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§ 90 (52). Public and Private. A fundamental division of corporations, heretofore adverted to, is into public and private.' The

Ante, chap. ii. §§ 31-39. In Mills v. Williams, 11 Ired. (N. Car.) Law, 558, Pearson, J., commenting on the common division of corporations, says: "The purpose in making all corpora

tions is the accomplishment of some public good. Hence the division into public and private has a tendency to confuse and lead to error in investigation; for, unless the public are to be

importance of this distinction cannot be too much emphasized, since upon it are based the legal principles which so broadly distinguish the two classes of corporations. With private corporations the present work has no other concern than to point out by way of illustration wherein they differ from those which are public. Both classes are alike created by the legislature, and in the same way, - by special charter or under general incorporation acts.

§ 91 (53). "Private" defined; Dartmouth College Case. Private corporations are created for private as distinguished from purely public purposes, and they are not, in contemplation of law, public, because it may have been supposed by the legislature that their establishment would promote, either directly or consequentially, the public interest. They cannot be compelled to accept a charter

benefited, it is no more lawful to con-
fer exclusive rights and privileges'
upon an artificial body than upon a
private citizen.
The substantial dis-
tinction is this: Some corporations are
created by the mere will of the legisla-
ture, there being no other party inter-
ested or concerned. To this body a por-
tion of the power of the legislature is
delegated to be exercised for the public
good, and it is subject at all times to be
modified, changed, or annulled. Other
corporations are the result of contract.
The legislature is not the only party
interested; for, although it has a pub-
lic purpose to be accomplished, it
chooses to do it by the instrumentality
of a second party. These two make a
contract. The expectation of benefit
to the public is the moving consider-
ation on one side; that of expected
remuneration for the outlay is the con-
sideration on the other. It is a con-
tract, and, therefore, cannot be modi-
fied, changed, or annulled without the
consent of both parties. Counties are
an instance of the former, railroad and
turnpike companies of the latter class
of corporations." This recognizes the
substantial difference between the two
classes of corporations, and is, in effect,
a criticism upon the names by which
they are distinguished.

some public enterprise in which the public interests are involved, such as railroad, turnpike, and canal companies; and corporations strictly private. Miner's Ditch Co. v. Zellerbach, 37 Cal. 543. The opinion of Sawyer, C. J., in this case, is able and instructive. The author prefers the ordinary division of corporations into public (which includes municipal) and private. This is the nomenclature in common use. The Civil Code of California thus defines public and private corporations (§ 284): "Corporations are either public or private. Public corporations are formed or organized for the government of a portion of the State; all other corporations are private.' Construing this section, it was held in Dean v. Davis, 51 Cal. 406, 410, that a levee district formed under an act of the legislature for reclamation purposes was a public corporation. Crockett, J., says: "It is true, perhaps, that it was not formed or organized for the government of a portion of the State, in the broadest sense of the term; nevertheless it exercises certain governmental functions within the district. To constitute a public corporation, it is not essential that it shall exercise all the functions of government within the prescribed district." S. P., see also According to the view of the Su- People v. Reclamation District, 53 Cal. preme Court of California, corpora- 346; Hoke v. Perdue, 62 Cal. 545. See tions should be divided into three Foster v. Fowler, 60 Pa. St. 27, in which classes, to wit: Public municipal cor- a company created to supply a city porations, the object of which is to with water was held to be a public, as promote the public interest; corpora- distinguished from a private corporations technically private, but of a tion. See chapter on Public Utilities, quasi public character, having in view post.

or incorporating act.' The assent of the corporation is necessary to make the incorporating statute operative; but when assented to, the legislative grant is irrevocable, and it cannot, without the consent of the corporation, be impaired or destroyed by any subsequent act of legislation, unless the right to do so was reserved at the time. The celebrated Dartmouth College Case, by its construction of the Federal Constitution, incorporated, wisely or otherwise, into American jurisprudence the principle which has been attended with such important practical consequences, namely, that privileges and franchises granted by legislative act to a private corporation, when accepted, constitute a contract within the meaning of the clause of the Constitution which secures inviolability of contracts by ordaining that no State shall pass any law impairing their obligation; and hence a law materially altering the charter of such a corporation is unconstitutional, unless the power to alter it was reserved, either generally or specially, when the grant was made.

