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.
Many states by constitutional provision or by general statute reserve the right to alter and amend certain legislative grants which would otherwise be contracts protected by this constitutional provision. Thus grants of corporate power which would otherwise be contracts,1 may be taken away by virtue of such provisions. Under such a reservation of power a greater liability for paving may be imposed upon a' street railroad ;2 the personal liability of stockholders may be increased;3 a turnpike company may be forbidden to keep up its toll-gates within city limits;* statutes granting exemptions from taxation may be repealed or amended,5 and so may statutes fixing the rate of taxation on the gross receipts of the railway;6 the right of eminent domain may be taken away ;7 the right of a railroad to fix its rates of transportation may be taken away, if the rates fixed by the state are reasonable ;8 the power of fixing water rates may be given to a city, though the water company had previously been allowed to exercise it;9 a railroad company may be required to abolish grade crossings at its own expense ;10 a corporation may be required to file reports,11 and an assessment insurance company may be changed to an old line company.12
19 Williams v. Wingo, 177 U. S. 601.
20 Warsaw Waterworks Co. v. Warsaw, 161 N. Y. 176; 55 N. E. 486; Skaneateles Waterworks Co. v. Skaneateles, 161 N. Y. 154; 46 L. R. A. 687; 55 N. E. 562; (citing Farrington v. Tennessee, 95 U. S. 679; Asylum v. New Orleans, 105 U. S. 362; New Orleans Gas Co. v. Light Co., 115 U. S. 650; Waterworks Co. v. Rivers, 115 U. S. 674; Louisville Gas Co. v. Citizens' Gaslight Co., 115 U. S. 683; Bank v. Knoop, 16 How. 369; (Dodge v. Woolsey, 18 How. 331; New Jersey v. Wilson, 7 Cranch. 164; People v. O'Brien, 111 N. Y. 1; 7 Am. St. Rep. 684; 2 L. R. A. 255; 18 N. E. 692).
1 People v. Cook, 148 U. S. 397; Hamilton, etc., Co. v. Hamilton, 146 U. S. 258; Matthews v. Board, 97 Fed. 400; Union Pacific Ry. v. Ry., 128 Fed. 230; affirming 124 Fed. 409; Webster v. Seminary. 78 Md. 193; 28 Atl. 25; Wagner Free Institute v. Philadelphia, 132 Pa. St. 612; 19 Am. St. Rep. 613; 19 Atl. 297.
2 Sioux City Street Ry. v. Sioux City, 138 U. S. 98; (affirming Sioux City Street R. Co. v. Sioux City. 78 la. 367; 43 N. W. 224;) Lincoln Street Ry. v. Lincoln, 61 Neb. 109; 84 N. W. 802; Storrie v. Ry., 92 Tex. 129; 44 L. R. A. 716; 46 S. W. 796.
3 McGowan v. McDonald, 111 Cal. 57; 52 Am. St. Rep. 149; 43 Pac.
Thus where an appeal bond is given and subsequently the jurisdiction of the court is transferred by statute, the appeal bond is not invalidated thereby if the legislature had such power over the jurisdiction of the court when the appeal bond was given.13
418; Bissell v. Heath, 98 Mich. 472; 57 N. W. 585.
4 Snell v. Chicago, 133 111. 413; 8 L. R. A. 858; 24 N. E. 532.
5 Gulf, etc., Ry. v. Hewes, 183 U. S. 66; Citizens' Savings Bank v. Owensboro, 173 U. S. 636; Covington v. Kentucky, 173 U. S. 231;. Louisville Water Co. v. Clark, 143 U. S. 1; Northern Bank v. Stone, 88 Fed. 413; Citizens' Savings Bank v. Owensboro, 173 U. S. 636; affirming Deposit Bank v. Daviess County, 102 Ky. 174; 44 L. R. A. 825; 39 S. W. 1030; (overruling Commonwealth v. Bank, 97 Ky. 590; 31 S. W. 1013;) State v. Ry., 90 Md. 447; 45 Atl. 465.
6 Northern Central Ry. v. Maryland, 187 U. S. 258. (Even if passed to compromise a dispute as to the exemption of the railway from taxation.)
7 Adirondack Ry. v. New York, 176 U. S. 335.
8 Minneapolis Eastern Ry. v. Minnesota, 134 U. S. 467; Chicago, etc., Ry. v. Jones, 149 111. 361; 41 Am. St. Rep. 278; 24 L. R. A. 141; 37 N. E. 247.
9 Freeport Water Co. v. Freeport, 186 111. 179; 57 N. E. 862; and see City of Knoxville v. Water Co., 107 Tenn. 647; 61 L. R. A. 888; 64 S. W. 1075. But a power to " regulate" water rates has been held not a power to reduce them below the contract rate. City of Los Angeles v. Water Co., 177 U. S. 558.
10 New York, etc., Ry. v. Bristol, 151 U. S. 556.
11 People v. Rose, 207 111. 352; 69 N. E. 762.
12 Wright v. Ins. Co., 193 U. S. 657.
13 Mexican National Ry. Co. v. Mussette. 86 Tex. 708; 24 L. R. A. 642; 26 S. W. 1075.
The power to alter, amend, or repeal, reserved by the legislature, cannot be so exercised as to divest vested property rights.14 Thus where a statute imposed a tax on the gross earnings of a corporation in lieu of a tax on property, even a reserved power to amend, alter or repeal cannot give the legislature the right to continue the tax on the gross earnings and at the same time restore the tax on property.15 So by the exercise of this power, contracts already made by the corporation with other parties cannot be impaired.16 It has, however, been held that contracts between corporations and their employees may be regulated.17