Dartmouth College v. Woodward
Year: 1819 American State Papers
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It can require no argument to prove that the
circumstances of this case constitute a contract. An application is made to
the Crown for a charter to incorporate a religious and literary institution.
In the application it is stated that large contributions have been made for
the object, which will be conferred on the corporation as soon as it shall be
created. The charter is granted, and on its faith the property is conveyed.
Surely in this transaction every ingredient of a complete and legitimate
contract is to be found.
The points for consideration are:
- Is this contract protected by the Constitution of
the United States?
- Is it impaired by the acts under which the
defendant holds?
2 On the first point, it has been argued that the word
contract, in its broadest sense, would comprehend the political relations
between the government and its citizens, would extend to offices held within a
state for state purposes and to many of those laws concerning civil
institutions, which must change with circumstances and be modified by ordinary
legislation; which deeply concern the public, and which, to preserve good
government, the public judgment must control-that even marriage is a contract,
and its obligations are affected by the laws respecting divorces; that the
clause in the Constitution, if construed in its greatest latitude, would
prohibit these laws.
3 Taken in its broad, unlimited sense, the clause would
be an unprofitable and vexatious interference with the internal concerns of a
state, would unnecessarily and unwisely embarrass its legislation, and render
immutable those civil institutions which are established for purposes of
internal government, and which, to subserve those purposes, ought to vary with
varying circumstances. That as the framers of the Constitution could never
have intended to insert in that instrument a provision so unnecessary, so
mischievous, and so repugnant to its general spirit, the term contract must be
understood in a more limited sense. That it must be understood as intended to
guard against a power of at least doubtful utility, the abuse of which had
been extensively felt; and to restrain the legislature in future from
violating the right to property. That anterior to the formation of the
Constitution, a course of legislation had prevailed in many, ii not in all, of
the states which weakened the confidence of man in man and embarrassed all
transactions between individuals by dispensing with a faithful performance of
engagements. To correct this mischief, by restraining that power which
produced it, the state legislatures were forbidden to pass any law impairing
the obligation of contracts, that is, of contracts respecting property, under
which some individual could claim a right to something beneficial to himself
and that since the clause in the Constitution must in construction receive
some limitation, it may be confined, and ought to be confined, to cases of
this description; to cases within the mischief it was intended to remedy.
4 The provision of the Constitution never has been
understood to embrace other contracts than those which respect property, or
some object of value, and confer rights which may be asserted in a court of
justice. It never has been understood to restrict the general right of the
legislature to legislate on the subject of divorces. Those acts enable some
tribunal not to impair a marriage contract but to liberate one of the parties
because it has been broken by the other. When any state legislature shall pass
an act annulling all marriage contracts, or allowing either party to annul it
without the consent of the other, it will be time enough to inquire whether
such an act be constitutional.
5 The parties in this case differ less on general
principles, less on the true construction of the Constitution in the abstract
than on the application of those principles to this case and on the true
construction of the charter of 1769. This is the point on which the cause
essentially depends. If the act of incorporation be a grant of political
power, if it create a civil institution to be employed in the administration
of the government, or if the funds of the college be public property, or if
the state of New Hampshire, as a government, be alone interested in its
transactions, the subject is one in which the legislature of the state may act
according to its own judgment, unrestrained by any limitation of its power
imposed by the Constitution of the United States.
6 But if this be a private, eleemosynary institution,
endowed with a capacity to take property for objects unconnected with
government, whose funds are bestowed by individuals on the faith of the
charter; if the donors have stipulated for the future disposition and
management of those funds in the manner prescribed by themselves, there may be
more difficulty in the case, although neither the persons who have made these
stipulations nor those for whose benefit they were made should be parties to
the cause. Those who are no longer interested in the property may yet retain
such an interest in the preservation of their own arrangements as to have a
right to insist that those arrangements shall be held sacred. Or, if they have
themselves disappeared, it becomes a subject of serious and anxious inquiry
whether those whom they have legally empowered to represent them forever may
not assert all the rights which they possessed, while in being; whether, if
they be without personal representatives who may feel injured by a violation
of the compact, the trustees be not so completely their representatives, in
the eye of the law, as to stand in their place, not only as respects the
government of the college but also as respects the maintenance of the college
charter.
7 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.
These are such as are supposed best calculated to effect the object for which
it was created. Among the most important are immortality, and, if the
expression may be allowed, individuality; properties by which a perpetual
succession of many persons are considered as the same, and may act as a single
individual. They enable a corporation to manage its own affairs and to hold
property without the perplexing intricacies, the hazardous and endless
necessity of perpetual conveyances for the purpose of transmitting it from
hand to hand. It is chiefly for the purpose of clothing bodies of men, in
succession, with these qualities and capacities that corporations were
invented and are in use.
8 By these means, a perpetual succession of individuals
are capable of acting for the promotion of the particular object, like one
immortal being. But this being does not share in the civil government of the
country, unless that be the purpose for which it was created. Its immortality
no more confers on it political power, or a political character, than
immortality would confer such power or character on a natural person. It is no
more a state instrument than a natural person exercising the same powers would
be.
