Charles River Bridge v. Warren Bridge (1837),
Supreme Court ruling relating to corporate development.In 1650, the Massachusetts legislature gave Harvard College an exclusive right to operate a ferry from
Boston across the Charles River to Charlestown. Under acts of 1785 and 1792, Massachusetts transferred all rights of Harvard's monopoly to the Charles River Bridge Company and gave that company a seventy‐year charter to operate a toll bridge between Charlestown and Boston. In 1828, the legislature chartered the Warren Bridge Company to build a new bridge that would revert to the state within six years after its completion. The stock owners of the Charles River Bridge complained that the charter for the new Warren Bridge violated its contract with the state. The Charles River Bridge Company argued that its original monopoly to operate the ferry included the bridge and that, in effect, the state had granted the company an exclusive right to operate a bridge between the two cities. The Charles River Bridge Company sued, citing the contracts clause of the U.S.
Constitution (art. 1, sec. 9), which bars states from “impairing the Obligations of Contracts.”
By a vote of 4–3, the U.S. Supreme Court in 1837 upheld Massachusetts's right to charter the Warren Bridge. Writing for the Court, Chief Justice Roger B.
Taney ruled that the charter granted to the Charles River Company should be read strictly; it did not include the promise of a monopoly, and therefore the state had the power to charter a new company.
This ruling allowed new industries to develop alongside—and even to supplant—existing technologies and companies. It gave states flexibility in developing public policy toward industries and utilities. It encouraged more competitive enterprise yet allowed states to grant monopolies to enterprises that served the public interest. Adhering to the logic of
Charles River Bridge, however, states often included contract clauses enabling them to revoke all or some of the charter rights.
See also
Business;
Capitalism;
Economic Development;
Industrialization.
Bibliography
Stanley I. Kutler , Privilege and Creative Destruction: The Charles River Bridge Case, 1971.
Elizabeth B. Monroe , Abridging Vested Interest: The Battle of the Masschusetts Bridge, in Historic Supreme Court Cases: 1690–1990, ed. John Johnson, 1992, pp. 174–81.
Paul Finkelman
