Majority — CLIFFORD J.
Syllabus
The legislature of Pennsylvania chartered a college “ at Canonsburg,” by the name of the Jefferson College, “in Canonsburg,” giving to it a constitution and declaring that the same should “ be and remain the inviolable constitution of the said college forever,” and should not bo “altered or alterable by any ordinance or law of the said trustees or in any other manner than by an act of the legislature” of Pennsylvania. The college becoming in need of funds put into operation a plan of endowment whereby in virtue of different specific sums named, different sorts of scholarships were created; one, ex. gr., by which on paying $400 a subscriber beoame entitled to a perpetual scholarship, capable of being sold or bequeathed; and another by which, on payment of $1200, he became entitled to a perpetual scholarship entitling a student to tuition, room-rent, and boarding; this sort of scholarship being capable, by the terms of the subscription, of being disposed of as other property. But nothing was specified in this plan as to where this education, under the scholarships, was to be. On payment of the different subscriptions, certificates were issued by the college, certifying that A. B. had paid $—, which entitled him “ to a scholarship as specified in the plan of endowment adopted by the trustees of J'efferson College, Canonsburg,” &c. An act of legislature, in 18C5, by consent of the trustees of the college at Canonsburg and of the trustees of another college at Washington, Pennsylvania, seven miles from Canonsburg, created a new corporation, consolidating the two corporations, vesting the funds of each in the new one, and in their separate form making them to cease, but providing that all the several liabilities of each, including the scholarships, should be assumed and discharged without diminution or abatement by the new corporation. Notwithstanding the act of Assembly, the collegiate buildings, &c., of Jefferson College were loft at Canonsburg, and certain parts of the collegiate course were still pursued there; the residue being pursued at Washington College, Washington. Subsequently, in 1869—the then existing Constitution of Pennsylvania (one adopted in 1857, allowing the legislature of the State “to alter, revoke, or annul any charter of incorporation thereafter granted, whenever in their opinion it may be injurious to the citizens, ... in suchdelivered the opinion of the court.
Jefferson College was incorporated on the fifteenth of January, 1802, by the name of the Trustees of Jefferson College in Canonsburg in the county of Washington, for the education of youth in the learned languages and the arts, sciences, and useful literature. By the charter, it was declared that the trustees should be a body politic and corporate, with perpetual succession, in deed and in law, to all intents and purposes whatsoever, and that the constitution of the college “shall not be altered or alterable by any ordinance or law of the said trustees, nor in any other manner than by an act of the legislature of the Commonwealth.”
Washington College was incorporated on the twenty-
Experience showed in the progress of events that the interests of both institutions would be promoted in their union, and the friends of both united in a common effort to effect that object. Application was accordingly made to the legislature for that purpose, and on the fourth of March, 1865, the legislature passed the “Act to unite the colleges of Jeffersou and Washington, in the county of Washington, and to erect the same into one corporation under the name of Washington and Jefferson College.” Enough is stated in the preamble of the act to show that the application was made to promote the best interests of both institutions, and that the legislative act which is the subject of complaint was passed at their united request and to sanction the union which their respective trustees had previously agreed to establish. Inconveniences resulted from the provisions contained in the thirteenth section of the act, which impliedly forbid an}' change in the sites of the respective colleges, and also provided that the studies of certain classes of the students should be pursued at each of the two institutions, and to that end prescribed certain rules for appropriating to each certain portions of the income derived from the funds of the institution, and the manner in which the same should be expended and applied by the trustees. Such embarrassments increasing, the legislature passed a supplementary act, providing that the several departments of the two colleges should be closely united, and that the united institution should be located as therein prescribed. Measures were also prescribed in the same act for determining the location of the united institution, and it appears that those measures, when carried into effect, resulted in fixing the location at Washington, in the county of the same name. Certain parties are dissatisfied with the new arrangement, and
I. Examination of these cases will be made in the order they appear on the calendar, commencing with the case in which the trustees of Jefferson College are the complainants. They bring their bill of complaint against the two colleges as united, under the first act of Assembly passed for that purpose. Service was made and the respondents appeared and pleaded in bar that the complainants, as such trustees, duly accepted the act of Assembly creating the union of the two institutions, and that having accepted the same they, as a corporation, became dissolved and ceased to exist, and have no authority to maintain their bill of complaint. Apart from the plea in bar they also filed an answer, but as the whole issue is presented in the plea in bar it will not be necessary to enter into those details. Opposed to that plea
"Whether the act of Assembly in question in this case is or not repugnant to the constitution of the State is conclusively settled against the complainants by the decision in this very case, and the question is not one open to re-examination in this court, as it is not one of Federal cognizance in a case brought here by a writ of error to a State court. Nothing, therefore, remains to be examined but the second question presented in the pleadings, which is, whether the supplementary act of Assembly uniting the two institutions and providing that there should be but one location of the same for any purpose, impairs the obligation of the contract between the State and the corporation of Jefferson College, as created by the original charter; or, in other words, whether it is repugnant to the tenth section of the first article of the Federal Constitution.
