Charles River Bridge v. Warren Bridge
Charles River Bridge v. Warren Bridge, 36 U.S. 420 (1837).
Facts: The Charles River Bridge (P) was created through a state charter that allowed the bridge company to replace a ferry franchise that Harvard College had operated across the river for over 100 years. Under the charter, the bridge company was to pay an annual fee to Harvard for 40 years and was entitled to charge a toll for the same period. Later P’s charter was extended to 70 years. 42 years after P was opened, the state chartered Warren Bridge (D) adjacent to P. The state then took over D and eliminated the toll, rendering P’s charter worthless. P sued and lost. P appeals.
Issue: Is a state’s contract limiting its power to provide for public needs to be construed narrowly against the private party?
Dissent (Story): The critical issue is the intent of the parties. The grant of a franchise is necessarily exclusive. The legislature could not rescind P’s grant. If P’s grant included a reservation to the state of the right to est. a free competitor, there would have been a gross inadequacy of consideration and P would have never been built. The Court’s holding destroys the incentive needed for entrepreneurs to take risks for the benefit of the public.
- A state may act retrospectively and divest vested rights, so long as it does not impair the obligation to contract. P must show that the state contracted to est. a free bridge such as D.
- The basic rule of construction for contracts between the public and private entrepreneurs is that any ambiguity must operate in favor of the public. In grants by the public, nothing passes by implication. Government must have power to provide for changing needs. If by implications the government could b e denied such power, its continued existence would be meaningless.
- Nothing in P’s charter forbids the state from creating a bridge such as D. P’s argument would render useless the investments in railroads and canals that compete with longstanding turnpike corporations, and progress in transportation would halt.