Charles River Bridge Case

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Charles River Bridge Case,

decided in 1837 by the U.S. Supreme Court. The Charles River Bridge Company had been granted (1785) a charter by the state of Massachusetts to operate a toll bridge. The state later authorized (1828) a competing bridge that would eventually be free to the public. The Charles River Bridge Company brought suit against the competing company, claiming that the state charter had given it a monopoly. The court upheld the state's authorization to the other company, holding that since the original charter did not specifically grant a monopoly, the ambiguity in the contract would operate in favor of the public, thus allowing a competing bridge. The holding modified the Dartmouth College CaseDartmouth College Case,
decided by the U.S. Supreme Court in 1819. The legislature of New Hampshire, in 1816, without the consent of the college trustees, amended the charter of 1769 to make Dartmouth College public. The trustees brought suit.
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, which held that a state could not unilaterally amend a charter.
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Importantly, the Charles River Bridge case had an "immediate
Sidak and Spulber counter by arguing that the regulatory contract in the United States is in fact quite old and dates back to the very first Supreme Court decision involving a rate-regulated "natural monopoly" utility--the Charles River Bridge case of 1837.(27) Sidak and Spulber also note that Irston Barnes' influential treatise on public utility regulation, which was published in 1942, cited an "implied-contract" theory, whose justification Barnes found in the utility's franchise from the government.(28) Sidak and Spulber then argue that the importance of the Charles River Bridge decision lies in the "common understanding throughout it that the relationship between the state and the private [regulated] firm was contractual in nature."(29)
The fact that the Charles River Bridge case involved a regulatory contract with the government is beyond dispute.

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