Opinion · Supreme Court of the United States

Trustees of Dartmouth College v. Woodward

17 U.S. (4 Wheat.) 518

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1819-02-15
Topic
general

How later courts describe this case

  • holding that the Contract Clause prevented a state from abrogating a charter granted to a college where the power to change the charter was not reserved in advance
  • holding that Clause precluded legislature from changing college charter granted prior to independence
  • noting that the most basic purposes of the contract clause point to the simple principle that government must keep its word
  • finding that Dartmouth College was a private corporation despite being defined in its charter as a “body corporate and politic”
  • finding that Dartmouth’s ability to govern itself and act to promote its educational purpose did not render it a public institution
  • noting that a corporation does not become “a part of the civil government 7 According to Random House Webster’s College Dictionary (2d rev. ed. 2000
  • explaining that the trustees were acting as assignees of the donors and founders, but also in their own interests as potential professors or leaders of the college
  • “Being the mere creature of law, [a corporation] possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.”

Citator

UpLaw has not yet analyzed Trustees of Dartmouth College v. Woodward. The absence of a flag is not a finding that it is good law.

Cited by
465 opinions

Headnotes

  1. Constitutional Law — Contracts Clause The charter granted by the British Crown to the trustees of Dartmouth College in 1769 is a contract within the Contracts Clause (art. 1, § 10) of the United States Constitution; the charter was not dissolved by the American Revolution, and a state legislative act altering a corporate charter without the corporation's consent, in a material respect, impairs the obligation of the charter and is unconstitutional and void.
  2. Constitutional Law — Contracts Clause Under its charter, Dartmouth College was a private corporation, not a public corporation; a corporation's establishment for general charity or education does not per se make it a public corporation subject to legislative control.
  3. Constitutional Law — Contracts Clause In charters creating artificial persons for purposes exclusively private and not interfering with the common rights of citizens, the legislature cannot interfere to amend without the grantees' consent; the grant of such a private charter may be considered analogous to a contract between the state and private individuals affecting their private rights, within the spirit of the constitutional prohibition.
  4. Constitutional Law — Contracts Clause Charters to public corporations for purposes of public policy are necessarily subject to legislative discretion, which may revoke or modify them as the exigencies of society require; where a private proprietary interest is coupled with the exercise of political power or a public trust, corporate charters have frequently been amended by legislative authority.
  5. Constitutional Law — Contracts Clause Where an act of incorporation is a grant of political power, creates a civil institution employed in administering government, or where the college funds are public property or the state is alone interested, the legislature may act unrestrained by the Contracts Clause; where, by contrast, the state has been a contributor of funds, the institution is not a private charity but a public institution subject to modification, alteration, and regulation by the supreme power of the state.
  6. Constitutional Law — Contracts Clause The Contracts Clause, construed in its greatest latitude, would be an unprofitable and vexatious interference with internal state concerns; the term "contract" must therefore be understood in a limited sense, confined to contracts respecting property under which some individual could claim a right to something beneficial to himself, and is not intended to restrain states in regulating their civil institutions adopted for internal government. *Fletcher v. Peck*, 6 Cranch 87
  7. Constitutional Law — Contracts Clause The Contract Clause contains no distinction excluding contracts made with a state; its words are general and applicable to contracts of every description, and any claimed exemption of contracts made with a state must arise from the character of the contracting party.
  8. Constitutional Law — Contracts Clause The restrictions on state legislative power in the Contracts Clause are founded on the framers' apprehension of violent acts prompted by the feelings of the moment, and manifest a determination to shield the people and their property from sudden and strong passions.
  9. Constitutional Law — Contracts Clause The right to change civil institutions is founded on their being instruments of government created for its purposes, not on their being incorporated; the character of civil institutions grows out of the manner in which they are formed and the objects for which they are created.
