The Charles River Bridge Case

Charles River Bridge v. Warren Bridge, 36 U.S. 420 (1837)[1], was a case heard by the United States Supreme Court under the leadership of Chief Justice Roger B. Taney. The case settled a dispute over the constitutional clause regarding obligation of contract.

In 1785, the Charles River Bridge Company had been granted a charter to construct a bridge over the Charles River connecting Boston and Charleston. When the Commonwealth of Massachusetts sanctioned another company to build the Warren Bridge, which would be very close in proximity to the first bridge and would connect the same two cities, the proprietors of the Charles River Bridge claimed that the Massachusetts legislature had broken its contract with the Charles River Bridge Company, and thus the contract had been violated. The owners of the first bridge claimed that the charter had implied exclusive rights to the Charles River Bridge Company. The Court ultimately sided with Warren Bridge. This decision was received with mixed opinions, and had some impact on the remainder of Taney's tenure as Chief Justice.

The controversy over the Charles River Bridge dated as far back as October 17, 1640 when the Massachusetts legislature, in accordance with common law, assumed control over public ferries. The legislature proceeded to give Harvard College the power to run a ferry on the Charles River between Boston and Charleston. Harvard continued to operate the ferry, and collect its profits until 1785. That year, a group of men petitioned the state legislature to build a bridge across the river due to the inconvenience of the ferry. As time had passed, the two towns had grown and communication between them had become more important, and technology was at a point now where a bridge appeared to be a wise economic undertaking.

The request was granted and the Charles River Bridge Company was given permission to build a bridge and collect tolls for 40 years, but during those 40 years the company would have to pay 200 pounds (or ~$670) to Harvard College annually in order to make up for the profits the college would lose from the ferry. After 40 years of collecting tolls, the company would turn the bridge over to the state, but the government would still have to pay Harvard annually.

The bridge was a giant success. It made large profits and proved to be very convenient. As a result, plans to construct more bridges were set into motion. In 1792, the Massachusetts legislature gave another company a charter to build a bridge, across the same river, between Cambridge and Boston. The second bridge was a considerable distance from the first one, but the proprietors of the first bridge still complained. The owners of the Charles River Bridge argued to the legislature that building the second bridge would take away traffic and revenue from the first bridge. The legislature responded by giving the proprietors of the Charles River Bridge another 30 years to collect tolls.

As more time passed, the population of Boston increased, as did the amount of business the city was doing with the rest of the world. With these increases, the Charles River Bridge collected more and more profits, and the value of Charles River Bridge Company stock started to rise. Shares that had a par value of $333.33 sold for $1,650 in 1805, and by 1814, their price had risen to $2,080.[2] By 1823, the value of the company was estimated to be $280,000, a substantial increase from its original value of $50,000. Between 1786 and 1827 the Charles River Bridge had collected $824,798 in tolls. Very few of the shares belonged to the company’s original investors at this time, and the stock was now owned by men who had bought it at very high prices. The public started to complain about having to continue to pay tolls after the bridge’s profits had far surpassed the original capital, with interest; but the new investors did not care. In their opinion, they had paid a large sum for the bridge stock, and they were not about to stop collecting tolls until they themselves had turned a profit. These proprietors decided not to meet any of the public’s demands, and they refused both to improve services and reduce tolls.

There were multiple attempts to convince the state legislature to give permission to build a new bridge between Boston and Charleston, which would be in direct competition with the Charles River Bridge. Eventually, the legislature agreed to grant a charter for a new bridge between Charleston and Boston. In 1828, a company was given the rights to build the Warren Bridge, which would be extraordinarily close to the Charles River Bridge. The Warren Bridge would be turned over to the state once enough tolls had been collected to pay for the bridge’s construction, or after a maximum of 6 years, after which it would be free to the public. Since it was free, and so close to the Charles River Bridge, the Warren Bridge would obviously take all of the competing