Franchise (law)

“ The position that a franchise granted by the bounty of the state is not taxable, because coupled with that franchise is the privilege of loaning money to the general government, is not more untenable than to argue that, because such a franchise enhances the credit of the United States, therefore the legislature could not repeal the law granting the franchise without violating its constitutional obligation. ”

“ But may it tax franchises which are the grant of the United States? In our judgment, it cannot. What is a franchise? Under the English law, Blackstone defines it as 'a royal privilege, or branch of the king's prerogative, subsisting in the hands of a subject.' 2 Comm. ”

“ On that occasion, the judges said, that while the first grant of a market remains unrepealed, even the default of the grantee of the franchise, in not providing, according to his duty, proper accommodations for the public, cannot operate, in point of law, as a ground for granting a new charter to another, to hold a market, within the common law, which shall really be injurious to the existing market. ”

“ Franchises are of various grades, from that of a mere right of succession to an estate in land, to the grant of a County Palatine, which is the highest franchise known to the law; the nature and character whereof is the same, whether the grant is to one or many. Corporations are also of all grades, and made for varied objects; all governments are corporations, created by usage and common consent, or grants and charters which create a body politic for prescribed purposes ”

“ The legislature shall not pass any law permitting the leasing or alienation of any franchise so as to release or relieve the franchise or property held thereunder from any of the liabilities of the lessor or grantor, or lessee or grantee, contracted or incurred in the operation, use, or enjoyment of such franchise, or any of its privileges. ”

“ The natural meaning of the words would be that the ordinary property of the consolidating corporations, the property such as any one might own without special franchise, and might transfer by deed, shall belong to the new company without deed, but the franchises of the new company would seem to be left to be determined by the general law. ”

“ Such laws as the franchise-tax law in this State, which the Court of Appeals recently unanimously decided constitutional- such a law as that passed in Congress last year for the purpose of establishing a Department of Commerce and Labor, under which there should be a bureau to oversee and secure publicity from the great corporations which do an interstate business--such a law as that passed at the same time for the regulation of the great highways of commerce so as to keep these roads clear on fair terms to all producers in getting their goods to market--these laws are in the interest not merely of the people as a whole, but of the propertied classes. For in no way is the stability of property better assured than by making it patent to our people that property bears its proper share of the burdens of the State; ”

“ But not to distinguish the acts enjoined or permitted, to give to the corporation its intended purpose and object, is to confound the franchises with such acts, and would nullify the means by which the franchises are to be produced.
A franchise is a privilege conferred in the United States by the immediate or antecedent legislation of an act of incorporation, with conditions expressed, or necessarily inferential from its language, as to the manner of its exercise and for its enjoyment. To ascertain how it is to be brought into existence, the whole charter must be consulted and compared. ”

“ The distinction thus attempted we regard as a refinement which has no foundation in reason, and one that, in truth, avoids the true legal or constitutional question in these causes; namely, that of the right in private persons, in the use or enjoyment of their private property, to control, and actually to prohibit, the power and duty of the government to advance and protect the general good. We are aware of nothing peculiar to a franchise which can class it higher, or render it more sacred, than other property. A franchise is property, and nothing more. ”

“ Therefore it can claim the franchises and privileges of its constituent companies by succession, only under the words 'property,' or 'assets and effects,' if at all. These words certainly are not happily chosen to express the transfer of a franchise, still less to express the continuance of a right not to be competed with, granted by the legislature to a named corporation, after that corporation shall have ceased to exist. ”

“ For, it is said, 'there must always be a corporation in existence liable to the public for the duties and liabilities assumed by the grantee for the privileges conferred in the grant of the franchise.' This reasoning, it seems to us, assumes that the franchise to operate the road did not pass by the sale, unless such new domestic corporation is organized. ”

“ In other words, a corporate franchise has no reason for being, except as it is in effect a pledge on the part of the corporation to do a public service to the greater advantage of the public than could otherwise be secured. Any theory of corporations, or of contracts smuggled into the doctrine of corporations, which denies to the public the right to get itself better served by adjustment of claims and termination of contract and franchise, is fiction for the gullible. ”

“ Franchises are not peculiar to corporations, they are granted to individuals, and may be held by any persons capable of holding or enjoying property; a franchise is property, a right to the privilege or immunity conferred by the grant ”

“ It seems to be the consensus of opinion of eminent legal authorities that all grants of franchises for public utilities are made upon the implied condition that the corporation receiving them will properly perform its obligations by furnishing reasonable accommodations to the public; and that when a corporation has committed its property to a public use, the public has a right to require proper performance of such duties under penalty of forfeiture of the franchise. ”

“ A corporation cannot, without the assent of the legislature, transfer its franchise to another corporation, and abnegate the performance of the duties to the public, imposed upon it by its charter as the consideration for the grant of its franchise. Neither the grant of a franchise to transport passengers, nor a general authority to sell and dispose of property, empowers the grantee, while it continues to exist as a corporation, to sell or to lease its entire property and franchise to another corporation. ”

“ As the greater power includes every less power which is a part of it, the right to withdraw a franchise must authorize a withdrawal of every or any right or privilege which is a part of the franchise. ”

“ Corporate franchises, granted to private corporations, if duly accepted by the corporators, partake of the nature of legal estates, and the grant, under such circumstances, if it be absolute in its terms, and without any condition or reservation, importing a different intent, becomes a contract within the protection of that clause of the Constitution which ordains that no State shall pass any law impairing the obligation of contracts. ”

