In 1785, the Commonwealth of Massachusetts had granted a charter to the Charles River Bridge Company, allowing it to construct and operate a toll bridge between Boston and Cambridge. Later, in 1828, long before the expiration of the original charter, a second bridge company received authorization for construction of a competing link across the Charles River. The new bridge was to become free to the public within six years. The initial entity sued, claiming that their charter had granted them a monopoly on such traffic.
The case moved from the highest court in Massachusetts to the United States Supreme Court, where the case was first argued in 1831. Chief Justice Marshall would have held the second grant invalid, but due to absences and disagreements, it was not possible formulate a decision at that time. When the decision was finally rendered in 1837, the composition of the court had changed.
The Court under Chief Justice Roger B. Taney held that the original charter had not specifically granted a monopoly and that the â€œgeneral welfareâ€� would be enhanced by opening a second bridge. This amounted to a significant modification of the Dartmouth College Case, which had found that states could not alter contracts. Taney acknowledged that only Congress had the power to regulate interstate commerce, but the states possessed a â€œpolice power,â€� entitling them to enact regulatory laws for the public benefit.
In the decision, Taney referred not to Dartmouth but to the 1830 case of Providence Bank v. Billings, in which a bank chartered in Rhode Island without any mention of a tax. When the state imposed a tax on banks, Providence Bank objected on the basis that the power to tax at all would imply the power to tax so heavily as to wipe out the bank, which would invalidate the charter. The court ruled instead that the power to tax was of such importance that it could not be relinquished, especially as an unstated corollary.
In the Charles River Bridge case, the court again concluded that the public interest, in this case to have a second bridge, could not be penalized by the assumption by the proprietors that there had been an implicit monopoly. This wsa a substantial extension, since in the Providence Bank case, the power to overtax was hypothetical. In this case, the elimination of the assumed monopoly was very real. In both cases, Taney sided with the unspoken public interest. In doing so, the court was acting fully in accord with the spirit of Jacksonian democracy, placing the public good ahead of property rights.
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