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A rendition of the Charles River Bridge from the early 19th century.
In Charles River Bridge v. Warren Bridge, the Court ruled that the charter of the Charles River Bridge Company did not exclude the state of Massachusetts from chartering another bridge nearby. Above, a rendition of the Charles River Bridge from the early 19th century.

Reproduction courtesy of the Library of Congress
Charles River Bridge v. Warren Bridge (1837)

Charles River Bridge v. Warren Bridge (1837) was one of the first decisions to find for the state in challenges invoking the Constitution's Contract Clause. Written by the Jacksonian Chief Justice Roger B. Taney, the majority opinion signaled the Court's shift towards states' rights and away from the nationalism of the Marshall Court.

The battle of the bridges began in 1785, when the Massachusetts legislature granted a charter to the Charles River Bridge Company authorizing it to build and operate a bridge across the Charles River connecting Cambridge and Boston. In return for the company's promise to build and maintain the bridge, the proprietors of the corporation were granted the right to collect tolls for the duration of the charter. The new bridge was a great success and a highly profitable venture for stockholders in the company. By the 1820s, however, much of the public had turned against the company. The company kept its tolls high in spite of its extraordinary profit margins, and the Boston area's increase in population necessitated more bridges. In 1828, the state responded by granting a charter to the Warren River Bridge Company to construct a second bridge across the Charles. Not only was the Warren River Bridge built extremely close to the Charles River Bridge, it was to be a toll-free bridge once it had paid its construction costs and reaped an agreed-upon profit.

Anticipating that its only source of revenue would be destroyed by the new toll-free bridge, the proprietors of the Charles River Bridge Company sued in the state court, arguing that the new state-issued charter to the Warren Bridge violated its property rights (specifically, the right to collect tolls) granted by the 1785 charter. Lawyers for the old bridge company claimed that the state act chartering the new bridge violated the Contract Clause of the Constitution, which prohibits states from passing laws impairing the obligation of contract. They cited the Marshall Court's decision in Dartmouth College v. Woodward (1819) to prove that corporate charters were contracts within the meaning of the Contract Clause. After a divided opinion in the Massachusetts court, the old bridge company appealed to the Supreme Court.

Writing for a 5-2 majority, Chief Justice Taney ruled that the second charter did not violate Charles River Bridge Company's charter rights, and, therefore, Massachusetts had not violated the Constitution's Contract Clause. The problem, said Taney, was that that the charter to the old bridge company did not explicitly grant it monopoly rights. Taney and the majority, over the bitter dissent of Justice Joseph Story, refused to extend monopoly rights by implication, particularly when the interests of the community (as represented in the act of the legislature) were at stake. As the Court put it, any "ambiguity in the terms of the contract must operate against [the private company], and in favor of the public." The loss of Charles River Bridge Company's profits from the construction of the second bridge was simply irrelevant to its contract rights. Taney was also concerned that old transportation corporations (like canal companies) might defeat new transportation technology (like the railroads), by using the doctrine of implied contracts, thus holding back economic progress.

Charles River Bridge v. Warren Bridge marked the beginnings of a more flexible approach to the Contract Clause. The Marshall Court, in fact, had begun to move in that direction in Providence Bank v. Billings (1830), and Chief Justice Taney cited that decision in his opinion. In his dissenting opinion, Justice Story disagreed, arguing the new Court was abandoning clearly established constitutional law. Since the 1930s, the Court has held that states may significantly alter the terms of existing contracts so long as such alterations constitute a "reasonable" use of that state's police power.

