Dartmouth College Case

4 Wheat. (17 U.S.) 518 (1819), argued 10–12 Mar. 1818, decided 2 Feb. 1819 by vote of 5 to 1; Marshall for the Court, Washington and Story concurring separately, Duvall in dissent without opinion. In 1816, New Hampshire's newly elected Jeffersonian‐Republican governor, William Plumer, and the Republican‐dominated legislature determined to transform Dartmouth College by ousting what they regarded as a self‐perpetuating Federalist hierarchy among the college's trustees and replacing it with trustees appointed through the political process. They therefore enacted statutes that revised the royal charter of 1769 that created the college, changing the institution to a “University,” altering the procedures of internal control, and imposing external, public restraints on the governance of the school. The college's extant trustees determined to contest the constitutionality of this action.

When the case reached the United States Supreme Court for argument in 1818, the college's lawyers, led by Daniel Webster, directed their arguments to the meaning and impact of the Contract Clause of the Constitution (Article I, section 10), contending that the New Hampshire legislature, in amending the original charter of the college, had passed a law “impairing the Obligation of Contracts.” Webster argued that in effect the state legislature had “take[n] away from one … rights, property, and franchises, and give[n] them to another” (p. 558). He asserted that the Contract Clause should be interposed as a constitutional barrier to state activity of this kind.

Chief Justice John Marshall responded in his characteristically facile manner. Though the Court had previously decided Contract Clause cases, Marshall, for the first time, extended the protection of the Contract Clause to a corporate charter. Since the college insisted that it was entitled to constitutional protection from the legislative acts, Marshall had to analyze the relationship between the Contract Clause and the legal status of the college. He found that the college charter was a contract and that the college under the charter was a private and not a public corporation. This last point was important because the New Hampshire state courts had construed the college to be a public, and not a private entity, and therefore subject to the state's regulatory power. If the college were held to be private, the state could not interfere with its vested rights, particularly its property rights of acquisition, management, or control, because the Contract Clause, according to Marshall, was directed at acts affecting private property. The Contract Clause prevented the state from impairing the obligations of the original contract between the college and the state (as successor to the colonial government under the original royal grant). When a charter or an act of incorporation is found to be a contract between a state and a private party, it is protected from legislative interference. Only Justice Joseph Story's concurring opinion modified the sweep of Marshall's statements, suggesting that legislatures could retain certain prerogatives by including “reservation” clauses in corporate charters that allowed legislatures to alter or amend the charter.

By construing the Contract Clause as a means of protecting corporate charters from state interventions, Marshall derived a significant constitutional limitation on state authority. As a result, various forms of private economic and social activity would enjoy security from state regulatory policy. Marshall thus encouraged, through constitutional sanction, the emergence of the relatively unregulated private, autonomous economic actor as the major participant in a liberal political economy that served the commonwealth by promoting enlightened self‐interest.

See also Private Corporation Charters; Property Rights.

Bibliography

• G. Edward White, History of the Supreme Court of the United States, vols. 3–4, The Marshall Court and Cultural Change, 1815–35 (1988)

— Alfred S. Konefsky

For more information on Dartmouth College case, visit Britannica.com.

• 4 Wheat. 518 (1819)
• Vote: 5–1
• For the Court: Marshall
• Concurring: Story and Washington
• Dissenting: Duvall

Dartmouth College was established in 1769 by a charter from King George III of England. After the formation of the United States, the agreement with the king became an agreement with the state of New Hampshire. In 1816 that state's legislature passed several amendments to the college's charter. By placing the school under the authority of the state government, these amendments had the effect of changing the private college into a state university.

Officials and friends of Dartmouth College objected. They believed the state legislature should not possess the authority to destroy the private nature of their college.

The Issue

Daniel Webster, arguing for the Dartmouth College trustees, maintained that the legislature had violated Article 1, Section 10, of the Constitution, which provides that “no State shall… pass any… Law impairing the Obligation of Contracts.” In an 1810 case (Fletcher v. Peck), the Supreme Court had ruled that a land grant is a contract. Webster now argued that “a grant of corporate powers and privileges is as much a contract as a grant of land.”

Is a charter a contract? Did the Constitution's contract clause protect private corporate charters, such as Dartmouth's?

