Charles River Bridge v. Warren Bridge Company 11 Peters 420 (1837)
CHARLES RIVER BRIDGE v. WARREN BRIDGE COMPANY 11 Peters 420 (1837)
The Charles River Bridge case reflected the tension within alexis de tocqueville's proposition that the American people desired a government that would allow them "to acquire the things they covet and which [would] … not debar them from the peaceful enjoyment of those possessions which they have already acquired." A metaphor for the legal strains that accompanied technological change, the case spoke more to the emerging questions of railroad development than to the immediate problem of competing bridges over the Charles River.
Following the Revolution, some investors petitioned the Massachusetts legislature for a charter to build a bridge over the Charles River, linking Boston and Charlestown. Commercial interests in both cities supported the proposal, and the state issued the grant in 1785. The charter authorized the proprietors to charge a variety of tolls for passage, pay an annual fee to Harvard College for the loss of its exclusive ferry service across the river, and then, after forty years, return the bridge to the state in "good repair."
Construction of the bridge began immediately, and in 1786, it was open to traffic, benefiting the proprietors, the communities, and the back country. The land route from Medford to Boston, for example, was cut from thirteen to five miles, and trade dramatically increased as the bridge linked the area-wide market. Success invited imitation, and other communities petitioned the legislature for bridge charters. When the state authorized the West Boston Bridge to Cambridge in 1792, the Charles River Bridge proprietors asked for compensation for the revenue losses they anticipated, and the state extended their charter from forty to seventy years. Ironically, that extension provided the basis for future political and legal assaults against the Charles River Bridge. Other bridges followed and no compensation was offered. The state specifically refuted any monopoly claims and the Charles River Bridge proprietors refrained from claiming any.
Increasing prosperity and population raised the collection of tolls to nearly $20,000 annually in 1805; the share values had increased over 300 percent in value. The toll rates having remained constant since 1786, profits multiplied. Swollen profits stimulated community criticism and animated a long-standing hostility toward monopolies. Opportunity was the watchword and special privilege its bane.
Beginning in 1823, Charlestown merchants launched a five-year effort to build a competing "free" bridge over the Charles. They argued that the existing facility was inadequate, overcrowded, and dangerous; but basically, they appealed for public support on the grounds that the tolls on the Charles River Bridge were "burdensome, vexatious, and odious." The proprietors, defending the bridge's utility, offered to expand and improve it. They consistently maintained that the legislature could not grant a new bridge franchise in the vicinity without compensating them for the loss of tolls. But the political climate persuaded legislators to support the new bridge, and in 1828, after rejecting various schemes for compensation, the legislature approved the Warren Bridge charter. The act established the bridge's termini at 915 feet from the existing bridge on the Boston side, and at 260 feet from it on the Charlestown side. The new bridge was given the same toll schedule as the Charles River Bridge, but the state provided that after the builders recovered their investment and five per cent interest, the bridge would revert to the commonwealth. In any event, the term for tolls could not exceed six years. Governor levi lincoln had previously vetoed similar legislation, but in 1828 he quietly acquiesced.
The new bridge, completed in six months, was an instant success—but at the expense of the Charles River Bridge. During the first six months of the Warren Bridge's operations, receipts for the old bridge rapidly declined. Net income for the Warren Bridge in the early 1830s consistently was twice that for the Charles River Bridge.
Counsel for the old bridge proprietors wasted little time in carrying their arguments to the courts. After daniel webster and lemuel shaw failed to gain an injunction to prevent construction of the new bridge, they appeared in the state supreme court to argue the merits of the charter in 1829, nearly one year after the bridge's completion. Shaw and Webster contended that the Charles River Bridge proprietors were successors to the Harvard ferry's exclusive franchise. In addition, they argued that the tolls represented the substance of the 1785 charter. Although the charter for the new bridge did not take away the plaintiffs' franchise, the 1828 act effectively destroyed the tolls—the essence and only tangible property of the franchise. The lawyers thus contended that the new bridge charter violated the contract clause and the state constitutional prohibition against expropriation of private property without compensation. The Warren Bridge defendants denied the old bridge's monopoly claims and emphasized that the state had not deprived the Charles River Bridge proprietors' continued right to take tolls. They also maintained that the old bridge proprietors had waived exclusivity when they accepted an extension of their franchise in 1792 after the state had chartered the West Boston Bridge.
