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the decisions the point cannot fairly be said to be settled. It has however been adjudged that the rights of the city of New York to

us suppose the city to be the owner of a parcel of land not adapted to any municipal use, but valuable only for sale to private persons for building purposes, or the like, no one, I think, can doubt but what it would be competent for the legislature to direct it to be sold, and the proceeds devoted to some municipal or other public purpose, within the city, as a courthouse, a hospital, or the like. . . . It is unnecessary to say whether the legislative jurisdiction would extend to diverting the city property to other public use than such as concerns the city and its inhabitants." And he considers the expression of Chancellor Kent (2 Com. 305) and of Mr. Justice Story, that where a municipal corporation is empowered to have and to hold private property, such property is invested with the security of other private rights, to mean only that it possesses such rights against wrong-doers, and not that it is exempt from legislative control. 31 N. Y. 164, 196.

Let us consider this interesting subject a moment longer. The city of New York is the owner of valuable real property in fee made by ancient grants, from which it derives large revenues. No one denies that the legislature may regulate or direct the uses of this property, provided it is not diverted from the municipality or appropriated to extra-municipal purposes. But could the legislature require it to be sold and the proceeds given to the city of Albany, or covered into the State treasury The injustice of such an act is so striking that it suggests that it must be beyond the legislative power, even if there are no special limitations in the Constitution. The text (sec. 68) states a ground on which the denial of such a power in the legislature can be rested. A chartered municipality is certainly a distinct legal personality; and it is a familiar principle that property acquired by a corporation under its franchises is invested with all the attributes of property, although the franchises of such corporation may be absolutely subject to legislative control. Mr. Justice Field, supra, and Ruger, C. J., in People v. O'Brien, 111 N. Y. VOL. I. - 8

1 (1888), express the opinion that the private property of municipalities and of corporations is protected by the contract clause of the Federal Constitution. Since the opinion of Mr. Justice Field was given, the Fourteenth Amendment has been adopted. It provides that no person shall be deprived of property without due process of law, and the property rights of private corporations are held by the Supreme Court of the United States to be within the Amendment. A compact body of people, such, for example, as the city of New York, have needs not common to the body of the State at large; hence, their incorporation with a distinct capacity to acquire and hold property for the use and benefit of this distinct body of people. It is their property. No reason suggests itself to us why their ownership, as against a total diversion of use, is not protected by the Fourteenth Amendment. See further, infra, secs. 68 a, 72, 73.

In two cases arising out of the Tweed frauds in New York, the conclusion was reached that, as between the State and the municipal corporation, the funds of the corporation owned and held for the public uses of the corporation are distinctively and exclusively the property of the corporation; and the opinion was expressed arguendo that such funds were invested with the security of other private property, subject to the plenary power of the legislature, as declared in Darlington v. Mayor, &c. supra, to direct their appropriation to any use or purpose for the benefit of the municipality or its inhabitants. People v. Ingersoll, 58 N. Y. 1 (1874); People v. Fields, 58 N. Y. 491 (1874). The exact point, however, which was adjudged in these cases is that, unless expressly given by statute, an action could not be maintained in the name of the State by the attorney-general, to recover a judgment for moneys of the county and city of New York, fraudulently taken by the defendants, as such right of action was exclusively in the municipality, which was the owner of moneys illegally appropriated. Post, chap. xxii.

real estate which it owns in fee simple absolute, under grants made to it in its ancient charters, which grants were confirmed by the Constitution of the State, are as indestructible by legislative act as are the like property rights of citizens; and, applying this principle, it was held, that the legislature had no authority to pass an act ordering the demolition of a reservoir, part of the water system of New York, built by the city at the expense of its citizens, upon property which it thus owned in fee simple and upon the demolition of such reservoir further enacting that the lands covered by it, together with other lands adjoining the same owned in like manner by the city, should be converted into, and maintained as one of the public parks of the city, except upon making compensation to the city therefor.1

