharfage. Such powers are
held by the United States Supreme Court to be "merely ad-
ministrative, and may be revoked at any time, not touching,
of course, any property of the city actually acquired in the
course of administration." 56

CONTRACTS AND OBLIGATIONS.

67. The legislative power of the state over the contracts and obligations of municipalities is limited by the vested rights of third parties, and the prohibitions found in many of the state constitutions. Subject to these limitations, the state has conrol over the contracts and obligations of a municipality.

This power was illustrated in the matter of licensing of wharves and ferries hereinbefore referred to, wherein was shown that the municipality has no vested rights in these things, upon the theory, expressed in some of the cases, that in such matters the corporation may not acquire vested rights as

tion is the death of the trustee of the community for whose use and benefit the franchise was granted. The beneficiaries still survive, and the public trust continues. The state as sovereign may and will see that the trust does not fail for want of a trustee, but will appoint a successor to hold and administer the trust for the welfare of the community.

53 Post, 189.

54 Hartford Bridge Co. v. East Hartford, 16 Conn. 149; EAST HARTFORD v. HARTFORD BRIDGE CO., 10 How. (U. S.) 511, 13 L. Ed. 518, 531.

55 New Orleans, M. & T. R. Co. v. Ellerman, 105 U. S. 166, 26 L. Ed. 1015.

se Id.

ING.CORP.-14

against its creator; " but practically its right to acquire a right in property has been recognized, as we shall see hereafter. The following decisions may illustrate the judicial opinion upon these subjects: Parties who have become creditors of a municipal corporation upon the faith of the taxing power granted to it to meet its obligations may enforce the execution of this power by the appropriate process. 58 The taxing statute is thus held to be a part of the contract whose obligation cannot be impaired; but the mode of taxation may be altered if the change does not materially affect the creditors' security." So, too, certain property may be made exempt from, which was originally subject to, taxation. But where credit has been given to a municipality upon the faith of a statutory provision that no further bonded indebtedness shall be contracted by the city, an injunction has been granted to restrain an increase of bonded indebtedness, upon the ground that it would impair the obligations of a contract. So, also, creditors may acquire a vested right in a sinking fund provided for their security, so as to authorize them to call upon the courts to prevent any material change in its character, or diversion of it to

61

57 PEOPLE v. MORRIS, 13 Wend. (N. Y.) 325; DARLINGTON v. MAYOR, 31 N. Y. 164, 88 Am. Dec. 248; CITY OF PHILADELPHIA v. FOX, 64 Pa. 180.

58 PORT OF MOBILE v. WATSON, 116 U. S. 289, 6 Sup. Ct. 398, 29 L. Ed. 620; Gilman v. Sheboygan, 2 Black (U. S.) 510, 17 L. Ed. 305; State v. New Orleans, 37 La. Ann. 13; UNITED STATES v. NEW ORLEANS, 103 U. S. 358, 26 L. Ed. 395; VON HOFFMAN v. QUINCY, 4 Wall. (U. S.) 535, 18 L. Ed. 403; Louisiana v. Pilsbury, 105 U. S. 278, 26 L. Ed. 1090; Nelson v. St. Martin's Parish, 111 U. S. 716, 4 Sup. Ct. 648, 28 L. Ed. 574; Goodale v. Fennell, 27 Ohio St. 426, 22 Am. Rep. 321.

59 People v. Bond, 10 Cal. 563; Cooley, Const. Lim. (6th Ed.) 347, 349.

60 Cooley, Const. Lim. (6th Ed.) 348; Seibert v. Lewis, 122 U. S. 284, 7 Sup. Ct. 1190, 30 L. Ed. 1161; Gilman v. Sheboygan, 2 Black (U. S.) 510, 17 L. Ed. 305; Goodale v. Fennell, 27 Ohio St. 426, 22 Am. Rep. 321.

61 Smith v. Appleton, 19 Wis. 468.

other uses, since the law had pledged it to them for their security.$2

OBLIGATIONS IMPOSED BY LEGISLATURE.

68. Upon the elementary principle that duty imposes obligation, the legislature has authority to impose upon the corporation without its consent, and even against its protest, such obligations as will enable it to perform its public functions.

It has accordingly been held that for such purpose a city may be compelled to pay a debt in excess of a legislative limit of indebtedness, to levy and collect taxes and appropriate them to the building and repair of highways, bridges, and canals, as being matters of public, as distinguished from municipal, concern; 63 also to expend money for the improvement of docks, wharves, and levees; 4 also to collect and appropriate money for the support of public schools of the city, 5 and even to provide for the distribution of money raised by taxation for school purposes after its collection; 66 also to compel the payment by a public corporation of a just debt not enforceable in law or equity; 67 and in a leading case the Su

65

62 Board of Liquidators of City Debts v. Municipality No. 1, 6 La. Ann. 21; KELLY v. MINNEAPOLIS, 63 Minn. 125, 65 N. W. 115, 30 L. R. A. 281; People v. Bond, 10 Cal. 563.

63 THOMAS v. LELAND, 24 Wend. (N. Y.) 65; People v. Board, 50 Cal. 561; Jensen v. Board, 47 Wis. 298, 2 N. W. 320; People v. Flagg, 46 N. Y. 401. In one case this duty was enforced by mandamus at the instance of a private person not showing either interest or injury. Pumphrey v. Baltimore, 47 Md. 145, 28 Am. Rep. 446.

64 Eastern & A. R. Co. v. Railroad Co., 52 N. J. Law, 267, 19 Atl. 722.

65 State v. Blue, 122 Ind. 600, 23 N. E. 963; State v. Haworth, 122 Ind. 462, 23 N. E. 946, 7 L. R. A. 240.

ee State Board of Education v. Aberdeen, 56 Miss. 518; School Dist. No. 1 v. Weber, 75 Mo. 558.

67 Creighton v. Board, 42 Cal. 446; Vasser v. George, 47 Miss.