| Trustees of Dartmouth College v. Woodward
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100 U.S. 1
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| Syllabus
| Opinion
[ Marshall ] | Concurrence
[ Washington ] | Concurrence
[ Story ] | Dissent
[ Duvall ] |
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Trustees of Dartmouth College v. Woodward
ERROR TO THE SUPERIOR COURT OF THE STATE OF NEW HAMPSHIRE
WASHINGTON, Justice.
This cause turns upon the validity of certain laws of the State of New Hampshire, which have been stated in the case, and which, it is contended by the counsel for the plaintiffs [p655] in error, are void, being repugnant to the constitution of that State and also to the Constitution of the United States. Whether the first objection to these laws be well founded or not is a question with which this Court, in this case, has nothing to do, because it has no jurisdiction as an appellate court over the decisions of a State court except in cases where is drawn in question the validity of a treaty, or statute of, or an authority exercised under, the United States, and the decision is against their validity, or where is drawn in question the validity of a statute of, or an authority exercised under, any State, on the ground of their being repugnant to the Constitution, treaties or laws of the United States, and the decision is in favor of their validity, or where is drawn in question the construction of any clause of the Constitution, or of a treaty, or statute of, or commission held under, the United States, and the decision is against the title, right, privilege or exemption specially set up or claimed by either party, under such clause of the said Constitution, treaty, statute or commission.
The clause in the Constitution of the United States which was drawn in question in the Court from whence this transcript has been sent is that part of the tenth section of the first article which declares that "no State shall pass any bill of attainder, ex post facto law, or any law impairing the obligation of contracts." The decision of the State court is against the title specially claimed by the plaintiffs in error under the above clause, because they contend that the laws of New Hampshire, above referred to, [p656] impair the obligation of a contract and are consequently repugnant to the above clause of the Constitution of the United States, and void. There are, then, two questions for this Court to decide: 1st.: Is the charter granted to Dartmouth College on the 13th of December 1769, to be considered as a contract? If it be, then, 2d.: Do the laws in question impair its obligation?
1. What is a contract? It may be defined to be a transaction between two or more persons, in which each party comes under an obligation to the other and each reciprocally acquires a right to whatever is promised by the other. Powell on Cont. 6. Under this definition, says Mr. Powell, it is obvious that every feoffment, gift, grant, agreement, promise, &c., may be included, because in all there is a mutual consent of the minds of the parties concerned in them, upon an agreement between them respecting some property or right that is the object of the stipulation. He adds that the ingredients requisite to form a contract are, parties, consent, and an obligation to be created or dissolved; these must all concur, because the regular effect of all contracts is, on one side, to acquire, and on the other, to part with, some property or rights, or to abridge or to restrain natural liberty, by binding the parties to do, or restraining them from doing, something which before they might have done or omitted. If a doubt could exist that a grant is a contract, the point was decided in the case of Fletcher v. Peck, 6 Cranch 87, [p657] in which it was laid down that a contract is either executory or executed; by the former, a party binds himself to do or not to do a particular thing; the latter is one in which the object of the contract is performed, and this differs in nothing from a grant; but whether executed or executory, they both contain obligations binding on the parties, and both are equally within the provisions of the Constitution of the United States, which forbids the State governments to pass laws impairing the obligation of contracts.
If, then, a grant be a contract within the meaning of the Constitution of the United States, the next inquiry is whether the creation of a corporation by charter be such a grant as includes an obligation of the nature of a contract which no State legislature can pass laws to impair? A corporation is defined by Mr. Justice Blackstone (2 Bl.Com. 37) to be a franchise. It is, says he,
a franchise for a number of persons to be incorporated and exist as a body politic, with a power to maintain perpetual succession, and to do corporate acts, and each individual of such corporation is also said to have a franchise, or freedom.
This franchise, like other franchises, is an incorporeal hereditament, issuing out of something real or personal, or concerning or annexed to, and exercisable within a thing corporate. To this grant or this franchise the parties are the King and the persons for whose benefit it is created, or Trustees for them. The assent of both is necessary. [p658] The subjects of the grant are not only privileges and immunities, but property, or, which is the same thing, a capacity to acquire and to hold property in perpetuity. Certain obligations are created, binding both on the grantor and the grantees. On the part of the former, it amounts to an extinguishment of the King's prerogative to bestow the same identical franchise on another corporate body, because it would prejudice his prior grant. 2 Bl.Com. 37. It implies, therefore, a contract not to reassert the right to grant the franchise to another, or to impair it. There is also an implied contract that the founder of a private charity, or his heirs, or other persons appointed by him for that purpose, shall have the right to visit and to govern the corporation of which he is the acknowledged founder and patron, and also that, in case of its dissolution, the reversionary right of the founder to the property with which he had endowed it should be preserved inviolate.
