Pennsylvania College Cases (1870)/Opinion of the Court

JUDGES: Before Thompson, C. J., Read, Agnew, Sharswood and Williams, JJ. OPINION BY: THOMPSON OPINION The opinion of the court was delivered, January 3d 1870, by Thompson, C. J.--

These three bills, relating to the same institution, and involving considerations common to each, were argued together, and as they can be most satisfactorily disposed of together, we now propose to do so.

The first of them raises the question whether the contract of scholarships between the complainants and others, and Jefferson College, did not interpose a constitutional barrier to any legislative grant of authority to the trustees of the college, to surrender its former charter and accept a new one, by which the college was eventually removed from Canonsburg to Washington, in the same county.

The second is by the trustees of Jefferson College, in which the same question is raised by them; and

The third is by some of the members of the board of trustees of Washington and Jefferson College, in which they complain of the defendant, that its trustees are, under the pretence of authority conferred by the Act of 26th February 1869, about to violate the provisions of the Act of 4th of March 1865, by which Washington and Jefferson College was authorized to provide for the instruction of the senior, junior and sophomore classes at Canonsburg, and students in the freshman class, and in the scientific and preparatory departments, and the department of agriculture and art at Washington; and in disregard thereof, about to unite all the classes at Washington, and to remove thither the library and other movable property of the college, and to sell or dispose of its real estate, charging that such intended acts and doings would be, and are, in contravention of the rights, duties and obligations conferred by the Act of the 4th of March 1865, referred to. Each of these cases was set down, and all heard together on bill and answer. The argument took a wide range, and counsel had an attentive hearing, such as the magnitude of the seeming consequences of a determination of the controversy demanded. The questions presented, however, were not numerous or complex; and notwithstanding the possible discontent which may for a time follow the displacement of an ancient and cherished institution of learning, if the law require it we must so determine. We do not make the law.

A question to be answered in passing on the merits of the first of these bills is, could Jefferson College surrender its charter, with the consent of the legislature, and accept a new one, consolidating it with another institution or college of the same nature and kind, without the assent of the holders of scholarships in the college?

The general right of a private corporation to surrender its franchises, may possibly have exceptions, but undoubtedly it is the rule. This is generally described as an inherent right, which would necessarily defeat any attempt by legislation to enforce upon a corporation qualities of perpetuity. Such a thing would be impossible in the nature of things. Corporations, like individuals, die by the decay, or loss of their vital functions, and this effectually defies authority, to render them perpetual. A surrender of a franchise is the voluntary death of the corporation, and is one mode by which it may cease to exist: 19 Johns. 456, 474; 8 Pet. 381. If anybody ever did dispute the right of a corporation to surrender its franchises of its own mere motion, it is not likely that such a contest about the question could be long maintained, where both parties, the state and the corporation, the grantor and grantee, consent to it, absolutely, or on condition. This I take to be incapable of dispute, and the history of this college will show that this is just what has transpired in its case. It is undisputed in the pleadings.

But independently of this mutual consent, there is in the Act of the 15th January 1802, the original act of incorporation of Jefferson College, a reservation of a right to do all that was done by the legislature by the Act of 1865. In the 18th section of the original act it is provided "that the constitution of the college hereby and herein established, shall be and remain the irrevocable constitution of said college for ever, and the same shall not be altered by any ordinance, or by-law of the trustees, nor in any other manner than by an Act of the Legislature of the Commonwealth." In The Commonwealth v. Bonsall, 3 Whart. 559, a provision like this was held to be a good reservation of the right by the legislature, to change and alter the charter of the corporation of the "Public School of Germantown." The reservation in [*438] that act of incorporation, was in the same words almost, as those used here--there is not a shade of difference in their meaning, and but a single literal difference. Granting the rule to be that a private charter of the date of 1802, could not be changed by the legislature without the assent of the corporators, or by virtue of the right reserved; that such charters stood on the footing of contracts, we have no difficulty, for there is not only assent here, but a sufficient reservation of the right to sustain the action of the legislature in the enactment of 1865. So far as that act is concerned, nobody objected to its passage, nor to what was done under it, in consolidating Washington and Jefferson Colleges into one body. The holders of the scholarships now complaining, made no objection, and we must presume them to have been satisfied. What was done was not done in a corner, and they do not allege they were uninformed of it. Thus the surrender of the charter of Jefferson College, and the acceptance of the new one, may strictly be said to have been with the assent, in point of fact, of the trustees, the legislature, and the scholarships. This is an assent of every interest to the new organization, and ought to silence all complaints by any person having a legal right to complain or interfere.

