A special privilege conferred
by government on individual or corporation, and which does not belong
to citizens of country generally of common right. Elliott
v. City of Eugene, 135 Or. 108, 294 P. 358, 360. In England
it is defined to be a royal privilege in the hands of a subject.
A "franchise," as used by Blackstone
in defining quo warranto, (3 Com. 262 [4th Am. Ed.] 322), had reference
to a royal privilege or branch of the king's prerogative subsisting
in the hands of the subject, and must arise from the king's grant,
or be held by prescription, but today we understand a franchise
to be some special privilege conferred by government on an individual,
natural or artificial, which is not enjoyed by its citizens in general.
State v. Fernandez, 106 Fla. 779, 143 So. 638, 639, 86 A.L.R. 240.
In this country a franchise
is a privilege or immunity of a public nature, which cannot be legally
exercised without legislative grant.
To be a corporation is
a franchise. The various powers conferred on corporations
are franchises. The execution of a policy of insurance by an insurance
company [e.g. Social Insurance/Socialist
Security], and the issuing a bank note by an incorporated
bank [such as a Federal Reserve NOTE],
are franchises. People v. Utica Ins. Co.. 15 Johns., N.Y., 387,
8 Am.Dec. 243. But it does not embrace the property acquired by
the exercise of the franchise. Bridgeport v. New York
& N. H. R. Co., 36 Conn. 255, 4 Arn.Rep. 63. Nor involve interest
in land acquired by grantee. Whitbeck v. Funk, 140 Or. 70, 12 P.2d
In a popular sense, the
political rights of subjects and citizens are franchises, such as
the right of suffrage. etc. Pierce v. Emery, 32 N.H. 484
; State v. Black Diamond
Co., 97 Ohio St. 24, 119 N.E. 195, 199, L.R.A.l918E, 352.
Elective Franchise. The right of
suffrage: the right or privilege of voting in public elections.
Exclusive Franchise. See Exclusive
Privilege or Franchise.
General and Special. The charter
of a corporation is its "general" franchise, while a "special" franchise
consists in any rights granted by the public to use property for
a public use but-with private profit. Lord v. Equitable Life Assur.
Soc., 194 N.Y. 212, 81 N. E. 443, 22 L.R.A.,N.S., 420.
Personal Franchise. A franchise of
corporate existence, or one which authorizes the formation and existence
of a corporation, is sometimes called a "personal" franchise. as
distinguished from a "property" franchise, which authorizes a corporation
so formed to apply its property to some particular enterprise or
exercise some special privilege in its employment, as, for example,
to construct and operate a railroad. See Sandham v. Nye, 9 Misc.ReP.
541, 30 N.Y.S. 552.
Secondary Franchises. The franchise
of corporate existence being sometimes called the "primary" franchise
of a corporation, its "secondary" franchises are the special and
peculiar rights, privileges, or grants which it may, receive under
its charter or from a municipal corporation, such as the right to
use the public streets, exact tolls, collect fares, etc. State v.
Topeka Water Co., 61 Kan. 547, 60 P. 337; Virginia Canon Toll Road
Co. v. People, 22 Colo. 429, 45 P. 398 37 L.R.A. 711. The franchises
of a corporation are divisible into (1) corporate or general franchises;
and (2) "special or secondary franchises. The former is the franchise
to exist as a corporation, while the latter are certain rights and
privileges conferred upon existing corporations. Gulf Refining
Co. v. Cleveland Trust Co., 166 Miss. 759, 108 So. 158, 160.
Special Franchisee. See Secondary
[Black’s Law Dictionary, 4th Edition, pp. 786-787]
People v. Ridgley, 21 Ill. 65, 1859 WL 6687, 11 Peck 65 (Ill., 1859)
The question for decision
is, therefore, squarely presented to us, as it was to the Circuit Court,
whether, by the aid of that statute, and within the limits of the power
it intended to confer, this bill can be sustained under the general
principles of equity jurisprudence.
