This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
An extension of the doctrine that executed contracts, including conveyances, were protected by this clause, led to the doctrine that the charter of a corporation might contain a contract between the corporation and the state, within the protection of this clause.1 This rule does not mean that every provision of the charter of a corporation must be a contract, but merely that as far as it is contractual in the contemplation of the law, it is protected by this constitutional provision.2 This principle is often recognized by the courts.3 Thus a right to sell lands formerly used for toll-house purposes to any purchaser,4 or a right to maintain toll-gates on a plank-road and to take toll,5 or a right that no competing turnpike should be established,6 or a land grant offered for each mile of road constructed,7 are contract rights that cannot be taken away by subsequent legislation. So a grant of power by a legislature to a railroad to fix rates8 may constitute a contract. Not every provision in the charter is contractual in its nature, however. Only provisions which either vest property in the corporation or may influence persons to take stock in the corporation constitute contracts.9 Power to consolidate with competing corporations may be taken away,10 and so may power to receive subscriptions from municipal corporations,11 or a statute fixing the proportion of bonds to stock.12 These rules, however, have little application in contract law, since charters of corporations, conveyances and the like are usually classed with contracts solely for invoking the protection of this clause. Further discussion here is therefore unnecessary.
11 Hamilton v. Brown, 161 U. S. 256.
12 Patton v. Patton, 39 O. S. 590.
13 Baltimore, etc., Road v. Ry., 81 Md. 247; 31 Atl. 854.
14 Bass v. Roanoke, etc., Co., Ill N. C. 439; 19 L. R. A. 247; 16 S. E. 402.
1 Dartmouth College v. Woodward, 4 Wheat. (U. S.) 518. See discussion in Greenwood v. Ry., 105 U. S. 13.
2 It is " not the charter which is protected but only any contract the charter may contain." Stone v. Mississippi, 101 U. S. 814, 817.
3 Houston, etc., Ry. v. Texas, 170 U. S. 243; Georgia, etc., Co. v.
Smith, 128 U. S. 174; Chicago, etc., Ry. v. Iowa, 94 U. S. 155; Central Trust Co. v. Ry., 82 Fed. 1; Foster v. Road Co. (Ky.), 65 S. W. 840; Highland Park v. Road Co., 95 Mich. 489; 55 N. W. 382; Turnpike Co. v. Davidson County, 106 Tenn. 258; sub nomine, Nashville, etc., Turnpike Co. v. Davidson County, 61 S. W. 68; State v. Turnpike Co. (Tenn. Ch. App.), 61 S. W. 1096.
4 Foster v. Road Co. (Ky.), 65 S. W. 840. (Hence a statute providing that they can be sold only to the owner of abutting land is invalid.)
5 Highland Park v. Road Co., 95 Mich. 489; 55 N. W. 382.