CHAPTER II.

LEGISLATIVE CONTROL OVER PUBLIC CORPORATIONS.

SECTION 1. GENERAL RELATION TO LEGISLATURE.

§ 13. Consent of inhabitants. We have seen that originally municipal corporations or boroughs in England were incorporated at their own request and for purely local purposes (§ 5, above). We have also seen that the quasi-municipal corporations were only administrative subdivisions of the state, which of late have been endowed with corporate capacity as a matter of convenience (§§1012, above). The question arises: Is the consent of the inhabitants of a given district to become a corporation necessary? To settle this we need to bear in mind the fact that, under our system of constitutional government, the legislature of each state is the body in which general legislative power is vested, i. e., the state legislature may do anything provided it be legislative in character, unless it be forbidden by the Constitution of the United States or of the state. As a part of this general power to legislate, it becomes the duty of the legislature to provide, so far as that is not done by the state constitution itself, for the creation, abolition, or alteration of public corporations of all kinds-towns, counties, cities and villages. In performing this function, it is not necessary that the legislature obtain the consent of the inhabitants of the district affected, except in those cases where such consent is required by the state constitution. For example, in Berlin v. Gorham (1) it was held that such consent was not

necessary, although the rule in the case of private corporations is the opposite. In the course of its opinion the court said:

"It was objected that to make an incorporation of a town effectual, there must be a legal town meeting holden in it. This objection rests upon the idea that the rule which applies in the case of private corporations, that the act is ineffectual until it is accepted by the corporators, governs also the case of public corporations, like towns. But there is no such rule in the case of public corporations of a municipal character. The acts of incorporation are imperative upon all who come within their scope. Nothing depends upon consent, unless the act is expressly made conditional. No man who lives within the incorporated district can withdraw from the corporation, unless by a removal from the town; and by the mere passage of the law the town is completely constituted, entitled to the rights and subjected to the duties and burdens of a town, whether the inhabitants are pleased or displeased. The legislature has entire control over municipal corporations, to create, change, or destroy them at pleasure, and they are absolutely created by the act of incorporation, without the acceptance of the people or any act on their part, unless otherwise provided by the act itself."

§ 14. Same: Constitutional provisions. It is, however, provided in many of the state constitutions that the consent of the inhabitants of the area affected must be obtained before the incorporation can become effective.

(1) 34 N. H. 266.

For example, in Massachusetts no town containing less than a given number of inhabitants may be erected into a city "unless it be with the consent and on the application of a majority of the inhabitants of such town present and voting thereon" (2). In the case just cited, the court held that this provision did not apply to the case of the annexation of a town to an already existing city. In discussing the general question involved, the court said:

"The control of the general court over the territorial division of the state into cities, towns and districts, unless controlled by some specific constitutional limitation, must necessarily be supreme. It is incident to that sovereign power which regulates the performance of public and political duties. The rights and franchises of such corporations are granted only to this end, and they may be modified and changed in their territorial limits as public convenience and necessity require. The inhabitants do not derive private or personal rights under the act of incorporation; they acquire no vested right in those forms of municipal government which exist under general laws in towns, as distinguished from those by which the affairs of cities are regulated. If injuriously affected by legislative action upon these political relations, within constitutional limits, the courts can afford no remedy. This power of the general court it was not the intention of the amendment in question to limit or affect. It has no application to the annexation, by the authority of the legislature, of a town or part of a town to a city already existing. It has express reference to the erection of a city

(2) Chandler v. Boston, 112 Mass. 200.

government in the place of a town government within the same town limits. We are referred by the defendants to many acts of the legislature annexing towns and parts of towns to cities, showing that this has been the uniform construction of the article in question."

A very common provision is one prohibiting the alteration, by division, of the boundaries of counties of a certain size without a vote of the inhabitants of the county in favor of the same. Such a provision, for example, exists in Wisconsin (3). It should be noted also that usually today the legislature is forbidden to pass special acts incorporating particular localities by general constitutional provisions which forbid the passing of special acts. The scope of this class of limitations will be discussed later (§§ 27-32).

§ 15. Charter of public corporation not a contract. In the case of Dartmouth College v. Woodward, the Supreme Court of the United States held a charter granted to a private corporation was a contract within the meaning of that clause of the Federal Constitution which forbids the states to impair the obligation of contracts (4). Whatever be the merits of that doctrine, it has no application to the charters granted to public corporations of any kind. For example, in Johnson v. San Diego (5), the legislature divided the city of San Diego in 1889 into two parts, but provided that the part segregated, known as Coronado Beach, should pay its pro rata share of the indebtedness of the original corporation. In 1893 the legislature

(3) Wisconsin Const., Art. XIII, sec. 7.

(4) 4 Wheat. 519.

(5) 109 Calif. 468.

passed a general act regulating the distribution of munic ipal debts in such cases of division, making the act retroactive so as to cover San Diego and Coronado Beach. This act changed the previous apportionment of the debt, so that Coronado Beach was exempted from all liability for the debt of the original municipality. It was argued that since the original division took place with the consent of the inhabitants of the old city of San Diego, a contract existed that the debt should be apportioned in the manner fixed in the original act. The court decided that no contract existed, and that, in the absence of constitutional limitations restricting the exercise of this right of division, the legislature could do as it pleased. The following passage from the opinion sums up the whole matter in a few words: "This right of legislative control, arising from the very nature of the creation of such corporations, is established under the well-settled doctrine that such corporations have no vested rights in powers conferred upon them for civil, political, or administrative purposes, or, as Dillon states it: 'Legislative acts respecting the political and governmental powers of municipal corporations not being in the nature of contracts, the provisions thereof may be changed at pleasure where the constitutional rights of creditors and others are not invaded.'"

§ 16. Same: Rights of legislature distinguished from rights of creditors. We must, however, be careful to distinguish between two different phases of the problem, viz.: (1) the question whether the municipal charter is a contract with the people of the district; (2) the question of the rights of creditors of the original corporation when the latter is divided or otherwise altered. The answer