Opinion of the Court

The Supreme Court ruled in favor of Dartmouth College. Chief Justice John Marshall's opinion held that the charter of a private corporation was a contract. Thus, the Constitution forbade the state legislature from changing that agreement. For the first time, the Court extended the protection of the Constitution's contract clause to a corporate charter. Marshall intended this ruling to be an important limitation on the powers and rights of state governments within the federal Union.

Dissent

Justice Gabriel Duvall dissented in this case. However, he did not file an opinion.

Significance

The decision increased the power of the federal government over the states. It reaffirmed that the U.S. Supreme Court could invalidate state laws when it found those laws unconstitutional. Further, the case reinforced the practice begun by Fletcher v. Peck of imposing restrictions upon state legislatures with regard to the regulation of corporations. The national government would not allow state legislatures to void or change existing charters because to do so would violate the contract clause of Article 1, Section 9, of the Constitution.

The Dartmouth College decision did not attract the attention of the press at the time. Yet it deserves recognition as one of the early Court's important decisions. Business corporations were just forming in a young nation, and the Court's decision gave these businesses security against unexpected legislative interference.

Such security was vital to those who might invest money in new industries and corporations. Investors could be sure that any rights granted a corporation by one state legislature could not be taken away by some future legislature. Such assurances encouraged investment in railroads and other new industries, which in turn stimulated the country's economic development. The Dartmouth College case did not, however, prevent states from regulating corporations. The decision merely held that a state government could not alter corporate charters it had already granted, unless the state reserved the right to do so when it initially granted the charter.

After the resolution of the Dartmouth College case, many state legislatures placed restrictions on companies they chartered. These new corporate charters often contained clauses allowing the state, under certain circumstances, to revoke the charters or to buy the companies. Nevertheless, the Dartmouth College decision encouraged investors by assuring them that the Supreme Court would regulate state grants and charters and that after the granting of a charter, the grantees could expect the courts to protect their rights.

See also Contract clause; Federalism; Fletcher v. Peck

Sources

• Richard N. Current, “The Dartmouth College Case”, in Quarrels That Have Shaped the Constitution, edited by John A. Garraty (New York: Harper & Row, 1987)

In 1819 the U.S. Supreme Court, in Trustees of Dartmouth College v. Woodward, 4 Wheaton 518, extended judicial interpretation by declaring private-corporation charters to be contracts and hence, by the contract clause of the Constitution of the United States, immune from impairment by state legislative action. Circumstances had aligned Republicans against Federalists and egalitarianism against religious establishment to complicate the education squabble. On 26 August 1815 the self-perpetuating board of trustees established under the charter of 1769 deposed the president of Dartmouth, John Wheelock. New Hampshire legislative enactments presently altered the charter and brought the institution under state control by enlarging the board; by creating a board of overseers appointed by the legislature, with veto on trustee action; and by changing its name to Dartmouth University. The college sued William H. Woodward, an adherent of the university faction and former secretary-treasurer of the college, for recovery of the charter, the seal, and other documents. After a state court decision favorable to the university faction, Daniel Webster argued the case before the Supreme Court. Chief Justice John Marshall's opinion held that the New Hampshire law was invalid because it impaired contractual obligations. This decision freed existing corporations from control by the states that created them and became a bulwark of laissez faire and a boon to corporate development. Control was later largely restored by (a) state legislation reserving the right to alter or repeal subsequent charters and (b) judicial decisions forbidding legislatures to grant, by charter, rights that menace the community or to surrender, by charter, its duty under the police power to protect the life, safety, and morals of the community.

Bibliography

Johnson, Herbert Alan. The Chief Justiceship of John Marshall, 1801–1835. Columbia: University of South Carolina Press, 1997.

Tobias, Marilyn. Old Dartmouth on Trial: The Transformation of the Academic Community in Nineteenth-Century America. New York: New York University Press, 1982.

—L. Ethan Ellis/A. R.

