This section is from the book "Popular Law Library Vol8 Partnership, Private Corporations, Public Corporations", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
Section 52. While municipal corporations are subject at all times to the control of the legislature, yet the State may make a contract with, or a grant to them, which it could not subsequently impair or resume; for in such a case, the municipal corporation is to be regarded as a private company. And, although the public may derive a common benefit therefrom, yet the corporation stands on the same footing as respects such grant, or contract, as would any body of persons upon whom like privileges were conferred.6
Whenever a municipal corporation engages in things not public in their nature, it acts as a private individual - no longer legislates, but contracts, and is as much bound by its engagements as is a private person. It is not in the power of the legislature, therefore, to authorize the violation of such a contract.7
When the State enters into a contract with a municipal corporation the subordinate relation of the corporation ceases, and an equality arises which exists between all contracting parties. The control of the legislature over the corporation can be exercised only in subordination to the principle which secures the inviolability of contracts.8