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Dartmouth v. Woodward Landmark Supreme Court Case on Contracts & Corporations
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The opinion of the court after mature deliberation, is, that this [charter] is a contract, the obligation of which cannot be impaired without violating the constitution of the United States.

This volume provides a full report of the landmark decision of Trustees of Dartmouth College v. Woodward. After Dartmouth College’s president was removed by its Trustees, the New Hampshire legislature attempted to invalidate the College’s 1769 charter to make it a public institution, giving the governor the power to appoint trustees. The Supreme Court ruled that a corporate charter (in this case, predating even the establishment of the state) was protected by the contracts clause of the Constitution. The decision upheld the sanctity of contracts as necessary to the function of a republic, and declared that a state legislature could not interfere with contracts between private parties, paving the way for American corporations and the modern free enterprise system.

TIMOTHY FARRAR. Book. Report of the Case of the Trustees of Dartmouth College against William H. Woodward. Portsmouth, New Hampshire: John W. Foster, and West, Richardson, and Lord, Boston, [1819]. First edition. With ownership signature of A. W. Haven and bookplate of William Russell Foster. 406 pp., 5¾ x 9½ in.

Inventory #25744       Price: $2,200

Excerpts:

Upon the decision of the questions involved in this case, depended the title to the whole property and corporate franchises of a useful and respectable literary institution.... But the importance of the decision is not limited to a single institution. It is perhaps of equal importance to every other literary and charitable corporation of our country.” (piii)

Opinion of Superior Court of New Hampshire

A complaint that private rights protected by the constitution have been invaded, will at all times deserve and receive the most deliberate consideration of this court. The cause of an individual whose rights have been infringed by the legislature in violation of the constitution, becomes at once the cause of all.” (p209)

In deciding a case like this, where the complaint is that corporate rights have been unconstitutionally infringed, it is the duty of this court to strip off the forms and fictions with which the policy of the law has clothed those rights, and look beyond that intangible creature of the law, the corporation which in form possesses them, to the individuals and the publick, to whom in reality, they belong, and who alone can be injured by a violation of them. This action, therefore, though in form the complaint of the corporation, must be considered as in substance the complaint of the trustees themselves.” (p216)

I am aware that this power in the hands of the legislature may, like every other power, at times be unwisely exercised; but where can it be more securely lodged?... I think the legislature had a clear constitutional right to pass the laws in question. My opinion may be incorrect, and our judgment erroneous, but it is the best opinion, which upon the most mature consideration, I have been able to form. It is certainly, to me, a subject of much consolation, to know that if we have erred, our mistakes can be corrected, and be prevented from working any ultimate injustice. If the plaintiffs think themselves aggrieved by our decision, they can carry the cause to another tribunal, where it can be re-examined, and our judgment be reversed, or affirmed, as the law of the case may seem to that tribunal to require. Let judgment be entered for the defendant.” (p234-35)

Daniel Webster’s argument before the U.S. Supreme Court

The legislature of New-Hampshire has no more power over the rights of the plaintiffs than existed, somewhere, in some department of government, before the revolution.” (p245)

The corporation in question is not a civil, although it is a lay corporation. It is an eleemosynary corporation. It is a private charity, originally founded and endowed by an individual, with a charter obtained for it at his request, for the better administration of his charity.” (p248)

That all property, of which the use may be beneficial to the publick, belongs therefore to the publick, is quite a new doctrine. It has no precedent, and is supported by no known principle.” (p260)

If the constitution [of New Hampshire] be not altogether waste paper, it has restrained the power of the legislature, in these particulars. If it has any meaning, it is, that the legislature shall pass no act directly and manifestly impairing private property and private privileges. It shall not judge, by act. It shall not decide, by act. It shall not deprive, by act. But it shall leave all these things to be tried and adjudged, by the law of the land.” (p266)

The plaintiffs contend, in the second place, that the acts in question are repugnant to the 10th section of the 1st article of the constitution of the United States. The material words of that section are; ‘no state shall pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts.’” (p273)

It is therefore contended, that this case falls within the true meaning of this provision of the constitution, as expounded in the decisions of this court; that the charter of 1769, is a contract, a stipulation or agreement; mutual in its considerations, express and formal in its terms, and of a most binding and solemn nature.” (p279)

The English colleges were founded in Catholic ages. Their religion was reformed with the general reformation of the nation; and they are suited perfectly well to the purpose of educating the protestant youth of modern times. Dartmouth college was established under a charter granted by the provincial government; but a better constitution for a college, or one more adapted to the condition of things under the present government, in all material respects, could not now be framed. Nothing in it was found to need alteration at the revolution. The wise men of that day saw in it one of the best hopes of future times, and commended it, as it was, with parental care, to the protection and guardianship of the government of the state.” (p281)

The case before the court is not of ordinary importance, nor of every day occurrence. It affects not this college only, but every college, and all the literary institutions of the country. They have flourished, hitherto, and have become in a high degree respectable and useful to the community. They have all a common principle of existence, the inviolability of their charters. It will be a dangerous, a most dangerous experiment, to hold these institutions subject to the rise and fall of popular parties, and the fluctuations of political opinions.” (p282-83)

