In 1819 in the Dartmouth College case19 a charter of a private corporation was held to be contract between the State granting it and the corporation, which the former might not impair by subsequent legislation. Prior to this decision, it had been held in Fletcher v. Peck,20 decided in 1810, that the obligation clause applied to executed as well as to executory contracts, and to contracts entered into by the States as well as to those between private individuals. In New Jersey v. Wilson21 it had also been held that a State might contract away its right of taxation as to certain specified persons and things, which contract could not be rescinded by a subsequent legislative act, and in Terrett v. Taylor22 that the constitutional prohibition was applicable to contracts entered into by the States. In this last case a State was not permitted to divest title to certain lands, the title to which rested upon an earlier legislative grant.

17 Wolff v. New Orleans, 103 U. S. 358; 26 L. ed. 395.

18 New Orleans Waterworks v. Louisiana Sugar Ref. Co., 125 U. S. 18; 8 Sup. Ct. Rep. 741; 31 L. ed. 607. In St. Paul Gaslight Co. v. St. Paul (181 U. S. 142; 21 Sup. Ct. Rep. 575; 45 L. ed. 788) this is declared to he "no longer open to question."

19 Trustees of Dartmouth College v. Woodward, 4 Wh. 518; 4 L. ed. 629.

20 6 Cr. 87; 3 L. ed. 162.

21 7 Cr. 164: 3 L. ed. 303.

22 9 Cr. 43; 3 L. ed. 650.

This fundamental doctrine that the charter of a private corporation is a contract which, under the obligation clause, a State may not impair by legislation, though it has been much criticized, has never been departed from by the Supreme Court. In practical operation, however, its force has been much weakened not only by a very general practice upon the part of the States, when granting charters, to reserve the right to amend or revoke them,23 but by later decisions of the courts with reference to the strictness with which the contractual elements of corporate charters are construed, and to the power of the States in the exercise of their police powers, their power of eminent domain, and their authority to control public service corporations, or corporate concerns affected with a public interest, to disregard even those charter rights which a strict construction shows to have been granted.