9 If, then, a natural person, employed by individuals
in the education of youth, or for the government of a seminary in which youth
is educated, would not become a public officer, or be considered as a member
of the civil government, how is it that this artificial being, created by law
for the purpose of being employed by the same individuals for the same
purposes, should become a part of the civil government of the country? Is it
because its existence, its capacities, its powers are given by law? Because
the government has given it the power to take and to hold property in a
particular form, and for particular purposes, has the government a consequent
right substantially to change that form or to vary the purposes to which the
property is to be applied? This principle has never been asserted or
recognized and is supported by no authority. Can it derive aid from reason?
From the fact, then, that a charter of incorporation
has been granted, nothing can be inferred which changes the
10 character of the
institution or transfers to the government any new power over it. The
character of civil institutions does not grow out of their incorporation but
out of the manner in which they are formed and the objects for which they are
created. The right to change them is not founded on their being incorporated
but on their being the instruments of government, created for its purposes.
The same institutions, created for the same objects though not incorporated,
would be public institutions and, of course, be controllable by the
legislature. The incorporating act neither gives nor prevents this control.
Neither, in reason, can the incorporating act change the character of a
private, eleemosynary institution.
11 From this review of the charter, it appears that
Dartmouth College is an eleemosynary institution, incorporated for the purpose
of perpetuating the application of the bounty of the donors to the specified
objects of that bounty; that its trustees or governors were originally named
by the founder and invested with the power of perpetuating themselves; that
they are not public officers, nor is it a civil institution, participating in
the administration of government, but a charity school, or a seminary of
education, incorporated for the preservation of its property, and the
perpetual application of that property to the objects of its creation. Yet a
question remains to be considered, of more real difficulty, on which more
doubt has been entertained than on all that have been discussed. The founders
of the college, at least those whose contributions were in money, have parted
with the property bestowed upon it, and their representatives have no interest
in that property. The donors of land are equally without interest so long as
the corporation shall exist. Could they be found, they are unaffected by any
alteration in its constitution, and probably regardless of its form, or even
of its existence. The students are fluctuating, and no individual among our
youth has a vested interest in the institution, which can be asserted in a
court of justice. Neither the founders of the college nor the youth for whose
benefit it was founded, complain of the alteration made in its charter or
think themselves injured by it. The trustees alone complain, and the trustees
have no beneficial interest to be protected. Can this be such a contract, as
the constitution intended to withdraw from the power of state legislation?
Contracts, the parties to which have a vested beneficial interest, and those
only, it has been said, are the objects about which the Constitution is
solicitous, and to which its protection is extended.
12 According to the theory of the British constitution,
their Parliament is omnipotent. To annul corporate rights might give a shock
to public opinion, which that government has chosen to avoid; but its power is
not questioned. Had Parliament, immediately after the emanation of this
charter, and the execution of those conveyances which followed it, annulled
the instrument, so that the living donors would have witnessed the
disappointment of their hopes, the perfidy of the transaction would have been
universally acknowledged. Yet then. as now, the donors would have had no
interest in the property; then, as now, those who might be students would have
had no rights to be violated; then, as now, it might he said that the
trustees, in whom the rights of all were combined, possessed no private,
individual, beneficial interest in the property confided to their protection.
Yet the contract would at that time have been deemed sacred by all. What has
since occurred to strip it of its inviolability? Circumstances have not
changed it. In reason, in justice, and in law, it is now what it was in 1769.
13 This is plainly a contract to which the donors, the
trustees, and the Crown (to whose rights and obligations New Hampshire
succeeds) were the original parties. It is a contract made on a valuable
consideration. It is a contract for the security and disposition of property.
It is a contract on the faith of which real and personal estate has been
conveyed to the corporation. It is then a contract within the letter of the
Constitution, and within its spirit also, unless the fact that the property is
invested by the donors in trustees for the promotion of religion and
education, for the benefit of persons who are perpetually changing, though the
objects remain the same, shall create a particular exception, taking this case
out of the prohibition contained in the Constitution.
14 It is more than possible that the preservation of
rights of this description was not particularly in the view of the framers of
the Constitution when the clause under consideration was introduced into that
instrument. It is probable that interferences of more frequent recurrence, to
which the temptation was stronger and of which the mischief was more
extensive, constituted the great motive for imposing this restriction on the
state legislatures. But although a particular and a rare case may not, in
itself, be of sufficient magnitude to induce a rule, yet it must be governed
by the rule, when established, unless some plain and strong reason for
excluding it can be given.
15 It is not enough to say that this particular case was
not in the mind of the Convention when the article was framed, nor of the
American people when it was adopted. It is necessary to go further and to say
that, had this particular case been suggested, the language would have been so
varied as to exclude it, or it would have been made a special exception The
case, being within the words of the rule, must be within its operation
likewise, unless there be something in the literal construction so obviously
absurd, or mischievous, or repugnant to the general spirit of the instrument
as to justify those who expound the Constitution in making it an exception.