Opinion of the Supreme Court by Chief Justice Marshall

This court can be insensible neither to the magnitude nor delicacy of this question. The validity of a legislative act is to be examined; and the opinion of the highest law tribunal of a state is to be revised;—an opinion which carries with it intrinsic evidence of the diligence, of the ability, and the integrity, with which it was formed.” (p307)

That education is an object of national concern, and a proper subject of legislation, all admit. That there may be an institution founded by government, and placed entirely under its immediate control, the officers of which would be publick officers, amendable exclusively to government, none will deny. But is Dartmouth College such an institution?” (p314)

A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties, which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.” (p315)

The opinion of the court after mature deliberation, is, that this [charter] is a contract, the obligation of which cannot be impaired without violating the constitution of the United States.” (p327)

It results from this opinion, that the acts of the legislature of New-Hampshire, which are stated in the special verdict found in this cause, are repugnant to the constitution of the United States; and that the judgment on this special verdict ought to have been for the plaintiffs. The judgment of the state court must therefore be reversed.” (p330)

Historical Background

In 1769, King George III granted a charter to Dartmouth College in Hanover, New Hampshire, vesting control of the college in a self-perpetuating board of trustees, initially all Christian ministers. After Eleazar Wheelock, the first president of Dartmouth, died in 1779, his son John was appointed to succeed him. In 1815, due to a religious controversy, the trustees removed John Wheelock as president. He filed a petition with the New Hampshire General Court (legislature) accusing the majority of the trustees of gross misconduct.

On June 27, 1816, the legislature passed an act to amend the charter of Dartmouth College to make it a public institution called Dartmouth University. Twenty-five overseers were given veto power over the trustees in the appointment and removal of the president and faculty and in the construction of new college buildings. The new charter also authorized the governor and council to fill any vacancies in the board of trustees and in the board of overseers. A minority of approximately eighty members of the New Hampshire House of Representatives signed a protest against the act. Two additional acts in December 1816 empowered the governor to summon a meeting of the trustees and imposed a fine of $500 on anyone who hindered the governance of the college.

The original twelve trustees of Dartmouth College rejected the acts of the legislature and claimed the right to govern the college under the original 1769 charter. On August 27, 1816, they removed William H. Woodward, who had allied himself with Wheelock, as secretary and a month later as treasurer of the college. However, the new board of trustees of Dartmouth University met on February 4, 1817, and reappointed Woodward as secretary and treasurer.

On February 8, 1817, the original trustees of Dartmouth College filed suit against Woodward in the Court of Common Pleas for Grafton County to recover the records and seal of the college, and the parties agreed to present the case directly to the Superior Court of New Hampshire in May 1817. The court, consisting of Chief Justice William M. Richardson and Associate Justices Samuel Bell and Levi Woodbury, delivered its opinion in November 1817. The court held that the acts of the legislature were constitutional. (Levi Woodbury later became the state’s governor, then U.S. Senator, then successively Secretary of the Navy, Secretary of the Treasury, and Associate Justice of the U.S. Supreme Court.)

The original trustees of Dartmouth appealed to the U.S. Supreme Court. In March 1818, Dartmouth College alumnus Daniel Webster opened the arguments for the original trustees. In February 1819, Chief Justice John Marshall held for the 5-1 majority that College’s charter was a contract protected by the United States Constitution, and that the acts of the New Hampshire legislature violated that contract. Associate Justices Bushrod Washington and Joseph Story delivered concurring opinions. Associate Justices William Johnson and Henry Brockholst Livingston agreed with Marshall’s majority opinion. Associate Justice Gabriel Duvall dissented but did not offer his own written opinion.

This persuasive tract, edited by Webster’s former law partner, gained for Webster the title “Defender of the Constitution.” Webster’s prepared remarks are printed here. (His delivered speech departed from the notes, and what became his famous peroration was “transcribed” by Professor Chauncey A. Goodrich of Yale University from memory thirty-five years later.)

Timothy Farrar Jr. (1788-1874), son of Chief Justice Timothy Farrar of the New Hampshire Court of Common Pleas, attended Phillips Academy in Andover, Massachusetts, and graduated from Dartmouth College in 1807. He read law under Daniel Webster, practiced law in New Ipswich from 1810-1813, then entered into a partnership with Webster in Portsmouth, where Farrar continued after Webster moved to Boston in 1816. In 1817, Farrar married Sarah Adams. In 1822, he moved his practice to Hanover, New Hampshire, where he also served as secretary, treasurer, and librarian of Dartmouth College. From 1824 to 1833, he served as a judge of the New Hampshire Court of Common Pleas. In 1854, he represented a Suffolk County district in the Massachusetts House of Representatives.

Condition

Joints weak, some loss to spine ends, boards a bit spotted, light foxing and offsetting. Bookplate to front pastedown and contemporary ownership inscription to front free endpaper.

References

Marvin 303; Harvard Law Catalogue 671; Sabin 23887; Shaw & Shoemaker 47960.


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