Trustees of Dartmouth College v. Woodward
Supreme Court of the United States
Decided February 2, 1819
Full case name	Trustees of Dartmouth College v. Woodward 1819
Citations	17 U.S. 518 (more) 4 L. Ed. 629
Prior history	ERROR to the Superior Court of the State of New Hampshire
Holding
The charter granted by the British crown to the trustees of Dartmouth College, in New-Hampshire, in the year 1769, is a contract within the meaning of that clause of the constitution of the United States, (art. 1. s. 10.) which declares that no State shall make any law impairing the obligation of contracts. The charter was not dissolved by the revolution.
Court membership
Chief Justice John Marshall Associate Justices Bushrod Washington · William Johnson Henry B. Livingston · Thomas Todd Gabriel Duvall · Joseph Story
Case opinions
Majority	Marshall
Concurrence	Washington
Concurrence	Story
Concurrence	Johnson (for reasons stated by Marshall)
Concurrence	Livingston (for reasons stated by Marshall, Washington, Story)
Laws applied
U.S. Const. Art. 1, Sec. 10

Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819), was a landmark United States Supreme Court case dealing with the application of the Contract Clause of the United States Constitution to private corporations. The case arose when the president of Dartmouth College was deposed by its trustees, leading to the New Hampshire legislature attempting to force the College to become a public institution and thereby place the ability to appoint trustees in the hands of the governor. The Supreme Court upheld the sanctity of the original charter of the College, which pre-dated the creation of the State.

Contents 1 Case 2 Decision 3 See also 4 References 5 External links

Case

In 1769 the King of England granted a charter to Dartmouth College. This document spelled out the purpose of the school, set up the structure to govern it, and gave land to the college.

In 1815, over thirty years after the conclusion of the American Revolution, the legislature of New Hampshire attempted to alter Dartmouth's charter in order to reinstate the College's deposed president, placing the ability to appoint positions in the hands of the governor, adding new members to the board of trustees, and creating a state board of visitors with veto power over trustee decisions. This effectively converted the school from a private to a public institution. The College's book of records, corporate seal, and other corporate property were removed. The trustees of the College objected and sought to have the actions of the legislature declared unconstitutional.

The trustees retained Dartmouth alumnus Daniel Webster, a New Hampshire native who would later become a U.S. Senator for Massachusetts and Secretary of State under President Millard Fillmore. Webster argued the college's case against William H. Woodward, the state-approved secretary of the new board of trustees. Webster's speech in support of Dartmouth (which he described as "a small college," adding, "and yet there are those who love it") was so moving that it apparently helped convince Chief Justice John Marshall, also reportedly bringing tears to Webster's eyes.

Decision

The decision, handed down on February 2, 1819, ruled in favor of the College and invalidated the act of the New Hampshire Legislature, which in turn allowed Dartmouth to continue as a private institution and take back its buildings, seal, and charter. The majority opinion was, predictably, written by Marshall. The opinion reaffirmed Marshall's belief in the sanctity of a contract (also seen in Fletcher v. Peck).

The Court ruled that the College's corporate charter qualified as a contract between private parties, the King and the trustees, with which the legislature could not interfere. Even though the United States are no longer royal colonies, the contract is still valid because the Constitution says that a state cannot pass laws to impair a contract. The fact that the government had commissioned the charter did not transform the school into a civil institution. Chief Justice Marshall's opinion emphasized that the term "contract" referred to transactions involving individual property rights, not to "the political relations between the government and its citizens.^[1]

The decision was not without precedent. Earlier the Court had invalidated a state act in Fletcher v. Peck, 10 U.S. 87 (1810), concluding that contracts, no matter how they were procured (in the case of Fletcher v. Peck, a land contract had been illegally obtained), cannot be invalidated by state legislation. Thus, the court, though working in an early era, was treading on familiar ground when it handed down Dartmouth.

Dartmouth was not a popular decision at the time, and a public outcry ensued. Thomas Jefferson's earlier commiseration with New Hampshire Governor Plumer stated essentially that the earth belongs to the living. Popular opinion influenced some state courts and legislatures to declare that state governments had an absolute right to amend or repeal a corporate charter.

Today some still view Dartmouth as a problematic extension of individual contract rights to artificial corporate entities. The traditional view holds that the case is one of the most important Supreme Court rulings, strengthening the Contract Clause and limiting the power of the States to interfere with private charters, including those of commercial enterprises.

See also

• List of United States Supreme Court cases, volume 17
• Dartmouth College
• John Marshall
• Contract Clause

References

1. ^ The Oyez Project, "Dartmouth College v. Woodward", 17 U.S. 518 (1819)]

External links

• Dartmouth College v. Woodward, 17 U.S. 518 (1819) (opinion full text).

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