1 Webb v. Mayor, &c. of New York, 64 How. Pr. Rep. 10 (Supreme Court, special term, 1882). In giving the judgment of the court, Macomber, J., after observing that the land in question was granted to the city in fee simple by the Dongan charter in 1686, and was also substantially embraced in the Montgomerie charter of 1730, which was confirmed by the colonial' legislature in 1732, and by the Constitutions of New York of 1777, 1821, and 1846, says: "The lands in question, therefore, are owned by the city in fee simple absolute. [Citing Furman v. New York, 5 Sandf. (S. C.) 16 ; s. c. 10 N. Y. 567.] If, therefore, the legislature has undertaken by its acts to destroy the property of this corporation, or to deprive the city of its use, without just compensation, it has violated a fundamental law of the State. Chancellor Kent (City Charter in Kent's Notes), in commenting upon the provisions of the ancient charters o the city, says: It may not be amiss to state here, once for all, that it is an acknowledged and settled principle that no vested right of property, whether it be longs to private individuals or be in the shape of a corporate franchise, can ever be lawfully taken away without some default or forfeiture, to be ascertained by a fair trial and pronounced by judicial decree. The English statute of Magna Charta establishes as a great principle the sanctity of rights and privileges then existing or thereafter to be lawfully procured; and that principle was intended to be of general and perpetual application. It provided that the city of London, and

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all other cities, should have all their liberties and free customs; and that no freeman should be disseized of his freehold or liberties, or free customs, but by lawful judgment of his peers or by the law of the land. Corporate franchises in this country rest on a basis which ought to be at least as solid as Magna Charta, for they are founded on grants which are contracts, and "no State," says the Constitution of the United States, "can pass any law impairing the obligation of contracts.'

"I perceive," continues Macomber, J., "no difference between the tenure of property thus held by the city and the proprietary rights of natural persons or private corporations. This privilege, however, is peculiar in this State to the city of New York. [Not meaning by this to decide that property owned in fee simple absolute by other cities is not equally protected by the Constitution.]

"Nor is this property, with other real estate owned by the city, held in trust for any person; nor is it stamped with any mere political trust of which the city may be deprived, and thus its claim to the right to the possession of the property destroyed. The title to the land rests somewhere, and, as has been shown above, so far as the records extend, no one claims it except the city itself.

"It seems to me that the weight of authority is to the effect that the property which New York holds in its proprietary or private character, though originally derived from the power claiming the ulti mate title, and which concerns the private advantage of the corporation, as a distinct

Where

§ 68 a. Same subject. Effect of Repeal or Dissolution. the Constitution or laws have reserved to the legislature absolute and unrestricted power to repeal the charters of private corporations and to dissolve them at will, the legislative supremacy over their existence would seem to be as complete as it is over that of municipal corporations; and by analogy the limitations on the legislative power over the property and contract rights or other vested rights of private corporations throw light upon like questions as respects municipal corporations. As to private corporations it can, we think, safely be affirmed that while the legislature may, under and pursuant to such reserved power, annul and dissolve them at pleasure, it is not within its competency, under the Federal Constitution as amended, or under like provisions in the Constitutions of the States, to impair or affect the property or property rights of the dissolved corporation, but only its right to exist, and such other rights as are directly and necessarily dependent on the continued existence of the corporation. The rights of mortgagees, of creditors generally, and rights arising under valid contracts with the corporation, survive the repeal and dissolution. And the same doctrine, doubtless, applies

legal personality, is stamped with so many of the rights and powers of natural persons or private corporations as that the city cannot be deprived of this reservoir without due process of law and without just compensation. It admits of no doubt that the legislature may change, modify, enlarge, or restrain the powers of a corporation which it has created. But whenever this is done, and a municipal corporation is relieved of the privilege and duty of maintaining a jurisdiction over the property and property rights, care has invariably been taken to restore to the original owner or proprietor the rights which the municipal corporation were for a time permitted to exercise. Terret v. Taylor, 9 Cranch, 52; 2 Kent, Commentaries, 257; Dartmouth College Case, 4 Wheat. 694; People v. Detroit, 28 Mich. 228; Bailey v. Mayor, &c. of New York, 3 Hill, 531; People v. Fields, 58 N. Y. 591; People v. Ingersoll, Id. 1; Maxmillian v. New York, 62 N. Y. 160."

