But the correctness of a judicial decision is not to be gauged by its influence for weal or woe. Rather should that be determined by its conformity to the Constitution, the statutes and the judicial precedents upon which it rests and the approval given it by later decisions. Judged by this test we must hold that Marshall and his colleagues decided well in the Dartmouth Col lege Case. The Supreme Court of the United States had early laid down the rule that there are certain vital principles of republican govern ment which will overrule a flagrant and appar ent abuse of legislative power. It had in the year 1810 declared a law granting land to pri vate companies to be in effect a contract which could not be so repealed as to impair the obliga tion of that contract. If the passage of the law were procured by fraud the court there doubted its power to declare it void for those reasons, but if that power existed it could be exercised only under those rules of law and equity which govern private transactions. Two years later there came before the same court a case involving a somewhat similar question. The State of New Jersey had traded land with an Indian tribe and had, by legislative enact ment, provided that the Indians should forever hold the lands received by them free from tax ation. With the consent of the State they sold their lands and, the question being properly presented, the court held that the law granting the exemption was a contract, that the exemp tion ran with the land and that the purchasers from the Indians enjoyed the same exemption.
By the decision in the Dartmouth College Case the rules• laid down in the foregoing casts were followed and their application extended to contracts in charters of incorporation, but their force when so applied.had already been limited by another line of decisions. In 1804 Chief Justice Marshall, speaking for the court, had said that the charter gives to a corporation all of the powers it possesses and no powers not granted can be exercised. A little later he had decided that there is a difference between a grant of corporate existence and a grant of peculiar remedies. The first is general. The second can only be exercised in those courts which the power bestowing the privilege can regulate. Moreover, as the bank charter in volved in that case contained a clause making it a felony to counterfeit its notes, the court be lieved it to be a public act and subject to repeal by succeeding legislatures. And in the year 1819 the same court had decided that the right to use a peculiar form of attachment granted in its charter to a bank could be taken away at any time because °The forms of administering jus tice and the duties and powers of the courts as incident to the exercise of a branch of the sov ereign power must ever be subject to the legis lative will and the power over them is inalien able so as to bind subsequent legislatures.' It is thus made fully apparent that the Dart mouth College Case decided only that if a legis lative grant, whether made in the form of a charter of incorporation or in any other form, conveyed to private citizens that which the leg islature had power to contract away, the grant so made was a contract and no succeeding legis lature could rescind the same without following the same rules which govern the rescission of private contracts: But if there is any doubt that such was the understanding of the chief justice who wrote the opinion of the court in that case, the same will be removed by a con sideration of certain later decisions in which he participated. In the year 1821 the court over
which he presided decided that Congress bad power to incorporate a lottery to do business beyond the limits of the District of Columbia, yet, where no mention was made thereof in the charter, it would not be presumed that Congress had done so and had thereby deprived the States of their power to regulate lotteries by prevent ing the sale of tickets within their boundaries. In the same year the same court decided that a town government cannot contract away its leg islative power. And in the case of Providence Bank v. Billings, the court presided over by Marshall decided that while a State might, through its legislature, grant immunity from taxation, it could not be presumed to have done so, and that, in the absence of any agreement to the contrary, it might tax to death a franchise which it had itself granted.
But the effect of the Dartmouth College de cision was not fully understood at the time of its rendition and the States eagerly availed themselves of a suggestion found in the decision itself .to the effect that if they wished the right to amend, alter or repeal charters granted by them they must expressly reserve that power. Such a reservation, whether expressed in the charter itself, the Constitution or the general laws of the State, has been held to have the effect of 'placing the State legislature back on the same platform of power and control over the charter containing it, as it would have oc cupied had the constitutional restriction never existed.° Yet the later decisions hold that this reserve power must be reasonably exercised.
The alterations must be made in good faith and consistent with the objects and scope of the act of incorporation. Sheer oppression and fraud cannot be inflicted under the guise of amend ment or alteration. This power cannot be so i employed as to defeat or substantially impair the object of the grant or any right which has become vested under it. Where this power has been reserved, a State may tax property which it has forever exempted from taxation, but the taxes must not be greater than those imposed upon other property. It can regulate the charges of common carriers, but no such legislation must amount to the taking of private property for public purposes without due process of law. We thus see that not only was the Dart mouth College decision as moderate as any of the later cases which have been said to have practically overruled it, but that even where reservations in charters have obviated the effect of that decision the later courts have reached a similar• conclusion by a different chain of logic.
Bibliography.— Cook, 'The Corporation Problem) ,• Cooley, (Constitutional Limita tions) • Curtis, 'Life of Daniel Hitchcock, (Constitutional Development of the United States as Influenced by Chief Justice Marshall) ; Morawetz, (Private Kent, (Commentaries on American Law' (Bos ton 1884) ; Maine, 'Popular Government' (Lon don 1885) ; Pomeroy, 'Introduction to the Con stitutional Law of the United States' (Boston 1886) ; Shirley, Dartmouth College Causes and the Supreme (Saint Louis 1879) ; Story, (On the Constitution' (Boston 1891) ; Tiedeman, The Unwritten Constitution of the United States) ; Von Hoist, Constitu tional Law of the United States' ; Walker, The Dartmouth College Case.'