The state supreme court, dividing equally, dismissed the complaint to facilitate a writ of error to the United States Supreme Court. The Jacksonian Democrats on the state court supported the state and their Whig brethren opposed it. The former rejected monopoly claims and berated the Charles River Bridge proprietors for their failure to secure an explicit monopoly grant. Chief Justice Isaac Parker, acknowledging that the 1785 grant was not exclusive, agreed that the state could damage existing property interests for the community's benefit without compensation. But he insisted that "immutable principles of justice" demanded compensation when the forms of property were indistinguishable. He conceded that canals and railroads might legitimately destroy the value of a turnpike; but when the state chartered a similar franchise, then operators of the existing property could claim an indemnity.
The United States Supreme Court first heard arguments in the case in March 1831. Although absences and disagreements prevented any decision before john marshall's death in 1835, the Court's records offer good circumstantial evidence that he had supported the new bridge. Following several new appointments and roger b. taney's confirmation as Chief Justice, the Court heard reargument in January 1837. Webster again appeared for the plaintiffs; defendants engaged Simon Greenleaf of Harvard, a close associate of joseph story and james kent. Both sides essentially continued the arguments advanced in the state court. Finally, in February 1837, after nearly nine years of litigation, the Court decisively ruled in behalf of the state's right to charter the new bridge.
Taney's opinion sought to balance property rights against community needs by strictly construing the old bridge charter. He rejected the proprietors' exclusivity claim, contending that nothing would pass by implication. "The charter … is a written instrument which must speak for itself," he wrote, "and be interpreted by its own terms." He confidently asserted that the "rule" of strict construction was well settled and he particularly invoked Marshall's 1830 providence bank v. billings opinion, rejecting a bank's claim to implied tax immunity. Like Marshall, Taney concluded that the implications of exclusivity constituted a derogation of community rights. He argued that the community's "interests" would be adversely affected if the state surrendered control of a line of travel for profit. Taney neatly combined old Federalist doctrines of governmental power with the leaven of Jacksonian rhetoric: "The continued existence of a government would be of no great value," he believed, "if by implications and presumptions, it was disarmed of the powers necessary to accomplish the ends of its creations; and the functions it was designed to perform, transferred to the hands of privileged corporations."
But the touchstone of Taney's opinion was its practical response to the contemporary reality of public policy needs. Taking note of technological changes and improvements, such as the substitution of railroad traffic for that of turnpikes and canals, Taney argued that the law must be a spur, not an impediment, to change. If the Charles River Bridge proprietors could thwart such change, he feared that the courts would be inundated with suits seeking to protect established property forms. Turnpike companies, for example, "awakening from their sleep," would call upon courts to halt improvements which had taken their place. Railroad and canal properties would be jeopardized and venture capital would be discouraged. The Supreme Court, he concluded, would not "sanction principles" that would prevent states from enjoying the advances of science and technology. Taney thus cast the law with the new entrepreneurs and risk-takers as the preferred agents for material progress.
In his dissent Justice Story rejected Taney's reliance upon strict construction and advanced an imposing line of precedents demonstrating that private grants had been construed in favor of the grantees. "It would be a dishonour of the government," Story said, "that it should pocket a fair consideration, and then quibble as to the obscurities and implications of its own contract." But Story's dissent was not merely a defense of vested rights. Like Taney, he, too, was concerned with progress and public policy. But whereas Taney emphasized opportunity, Story maintained that security of title and the full enjoyment of existing property was a necessary inducement for private investment in public improvements. Story insisted that the proprietors were entitled to compensation. He thus discounted the potentially staggering social and economic costs implicit in a universal principle requiring just compensation when new improvement projects diminished the value of existing franchises.
Story's position reflected immediate reality. Several years earlier, the state's behavior in the bridge controversy had discouraged stock sales for the proposed Boston and Worcester Railroad. Lagging investment finally had forced the legislature to grant the railroad a thirty-year guarantee of exclusive privileges on the line of travel.
Given the materialism of the American people, Taney's arguments had the greater appeal and endurance. He allied the law with broadened entrepreneurial opportunities at the expense of past assets. Nothing threatened the economic aspirations of Americans more than the scarcity of capital; nothing, therefore, required greater legal encouragement than venture capital, subject only to the risks of the marketplace. These were the concerns that took a local dispute over a free bridge out of its provincial setting and thrust it into the larger debate about political economy. In a society that placed a premium on "progress" and on the release of creative human energy to propel that progress, the decision was inevitable. And throughout American economic development, the Charles River Bridge case has fostered the process that Joseph Schumpeter called "creative destruction," whereby new forms of property destroy old ones in the name of progress.
Stanley I. Kutler