“ If, on the other hand, the argument be sound, that the sovereign power cannot grant a franchise, to be exclusive within certain limits, and cannot contract not to grant the same, or any like franchise, within the same limits, to the prejudice of the first grant, because it would abridge the sovereign power in the exercise of its right to grant franchises ”

“ But the plaintiffs in this case are not corporators, or stockholders in the bank; they hold no franchise, powers, or privileges, under the act of incorporation; they are no parties to the contracts, nor have they any vested rights under it, which have been impaired by the repeal of the twenty-eighth section. If the corporation, or those who claim the franchises and powers granted to it, do not complain of an infringement of their contract, no other person can. ”

“ V. There was no violation of the rights of the appellants in authorizing the Louisa Company to cross their road, because they could do so only upon condition of paying the value of the privilege, even to the extent, if necessary, of the entire value of the franchise. A franchise is but a qualified property, and cannot, therefore, be more sacred and inviolable than the unqualified property of the owner in fee, whose property is condemned for the purposes of the franchise; over every franchise the jus publicum must prevail, as it does over all other property. ”

“ It is true, that the shares in a corporation are property, but the franchise is not. It cannot be taken to respond to any liabilities of the corporation, and can only be extinguished by forfeiture. It is entirely unlike a grant of land, to which the State court compare it, in this,-this is a grant of royal prerogative, or branch of sovereignty; whereas, when land is granted, all the powers of sovereignty, to enforce the laws, levy taxes, and in all other respects, remain still in the State over the granted territory. ”

“ It is, says he, 'a franchise for a number of persons, to be incorporated and exist as a body politic, with a power to maintain perpetual succession, and to do corporate acts, and each individual of such corporation is also said to have a franchise or freedom.' This franchise, like other franchises, is an incorporeal hereditament, issuing out of something real or personal, or concerning or annexed to, and exercisable within a thing corporate. ”

“ The ordinance impairs the franchise contract entitling the appellant to conduct its business within the city for a term of fifty years, and thereby infringes the contract clause of the Constitution, in that it makes the continued enjoyment of the franchise depend on the payment of the tax. ”

“ If the appellant has a right to enforce the sale of the whole property, including the franchise, his remedy is in a court of chancery, where the rights and priorities of all the creditors may be considered and protected, and the property of the corporation disposed of to the best advantage, for the benefit of all concerned. ”

“ The franchise of the company is the right to hold property and exercise its corporate privileges. The Supreme Court of the United States has decided that where a corporation is exempted from taxation, it is not subject to a tax on its franchise. ”

“ Nor is it justified by any reasonable interpretation of the language of the company's charter. The right of the plaintiff in error to exist as a corporation, and its authority, in that capacity, to conduct the particular business for which it was created, were granted, subject to the condition that the privileges and franchises conferred upon it should not be abused, or so employed as to defeat the ends for which it was established, and that, when so abused or misemployed, they might be withdrawn or reclaimed by the state in such way and by such modes of procedure as were consistent with law. ”

“ With such a corporation, it is not competent for the legislature to interfere. It is a franchise, or incorporeal hereditament, founded upon private property, devoted by its patron to a private charity, of a peculiar kind, the offspring of his own will and pleasure, to be managed and visited by persons of his own appointment, according to such laws and regulations as he, or the persons so selected, may ordain. ”

“ The general tendency of the Courts has been to treat a franchise as a contract, and to be governed closely by the language and evident intent of the makers, but to safeguard the rights of the public to the fullest extent consistent with justice.
A franchise requires specific performance of specific acts. Nothing will be assumed or implied. The Courts recognize that the investors are entitled to reasonable returns, and that the public is entitled to fair rates. ”

“ A franchise is merely a grant of the right to use public property (the streets, particularly) either in perpetuity or for a term of years and subject to certain conditions. Before any public service company can begin operations it must first secure a franchise from the state, city, town, or township as the case may be. ”

“ It should be practicable for any corporation to obtain a legitimate and proper franchise without the payment of fees for legislative favors. It ought always to be understood that illegitimate privileges or concessions prejudicial to the interests of the community could not be obtained at any price. ”

“ Corporations with existence limited in time may take a fee simple or a franchise of longer duration than themselves. Minneapolis v. Minneapolis Street R. Co. 215 U.S. 417, 430, 54 L. ed. 259, 269, 30 Sup. Ct. Rep. 118; Detroit v. Detroit Citizens' Street R. Co. 184 U.S. 368, 394, 395, 46 L. ed. 592, 610, 611, 22 Sup. Ct. Rep. 410. There is a distinction between the franchise to be a corporation and that to operate its plant. ”

“ It is said that 'a corporation can have no legal existence out of the sovereignty by which it is created.' Ang. and Ames on Corps., Sec. 161. And this is equally true of all other franchises.
Take the case of a franchise for a toll-bridge across the Ohio, only authorized by a grant from Kentucky, and to make the supposed case parallel with the case at bar, let the Kentucky franchise only authorize the bridge and transportation over it from Kentucky to Ohio; could such a franchise be sustained or pleaded in restriction of any common right, lawfully exercisable, if no valid franchise existed? ”

“ The franchise is a vested right. The state has power to grant it. It may retake it, as it may take other private property, for public uses, upon the payment of just compensation. A like, though a superior, power exists in the national government. It may take it for public purposes, and take it even against the will of the state; but it can no more take the franchise which the state has given than it can any private property belonging to an individual. ”