Greenwood v. Freight Company - 105 U.S. 13 (1881)
U.S. Supreme Court
Greenwood v. Freight Company, 105 U.S. 13 (1881)
Greenwood v. Freight Company
105 U.S. 13
1. Where, by a state statute, the charter of a street railroad company was repealed, and its franchises and track were transferred to another, and the company refuses to seek a remedy, a stockholder who asks an injunction on the ground that the statute impairs the obligation of a contract will have a standing in a court of equity.
2. Such a statute impairs the obligation of a contract unless the legislature reserved the right to repeal the statute conferring the charter.
3. In Massachusetts such, a reservation becomes part of every act of incorporation by virtue of sec. 41, c. 68, of the General Statutes, which declares
"Every act of incorporation passed after the eleventh day of March, in the year one thousand eight hundred and thirty-one, shall be subject to amendment, alteration, or repeal at the pleasure of the legislature."
4. The origin of this and similar clauses of reservation in the statutes of the states stated.
5. By the exercise of the repealing power reserved by such a clause, the charter no longer exists, and whatever validity transactions entered into and authorized by it while it was in force may possess, there can be no new transactions dependent on the special power conferred by the charter. Such power is abrogated when the law granting it is repealed.
6. Neither the rights of the shareholders to the real and personal property of the corporation nor rights of contract or chosen in action are destroyed by such repeal, and if the legislature has provided no specific mode of enforcing and protecting such rights, the courts will do so by the means within their power.
7. If the legislature has the power to repeal the statute under which a company was organized, it can charter a new one and confer the same powers on it as the former possessed, and so far as the property or franchises of the old company are necessary to the public use, it can authorize the new one to take them on making due compensation therefor.
8. A statute which under this power repeals an act of incorporation and at the same time creates a new one with similar powers, the use of which requires the exercise of the right of eminent domain, is not in conflict with the Constitution of the United States if it provides for compensation for the property of the extinct corporation so taken by the new one.
The facts are stated in the opinion of the Court.