Corporate franchises granted to private corporations, if duly accepted by the corporators, partake of the nature of legal estates, as the grant under such circumstances becomes a coutract within the protection of that clause of the Constitution which ordains that no State shall pass any law impairing the obligation of contracts.[14] Charters of private corporations are regarded as executed contracts between the government and the corporators, and the rule is well settled that the legislature cannot repeal, impair, or alter such a
Apply those principles to the case under consideration and it is quite clear that the decision of the State court was correct, as the fifth section of the charter, by necessary implication, reserves to the State the power to alter, modify, or amend the charter without any prescribed limitation. Provision is there made that the constitution of the college shall not be altered or alterable by any ordinance or law of the trustees, “ nor in any other manner than by an act of the legislature of the Commonwealth,” which is in all respects equivalent to an express reservation to the State to make any alterations in the charter which the legislature in its wisdom may deem fit, just,, and expedient to enact, and the donors of the institution are as much bound by that provision as the trustees.[16]
II. Sufficient has already been remarked to show that the case of the dissenting trustees of the new corporation, which is the second case, is governed by the same principles as the preceding ease. They admit that the act of the legislature
Viewed in the light of these suggestions the present case stands just as it would if the reservation contained in the original charter had been in terms incorporated into the new charter uniting the two institutions into one corporation, which the complainants in this case admit is a valid act of the legislature. Such an admission, however, is not necessary to establish that fact, as the act was passed by the assent of the two corporations aud in pursuance of the reserved power to that effect contained iu the original charter of the corporation to which the complaining corporators in the preceding case belonged. Grant that the power existed in the legislature to pass the act uniting the two institutions aud it follows that the supplementary act which was passed to render the first act practically available is also a rightful exercise of legislative authority, as it is clear that substantially the same reservation is contained iu the act providing for the union of the two institutions as that contained in the original charter by virtue of which the act was passed uniting the two institutions in one corporation.[14] Tested by these considerations the court here is of the opinion that
III. Plans of various kinds were devised by the trustees of Jefferson College and put in operation for the endowment of the institution; and, among others, was the plan of establishing what was called the scholarships, whereby a contributor on payment of twenty-five dollars became entitled to tuition for one person for a prescribed period, called a right to a single scholarship; or, on payment of fifty dollars, to a family scholarship; or, on payment of one hundred dollars, to tuition for thirty years; or, on payment of four hundred dollars, to a perpetual scholarship, to be designated by whatever name the contributor might select. Contracts of the kind were outstanding at the respective times when each of the two acts of the legislature in question was passed, and the complainants in the third case are owners of such scholarships, and they bring their bill of complaint, for themselves and such other persons owning such scholarships as may desire to unite in the bill for the relief therein prayed. They pray that both of the before-mentioned acts of the legislature may be declared null and void as repugnant both to the State and Federal Constitution, but it will be sufficient to remark, without entering into any further explanations, that the second question is the only one which can bo re-examined in this court. "What they claim is that the acts of the legislature in question impair the obligation of their contracts for scholarship as made with the trustees of Jefferson College before the two institutions were united in one corporation. Deference must be made to the charter creating the union as well as to the original charters in order to ascertain whether there is any foundation for the allegations of the bill of complaint.