1 People v. O'Brien, Receiver (Broadway Railway Case), 111 N. Y. 1 (1888); Mumma v. Potomac Co., 8 Pet. 285; Fletcher v. Peck, 6 Cranch, 135; Sinking Fund Cases (arising under reserved power to amend or repeal Pacific Railway acts),

99 U. S. 700 (1878); Greenwood v. Freight Co., 105 U. S. 13 (1881); Detroit v. Howell Plank Road Co., 43 Mich. 140, 147.

Broadway Surface Railway Case: While the legislature of New York, under the power reserved in the Constitution "to alter or repeal," from time to time, laws under which corporations are formed, and under a general reserved power by statute that "all corporations shall be subject to alteration, suspension, and repeal in the discretion of the legislature," may annul or repeal the charter of a corporation or dissolve it; yet it cannot, by virtue of such an act, or any act, impair or affect the property or property rights of the corporation. The extent and limits of legislative power over corporations and their rights and the rights of their mortgagees, and of persons having contracts with the dissolved corporations, underwent the most thorough and deliberate consideration of the Court of Appeals of New York in Broadway Surface Railway Case. People v. O'Brien, Receiver, et al., 111 N. Y. 1 (1888). In that case the Broadway Surface Railway Company was, in 1884, duly incorporated. It acquired from the municipal authorities the right to lay down

to property rights acquired by virtue of valid municipal grants;1 and it has also been declared in respect of the property rights of municipalities, though as to this, the doctrine remains, perhaps, to be fully settled, defined, and its limitations ascertained by actual judicial judgments. It is agreed by all the authorities that under the

tracks and to run cars over Broadway from the Battery to Fourteenth street. It was authorized by statute to mortgage its property and franchises, and also to make contracts with connecting railroad companies for the use of their tracks. It executed mortgages on its property and franchises to secure negotiable bonds, which were sold in the market. Afterwards it appeared to the legislature probable, if not certain, that the corporation acquired the right to occupy the streets by means of bribery of a majority of the board of aldermen; and this was the motive, doubtless, that led the legislature, in 1886, to repeal the charter of the Broadway Company, to dissolve the corporation, and to provide for winding up its affairs and disposing of and distributing its property. The opinion of the court, delivered by Ch.-Judge Ruger, discusses the interesting questions involved with learning and marked ability. The court held that the franchise of the corporation, under its charter, and the grants from the municipal authorities to lay down tracks and operate its railroad, was a property right which survived the dissolution of the corporation; so were the rights of the corporation under its contracts with connecting railroads, and also the rights of the mortgagees to the continued use of the street in connection with the railroad, under the municipal consent to the use thereof for railway purposes. The special provisions of the repealing act as to winding up the affairs of the dissolved corporation and disposing of and distributing its property, were held to be unconstitutional.

1 R. R. Co. v. Delamore, 114 U. S. 501; Langdon v. Mayor, &c., 93 N. Y. 129; People v. O'Brien, supra, and cases cited. Concerning rights acquired under municipal grants to others, Ruger, C. J., in The People v. O'Brien, supra, speaking of the grant by the corporation of New York City to the Broadway Surface Railway Company to use the streets of New York

for its railway, says: "Grants similar in all material respects to the one in question have heretofore been before the courts of this State for construction, and it has been quite uniformly held that they are grants in fee vesting the grantee with an interest in the street in perpetuity to the extent necessary for the purposes of a street railroad. People v. Sturtevant, 9 N. Y. 263 ; Davis v. The Mayor, &c., 14 N. Y. 506; Milhau v. Sharp, 27 N. Y. 611; Mayor v. Second Ave. R. R. Co., 32 N. Y. 261; Sixth Ave. R. R. Co. v. Kerr, 72 N. Y. 330. Other cases are also reported in the books, but it is deemed unnecessary to accumulate authorities on this point. . . We are therefore of the opinion that the Broadway Surface Railroad Company took an estate in perpetuity in Broadway through its grant from the city under the authority of the Constitution and the act of the legislature. It is also well settled by authority in this State that such a right constitutes property within the usual and common signification of that word. Sixth Ave. R. R. Co. v. Kerr, 72 N. Y. 330; People v. Sturtevant, 9 N. Y. 263. . It is, however, earnestly contended for the State that such a franchise is a mere license or privilege enjoyable during the life of the grantee only, and revocable at the will of the State. We believe this proposition to be not only repugnant to justice and reason, but contrary to the uniform course of authority in this coun⚫ try. The laws of this State have made such interests taxable, inheritable, alienable, subject to levy and sale under execution, to condemnation under the exercise of the right of eminent domain, and invested them with the attributes of property generally."

