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The Once Famous Charles River Bridge Case

A reader asked for more discussion of  the Charles River Bridge decision, which I cited as a precedent against claims that taxis displaced by Uber were legally entitled to compensation.  Charles River Bridge is a fascinating Supreme Court case that is largely unknown to this generation of lawyers.  I remembered it only from discussions in American history class as a high school student.

The case marks the transition from the Marshall Court to the Taney Court. In fact, it was first argued under the Great Chief Justice but decided under Taney.   It shows how  Jacksonian democracy shifted the course of constitutional law.

The case revolved around bridges and the anti-monopoly principle.  The bridges at issue spanned the Charles River in Massachusetts.  That first bridge builder, the Charles River Bridge Company, argued that the state had given it a monopoly in return for building its bridge.    Thus a subsequent charter to another company for building another bridge violated the provision of the Constitution which bars states from “impairing the obligation of contracts.”

Justice Taney’s opinion based his reading on the original charter for Charles River Bridge company, which he interpreted as not granting any monopoly right. But his interpretation was heavily influenced by his democratic and indeed Democratic ideals. According to Taney, since government existed to protect “the happiness and prosperity” of citizens, judges should not interpret a contract to provide a monopoly unless expressly so stated. The opinion is interesting for at least four reasons.

First,  however sound this decision is as a matter of public policy, it may reflect Taney’s infusion of his own values into the Constitution, something that became notorious in Dred Scott.  It is not at all clear where in the Constitution he gets his rule for requiring that monopoly provisions in public contracts be express rather than fairly implied. Or to put it in another way, what justifies Taney in requiring an express statement if no such statement were required for state charter or contract  law to imply a monopoly in favor of the Charles River Bridge Company?  Justice Joseph Story in dissent makes several arguments that this company would not have made the investments to build the bridge had it not been understood to be an exclusive right.

Second, this opinion may be the first example of the clear statement doctrine in the history of the Supreme Court—a requirement that the legislature speak clearly to overcome some constitutional value—in this case an anti-monopoly principle. A clear statement requirement permits the Court to structure the political process to promote certain preferred values. But because a clear statement requirement is a default rule, it does not prevent the legislature from realizing other values not so preferred. After Charles River Bridge decision, legislatures could still grant monopolies by charter so long as they did so expressly.   Nothing in the decision suggested that such express provisions would not be binding under the Contract Clause.

Third, the clear statement requirement strikes a blow for political transparency.  If one thinks that special interests succeed because they can make deals with the legislatures that cloak their benefits and hide the public’s losses, Taney’s approach empowers the public by forcing the legislature to make its deals for monopolies more explicit.

Finally, the opinion reminds us that there was a time when the Democratic party was a strong advocate of free markets, particularly for their capacity to encourage new entry.  It suspected the legislative action in derogation of markets would redound to the benefit of the well connected and well born. But Democrats  now see government as the common man’s natural friend rather than hereditary enemy.  This changed perspective has transformed our politics.

Reader Discussion

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on June 26, 2014 at 14:54:59 pm

" It is not at all clear where in the Constitution he gets his rule for requiring that monopoly provisions in public contracts be express rather than fairly implied. Or to put it in another way, what justifies Taney in requiring an express statement if no such statement were required for state charter or contract law to imply a monopoly in favor of the Charles River Bridge Company? Justice Joseph Story in dissent makes several arguments that this company would not have made the investments to build the bridge had it not been understood to be an exclusive right."

So, based upon these comments, how is it that you view this as a settled issue? It would seem that a state or municipality may, in fact, allow for a monopoly. In the case of taxis, clearly, this is the intention and effect of requiring a medallion AND this inference is further strengthened by the municipality having taken action against non-medallioned taxi operators (at least up until a number of years ago).
It does not seem so settled to me!

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gabe
on September 17, 2014 at 18:02:00 pm
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nobody.really

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