We say by the aid of that statute, because it is conceded on all sides
that without it the bill cannot stand. The service of compulsory process
on a party residing without the limits of the district of Connecticut
who is not found within them, is expressly forbidden by the general
statute defining the jurisdiction of the circuit courts. Parties and
subjects of complaint having no proper connection with each other are
grouped *602 together in this bill, and they, by the accepted
canons of equity, pleading, render it multifarious. This, and other
matters of like character, which are proper causes of demurrer, are
fatal to it, unless the difficulty be cured by the statute.
When we recur to its provisions, which are said to authorize these and
other departures from the general rules of equity procedure, counsel
for the appellees insist that it is unconstitutional, not only in the
particulars just alluded to, but that it is absolutely void as affecting
the substantial rights of defendants in regard to matters beyond the
power of Congress.
If this be true, we need inquire no further into the frame of the bill,
and we therefore proceed, on the threshold, to consider the objections
to the validity of the statute.
The Constitution declares (art. 3, sect. 2) that the judicial power
shall extend to all cases in law and equity arising under the Constitution,
the laws of the United States, and the treaties made, or which shall
be made, under their authority; and to controversies to which the United
States shall be a party.>
**26 The matters in regard to which the statute authorizes a suit to
be brought are very largely those arising under the act which chartered
the Union Pacific Railroad Company, conferred on it certain rights and
benefits, and imposed on it certain obligations. It is in reference
to these rights and obligations that the suit is to be brought. It is
also be be brought by the United States, which is, therefore, necessarily
the party complainant. Whether, therefore, this suit is authorized by
the statute or not, it is very clear that the general subject on which
Congress legislated is within the judicial power as defined by the Constitution.
The same article declares, in
sect. 1, that this ‘power shall be vested in one supreme court and
in such inferior courts as the Congress may, from time to time, ordain.’
The discretion, therefore, of Congress as to the number, the character,
the territorial limits of the courts among which it shall distribute
this judicial power, is unrestricted except as to the Supreme Court.
On that court the same article of the Constitution confers a very limited
original jurisdiction,-namely, ‘in all cases affecting ambassadors,
other public ministers, and consuls, and cases in which a State shall
be a party,’-and an *603 appellate jurisdiction in all the other cases
to which this judicial power extends, with such exceptions and under
such regulations as the Congress shall make.
There is in this same section a limitation as to the place of trial
of all crimes, which it declares shall (except in cases of impeachment)
be held in the State where they shall have been committed, if committed
within any State.
Article 6 of the amendments also provides that in all criminal prosecutions
‘the accused shall enjoy the right to a speedy and public trial by an
impartial jury of the State and district wherein the crime shall have
been committed, which district shall have been previously ascertained
by law.’ These provisions, which relate solely to the place of the trial
for criminal offences, do not affect the general proposition. We say,
therefore, that, with the exception of the Supreme Court, the authority
of Congress, in creating courts and conferring on them all or much or
little of the judicial power of the United States, is unlimited by the
Congress has, under this authority, created the district courts, the
circuit courts, and the Court of Claims, and vested each of them with
a defined portion of the judicial power found in the Constitution. It
has also regulated the appellate jurisdiction of the Supreme Court.
The jurisdiction of the Supreme Court and the Court of Claims is not
confined by geographical boundaries. Each of them, having by the law
of its organization jurisdiction of the subject-matter of a suit, and
of the parties thereto, can, sitting at Washington, exercise its power
by appropriate process, served anywhere within the limits of the territory
over which the Federal government exercises dominion.
**27 It would have been competent for Congress to organize a judicial
system analogous to that of England and of some of the States of the
Union, and confer all original jurisdiction on a court or courts which
should possess the judicial power with which that body thought proper,
within the Constitution, to invest them, with authority to exercise
that jurisdiction throughout the limits of the Federal government. This
has been done in reference to the Court of Claims. It has now jurisdiction
only of cases in which the United States is defendant. It is just as
*604 clearly within the power of Congress to give it exclusive jurisdiction
of all actions in which the United States is plaintiff. Such an extension
of its jurisdiction would include all that the statute under consideration
has granted to the Circuit Court.
It is true that Congress has declared that no person shall be sued in
a circuit court of the United States who does not reside within the
district for which the court was established, or who is not found there.