§ 92 (54). Public Corporations defined. - Public, including mu nicipal, corporations are called into being at the pleasure of the State, and while the State may, and in the case of municipal corporations usually does, it need not, obtain the consent of the people to the locality to be affected. The charter or incorporating act of a municipal corporation is in no sense a contract between the State and the corporation, although, as we shall presently see, vested rights in favor of third persons, if not indeed in favor of the corporation or rather the community which is incorporated, may arise under it. Public corporations within the meaning of this rule are such as are established for public purposes exclusively, — that is, for purposes connected with the administration of civil or of local government, and corporations are public only when, in the language of Chief Justice Marshall, "the whole interests and franchises are the exclusive property and domain of the government itself," such as quasi corporations (so called), counties and towns or cities upon which are conferred the powers of local administration. Subject to constitutional limitations presently to be noticed, the power of the legislature over such

1 Ante, § 69.

2 Dartmouth College v. Woodward, 4 Wheat. 518. All attempts to overthrow this judgment have failed. In the great case of People v. O'Brien, 111 N. Y. 1, arising out of the acts of the legislature of New York in 1886, repealing the charter of the Broadway Surface Railway Company, and dissolving that corporation, decided by the

Court of Appeals of New York, Ruger, C. J., speaking of the Dartmouth College Case, says: "Although it has sometimes been criticised, it has been uniformly acquiesced in by the courts of the several States as the law of the land, and may be regarded as too firmly settled to admit of question or dispute." Infra, §§ 112, 273.

corporations is supreme and transcendent: it may, where there is no constitutional inhibition, erect, change, divide, and even abolish them, at pleasure, as it deems the public good to require.1

Dartmouth College v. Woodward, 221; Heard v. State, 113 Ga. 444; Mattox v. State, 115 Ga. 212; True v. Davis, 133 Ill. 522; Somonauk v. People, 178 Ill. 631, 634; Cicero v. Chicago, 182 Ill. 301, 309; In re Dalton, 61 Kan. 257, 264; Frederick v. Groshen, 30 Md. 436, 444; Redell v. Moores, 63 Neb. 219, 230; People v. Shepard, 36 N. Y. 285; Wilcox v. McClellan, 175 N. Y. 9, affirming 110 N. Y. App. Div. 378; MacMullen v. Middleton, 187 N. Y. 37; De Camp v. Eveland, 19 Barb. (N. Y.) 81; Board of Education v. Board of Education, 76 N. Y. App. Div. 355; Portland & W. V. R. Co. v. Portland, 14 Oreg. 188; In re Malone's Estate, 21 S. Car. 435; State v. Narragansett, 16 R. I. 424, 435; Morris v. State, 62 Tex. 728; Malone v. Williams, 118 Tenn. 390, holding void the Act of March 27, 1907, granting Memphis a new charter under the name of an amended or modified charter.