But in order to meet the objection of the holders of scholarships in the Jefferson College, directly on the merits of their objection, which is, that these contracts are impaired by the Acts of 1865 and 1869, let usconsider it and see whether there is anything sound in it. If I understand it, it is supposed that these scholarships are impaired in value by the establishment of Washington and Jefferson College at the town of Washington, some seven miles distant from Canonsburg, under the authority of the Act of 26th February 1869. It may be noticed that these scholarships are, as stated in the certificates, for the endowment of Jefferson College. This designation does not alter the matter. They are contracts for tuition in consideration of a pre-paid subscription, and are to be interpreted as ordinary contracts. This is their effect, no more and no less.

By the Act of March 1865, Washington and Jefferson Colleges were consolidated under a new charter accepted by both. The legislature was careful in granting the new charter, to avoid the very question now introduced, and to do entire justice to the holders of certificates and scholarships, and others, provided as follows: "and all the several liabilities of said two colleges, or corporations, by either of them suffered or created, including the scholarships heretofore granted by and now obligatory upon each of them, are hereby imposed upon and declared to be assumed by the corporation hereby created, which shall discharge and perform the same, without diminution or abatement." The whole and entire of these contracts are thus saved in their identity and integrity. This was one of the terms of acceptance of the new charter, and there is no pretence even now that it is not obligatory on the new institution, and may be enforced against it after acceptance of the charter, by every means known in the law, applicable to it under the original charter. The nature of the new college, as an institution of learning, the subjects and mode of instruction, organization, and even the professors, I believe, are the same as they were in Jefferson College. There is no pretence of impairment of these contracts on grounds of dissimilarity of instruction, or capacity on part of the new institution to impart it. In passing I may say, that no objection on any ground, was made to the chang during the three years in which the college acted partly at Canonsburg, and partly at Washington, under the most cumbrous and unheard of arrangements for a college.

It is not, therefore, on either of these grounds, that these scholarship contracts can be, or are claimed, to be impaired, but another and different ground is insisted on, namely: that the contract for the tuition, &c., contained therein, was to be performed at Canonsburg, and not elsewhere.

When we recur to these contracts, there is no word or provision to this effect in them, nor in the plan or prospectus put forth to induce investments in them. No doubt it was expected from the fact that Jefferson College was located at Canonsburg, that that was to be the place of the performance of the contracts. On the face of the contracts, and there is nothing but this in the case, the contracts are personal to the corporation, and it could perform or offer performance anywhere, whether at Washington or Canonsburg. The contracts are complete, so as to bind both contracting parties without designating the place. The party liable to perform, as in any other personal contract, is liable wherever found. It was not even an incident of the contract that it was to be performed at Canonsburg. It was an expectancy perhaps; even that we do not know:--we simply infer it, not from the contract, but from the situation of the contracting parties. We all know that the incidents of contracts may be changed without impinging on the constitutional prohibition against impairing contracts. Stay laws, which change the remedy and rights of the parties, to some extent at least, have from time to time been passed in this and other states, and they have been uniformly sustained, whenever the contract did not specially provide to the contrary. The cases of Chadwick v. Moore, 8 Watts & Serg. 49; Bunn, Raiguel & Co. v. Gorgas, 41 Pa. 441, and Billmeyer v. Evans & Rodenbaugh, 40 Pa. 324, contain all that need be cited on this point, and in regard to the distinction noticed. In these cases and in every one of the kind, it has been usual to present the argument, that the contract having been made in view of the remedy existing at the time for its enforcement, it was a part of it, or at least an inseparable incident of it, and to permit it to be controlled by a new rule, was to impair the contract. There are instances, it must be admitted, very near the outer verge of legislative power, but they have been always sustained, and in their apparently objectionable features, are incomparably stronger than anything which can be assumed or predicated of the contracts in question.

The argument in support of the plaintiff's position, not being sufficiently self-sustaining, an equity is invoked in its aid. That, as a consideration in the question before us, is outside of the case, excepting as it may serve to illustrate the argument. This equity is, that the subscribers for scholarships made them in view of their proximity to Jefferson College, and convenience of maintaining scholars at home while attending upon a collegiate course of instruction, and that they will be deprived of this advantage by the removal of the college to Washington. As nothing of this appears by the contracts, and there is no proof of it aliunde, it may or may not be so. It may have induced some or all to subscribe; but this is surmise. Certain it is, it could have had no effect on subscribers for perpetual scholarships; for the college in such cases, finds boarding, lodging, and tuition to the scholar, and it is no matter to the subscriber where that may be done, so far as expense is concerned; that is a matter of indifference to him. But disappointed expectations, the motive in entering into a contract, do not effect the existence of the contract. All that may occur, and the contract remain in full vigor. No constitutional provisions extend to cure this oft necessary result. We must not at this point overlook the great fact in every contract, that it is always made in view of and subject to the natural or legal contingencies which may affect it, or to which the contracting parties may be subject. If a contract be made with a corporation, to be executed in the future, the contingency of existence must be regarded as having been in view as much as between man and man. The risk is taken by both parties. They knew themselves to be subject to such contingencies, and not the contingencies subject to them. It must be presumed that the subscribers to these scholarships knew that the legislature might, with the assent of the corporation, alter its fundamental law, or might do it in the terms of the reservation already referred to, and thus defeat their motive for subscribing, and that it had power to do so, only preserving their contract. This might be done, and this the law presumes all parties to have known. Therefore in no sense could just expectations, even, have been disappointed by the act of removing the college to Washington. The case of the Genesee College, and the opinion of Judge Johnston, at chambers I presume, have been considered. The occasion of the delivery of that opinion was upon a motion to vacate an injunction order restraining the removal of the college at Lima to Syracuse, pending litigation as to the right to remove. It is true, he seems to have gone beyond the limits of the question somewhat, and discussed the question of scholarships, importing the force of a contract into the motives for subscribing; but as I understand the case (no facts being reported with the opinion furnished us on a separate leaf), the contest was between the scholarships and the college, unaffected by the authority of the legislature. This might make a material difference between that case and the one in hand. I incline to think it would. Be that as it may, if the case goes further than this, while we acknowledge great respect for the learned jurist who delivered the opinion, we cannot follow it to the extent claimed here.