But a citizen residing in Oregon may be sued in Maine, if found there,
so that process can be served on him. There is, therefore, nothing in
the Constitution which forbids Congress to enact that, as to a class
of cases or a case of special character, a circuit court-any circuit
court-in which the suit may be brought, shall, by process served anywhere
in the United States, have the power to bring before it all the parties
necessary to its decision.
Whether parties shall be compelled to answer in a court of the United
States wherever they may be served, or shall only be bound to appear
when found within the district where the suit has been brought, is merely
a matter of legislative discretion, which ought to be governed by considerations
of conveyience, expense, &c., but which, when exercised by Congress,
is controlling on the courts.
So, also, the doctrine of multifariousness; whether relating to improperly
combining persons or grievances in the bill, it is simply a rule of
pleading adopted by courts of equity. It has been found convenient in
the administration of justice, and promotive of that end, that parties
who have no proper connection with each other shall not be compelled
to litigate together in the same suit, and that matters wholly distinct
from and having no relation to each other, and requiring defences equally
unconnected, shall not be alleged and determined in one suit. The rule
itself, however, is a very accommodating one, and by no means inflexible.
Such as it is, however, it may be modified, limited, and controlled
by the same power which creates the court and confers its jurisdiction.
The Constitution imposes no restraint in this respect upon the power
of Congress. Sect. 921 of the Revised Statutes, which has been the law
for fifty years, declares that when causes of like nature or relating
to the same question are pending, the court may consolidate *605 them,
or make such other orders as are necessary to avoid costs and delay.
It is every-day practice, under this rule, to do what the statute authorizes
to be done in the case before us.
**28 But it is argued that the statute confers a special jurisdiction
to try a single case, and is intended to grant the complainant new and
substantial rights, at the expense and by a corresponding invasion of
those of the defendants.
It does not create a new or special tribunal. Any circuit court of the
United States where the bill might be filed was, by the act, invested
with the jurisdiction to try the case. Nor was new power conferred on
the court beyond those which we have regarded as affecting the mode
of procedure. It seems to us that any circuit court, sitting as a court
of equity, which could by its process have lawfully obtained jurisdiction
of the parties, and considered in one suit all the matters mentioned
in the statute, could have done this before the act as well as afterwards.
But if this be otherwise, we are aware of no constitutional objection
to the power of the legislative body to confer on an existing court
a special jurisdiction to try a specific matter which in its nature
is of judicial cognizance.
The principal defendant in this suit, the one around which all the contest
is ranged, is a corporation created by an act which reserved the right
of Congress to repeal or modify the charter. To this corporation Congress
made a loan of $27,000,000, and a donation of lands of a value probably
equal to the loan.
The statute-books of the States are full of acts directing the law officers
to proceed against corporations, such as banks, insurance companies,
and others, in order to have a decree declaring their charters forfeited.
Special statutes are also common, ordering suits against such corporations
when they have become insolvent, to wind up their business affairs,
and to distribute their assets, and prescribing with minuteness the
course of procedure which shall be followed and the court in which the
suit shall be brought.
This court said, in the case of The
Bank of Columbia v. Okely (4 Wheat. 235), in speaking
of a summary proceeding given by the charter of that bank for the collection
of its debts: ‘It is the remedy, and not the right, and as such we have
no doubt *606 of its being subject to the will of Congress. The forms
of administering justice, and the duties and powers of courts as incident
to the exercise of a branch of sovereign power, must ever be subject
to legislative will, and the power over them is unalienable, so as to
bind subsequent legislatures.’ And in
Young v. The Bank of Alexandria (4 Cranch, 397), Mr.
Chief Justice Marshall says: ‘There is a difference between those rights
on which the validity of the transactions of the corporation depends,
which must adhere to those transactions everywhere, and those peculiar
remedies which may be bestowed on it. The first are of general obligation;
the last, from their nature, can only be exercised in those courts which
the power making the grant can regulate.’ See also The Commonwealth
v. The Delaware & Hudson Canal Co. et al., 43 Pa. St. 227;
State of Maryland v. Northern Central Railroad Co., 18
Md. 193; Colby v. Dennis, 36 Me. 1; Gowan v.
Penobscot Railroad Co., 44 id. 140.