2 Mayor, &c. v. Second Ave. R. R. Co., 32 N. Y. 261. In this case Brown, J., said: "The rights of municipal corporations to property in lands and its usual incidents, and to create ferries and railroad franchises, are quite distinct and separate

power to repeal the charters of private corporations the legislature cannot take away property acquired under the operation of the charter; and as to municipal corporations the only question is whether the legislature can deprive them, or rather, perhaps, their inhabitants, of their property. It is believed by the author, for the reasons suggested in this chapter,2 that while the legislature has full

from their duties as legislatures, having authority to pass ordinances for the control and government of persons and interests within the city limits. The latter are powers held in trust, as all legislative powers are, to be used and exercised for the benefit and welfare of the whole community, while the former are property, in the ordinary sense, to be acquired and conveyed in the same manner as natural persons acquire and transfer property." The same learned judge said, in Brooklyn Cent. R. R. Co. v. Brooklyn City R. R. Co., 32 Barb. 364: "The grant to the City Railroad Company and its acceptance of the conditions annexed, with the duties and obligations and large expenditures resulting therefrom, would seem, therefore, to invest the company with the right of property in the franchise, of which it cannot be deprived without its consent or against its will.”

1 See cases cited in note 1 to this section. In Detroit v. Howell Plank Road Co., 43 Mich. 140, 147, Cooley, J., said: "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 private property, and it is then protected by the 'law of the land.""

Speaking of the reserved power to "amend or repeal" the charter of the Union Pacific Company, Waite, C. J., in the Sinking Fund Cases, 99 U. S. 700 (1878), delivering the opinion of the court, said: "All agree that it cannot be used to take away property already acquired under the operation of the charter, or to deprive the corporation of the fruits, actually reduced to possession, of contracts lawfully made."

In same case (p. 73), Strong, J., defines property. In The People v. O'Brien, su

pra, Ruger, C. J., said: "It is also to be observed that in none of the provisions for repeal in this State is there anything contained which purports to confer power to take away or destroy property or annul contracts, and the contention that the property of a dissolved corporation is forfeited, rests wholly upon what is claimed to be the necessary consequence of the extinction of corporate life. We do not think the dissolution of a corporation works any such effect. It would not naturally seem to have any other operation upon its contracts or property rights than the death of a natural person upon his. Mumma v. Potomac Co., 8 Pet. 285. The power to repeal the charter of a corporation cannot, upon any legal principle, include the power to repeal what is in its nature irrepealable, or to undo what has been lawfully done under power lawfully conferred. Butler v. Palmer, 1 Hill, 335."

A legislative grant of an exclusive right to supply gas to a municipality and to its inhabitants, through pipes and mains laid in the public streets, and upon condition of the performance of the service by the grantee, is, after acceptance and performance by the grantee, a contract protected by the Constitution of the United States against subsequent State legislation which impairs it. The legislature, however, retains its police power, including the duty to protect the public health, morals, and safety. New Orleans Gas Company v. Louisiana Light Company, 115 U. S. 650 (1885); Louisville Gas Company v. Citizens' Gas Company, 115 U. S. 683. The same principle applied to a legislative grant of an exclusive right to supply water to a municipality and its inhabitants. New Orleans Water-Works Company v. Rivers, 115 U. S. 674 (1885).

2 Ante, sec. 68; post, sec. 69, and note.

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