The original U.S. Constitution contained few restrictions on how the states could treat their own citizens. One exception is the Contract Clause—Article I, Section 10, of the Constitution—providing that no state shall pass any law “impairing the obligation of contracts.” Under the leadership of Chief Justice John Marshall, the U.S. Supreme Court interpreted the Contract Clause broadly to include public charters as well as private contracts between individuals.
Charles River Bridge Company v. Warren Bridge Company (1837) gave Marshall’s successor, Roger Brooke Taney, his first opportunity to interpret the Contract Clause. In 1785, the Commonwealth of Massachusetts issued a charter to the Charles River Bridge Company to build and operate a bridge over the Charles River linking Boston and Charlestown. Commerce flourished, and in 1823 the Massachusetts legislature issued a charter to the Warren Bridge Company for the construction of a second bridge. The older Charles River Bridge Company, fearing the competition from the newer bridge, brought suit, claiming that its 1785 charter constituted a contract within the meaning of the Contract Clause that was now being unconstitutionally interfered with.
Chief Justice Taney, however, in his first major opinion, disagreed, maintaining that public charters must be construed narrowly, so as to protect the public interest and not unduly limit the state’s police power. Thus, unless the 1785 charter specifically gave the Charles River Bridge Company an exclusive privilege to operate a bridge over the Charles River, none could be implied.
The Charles River Bridge case marks the beginning of the end of the use of the Contract Clause as a limitation on state police powers.