  10. Constitutional Law — Contracts Clause A grant is a contract executed, differing in nothing from a grant, and amounts to an extinguishment of the grantor's right, implying a contract not to re-assert that right; a party is always estopped by his own grant, and a pure donation, once the grant is complete and accepted, involves a contract that the grantees shall hold and the grantor shall not re-assume the grant as much as if founded on valuable consideration. *Fletcher v. Peck*, 6 Cranch 87
  11. Constitutional Law — Contracts Clause It is not necessary that the consideration for a charter be a benefit to the grantor; it is sufficient if it imports damage or loss, forbearance of benefit, or any act done or to be done on the part of the grantee, and even a pepper-corn is in the eye of the law of sufficient value to found a contract upon a valuable consideration.
  12. Constitutional Law — Contracts Clause Where a corporation is expressly created for the purpose of distributing in perpetuity the charitable donations of private benefactors, and by the terms of the charter the trustees and their successors in their corporate capacity are to receive, hold, and exclusively manage all funds so contributed, the crown pledges its faith that such donations shall be perpetually devoted to their original purposes, without interference on its own part, and shall be for ever administered by the trustees of the corporation unless its corporate franchises should be taken away by due process of law.
  13. Constitutional Law — Contracts Clause Upon a donation being made to a corporation created by charter for the distribution of private charities, an implied contract springs up, founded on a valuable consideration, that the crown will not revoke or alter the charter, or change its administration, without the consent of the corporation, and a like implied contract arises between the corporation and every benefactor that the corporation will administer the bounty according to the terms and for the objects stipulated in the charter.
  14. Constitutional Law — Contracts Clause Upon acceptance of a charter, there is an implied contract on the part of the grantees, in consideration of the charter, that they will perform the duties and exercise the authorities conferred by it; where a charter is granted to persons who have not applied for it, the grant remains in fieri until their acceptance, and a grant of incorporation is a compact between the crown and a certain number of subjects who undertake, in consideration of the privileges bestowed, to exert themselves for the good government of the place incorporated.
  15. Constitutional Law — Contracts Clause A grant of land or franchises to a corporation created for the very purpose of receiving it is an executed contract once the corporation is in esse and the property and franchises vest in it, indistinguishable from a like grant to a pre-existing corporation; the law recognizes a priority of operation of things within the same grant, and two parties are necessary to form a perfect contract, but it is not necessary that the assent of both parties be given at the same time.
  16. Constitutional Law — Contracts Clause State legislatures have power to enlarge, repeal, and limit the authorities of public officers in their official capacities where state constitutions do not prohibit it, because there is no express or implied contract that such officers shall exercise such authorities during their continuance in office; but where the legislature makes a contract with a public officer, as in the case of a stipulated salary for his services during a limited period, that contract is, during the limited period, within the purview of the constitutional prohibition against impairing contracts as much as a like contract between two private citizens.
  17. Constitutional Law — Contracts Clause Corporations for mere public government, such as towns, cities, and counties, may in many respects be subject to legislative control, but the legislative power is not so transcendent that it may at will take away a municipal corporation's private property or change the uses of its private funds acquired under the public faith; the legislature cannot confiscate to its own use the private funds a municipal corporation holds under its charter without default or consent of the corporators, and the public faith, which constitutes a valid compact subject only to judicial inquiry, construction, and abrogation, is pledged against such seizure and appropriation. *New Jersey v. Wilson*, 7 Cranch 164
  18. Constitutional Law — Contracts Clause The Contracts Clause has never been understood to embrace contracts other than those respecting property or some object of value and conferring rights assertable in a court of justice, and has never been understood to restrict the general legislative right to legislate on the subject of divorces; a general law regulating divorces from the contract of marriage, like a law regulating remedies in other cases of breach of contract, is not necessarily a law impairing the obligation of such a contract, nor is a law punishing a breach of contract by imposing forfeiture of rights acquired under it, or dissolving it because mutual obligations were no longer observed, in any correct sense a law impairing the obligation of the contract.