The rights acquired by the other contracting party are those of having perpetual succession, of suing and being sued, of purchasing lands for the benefit of themselves and their successors, and of having a common seal and of making by-laws. The obligation imposed upon them, and which forms the consideration of the grant, is that of acting up to the end or design for which they were created by their founder. Mr. Justice Buller, in the case of the King v. Pasmore, 3 T.R. 246, says that the grant of incorporation is a compact between the Crown and a number of persons, the latter of whom undertake, in consideration [p659] of the privileges bestowed, to exert themselves for the good government of the place. If they fail to perform their part of it, there is an end of the compact. The charter of a corporation, says Mr. Justice Blackstone, 2 Bl.Com. 484, may be forfeited through negligence or abuse of its franchises, in which case the law judges that the body politic has broken the condition upon which it was incorporated, and thereupon the corporation is void. It appears to me, upon the whole, that these principles and authorities prove incontrovertibly that a charter of incorporation is a contract.
2. The next question is do the acts of the Legislature of New Hampshire of the 27th of June, and 18th and 26th of December, 1816, impair this contract within the true intent and meaning of the Constitution of the United States? Previous to the examination of this question, it will be proper clearly to mark the distinction between the different kinds of lay aggregate corporations in order to prevent any implied decision by this Court of any other case than the one immediately before it.
We are informed by the case of Philips v. Bury, 1 Lord Raym. 5, S.C. 2 T. R. 346, which contains all the doctrine of corporations connected with this point, that there are two kinds of corporations aggregate, viz., such as are for public government and such as are for private charity. The first are those for the government of a town, city or the like, and, being for public advantage, are [p660] to be governed according to the law of the land. The validity and justice of their private laws and Constitutions are examinable in the King's courts. Of these, there are no particular founders, and consequently, no particular visitor; there are no patrons of these corporations. But private and particular corporations for charity, founded and endowed by private persons, are subject to the private government of those who erect them, and are to be visited by them or their heirs or such other persons as they may appoint. The only rules for the government of these private corporations are the laws and Constitutions assigned by the founder. This right of government and visitation arises from the property which the founder had in the lands assigned to support the charity; and, as he is the author of the charity, the law invests him with the necessary power of inspecting and regulating it. The authorities are full to prove that a College is a private charity, as well as an hospital, and that there is, in reality, no difference between them except in degree, but they are within the same reason, and both eleemosynary.
These corporations, civil and eleemosynary, which differ from each other so especially in their nature and constitution, may very well differ in matters which concern their rights and privileges, and their existence and subjection to public control. The one is the mere creature of public institution, created exclusively for the public advantage, without other endowments than such as the King, or government may bestow upon it, and having no other founder or visitor than the King or government, the fundator incipiens. [p661] The validity and justice of its laws and Constitution are examinable by the courts having jurisdiction over them, and they are subject to the general law of the land. It would seem reasonable that such a corporation may be controlled, and its Constitution altered and amended, by the government in such manner as the public interest may require. Such legislative interferences cannot be said to impair the contract by which the corporation was formed, because there is, in reality, but one party to it, the Trustees or Governors of the corporation being merely the Trustees for the public, the cestui que trust of the foundation. These Trustees or Governors have no interest, no privileges or immunities, which are violated by such interference, and can have no more right to complain of them than an ordinary trustee, who is called upon in a court of equity to execute the trust. They accepted the charter for the public benefit alone, and there would seem to be no reason why the government, under proper limitations, should not alter or modify such a grant at pleasure. But the case of a private corporation is entirely different. That is the creature of private benefaction for a charity or private purpose. It is endowed and founded by private persons, and subject to their control, laws and visitation, and not to the general control of the government, and all these powers, rights and privileges flow from the property of the founder in the funds assigned for the support of the charity. Although the King, by the grant of the charter, is in some sense the founder of all eleemosynary corporations because, without his grant, they cannot exist, yet the patron or endower is the perficient founder to whom belongs, as of [p662] right, all the powers and privileges, which have been described. With such a corporation it is not competent for the legislature to interfere. It is a franchise or incorporeal hereditament founded upon private property, devoted by its patron to a private charity, of a peculiar kind, the offspring of his own will and pleasure, to be managed and visited by persons of his own appointment according to such laws and regulations as he or the persons so selected may ordain.
It has been shown that the charter is a contract on the part of the government that the property with which the charity is endowed shall be forever vested in a certain number of persons and their successors, to subserve the particular purposes designated by the founder and to be managed in a particular way. If a law increases or diminishes the number of the Trustees, they are not the persons which the grantor agreed should be the managers of the fund. If it appropriate the fund intended for the support of a particular charity to that of some other charity, or to an entirely different charity, the grant is in effect set aside, and a new contract substituted in its place, thus disappointing completely the intentions of the founder by changing the objects of his bounty. And can it be seriously contended that a law which changes so materially the terms of a contract does not impair it? In short, does not every alteration of a contract, however unimportant, even though it be manifestly for the interest of the party objecting to it, impair its obligation? If the assent of all the parties to be bound by a contract be of its essence, how [p663] is it possible that a new contract, substituted for or engrafted on another without such assent, should not violate the old charter?
