The case of Dartmouth College versus Woodward

The case of Dartmouth College versus Woodward, came before the Supreme Court of the United States of America after already being ruled on by the state of New Hampshire. This case is considered to be a landmark case that took place in 1819. This case affected the American people in various ways. Through the course of this case in the state court to the Supreme Court, this case established that the federal court has the power to reverse a state court’s decision, defined in legal terms what a corporation is, and help to interpret the Contract Clause of the Constitution.

In 1769, Dartmouth College received a charter from the King of England. This established it as a college. Through the years the state of New Hampshire had granted additional land to the college. The college in turn had taken upon itself the duty of providing a higher education in the state, and not simply being a private college. On June 27, 1816 the state of New Hampshire amended the charter of Dartmouth College, and changed the name to Dartmouth University. This was due to William Plumer, New Hampshire’s newly elected Jeffersonian-Republican governor “determined to transform Dartmouth College by ousting what they regarded as a self-perpetuating Federalist hierarchy among the college’s trustees appointed through the political process.”

Changing the name Dartmouth College to a university greatly affected the internal structure of Dartmouth. But, it mainly affected the board of trustees. It is the responsibility of this board of trustees to govern the college, appoint and remove tutors, fix the salaries, direct the course of study, and fill vacancies within the board of trustees. Under the charter from the King of England the college’s board of trustees can only consist of twelve members. But, by changing the college to Dartmouth University, the amended charter increased the number of trustees to twenty-one, gave the appointment

of additional members to the executive of the state, and created a board of twenty-five overseers. This board of overseers consisted of twenty-one people whom the executive of the state of New Hampshire appointed, and who had the power to inspect and control the majority of the actions of the trustees. This transferred the whole power to govern the power from the previous board of trustees to the new executive of New Hampshire. This revised charter also referred to the board of trustees as the corporation of Dartmouth College. This given name later affects the Supreme Court’s decision on ...

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Five separate lawsuits that were later combined into one, in which the original college sued the state of New Hampshire, “claiming that under the U.S. Constitution the state had no authority to pass laws impairing the obligations of contracts. The original charter, they claimed, was such a contract.”

The state of New Hampshire ruled in favor of the state. The case was then in 1818 brought to the Supreme Court. Daniel Webster was arguing on the half of the appellant, and John Holmes was arguing on behalf of the state of New Hampshire. “Both lawyers directed their arguments to the meaning and impact of the Contract Clause of the Constitution (Article I, section 10).”

Daniel Webster “pointed out that to take property away from an institution is an act of forfeiture, and should be the action of the judiciary, not of the legislature. The charter, which the King had issued, was such that not even the Parliament could have annulled it, and it was thus improper for the state of New Hampshire to believe that it could. The corporation that was established was a lay corporation, not a civil corporation, and therefore it did not belong to the public. Rather, it belonged to the

trustees and to those they appointed to succeed them.” Webster further argued that the original charter of the state legislature had “taken away from one…rights, property, and franchises, and given them to another. He asserted that the Contract Clause should be interposed as a constitutional barrier to state activity of this kind.”

John Holmes argued on behalf of the state of New Hampshire. Holmes, like Webster, based his argument on the nature of the college, whether it was a corporation or not, and what rights it held. “Holmes argued that the charter was not a private institution, but was a grant of a public nature.”

Chief Justice Marshall presented the majority opinion of the Supreme Court. The two major points that were considered in this trial were, was this contract protected by the United States, and was it impaired by the acts under which the defendant holds. According to Chief Judge Marshall the answer to both of these questions is yes.

Chief Judge Marshall’s opinion turned on the question of whether, “the original royal charter was a contract, and the State acts, in consequence, an impairment of contract obligations prohibited by the Contract Clause of the Constitution. Marshal ruled that the College was a private eleemosynary institution and that the charter establishing the college was a contract between the state and the original donors to the institution.” Marshall for the first time extended the protection of the Contract Clause to a corporate charter. Marshall analyzed 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.” The fact that the college was a private corporation was a vital part in the decision of Chief Justice

Marshall. The New Hampshire state court had treated the college as a public entity, and “therefore was 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 the 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. 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. This suggests that legislatures could retain certain prerogatives including reservation clauses in corporate charters that allowed legislatures to alter or amend the charter.” Marshall reversed the state court decision and restored the original trustees to power.

The interpretations and speculations that combined to form this ruling on the case of Dartmouth College versus Woodward impacted the American people of that current time as well as greatly affected the American people in future times. In this case the court expanded its definition of the Contract Clause, the federal court claimed strong authority over the state courts by demonstrating the power to reverse a state court’s decision, as well as define what a corporation is.

The interpretations and definitions of the Contract Clause derived from this case were varied but Chief Justice Marshall created the mainly accepted view. Marshall viewed the Contract Clause “as a means of protecting corporate charters from state interventions. As a result various forms of private economic and social activity would enjoy security from state regulatory policy.” This case’s decision also helped

“corporations raise capital by assuring investors that rights granted by state legislatures would be secure from later political or popular changes.”

The corporation as pointed out by Judge Marshall, “is an artificial being – immortal. However, it may act as an individual. But, it does not have a political character (it cannot vote or run for office).”

This case was considered to be a landmark case in the history of the United State’s Supreme Court. This fact was further demonstrated by how the future was affected by this case. In later times when states chartered colleges or other institutions the states reserved the right to amend the charter in later years.