  19. Constitutional Law — Contracts Clause Under the constitution, the prohibitory clause as to grants and contracts is not to be construed narrowly so as to apply only where the parties take for their own private benefit; a grant to a private trustee for the benefit of a particular cestui que trust, or for any special, private, or public charity, is not the less a contract because the trustee takes nothing for his own benefit, and a grant of the next presentation to a church is still a contract although it limits the grantee to a mere right of nomination or patronage.
  20. Constitutional Law — Contracts Clause A private donation vested in a trustee for objects of a general nature does not thereby become a public trust that the government may at its pleasure take from the trustee and administer in its own way; the government has no power to revoke a grant, even of its own funds, when given to a private person or a corporation for special uses, and the only authority remaining to the government over such grants is judicial—to ascertain the validity of the grant, to enforce its proper uses, to suppress frauds, and, where the uses are charitable, to secure their regular administration through equitable tribunals.
  21. Constitutional Law — Contracts Clause Many rights, franchises, and authorities are valuable in contemplation of law where no beneficial interest can accrue to the possessor; a power given to executors to sell an estate for payment of debts is coupled with a trust and capable of survivorship, and many dignities and offices existing at common law are merely honorary and without profit, yet the grant of such honorary or onerous dignities and offices is not on that account any less a contract.
  22. Constitutional Law — Contracts Clause Grants of franchises, whether corporate or not, including a right of fishery, to hold a ferry, market or fair, or to erect a turnpike, bank or bridge, are within the constitution; all incorporeal hereditaments, whether immunities, dignities, offices, franchises or other rights, are deemed valuable in law, their owners have a legal estate and property in them and legal remedies to support and recover them in case of injury, obstruction or disseisin, and incorporeal hereditaments, when the subject of a contract or grant, are within the reach of the constitution as any other grant.
  23. General — Powers — Revocability Mere naked powers to be exercised for the exclusive benefit of the grantor are revocable by him for that reason, but a power to be exercised in aid of a right vested in the grantee is not revocable; a power of attorney forming part of a security upon the assignment of a chose in action is not revocable by the grantor because it sounds in contract and is coupled with an interest, and where an estate is conveyed in trust for the grantor the estate is irrevocable in the grantee although the grantee can take no beneficial interest for himself.
  24. Business & Corporate Law — Franchises Corporate franchises are legal estates vested in the corporation itself as soon as it is in esse, and are not mere naked powers granted to the corporation but powers coupled with an interest; the property of a corporation rests upon the possession of its franchises, the corporation has a legal interest in them, and it may sue and be sued for its franchises.
  25. Business & Corporate Law — Corporate Membership The right to be a freeman of a corporation—a right of voting and acting in corporate concerns—is a valuable temporal right, founded on the same basis as, and as sacred as, the right of voting in public elections, which the law recognizes and enforces and for whose violation it provides a remedy.
  26. Business & Corporate Law — Visitatorial Power Where the visitatorial power devolves upon the founder of a charity, it is an hereditament descendible in perpetuity to his heirs and, in default of heirs, escheats to the government; it is a valuable right founded in property, partakes of a judicial nature, and a founder may contract for the possession of the visitatorial right in return for his endowment as for any other equivalent, so that if he assigns it in perpetuity to the trustees of the corporation it remains a valuable hereditament in their hands.
  27. Business & Corporate Law — Corporate Franchises A franchise may be vested in a corporation aggregate while the benefit redounds to the particular members and is enjoyed by them in their private capacities; where a privilege of election is used by particular persons, it is a particular right vested in each particular man, and each trustee of a college has a legal right and interest in his office, for the obstruction of which the law furnishes an adequate remedy in damages, and which cannot be divested except by due course of law.
  28. Evidence — Competency of Witnesses The decisions do not establish that trustees are incompetent witnesses in a suit for corporate property vested in them in their corporate capacity; the mere fact that corporators may be technically parties to the record does not show that trustees are competent witnesses in a suit for corporate franchises to be exercised by the trustees or to enforce their visitatorial power, and on a mandamus to restore a trustee to corporate or visitatorial power the trustee is not a competent witness to establish his own rights or the corporate rights.
