Dartmouth College v. Woodward
Encyclopedia
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.
The decision settled the nature of public versus private charters and resulted in the rise of the American business corporation.
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.
) as necessary to the functioning of a republic (in the absence of royal rule, contracts rule).
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.
The decision was not without precedent. Earlier the Court had invalidated a state act in Fletcher v. Peck
, , 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 Dartmouth. Fletcher was not a popular decision at the time, and a public outcry ensued. Thomas Jefferson
's earlier commiseration with New Hampshire Governor William 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. The courts, however, have imposed limitations to this.
After the Dartmouth decision, many states wanted more control so they passed laws or constitutional amendments giving themselves the general right to alter or revoke at will, which the courts found to be a valid reservation. The courts have established, however, that the alteration or revocation of private charters or laws authorizing private charters must be reasonable and cannot cause harm to the members (founders, stockholders, and the like)
.
The traditional view holds that this 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.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
case dealing with the application of the Contract Clause
Contract Clause
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights...
of the United States Constitution
United States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...
to private corporations. The case arose when the president of Dartmouth College
Dartmouth College
Dartmouth College is a private, Ivy League university in Hanover, New Hampshire, United States. The institution comprises a liberal arts college, Dartmouth Medical School, Thayer School of Engineering, and the Tuck School of Business, as well as 19 graduate programs in the arts and sciences...
was deposed by its trustees
Board of Trustees of Dartmouth College
The Board of Trustees of Dartmouth College is the governing body of Dartmouth College, an Ivy League university located in Hanover, New Hampshire, United States. , the Board includes twenty-three people...
, leading to the New Hampshire
New Hampshire
New Hampshire is a state in the New England region of the northeastern United States of America. The state was named after the southern English county of Hampshire. It is bordered by Massachusetts to the south, Vermont to the west, Maine and the Atlantic Ocean to the east, and the Canadian...
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.
The decision settled the nature of public versus private charters and resulted in the rise of the American business corporation.
Facts
In 1769 King George III 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
American Revolution
The American Revolution was the political upheaval during the last half of the 18th century in which thirteen colonies in North America joined together to break free from the British Empire, combining to become the United States of America...
, 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
Board of Trustees of Dartmouth College
The Board of Trustees of Dartmouth College is the governing body of Dartmouth College, an Ivy League university located in Hanover, New Hampshire, United States. , the Board includes twenty-three people...
objected and sought to have the actions of the legislature declared unconstitutional.
The trustees retained Dartmouth alumnus Daniel Webster
Daniel Webster
Daniel Webster was a leading American statesman and senator from Massachusetts during the period leading up to the Civil War. He first rose to regional prominence through his defense of New England shipping interests...
, a New Hampshire native who would later become a U.S. Senator for Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
and Secretary of State
United States Secretary of State
The United States Secretary of State is the head of the United States Department of State, concerned with foreign affairs. The Secretary is a member of the Cabinet and the highest-ranking cabinet secretary both in line of succession and order of precedence...
under President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Millard Fillmore
Millard Fillmore
Millard Fillmore was the 13th President of the United States and the last member of the Whig Party to hold the office of president...
. 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
John Marshall
John Marshall was the Chief Justice of the United States whose court opinions helped lay the basis for American constitutional law and made the Supreme Court of the United States a coequal branch of government along with the legislative and executive branches...
, also reportedly bringing tears to Webster's eyes.
Judgment
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 of the court was written by John Marshall. The opinion reaffirmed Marshall's belief in the sanctity of a contract (also seen in Fletcher v. PeckFletcher v. Peck
Fletcher v. Peck, , was a landmark United States Supreme Court decision. The first case in which the Supreme Court ruled a state law unconstitutional, the decision also helped create a growing precedent for the sanctity of legal contracts, and hinted that Native Americans did not hold title to...
) as necessary to the functioning of a republic (in the absence of royal rule, contracts rule).
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.
The decision was not without precedent. Earlier the Court had invalidated a state act in Fletcher v. Peck
Fletcher v. Peck
Fletcher v. Peck, , was a landmark United States Supreme Court decision. The first case in which the Supreme Court ruled a state law unconstitutional, the decision also helped create a growing precedent for the sanctity of legal contracts, and hinted that Native Americans did not hold title to...
, , concluding that contracts, no matter how they were procured (in the case of Fletcher v. Peck
Fletcher v. Peck
Fletcher v. Peck, , was a landmark United States Supreme Court decision. The first case in which the Supreme Court ruled a state law unconstitutional, the decision also helped create a growing precedent for the sanctity of legal contracts, and hinted that Native Americans did not hold title to...
, 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 Dartmouth. Fletcher was not a popular decision at the time, and a public outcry ensued. Thomas Jefferson
Thomas Jefferson
Thomas Jefferson was the principal author of the United States Declaration of Independence and the Statute of Virginia for Religious Freedom , the third President of the United States and founder of the University of Virginia...
's earlier commiseration with New Hampshire Governor William Plumer
William Plumer
William Plumer was an American lawyer and Baptist lay preacher from Epping, New Hampshire. Born in 1759 in Newburyport, Massachusetts, he represented New Hampshire as a Federalist in the United States Senate from June 17, 1802 to March 4, 1807...
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. The courts, however, have imposed limitations to this.
After the Dartmouth decision, many states wanted more control so they passed laws or constitutional amendments giving themselves the general right to alter or revoke at will, which the courts found to be a valid reservation. The courts have established, however, that the alteration or revocation of private charters or laws authorizing private charters must be reasonable and cannot cause harm to the members (founders, stockholders, and the like)
.
The traditional view holds that this case is one of the most important Supreme Court rulings, strengthening the Contract Clause
Contract Clause
The Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights...
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 CollegeDartmouth CollegeDartmouth College is a private, Ivy League university in Hanover, New Hampshire, United States. The institution comprises a liberal arts college, Dartmouth Medical School, Thayer School of Engineering, and the Tuck School of Business, as well as 19 graduate programs in the arts and sciences...
- John MarshallJohn MarshallJohn Marshall was the Chief Justice of the United States whose court opinions helped lay the basis for American constitutional law and made the Supreme Court of the United States a coequal branch of government along with the legislative and executive branches...
- Contract ClauseContract ClauseThe Contract Clause appears in the United States Constitution, Article I, section 10, clause 1. It states:The Contract Clause prohibits states from enacting any law that retroactively impairs contract rights...
- Special-purpose districtSpecial-purpose districtSpecial-purpose districts or special district governments in the United States are independent governmental units that exist separately from, and with substantial administrative and fiscal independence from, general purpose local governments such as county, municipal, and township governments. As...
- Case of Sutton's HospitalCase of Sutton's HospitalCase of Sutton's Hospital 77 Eng Rep 960 is an old common law case decided by Sir Edward Coke. It concerned the London Charterhouse, which was held to be a properly constituted corporation.-Facts:...
(1612) 77 Eng Rep 960