Dartmouth College v. Woodward Case Summary

The United States has a long history of supporting education. Even before the nation's founding, the King of England granted a Presbyterian minister, Eleazar Wheelock, a royal charter to establish a college "for the education of Indian [sic] and English youth in the province." This school eventually became Dartmouth College in New Hampshire.

Eleazar Wheelock died in 1779. His son, John Wheelock, succeeded him as president of the board of trustees for Dartmouth College. The junior Wheelock served in that role for nearly 40 years. During his tenure, he oversaw the founding of Dartmouth Medical School. 

Unfortunately, Wheelock had a falling out with the other trustees. In 1815, the board fired him.

In response, Wheelock persuaded the governor of New Hampshire to amend Dartmouth College's charter. The change made the school a public institution (Dartmouth University) and placed control of it in the hands of appointee William H. Woodward. Outraged, the original trustees filed suit against Woodward.

The case eventually reached the U.S. Supreme Court, which ruled on the dispute in 1819. 

Procedural History

The New Hampshire state court issued a conditional verdict for Woodward. The court said the acts of the New Hampshire legislature were valid if they were not contrary to the contracts clause of the Constitution of the United States. 

This question was relatively novel for courts in 1815. The New Hampshire court requested a ruling from the United States Supreme Court on the issue.

First Question: Is the Charter a Contract?

Chief Justice John Marshall established the U.S. Supreme Court as the arbiter of Constitutional review in Marbury v. Madison (1803). 

Writing for the majority in Dartmouth, Marshall agreed that a "charter" from the royal government of England establishing Dartmouth College as a private corporation (an "eleemosynary") contained all the necessary elements of a contract.

The charter that established the college created an agreement between King George III (the "grantor"), Eleazar Wheelock (the "grantee"), and the trustees of the board of Dartmouth College. The terms of the charter granted the trustees governance of the college.

The charter also contained terms for the governance of the college that the grantor and grantee were meant to be "perpetual." Wheelock meant for the trustees to manage the college funds and property. Donors, in turn, expected the trustees to use their donations for that purpose and no other.

The original charter created a private corporation with specific powers and limits on the trustees. Therefore, the Supreme Court determined that the charter was a contract according to the law.

Second Question: Does the U.S. Constitution Apply?

The Court's next question was whether the U.S. Constitution applied to this contract.

The Court's analysis distinguished between:

• Private corporations created for a charitable purpose and funded by private donations
• Public corporations that exist for general government functions and receive public money

States could intervene in a public corporation's charter but not in that of a private corporation.

The state of New Hampshire made fundamental changes to the original charter that altered the terms of the agreement. The state added additional members to the board of trustees, changed the method of selection, and created a new board of overseers controlled by the state. 

Marshall reasoned that the state unilaterally created a new agreement. This action "impaired the original charter" in violation of the Constitution of the United States."

The opinion of the court referenced Article I, Section 10, now known as the contracts clause. The clause prohibits states from passing any "Law impairing the Obligation of Contracts." 

Marshall wrote that if granting the charter had been "politically or publicly" connected to the New Hampshire legislature, the state would have been free to act. Since Dartmouth College was a charity college, not a civil institution, the charter was a private contract protected by the Constitution.

Holding

Legendary orator and statesman Daniel Webster argued the plaintiffs' case. He reportedly brought the justices to tears with his now-famous quote, "It is, Sir, as I have said, a small college. And yet, there are those who love it!" 

The final ruling held that:

• State legislatures could not interfere with contracts between private individuals.
• States could not pass laws impairing the obligation of contracts.
• States must honor contracts between individuals and other governments, even if those governments are no longer in power (such as Great Britain).

The ruling overturned the lower court's decision and granted the plaintiff's request.

The Contracts Clause

When the U.S. Constitution was first adopted, Article I, Section 10, clause 1 (the "contract clause") acted as a brake on state control over private contracts. It states:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

However, the contract clause is not as widely used today. Instead, the courts rely on the due process clause of the Fourteenth Amendment, which provides broad protection of fundamental rights. It states:

"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor    deny to any person within its jurisdiction the equal protection of the laws."

Fourteenth Amendment case law protects individual rights and privileges, including the right to contract, without resorting to the contract clause.​

The Significance of Dartmouth College v. Woodward

Dartmouth College v. Woodward was the Supreme Court's second ruling on the obligation of contracts. An earlier case, Fletcher v. Peck (1810), applied the same arguments to land grants from the Georgia legislature. 

In 1795, the legislature sold property to land companies, which then sold it to individuals. The 1796 legislature revoked the grants. The Supreme Court ruled that state governments could not alter contracts between third parties (the individual buyers and the land companies).

The ruling in Dartmouth College extended this precedent to corporate charters. Once a state granted a business charter, it lost the ability to alter the charter and regulate the beneficiaries. Today, these state-issued charters are known as articles of incorporation. 

With the clarification provided by Dartmouth College and Fletcher, private investors were more willing to support private enterprises since the government could not interfere with their arrangements.

The protection from state interference granted by Dartmouth College v. Woodward has extended to modern cases like Citizens United v. FEC (2010).

You can view the full text of the Supreme Court's opinion in Trustees of Dartmouth College v. Woodward on FindLaw's Cases & Codes.