The Charles River Bridge Case

Charles River Bridge v. Warren Bridge, 36 U.S. 420 (1837)[1], was a case heard by the United States Supreme Court under the leadership of Chief Justice Roger B. Taney. The case settled a dispute over the constitutional clause regarding obligation of contract.

In 1785, the Charles River Bridge Company had been granted a charter to construct a bridge over the Charles River connecting Boston and Charleston. When the Commonwealth of Massachusetts sanctioned another company to build the Warren Bridge, which would be very close in proximity to the first bridge and would connect the same two cities, the proprietors of the Charles River Bridge claimed that the Massachusetts legislature had broken its contract with the Charles River Bridge Company, and thus the contract had been violated. The owners of the first bridge claimed that the charter had implied exclusive rights to the Charles River Bridge Company. The Court ultimately sided with Warren Bridge. This decision was received with mixed opinions, and had some impact on the remainder of Taney's tenure as Chief Justice.

The controversy over the Charles River Bridge dated as far back as October 17, 1640 when the Massachusetts legislature, in accordance with common law, assumed control over public ferries. The legislature proceeded to give Harvard College the power to run a ferry on the Charles River between Boston and Charleston. Harvard continued to operate the ferry, and collect its profits until 1785. That year, a group of men petitioned the state legislature to build a bridge across the river due to the inconvenience of the ferry. As time had passed, the two towns had grown and communication between them had become more important, and technology was at a point now where a bridge appeared to be a wise economic undertaking.

The request was granted and the Charles River Bridge Company was given permission to build a bridge and collect tolls for 40 years, but during those 40 years the company would have to pay 200 pounds (or ~$670) to Harvard College annually in order to make up for the profits the college would lose from the ferry. After 40 years of collecting tolls, the company would turn the bridge over to the state, but the government would still have to pay Harvard annually.

The bridge was a giant success. It made large profits and proved to be very convenient. As a result, plans to construct more bridges were set into motion. In 1792, the Massachusetts legislature gave another company a charter to build a bridge, across the same river, between Cambridge and Boston. The second bridge was a considerable distance from the first one, but the proprietors of the first bridge still complained. The owners of the Charles River Bridge argued to the legislature that building the second bridge would take away traffic and revenue from the first bridge. The legislature responded by giving the proprietors of the Charles River Bridge another 30 years to collect tolls.

As more time passed, the population of Boston increased, as did the amount of business the city was doing with the rest of the world. With these increases, the Charles River Bridge collected more and more profits, and the value of Charles River Bridge Company stock started to rise. Shares that had a par value of $333.33 sold for $1,650 in 1805, and by 1814, their price had risen to $2,080.[2] By 1823, the value of the company was estimated to be $280,000, a substantial increase from its original value of $50,000. Between 1786 and 1827 the Charles River Bridge had collected $824,798 in tolls. Very few of the shares belonged to the company's original investors at this time, and the stock was now owned by men who had bought it at very high prices. The public started to complain about having to continue to pay tolls after the bridge's profits had far surpassed the original capital, with interest; but the new investors did not care. In their opinion, they had paid a large sum for the bridge stock, and they were not about to stop collecting tolls until they themselves had turned a profit. These proprietors decided not to meet any of the public's demands, and they refused both to improve services and reduce tolls.

There were multiple attempts to convince the state legislature to give permission to build a new bridge between Boston and Charleston, which would be in direct competition with the Charles River Bridge. Eventually, the legislature agreed to grant a charter for a new bridge between Charleston and Boston. In 1828, a company was given the rights to build the Warren Bridge, which would be extraordinarily close to the Charles River Bridge. The Warren Bridge would be turned over to the state once enough tolls had been collected to pay for the bridge's construction, or after a maximum of 6 years, after which it would be free to the public. Since it was free, and so close to the Charles River Bridge, the Warren Bridge would obviously take all of the competing bridge's traffic, and therefore its construction would leave the stock of the Charles River Bridge void of any value.

After the charter had been granted, the Charles River Bridge Company filed a lawsuit in the Supreme Court of Massachusetts in an effort to stop the erection of the second bridge. The endeavor failed, and the case was taken to the United States Supreme Court. The case was argued before the Court in 1831, where the plaintiffs argued that it was unconstitutional for the Massachusetts legislature to charter the Warren Bridge, because creating a competing bridge violated the contract clause in Article I, Section 10, which states, "No State shall pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts".

It appears as though Chief Justice John Marshall, Justice Joseph Story and Justice Smith Thompson, were all in agreement that the Massachusetts legislature had indeed violated the obligation of contract clause in the constitution, but because of justice absences, and disagreements between the justices, no final decision was reached.

Due to more absences of justices, the case was not argued again for six years. During those six years, three new justices had been appointed by President Andrew Jackson, including the new Chief Justice, Roger Taney; the Warren Bridge had been constructed, and made back the money it had cost to build, and had become a toll-free bridge. The Washington River Bridge was now closed, since it was no longer getting any traffic due to its toll.

Before the Charles River Bridge case was argued before the Supreme Court again, there was a situation in 1833 involving the Camden and Amboy Railroad and the Delaware and Raritan Canal companies. This was not a case that went before the Supreme Court, but many prominent lawyers and justices were asked for their opinion on the situation, and among them was Taney, who was then the Attorney General