This course of reasoning, which appears to be perfectly manifest, is not without authority to support it. Mr. Justice Blackstone lays it down, 2 Bl.Com. 37, that the same identical franchise that has been before granted to one cannot be bestowed on another, and the reason assigned is that it would prejudice the former grant. In the King v. Pasmore, 3 T.R. 246, Lord Kenyon says that an existing corporation cannot have another charter obtruded upon it by the Crown. It may reject it, or accept the whole or any part of the new charter. The reason is obvious -- a charter is a contract, to the validity of which the consent of both parties is essential, and therefore it cannot be altered or added to without such consent.
But the case of Terrett v. Taylor, 9 Cranch 43, fully supports the distinction above stated between civil and private corporations, and is entirely in point. It was decided in that case that a private corporation, created by the legislature, may lose its franchises by misuser or nonuser, and may be resumed by the government under a judicial judgment of forfeiture. In respect to public corporations, which exist only for public purposes, such as towns, cities, &c., the legislature may, under proper limitations, change, modify, enlarge or restrain them, securing, however, the property for the use of those for whom and at whose expense it was purchased. But it is denied that it has power to repeal [p664] statutes creating private corporations or confirming to them property already acquired under the faith of previous laws, and that it can, by such repeal, vest the property of such corporations in the State, or dispose of the same to such purposes as it may please, without the consent or default of the corporators. Such a law, it is declared, would be repugnant both to the spirit and the letter of the Constitution of the United States.
If these principles, before laid down, be correct, it cannot be denied that the obligations of, the charter to Dartmouth College are impaired by the laws under consideration. The name of the corporation, its constitution and government, and the objects of the founder and of the grantor of the charter are totally changed. By the charter, the property of this founder was vested in twelve trustees, and no more, to be disposed of by them, or a majority, for the support of a College, for the education and instruction of the Indians, and also of English youth, and others. Under the late acts, the trustees and visitors are different, and the property and franchises of the College are transferred to different and new uses not contemplated by the founder. In short, it is most obvious that the effect of these laws is to abolish the old corporation and to create a new one in its stead. The laws of Virginia, referred to in the case of Terrett v. Taylor, authorized the Overseers of the poor to sell the glebes belonging to the Protestant Episcopal Church and to appropriate the proceeds to other uses. The laws in question divest the Trustees of Dartmouth College of the property vested in them [p665] by the founder and vest it in other trustees, for the support of a different institution, called Dartmouth University. In what respects do they differ? Would the difference have been greater in principle if the law had appropriated the funds of the College to the making of turnpike roads, or to any other purpose of a public nature? In all respects in which the contract has been altered without the assent of the corporation, its obligations have been impaired, and the degree can make no difference in the construction of the above provision of the Constitution.
It has been insisted in the argument at the bar that Dartmouth College was a mere civil corporation, created for a public purpose, the public being deeply interested in the education of its youth, and that, consequently, the charter was as much under the control of the Government of New Hampshire as if the corporation had concerned the government of a town or city. But it has been shown that the authorities are all the other way. There is not a case to be found which contradicts the doctrine laid down in the case of Philips v. Bury, viz., that a College founded by an individual or individuals is a private charity, subject to the government and visitation of the founder, and not to the unlimited control of the government.
It is objected, in this case that Dr. Wheelock is not the founder of Dartmouth College. Admit he is not. How would this alter the case? Neither the King nor the Province of New Hampshire was the founder, and if the contributions made by the Governor of New Hampshire, by those persons who [p666] granted lands for the College, in order to induce its location in a particular part of the State, by the other liberal contributors in England and America, bestow upon them claims equal with Dr. Wheelock, still it would not alter the nature of the corporation, and convert it into one for public government. It would still be a private eleemosynary corporation, a private charity, endowed by a number of persons instead of a single individual. But the fact is that whoever may mediately have contributed to swell the funds of this charity, they were bestowed at the solicitation of Dr. Wheelock, and vested in persons appointed by him, for the use of a charity of which he was the immediate founder and is so styled in the charter.
Upon the whole, I am of opinion that the above acts of New Hampshire, not having received the assent of the corporate body of Dartmouth College, are not binding on them, and, consequently that the judgment of the State Court ought to be reserved.
Mr. Justice JOHNSON concurred for the reasons stated by the Chief Justice.
Mr. Justice LIVINGSTON concurred for the reasons stated by the Chief Justice, and Justices WASHINGTON and STORY.
