The provision relating to the letting of contracts does not prohibit the legislature from relieving a contractor from the effects of a hard bargain with the state, nor from liquidating and paying a just claim upon the state, for damages accruing to a canal contractor in the performance of his contract, under circumstances raising an obligation on the part of the state to pay them. People v. Densmore (1873) 1 Thomp. & C. 280.

This provision does not prevent the legislature from modifying the contract, with the consent of the contractor. People ex rel. Wilhams v. Dayton (1874) 55 N. Y. 367; People v. Canal Board (1874) 55 N. Y. 390. It should be observed that these cases were decided before the Constitution was amended prohibiting an allowance of extra compensation to contractors. These amendments were adopted in 1874, and now appear in this section, and also in § 28 of article 3.

§ 10. [Canal improvement.]—The canals may be improved in such manner as the legislature shall provide by law. A debt may be authorized for that purpose in the mode prescribed by section four of this article, or the cost of such improvement may be defrayed by the appropriation of funds from the state treasury, or by equitable annual

tax.

[New.]

At the November election in 1895 the people approved an act, chap. 79, authorizing the expenditure of $9,000,ooo for the improvement of the canals. Questions relating to this expenditure were considered in Baker v. State (1902) 77 App. Div. 528, 78 N. Y. Supp. 922, which has been cited under § 4 of this article. The people again, in 1903, approved a law authorizing the expenditure of $101,000,000 for canal improvement, embodying a plan for a barge canal.

The origin of this section will be found in the history of the Convention of 1894, in the third volume.

The legislature of 1903 proposed an amendment to this article, adding the following section, numbered eleven, and directed its submission to the people at the general election in 1905.

§ 11. [State debts, how paid; sinking funds.]— The legislature may appropriate out of any funds in the treasury, moneys to pay the accruing interest and principal of any debt heretofore or hereafter created, or any part thereof, and may set apart in each fiscal year, moneys in the state treasury as a sinking fund to pay the interest as it falls due, and to pay and discharge the principal of any debt heretofore or hereafter created under section four of article seven of the Constitution until the same shall be wholly paid, and the principal and income of such sinking fund shall be applied to the purpose for which said sinking fund is created, and to no other purpose whatever; and in the event such moneys so set apart in any fiscal year be sufficient to provide such sinking fund, a direct annual tax for such year need not be imposed and collected, as required by the provisions of said section four of article seven, or of any law enacted in pursuance thereof.

See last paragraph of preface to this volume.

The legislature of 1905 submitted to the people at the general election in that year an amendment adding to this article the following section, numbered twelve. It seems to have been assumed that the preceding new section, eleven, would be approved by the people.

- A debt or

§ 12: [Improvement of highways.] debts of the state may be authorized by law for the improvement of highways. Such highways shall be determined under general laws, which shall also provide for the equitable apportionment thereof among the counties. The

aggregate of the debts authorized by this section shall not at any one time exceed the sum of fifty millions of dollars. The payment of the annual interest on such debt, and the creation of a sinking fund of at least two per centum per annum to discharge the principal at maturity, shall be provided by general laws, whose force and effect shall not be diminished during the existence of any debt created thereunder. The legislature may, by general laws, require the county or town or both to pay to the sinking fund the proportionate part of the cost of any such highway within the boundaries of such county or town, and the proportionate part of the interest thereon, but no county shall, at any time, for any highway, be required to pay more than thirty-five hundredths of the cost of such highway, and no town more than fifteen hundredths. None of the provisions of the fourth section of this article shall apply to debts for the improvement of highways hereby authorized.

See last paragraph of preface to this volume.

ARTICLE VIII.

[CORPORATIONS AND CHARITIES.]

§1. [Corporations, how formed.]-Corporations may be formed under general laws; but shall not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws and special acts passed pursuant to this section may be altered from time to time or repealed. [Const. 1821, art. 7, § 9; 1846, art. 8, § 1.]

The history of this subject will be found in the chapter on the Convention of 1846, where I have tried to show

the evolution of the policy of constitutional control of corporations. The corporation article, except that portion added in 1894, was substantially worked out by that Convention, and it has already been noted that the essential provisions of the article have not since been changed.

