Inalienable Police Power
INALIENABLE POLICE POWER
thomas cooley, writing on the state police power in 1868, concluded that the contract clause did not permit a state "under pretense of regulation, [to] take from the corporation any of the essential rights and privileges which the charter confers." Constitutional law changed quickly. In boston beer co. v. massachusetts (1878), when holding that the reserved police power allowed a state to revoke the charter of a brewery company, the Supreme Court declared that even in the absence of a reserved power to revoke, the revocation would be valid: the legislature cannot contract away or otherwise alienate the sovereign power to protect the lives, health, safety, or morals of its citizens. A legislature can, however, alienate its tax powers, as new jersey v. wilson (1812) and piqua branch bank v. knoop (1854) demonstrated. As the Court frequently explained, the tax power is a right of government that the contract clause does not protect; it protects property rights only. That distinction scarcely explains why the power of eminent domain, a government right, cannot be contracted away. Nevertheless, the inalienable police power proved to be an effective rationale for supporting a variety of regulatory legislation against contract clause claims.
In northwestern fertilizing company v. hyde park (1878) the Court upheld as a protection of public health an ordinance forcing the removal of a fertilizer plant. In stone v. mississippi (1880) the Court sustained a state act revoking the charter of a lottery company; the contract clause could not limit a power to protect public morality from gambling. Within a few years the Court upheld one state act revoking a monopoly of the slaughterhouse business and another establishing a commission to fix the rates of a railroad company whose charter expressly authorized it to fix its own rates. In the rate case, stone v. farmers ' loan and trust company (1886), the fact that the state had not reserved a power to alter or amend the charter made the defeat of the contract clause claim seem kindred to a victory for the inalienable police power. The unreliability of the contract clause, especially in rate cases, led shortly to the acceptance of substantive due process of law to defeat the police power.
That the inalienable police power was not limited to cases of public health, safety, or morality is shown by the unanimous opinion in Chicago and Alton Railroad v. Tranbarger (1915), sustaining a state requirement that railroads construct roadbeds that prevent water damage to private property. Justice mahlon pitney for the Court declared that all contract and property rights are held subject to the exercise of a police power that "is inalienable even by express grant" and is not limited by either the contract clause or the due process clause. Pitney added that the power embraced regulations promoting "public convenience or the general welfare and prosperity" as well as the "public health, morals, or safety." Protection of the "general welfare and prosperity" figured prominently in the Court's decision in home building and loan association v. blaisdell (1934). In that case the Court referred to the reserved police power but meant the inalienable police power.
Leonard W. Levy
Wright, Benjamin F. 1938 The Contract Clause of the Constitution. Pages 195–213. Cambridge, Mass.: Harvard University Press.