**29 Statutes of this character, if not so common as to be called ordinary
legislation, are yet frequent enough to justify us in saying that they
are well-recognized acts of legislative power uniformly sustained by
It may be said, and probably with truth, that such statutes, when they
have been held to be valid by the courts, do not infringe the substantial
rights of property or of contract of the parties affected, but are intended
to supply defects of power in the courts, or to give them improved methods
of procedure in dealing with existing rights.
This leads to an inquiry indispensable to a sound decision of the case
before us; namely, does this statute, by its true construction, do any
thing more than this?
We might rest this branch of the case upon the concession of counsel
for appellants, made both in their brief and in the oral argument, but
we proceed to examine the proposition for ourselves.
The first suggestion of the legal mind on this inquiry is, that it will
not be presumed, unless the language of the statute imperatively requires
it, that Congress, by a retrospective law, intended to create new rights
in one party to the suit at the expense, or by an invasion of the rights,
of other parties; or, *607 where no right of action founded on past
transactions existed, that Congress intended to create it.
The United States was to be sole complainant in a suit in equity, and
though there may be other defendants, the Union Pacific Railroad Company
is the only one named in the act. The relief to be granted is the collection
and payment of moneys and the restoration of property, or its value,
‘either to said railroad corporation or to the United States, whichever
shall in equity be entitled thereto.’ The decree, therefore, can only
be made on the ground of some relief to which the United States or the
company is entitled by the general principles of equity jurisprudence.
It is no objection to granting such relief that the company is a defendant,
for by the flexibility of chancery practice a person whose interests
in the subject of litigation are on the same side with the complainant
may be made a defendant. The corporation could also in such a suit file
a cross-bill against the complainant, and, by virtue of this statute,
against any co-defendant of whom it could rightfully claim the relief
which the statute authorizes.
But whatever be the relief asked, it could only, by the express terms
of the act, be granted to that party who was in equity thereunto entitled.
It is very plain that there was here no new right established. No new
cause of equitable relief. No new rule for determining what were the
rights of the parties. That was to be decided by the principles of equity;
not new principles of equity, but the existing principles of equitable
But the statute very specifically defines the matters which may be embraced
in this suit as foundations for relief, and classifies them under a
very few heads, by declaring who besides the corporation may be sued.
They are persons who have received,--
[. . .]
The proposition is that
the United States, as the grantor of the franchises of the company,
the author of its charter, and the donor of lands, rights, and privileges
of immense value, and as parens patriae, is a trustee, invested
with power to enforce the proper use of the property and franchises
granted for the benefit of the public.
The legislative power of Congress over this subject has already
been considered, and need not be further alluded to. The trust here
relied on is one which is supposed to grow out of the relations of the
corporation to the government, which, without any aid from legislation,
are cognizable in the ordinary courts of equity.
It must be confessed that, with every desire to find some clear and
well-defined statement of the foundation for relief under this head
of jurisdiction, and after a very careful examination of the authorities
cited, the nature of this claim of right remains exceedingly vague.
Nearly all the cases- we may almost venture to say all of them-fall
under two heads:--
1. Where municipal, charitable, religious, or eleemosynary corporations,
public in their character, had abused their franchises, perverted the
purpose of their organization, or misappropriated their funds, and as
they, from the nature of their corporate functions, were more or less
under government supervision, the Attorney-General proceeded against
them to obtain correction of the abuse; or,
2. Where private corporations, chartered for definite and limited
purposes, had exceeded their powers, and were restrained *618 or enjoined
in the same manner from the further violation of the limitation to which
their powers were subject.
The doctrine in this respect is well condensed in the opinion in
The People v. Ingersoll, recently decided by the
Court of Appeals of New York. 58 N. Y. 1. ‘If,’ says the court,
‘the property of a corporation be illegally interfered with by corporation
officers and agents or others, the remedy is by action at the suit of
the corporation, and not of the Attorney-General. Decisions are cited
from the reports of this country and of this State, entitled to consideration
and respect, affirming to some extent the doctrine of the English courts,
and applying it to like cases as they have arisen here. But in none
has the doctrine been extended beyond the principles of the English
cases; and, aside from the jurisdiction of courts of equity over trusts
of property for public uses and over the trustees, either corporate
or official, the courts have only interfered at the instance of the
Attorney-General to prevent and prohibit some official wrong by municipal
corporations or public officers, and the exercise of usurped or the
abuse of actual powers.’ p. 16.