The general scope and purpose of this section are pointed out by the court in Bank of Chenango v. Brown (1863) 26 N. Y. 467, where Judge Emott says that "the new Constitution intended to introduce a system of general, and not special, legislation. To this end any barriers which existed in or under the former Constitution, in the way of such general legislation in respect to corporations, were abolished, and the legislative power was left free to act by general enactments upon this class of subjects. But the power to pass such laws resulted from the grant of the legislative power of the people to the legislature, and not from the provision which either indicated the general system which the Constitution was intended to favor, and in some cases to direct, or from the removal of the restrictions in former Constitutions in the way of such legislation. Such provisions were merely directions for the exercise of an existing authority, and not its creation, and the removal of restrictions upon it indicated that, but for such restrictions, it might even before have been exercised."

Denying the power of the legislature to destroy property rights by the repeal of a corporate charter, the court, in People v. O'Brien (1888) 111 N. Y. 1, 2 L. R. A. 255, 7 Am. St. Rep. 684, 18 N. E. 692, say that "whatever might have been the intention of the legislature, or even of the framers of our Constitution, in respect to the effect of the power of repeal reserved in acts of incorporation, upon the property rights of a corporation, such power must still be exercised in subjection to the provisions of the Federal Constitution.” Property invested in corporate securities is not beyond the pale of the protection afforded by the fundamental law. "We think that there are no reported cases in which the judgment of the court has ever taken the franchises or property of a corporation from its stockholders and creditors, through the exercise of the reserved power of amendment and repeal, or transferred it to other persons or corporations, without provision made for compensation."

Discussing the reserved power of the legislature over corporations, Judge Earl, in New York v. Twenty-third Street R. Co. (1889) 113 N. Y. 311, 21 N. E. 60, says: "It is difficult to put precise

limits upon the power of the legislature thus reserved over corporations created by it or under its authority. Under its reserved power it cannot deprive a corporation of its property or interfere with or annul its contracts with third persons. . . . But it may take away its franchise to be a corporation, and may regulate the exercise of its corporate powers. As it has the power utterly to deprive the corporation of its franchise to be a corporation, it may prescribe the conditions and terms upon which it may live and exercise such franchise." The court sustained the act of 1873, chap. 647, requiring the company to pay into the city treasury one per cent of its gross receipts instead of a car license fee of $50. The legislature had power thus to change the public obligations of the corporation.

The effect of the amendment of 1874, which went into operation January 1, 1875 (article 3, § 18), relating to street railroads, was considered in Re Third Ave. R. Co. (1890) 121 N. Y. 536, 9 L. R. A. 124, 24 N. E. 951, where the court say that "the powers and franchises of street railways existing prior to 1875 may be regulated without violating the constitutional provision referred to, and that may be done by enlarging as well as restricting them." The act of 1889, chap. 531, relating to a change of motive power, was sustained. The reserved legislative power was also considered in Geneva & W. R. Co. v. New York C. & H. R. R. Co. (1895) 90 Hun, 9, 35 N. Y. Supp. 339, affirmed in (1897) 152 N. Y. 632, 46 N. E. 1147, where it was declared that under this power additional burdens and obligations may be imposed on a corporation. Re Brooklyn (1894) 143 N. Y. 596, 26 L. R. A. 270, 38 N. E. 983, affirmed in (1897) 166 U. S. 685, 41 L. ed. 1165, 17 Sup. Ct. Rep. 718; Roddy v. Brooklyn City & N. R. Co. (1898) 32 App. Div. 311, 52 N. Y. Supp. 1025; Rochester & C. Turnp. Road Co. v. Joel (1899) 41 App. Div. 43, 58 N. Y. Supp. 346.

Another view of the subject is presented in Palmer v. Hickory Grove Cemetery (1903) 84 App. Div. 600, 82 N. Y. Supp. 973, construing the act of 1902, chap. 73, limiting, in certain counties, the right of cemetery associations to hold lands.

A general act affecting all railroad corporations was held to amend a railroad charter granted by special law, and was constitutional within this section. Accordingly the court sustained the act of 1851, chap. 157, authorizing any railroad corporation, with the assent of two thirds of its stockholders, to loan its credit or subscribe for the stock of a Canadian railroad corporation with a terminus at the Niagara river. White v. Syracuse & U. R. Co. (1853) 14 Barb. 559. This corporation was organized in 1836 (chap. 292) and was