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4 Wheat. 518; Allen v. McKean, 1 Sumner, 276 (the Bowdoin College Case, elaborately considered by Story, J.); see reference to this case, 2 Story's Life and Letters, 150; Cheaney v. Hooser, 9 B. Mon. (Ky.) 330; Berlin v. Gorham, 34 N. H. 266; Meriwether v. Garrett (repeal of charter of city of Memphis), 102 U. S. 472, citing text; Sinton v. Carter Co., 23 Fed. Rep. 535; People v. Morris, 13 Wend. (N. Y.) 325. In this case the defendant insisted that the rights and privileges conferred upon the village of Ogdensburg by the act incorporating it were vested rights, and could not be impaired by subsequent legislation. But, said Nelson, J., with his usual clearness, "It is an unsound and even absurd proposition that political power conferred by the legislature can become a vested right as against the government in any individual or body of men. Henderson v. New York, 65 N. Y. App. Div. 180, citing text; s. P. Penobscot Boom Corporation v. Lawson, 16 Me. 225; Yarmouth v. North Yarmouth, 34 Me. 411; Story, Com. Const., §§ 1385, 1388; North Yarmouth v. Skillings, 45 Me. 133; Girard v. Philadelphia, 7 Wall. 1; United States v. Baltimore & O. R. Co., 17 Wall. (U. S.) 322; Philadelphia v. Fox, 64 Pa. St. 169; Mobile v. Watson, 116 U. S. 289; ante, § 15; Jersey City v. Railroad Co., 20 N. J. Eq. 360; Rundle v. Del., &c. Canal Co., 1 Wall. Jr. 275; s. c. 14 How. 80; Tinsman v. Railroad Co., 26 N. J. L. 148; State v. Brannin, 23 N. J. L. 485; State v. Fuller, 34 N. J. L. 227; Paterson v. Society, &c., 24 N. J. L. 385; ante, § 69; State v. Jennings, 27 Ark. 419; Clinton v. Railroad Co., 24 Iowa, 455; San Francisco v. Canavan, 42 Cal. 541; Demarest v. New York, 74 N. Y. 161; s. c. 11 Hun, 19; Cornell v. People, 107 Ill. 372; Lutz v. Crawfordsville, 109 Ind. 466; McKim v. Odom, 3 Bland (Md.), 407, 417; Wood v. Town of Oxford, 97 N. Car. 227; David v. Portland Water Com'rs, 14 Oreg. 98; Mt. Pleasant v. Beckwith, 100 U.S. 514, 525; Comanche County v. Lewis, 133 U. S. 198; Bernard's Township. Morrison, 133 U. S. 523, 528; Williams v. Eggleston, 170 U. S. 304, 310; Atkin v. Kansas, 191 U. S. 207,

"Municipal corporations are the creatures, mere political subdivisions, of the State for the purpose of exercising a part of its powers. They may exert only such powers as are expressly granted to them, or such as may be necessarily implied from those granted. What they lawfully do of a public character is done under the sanction of the State. They are, in every essential sense, only auxiliaries of the State for the purposes of local government. They may be created, or, having been created, their powers may be restricted or enlarged or altogether withdrawn at the will of the legislature; the authority of the legislature, when restricting or withdrawing such powers, being subject only to the fundamental condition that the collective and individual rights of the people of the municipality shall not thereby be destroyed." Per Harlan, J., in Atkin v. Kansas, 191 U. S. 207, 220.

"A municipal corporation, in which is vested some portion of the administration of the government, may be changed at the will of the legislature. Such is a public corporation, used for public purposes." Per McLean, J., in State Bank v. Knoop, 16 How. (U. S.) 369, 380. "Public or municipal corporations are established for the local government of towns or particular districts. The special powers conferred

Municipal corporations, so far as their organization and purely municipal relations and regulations are concerned, being simply