**37 To bring the present case within the rule governing the exercise
of the equity powers of the court, it is strongly urged that the company
belongs to the class first described.
The duties imposed upon it by the law of its creation, the loan of money
and the donation of lands made to it by the United States, its obligation
to carry for the government, and the great purpose of Congress in opening
a highway for public use and the postal service between the widely separated
States of the Union, are relied on as establishing this proposition.
But in answer to this it must be said that, after all, it is but a railroad
company, with the ordinary powers of such corporations. Under its contract
with the government, the latter has taken good care of itself; and its
rights may be judicially enforced without the aid of this trust relation.
They may be aided by the general legislative powers of Congress, and
by those reserved in the charter, which we have specifically quoted.
The statute which conferred the benefits on this company, the loan of
money, the grant of lands, and the right of way, did the same for other
corporations already in existence under State or territorial charters.
Has the United States the right *619 to assert a trust in the Federal
government which would authorize a suit like this by the Attorney-General
against the Kansas Pacific Railway Company, the Central Pacific Railroad
Company, and other companies in a similar position?
If the United States is a trustee,
there must be cestuis que trust. There cannot be the one without
the other, and the trustee cannot be a trustee for himself alone. A
trust does not exist when the legal right and the use are in the same
party, and there are no ulterior trusts.
Who are the cestuis que trust for whose benefit this suit is
brought? If they be the defrauded stockholders, we have already shown
that they are capable of asserting their own rights; that no provision
is made for securing them in this suit should it be successful, and
that the statute indicates no such purpose.
If the trust concerned relates to the rights of the public in the use
of the road, no wrong is alleged capable of redress in this suit, or
which requires such a suit for redress.
Company v. Peniston (18 Wall. 5) shows that the company
is not a mere creature of the United States, but that while it owes
duties to the government, the performance of which may, in a proper
case, be enforced, it is still a private corporation, the same as other
railroad companies, and, like them, subject to the laws of taxation
and the other laws of the States in which the road lies, so far as they
do not destroy its usefulness as an instrument for government purposes.
We are not prepared to say that there are no trusts which the United
States may not enforce in a court of equity against this company. When
such a trust is shown, it will be time enough to recognize it. But we
are of opinion that there is none set forth in this bill which, under
the statute authorizing the present suit, can be enforced in the Circuit
**38 There are many matters alleged in the bill in this case, and many
points ably presented in argument, which have received our careful attention,
but of which we can take no special notice in this opinion. We have
devoted so much space to the more important matters, that we can only
say that, under the view which we take of the scope of the enabling
statute, they furnish no ground for relief in this suit.
*620 The liberal manner in which the government has aided this company
in money and lands is much urged upon us as a reason why the rights
of the United States should be liberally construed. This matter is fully
considered in the opinion of the court already cited, in United States
v. Union Pacific Railroad Co. (supra), in which it is shown that
it was a wise liberality for which the government has received all the
advantages for which it bargained, and more than it expected. In the
feeble infancy of this child of its creation, when its life and usefulness
were very uncertain, the government, fully alive to its importance,
did all that it could to strengthen, support, and sustain it. Since
it has grown to a vigorous manhood, it may not have displayed the gratitude
which so much care called for. If this be so, it is but another instance
of the absence of human affections which is said to characterize all
corporations. It must, however, be admitted that it has fulfilled the
purpose of its creation and realized the hopes which were then cherished,
and that the government has found it a useful agent, enabling it to
save vast sums of money in the transportation of troops, mails, and
supplies, and in the use of the telegraph.
A court of justice is called on to inquire not into the balance of benefits
and favors on each side of this controversy, but into the rights of
the parties as established by law, as found in their contracts, as recognized
by the settled principles of equity, and to decide accordingly. Governed
by this rule, and by the intention of the legislature in passing the
act under which this suit is brought, we concur with the Circuit Court
in holding that no case for relief is made by the bill.
[U.S. v. Union Pac. R. Co., 98 U.S. 569 (1878)]