16 On what safe and intelligible ground can this
exception stand? There is no expression in the Constitution, no sentiment
delivered by its contemporaneous expounders which would justify us in making
it. In the absence of all authority of this kind, is there, in the nature and
reason of the case itself, that which would sustain a construction of the
Constitution not warranted by its words? Are contracts of this description of
a character to excite so little interest that we must exclude them from the
provisions of the Constitution as being unworthy of the attention of those who
framed the instrument? Or does public policy so imperiously demand their
remaining exposed to legislative alteration as to compel us, or rather permit
us, to say that these words, which were introduced to give stability to
contracts, and which in their plain import comprehend this contract, must yet
be so construed as to exclude it?
17 Almost all eleemosynary corporations, those which are
created for the promotion of religion, of charity, or of education, are of the
same character. The law of this case is the law of all. In every literary or
charitable institution, unless the objects of the bounty be themselves
incorporated, the whole legal interest is in trustees and can be asserted only
by them. The donors, or claimants of the bounty, if they can appear in court
at all, can appear only to complain of the trustees. In all other situations,
they are identified with, and personated by, the trustees; and their rights
are to be defended and maintained by them. Religion, charity, and education
are, in the law of England, legatees or donees, capable of receiving bequests
or donations in this form. They appear in court and claim or defend by the
corporation.
18 The opinion of the Court, after mature deliberation,
is that this is a contract, the obligation of which cannot be impaired without
violating the Constitution of the United States. This opinion appears to us to
be equally supported by reason and by the former decisions of this Court.
19 We next proceed to the inquiry whether its obligation
has been impaired by those acts of the legislature of New Hampshire to which
the special verdict refers. By the Revolution, the duties as well as the
powers of government devolved on the people of New Hampshire. It is admitted
that among the latter was comprehended the transcendent power of Parliament,
as well as that of the Executive Department. It is too clear to require the
support of argument that all contracts and rights respecting property remained
unchanged by the Revolution.
20 The obligations, then, which were created by the
charter to Dartmouth College were the same in the new that they had been in
the old government. The power of the government was also the same. A repeal of
this charter at any time prior to the adoption of the present Constitution of
the United States would have been an extraordinary and unprecedented act of
power, but one which could have been contested only by the restrictions upon
the legislature to be found in the constitution of the state. But the
Constitution of the United States has imposed this additional limitation, that
the legislature of a state shall pass no act impairing the obligation of
contracts.
21 It has been already stated that the act to amend the
charter, and enlarge and improve the corporation of Dartmouth College
increases the number of trustees to twenty-one, gives the appointment of the
additional members to the executive of the state, and creates a board of
overseers to consist of twenty-five persons, of whom twenty-one are also
appointed by the executive of New Hampshire, who have power to inspect and
control the most important acts of the trustees.
22 On the effect of this law, two opinions cannot be
entertained. Between acting directly and acting through the agency of trustees
and overseers, no essential difference is perceived. The whole power of
governing the college is transferred from trustees, appointed according to the
will of the founder, expressed in the charter, to the executive of New
Hampshire. The management and application of the funds of this eleemosynary
institution, which are placed by the donors in the hands of trustees named in
the charter and empowered to perpetuate themselves, are placed by this act
under the control of the government of the state. The will of the state is
substituted for the will of the donors in every essential operation of the
college.
23 This is not an immaterial change. The founders of the
college contracted, not merely for the perpetual application of the funds
which they gave to the objects for which those funds were given; they
contracted, also, to secure that application by the constitution of the
corporation. They contracted for a system, which should, as far as human
foresight can provide, retain forever the government of the literary
institution they had formed in the hands of persons approved by themselves.
24 This system is totally changed. The charter of 1769
exists no longer. It is reorganized; and reorganized in such a manner as to
convert a literary institution, molded according to the will of its founders
and placed under the control of private literary men, into a machine entirely
subservient to the will of government. This may be for the advantage of this
college in particular, and may be for the advantage of literature in general,
but it is not according to the will of the donors, and is subversive of that
contract, on the faith of which their property was given.
25 In the view which has been taken of this interesting
case, the Court has confined itself to the rights possessed by the trustees,
as the assignees and representatives of the donors and founders, for the
benefit of religion and literature. Yet it is not clear that the trustees
ought to be considered as destitute of such beneficial interest in themselves
as the law may respect. In addition to their being the legal owners of the
property, and to their having a freehold right in the powers confided to them,
the charter itself countenances the idea that trustees may also be tutors with
salaries. The first president was one of the original trustees; and the
charter provides that in case of vacancy in that office the senior professor
or tutor, being one of the trustees, shall exercise the office of president
until the trustees shall make choice of, and appoint a president.
26 According to the tenor of the charter, then, the
trustees might, without impropriety, appoint a president and other professors
from their own body.
This is a power not entirely unconnected with an interest. Even if the
proposition of the counsel for the defendant were sustained; if it were
admitted that those contracts only are protected by the Constitution, a
beneficial interest in which is vested in the party, who appears in court to
assert that interest; yet it is by no means clear that the trustees of
Dartmouth College have no beneficial interest in themselves. But the Court has
deemed it unnecessary to investigate this particular point.
27 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
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