  29. Constitutional Law — Contracts Clause At common law the crown cannot force a new charter upon a private corporation, compel the old members to give up their own franchises, or compel them to admit new members into the corporation, nor compel a person to become a member of such a corporation against his will; under limited governments the legislature is not supposed to possess such transcendent authority, a state legislature has no authority to compel a person to become a member of a mere private corporation created for the promotion of a private enterprise, and rights legally vested in a corporation cannot be controlled or destroyed by any subsequent statute unless a power for that purpose is reserved to the legislature in the act of incorporation.
  30. Constitutional Law — Contracts Clause The New Hampshire acts of June 27 and December 18 and 26, 1816, in substance create a new corporation including the old corporators with new powers and subject to a new control, and by increasing the trustees, converting the college into a university, transferring the property to the new board, changing the quorum, adding governor-appointed trustees, and creating a board of overseers with general supervision and a negative upon the trustees' most important acts, they impair the charter as a protected contract by impairing corporate and individual rights, imposing new duties, directing funds to new purposes, vesting control in unchartered overseers, and adding nine new trustees contrary to the charter.
  31. Constitutional Law — Contracts Clause A legislature may not take away any powers or franchises vested by its charter in a private corporation or its corporate officers, restrain or control their legitimate exercise, or transfer them to other persons without the corporation's assent, as doing so violates the obligation of that charter and is unconstitutional and void; if a legislature intends to claim authority to alter charter-granted powers or franchises, that authority must be reserved in the grant itself.
  32. Constitutional Law — Contracts Clause A grant of land or franchises made to A in trust for special purposes cannot be revoked and re-granted to A, B, and C in trust for the same purposes without violating the obligation of the first grant; where property is vested by grant in A and B for the use of a college or hospital of private foundation, the obligation of that grant is impaired when the estate is taken from their exclusive management and vested in them in common with ten other persons, and where a power of appointment is given to A and B, it violates their right to annul the appointment unless it is assented to by five other persons and then confirmed by a distinct body.
  33. Statutory Interpretation — Retrospective Operation A statute, even of Parliament, is not to have retrospective effect—nova constitutio futuris formam imponere debet, et non praeteritis—and the lawgiver cannot alter his mind to another's prejudice; laws and constitutions give form to future matters, not past acts or pending matters, and the rule against retrospective laws is now to be regarded as sacred under our constitutions. Bracton, lib. 4, fol. 228; 2 Inst. 292
  34. Constitutional Law — Judicial Review Whether a law is void for repugnancy to the constitution ought seldom, if ever, to be so decided in a doubtful case; a legislature is not to be pronounced to have transcended its powers, nor its acts held void, on slight implication and vague conjecture, and the opposition between constitution and law must be clear and strong—a law should not be held void but in a very clear case. *Fletcher v. Peck*, 6 Cranch 87; *Calder v. Bull* (Chase, J.)
  35. Constitutional Law — Contracts Clause The prohibitions against tender laws and laws impairing the obligation of contracts were inserted to secure private rights; property rights vested under an act amounting to a contract cannot be divested without violating the public faith solemnly pledged. Chase, J.; *Terrett v. Taylor*
  36. Constitutional Law — Contracts Clause Where a contract has once passed bona fide into grant, neither the king nor any private person who may be the grantor can recall the grant of the property, although the conveyance may have been purely voluntary; a gift completely executed is irrevocable, the property conveyed becoming as against the donor the absolute property of the donee, and a gift by the crown of incorporeal hereditaments such as corporate franchises, when executed, comes completely within this principle and is in the strictest sense a grant.
  37. Constitutional Law — Contracts Clause A charter granted for a bank, where the stockholders pay in their own funds, is not to be deemed a grant without consideration and therefore revocable at the pleasure of the grantor, and where grantees are mere trustees performing services without reward exclusively for the benefit of others for public charity, those services are not less valuable to the government than if performed for the private emolument of the trustees themselves.
  38. Business & Corporate Law — Judicial Review of Corporate Acts As managers of a corporation's property and revenues, the trustees are amenable to the jurisdiction of the judicial tribunals of the state, but as visitors their discretion is limited only by the charter and liable to no supervision or control, at least unless fraudulently misapplied.