upon them are not vested rights as New Orleans, 26 La. An. 478; Coles v. against the State, but, being wholly Madison County, Breese (Ill.), 115; political, exist only during the will Laramie County v. Albany County, 92 of the general legislature; otherwise, U. S. 307; C. & A. R. R. Co. v. Adler, there would be numberless petty gov- 56 Ill. 344; State v. Branin, 23 N. J. L. ernments existing within the State and 485; Rader v. Road Dist., 36 N. J. L. forming part of it, but independent of 273; Bush v. Shipman, 5 Ill. 190; Holthe control of the sovereign power. liday v. People, 10 Ill. 216; Richland Such powers may at any time be re- County v. Lawrence County, 12 Ill. 1; pealed or abrogated by the legislature, Trustees, &c. v. Tatman, 13 Ill. 30; either by a general law operating upon Gutzweller v. People, 14 Ill. 142; Santhe whole State, or by a special act gamon County v. Springfield, 63 Ill. altering the powers of the corporation." 66; State v. Savannah, R. M. Charlt. Sloane v. State (implied modification (Ga.) 250; State, &c. v. St. Louis of charter as to vending liquor by sub- County Court, 34 Mo. 546; Purdy v. sequent general law), 8 Blackf. (Ind.) People, 4 Hill (N. Y.), 385; Morey v. 361, per Smith, J., approving People Newfane, 8 Barb. (N. Y.) 645; Lloyd v. Morris, 13 Wend. 325; Armstrong v. Mayor, &c. of New York, 5 N. Y. v. Comm. (as to removal of county 369; Lowber v. Same, 5 Abb. Pr. R. seat), 4 Blackf. (Ind.) 208; post, §§ 105, (N. Y.) 325; Green v. Same, 5 Abb. Pr. 353. R. (N. Y.) 503; Aurora v. West, 9 Ind. 74; Plymouth v. Jackson, 15 Pa. St. 44; Louisville v. Commonwealth, 1 Duvall (Ky.), 295; Murphy v. Louisville, 9 Bush (Ky.), 189; O'Hara v. Portland, 3 Oreg. 525; Gray v. Brooklyn, 10 Abb. (N. Y.) Pr. Rep. N. s. 186; State v. Hundelhausen, 26 Wis. 432: Tinsman v. Railroad Company, 26 N. J. L. 148; Marietta v. Fearing, 4 Ohio, 427; Richmond v. Richmond, &c. Railroad Co., 21 Gratt. (Va.) 604; State v. Mobile, 24 Ala. 701; Governor v. McEwen, 5 Humph. (Tenn.) 241; Grogan v. San Francisco, 18 Cal. 590; Darlington v. Mayor, &c. of New York, 31 N. Y. 164; Savings Fund Society v. Philadelphia, 13 Pa. St. 175, 185; Philadelphia v. Field, 58 Pa. St. 320; infra, § 131; Erie v. Canal Company, 59 Pa. St. 174; Dunsmore's Appeal, 52 Pa. St. 374; Blanding v. Burr, 13 Cal. 343; People v. Hill, 7 Cal. 97; Nichol v. Mayor, &c., 9 Humph. 252; Creighton v. San Francisco, 42 Cal. 446; Lucas v. Tippecanoe Co., 44 Ind. 524; Burns v. Clarion County, 62 Pa. St. 422; Durach's Appeal, 62 Pa. St. 491; New Orleans v. Hoyle, 23 La. An. 740; Amite City v. Clements, 24 La. An. 27.

In the case of the United States v. Baltimore & O. R. Co., 17 Wall. (U.S.) 322, in which it was held that the general government could not tax the income or property of the city of Baltimore under the Internal Revenue Act (post, § 1398), the court discusses and examines the nature of municipal corporations and the relation they sustain to the State, of which they are treated as arms or agencies. The court says: "A municipal corporation like the city of Baltimore is a representative not only of the State, but is a portion of its governmental power. It is one of its creatures, made for a specific purpose, to exercise within a limited sphere the powers of the State. The State may withdraw these local powers of government at pleasure, and may, through its legislature or other appointed channels, govern the local territory as it governs the State at large. It may enlarge or contract its powers or destroy its existence. As a portion of the State, in the exercise of a limited portion of the powers of the State, its revenues, like those of the State, are not subject to taxation." Post, §§ 248, 1396, 1398.

As to extent of LEGISLATIVE CONTROL, and the distinction between PUBLIC and PRIVATE corporations in this respect, see infra, §§ 109, 112, 119-122, and cases; Cooley, Taxation (2d ed.), 688. See also People v. Wren (division of a county), 5 Scam. (Ill.) 269; Martin v. Dix, 52 Miss. 53; People v. Detroit, 28 Mich. 228; New Orleans, &c. Co. v.

This subject is discussed in an interesting manner by Sharswood, J., in his learned judgment, in Philadelphia v. Fox, 64 Pa. St. 169. The doctrine is here laid down that since the legislature cannot alienate any part of its legislative power, it cannot therefore by legislative act or contract invest any municipal corporation with an irrevo

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