By the first section of the act creating the union it is provided that the new corporation “ shall possess and enjoy all the capacities, powers, privileges, immunities, and franchises which were conferred upon and held by said colleges of Jefferson and Washington and the trustees thereof’ with such enlargements and subject to such changes therein as are
Undoubtedly the corporate franchises of the two institutions were contracts of the description protected by that clause of the Constitution which ordains that no State shall pass any law impairing the obligation of contracts, but the contract involved in such an act of incorporation is a contract between the State and the corporation, and as such the terms of the contract may, as a general rule, be altered, modified, or amended by the assent of the corporation, even though the charter contains no such reservation and there was none such existing in any general law of the State at the time the charter was granted. Persons making contracts with a private corporation know that the legislature, even without the assent of the corporation, may amend, alter, or modify their charters in all cases where the power to do so is reserved in the charter or in any antecedent general law in operation at the time the charter was granted, and they also know that such amendments, alterations, and modifications may, as a general rule, be made by the legislature with the assent of the corporation, even in cases where the charter is unconditional in its terms and there is no general law of the State containing any such reservation. Such contracts made between individuals and the corporation do not vary or in any manner change or modify the relation between the State and the corporation in respect to the right of the State to alter, modify, or amend such a charter,
Decided cases are referred to in which it is held that the trustees"of such an institution, where the terms of the charter amount to a contract and the charter contains no reservation of a right to alter, modify, or amend it, cannot consent to any change in the charter made by the legislature, which contemplates a diversion of the funds of the institution to any other purpose than that described and declared in the original charter. All, or nearly all of such decisions are based on a state of facts where an attempt was made to take
Controlled by these reasons the court is of the opinion that the act uniting the two colleges in one corporation was a valid act even as against the complainants in the third case.
* People v. Manhattan Co., 9 Wendell, 351; Roxbury v. Railroad Co., 6 Cushing, 424; White v. Railroad, 14 Barbour, 559.
† † 3 Wharton, 566 .
‡ ‡ State v. Miller, 2 Vroom, 521 ; Story v. Jersey City et al., 1 C. E. Green, N. J., 13.
Decree in each case affirmed.
Footnotes
- * Dartmouth College v. Woodward, 4 Wheaton, 700.
- * Fletcher v. Peck, 6 Cranch, 136 ; Terrett v. Taylor, 9 Id. 51.
- † † Dartmouth College v. Woodward, 4 Wheaton, 708; General Hospital v. Insurance Co., 4 Gray, 227 ; Suydam v. Moore, 8 Barbour, 358; Angel & Ames on Corporations (9th ed.), § 767, p. 787.
- * Mumma v. Potomac Co., 8 Peters., 286; Dartmouth College v. Woodward, 4 Wheaton, 712; Slee v. Bloom, 19 Johnson, 474; Riddle v. Locks and Canals, 7 Massachusetts, 185; McLaren v. Pennington, 1 Paige’s Chancery, 107; Lincoln v. Kennebec Bank, 1 Greenleaf, 79; Navigation Co. v. Coon, 6 Pennsylvania State, 379; Com. v. Cullen, 13 Id. 133; Sprague v. Railroad, 19 Id. 174; Joy v. Jackson Co., 11 Michigan, 155.
- † † Cooley on Constitutional Limitations, 279; Binghamton Bridge Case, 3 Wallace, 51; Piqua Bank v. Knoop, 16 Howard, 369 ; Vincennes University v. Indiana, 14 Howard, 268 ; Planters' Bank v. Sharp, 6 Id. 301 .
- ‡ ‡ Railroad v. Dudley, 14 New York, 354; Plank Road v. Thatcher, 1 Kernnan, 102.
- * Revere v. Copper Co., 15 Pickering, 351; Attorney-General v. Clergy Society, 10 Richardson’s Equity, 604.
- * Bailey v. Hollister, 26 New York, 112; Sherman v. Smith, 1 Black, 587 .
- * Hascall v. Madison University, 8 Barbour, 174.
- † † Ward v. The Society of Attorneys, 1 Collyer Chancery Cases, 377.
- * State v. Adams, 44 Missouri, 570.
- † † Railroad v. Canal Co., 21 Pennsylvania State, 22.
- ‡ ‡ Allen v. McKeen, 1 Sumner, 299.