Lastly, the argument in this case culminates in an assumption that the legislature and corporation of Jefferson College, and so of any other corporate body, may be controlled in changing, altering, repealing and surrendering the charter, by the contractors with the corporation. The one may consent, and the other act upon such consent, and yet this may be set aside by outside parties. This position is only true of corporations, generally to the extent of leaving intact contracts and preserving legal remedies. Obviously no more. That is always provided for by the legislature. The 10th sect. of Art. I. of the constitution of the United States would probably require this, although the 16th sect. of Art. I. of the constitution of the state expressly provides, only, that in repealing or revoking charters by the legislature, no injury be done to the corporators. But we need not elaborate this consideration, as both the contract and remedy are preserved in this case.

In conclusion, so far as the first part of these cases is concerned, it must be recollected that Washington and Jefferson College was incorporated by Act of 4th of March 1865, and located for certain specified purposes both at Canonsburg and Washington; that this act was accepted by both of the old institutions to be consolidated. Thenceforth the corporation is under that act; the act of 24th February 1869, therefore, providing for its removal, as the trustees or a majority might decide, was clearly within the constitutional power of the legislature: Sect. 16, Art. I., Const. Penna., and being assented to, it is valid beyond question or controversy.

For all these reasons, the bill in this case is not sustained, and must be dismissed. Bill dismissed at the costs of the plaintiffs.

2. As to the second of the above-mentioned bills, viz.: The Trustees of Jefferson College v. Washington and Jefferson College, but little is required to be said. We have virtually decided it, in holding, as we have done in the first of these cases, that by the acceptance of the Act of 1865 in connection with Washington College, it ceased to exist under its original charter. There is, therefore, now no such board as the trustees of Jefferson College, with the right of suit in the name of that corporation: 33 U.S. 281. Consequently the plea of the defendant is sustained, and this bill must be dismissed.

Bill dismissed, and William Jeffery, who filed it, is ordered to pay the costs, no other names appearing of record as complainants, and there being no such legal board of trustees as that which purports to be plaintiffs in the bill.

3. The third and last of these bills was filed by a minority of the board of trustees of Washington and Jefferson College, and they claim that the Act of Assembly of 1869, authorizing the removal of the college as consolidated by the Act of 1865, in obedience to the decision of the requisite number of trustees, is unconstitutional, for the reason, it is alleged, that it infringes the contracts of scholarships with Jefferson College, which they assume could only be performed by the college at Canonsburg. This question we have disposed of in our views in regard to the first of these cases. We need not repeat them, but refer to them as showing that the ground of unconstitutionality is not tenable. It is difficult to discover wherein the Act of 1869 is obnoxious to the charge made, and the Act of 1865, which was not complained of by the plaintiffs, was not. By that act the freshman class and preparatory departments of the college were to be at Washington, and the senior, junior, and sophomore classes were to be taught at Canonsburg. Now unless the scholarships exclude the freshman and preparatory departments of the college, which they do not, there was just the same impairment of contract, if any, of scholarships, in obliging scholars to go to Washington for tuition in the preparatory department and freshman class, as to require them to go there to pass through the remainder of the course. Yet this objection was not made by the plaintiffs or anybody else. This, I admit, is rather argumentum ad hominem, than an illustration of the question on principle, but that we think we have already done.

To another charge in the bill, the respondents answer that they intend to remove the classes of the college to Washington, the place fixed as the site of the college, under the provisions of the Act of 1869, and to dispose of the realty, strictly pursuant to the authority of the act; and as this was not replied to by the complainants, it must be taken to be true, and as we have already in the first of these cases held the Act of Assembly of 1869 to be constitutional, it follows that this bill also, must be dismissed at the costs of the complainants.

Ordered: That the several bills of the several plaintiffs herein considered be dismissed at the costs of the several plaintiffs in the said bills respectively, and that it be so entered in each of the cases.