The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Publisher’s Note
• Preface to the First Edition
• Preface to the Edition of 1910
• Note to Edition of 1914
• List of Presidents
• Dates of Some Remarkable Events In the History of the North American Colonies and United States
• Area, Population, and Date of Admission of the States
• Chapter 1: Introductory
• Part I: The National Government
• Chapter 2: The Nation and the States
• Chapter 3: The Origin of the Constitution
• Chapter 4: Nature of the Federal Government
• Chapter 5: The President
• Chapter 6: Presidential Powers and Duties
• Chapter 7: Observations On the Presidency
• Chapter 8: Why Great Men Are Not Chosen Presidents
• Chapter 9: The Cabinet
• Chapter 10: The Senate
• Chapter 11: The Senate As an Executive and Judicial Body
• Chapter 12: The Senate: Its Working and Influence
• Chapter 13: The House of Representatives
• Chapter 14: The House At Work
• Chapter 15: The Committees of Congress
• Chapter 16: Congressional Legislation
• Chapter 17: Congressional Finance
• Chapter 18: The Relations of the Two Houses
• Chapter 19: General Observations On Congress
• Chapter 20: The Relations of Congress to the President 1
• Chapter 21: The Legislature and the Executive
• Chapter 22: The Federal Courts
• Chapter 23: The Courts and the Constitution
• Chapter 24: The Working of the Courts
• Chapter 25: Comparison of the American and European Systems
• Chapter 26: General Observations On the Frame of National Government
• Chapter 27: The Federal System
• Chapter 28: Working Relations of the National and the State Governments
• Chapter 29: Criticism of the Federal System
• Chapter 30: Merits of the Federal System
• Chapter 31: Growth and Development of the Constitution
• Chapter 32: The Amendment of the Constitution
• Chapter 33: The Interpretation of the Constitution
• Chapter 34: The Development of the Constitution By Usage
• Chapter 35: The Results of Constitutional Development
• Part II: The State Governments
• Chapter 36: Nature of the American State
• Chapter 37: State Constitutions
• Chapter 38: The Development of State Constitutions
• Chapter 39: Direct Legislation By the People
• Chapter 40: State Governments: the Legislature
• Chapter 41: The State Executive
• Chapter 42: The State Judiciary
• Chapter 43: State Finance
• Chapter 44: The Working of State Governments
• Chapter 45: Remedies For the Faults of State Governments
• Chapter 46: State Politics
• Chapter 47: The Territories
• Chapter 48: Local Government
• Chapter 49: Observations On Local Government
• Chapter 50: The Government of Cities
• Chapter 51: The Working of City Governments
• Chapter 52: An American View of Municipal Government In the United States
• Appendix: Note to Chapter 3: On Constitutional Conventions
• Note to Chapter 4: What the Federal Constitution Owes to the Constitutions of the Several States
• Note to Chapter 10: Extracts From the Rules of the Senate
• Note (a) to Chapter 16: Private Bills
• Note (b) to Chapter 16: The Lobby
• Note (a) to Chapter 30: Constitution of the Confederate States, 1861–65
• Note (b) to Chapter 30: The Federal Constitution of Canada
• Note to Chapter 33: The Dartmouth College Case
• Articles of Confederation, 1781–88
• Constitution of the United States
• Extracts From the Constitution of the State of Oklahoma 1

Note to Chapter 33

THE DARTMOUTH COLLEGE CASE

The famous case of Dartmouth College v. Woodward (4 Wheat. 518), decided in 1818, has been so often brought up in English discussions, that it seems proper to give a short account of it, taken from an authoritative source, an address by Mr. Justice Miller (the senior justice, and one of the most eminent members, of the Supreme Court), delivered before the University of Michigan, June 1887.

“It may well be doubted whether any decision ever delivered by any court has had such a pervading operation and influence in controlling legislation as this. It is founded upon the clause of the Constitution (Art. i. § 10) which declares that no State shall make any law impairing the obligation of contracts.

“Dartmouth College existed as a corporation under a charter granted by the British Crown to its trustees in New Hampshire, in the year 1769. This charter conferred upon them the entire governing power of the college, and among other powers that of filling up all vacancies occurring in their own body, and of removing and appointing tutors. It also declared that the number of trustees should forever consist of twelve and no more.

“After the Revolution, the legislature of New Hampshire passed a law to amend the charter, to improve and enlarge the corporation. It increased the number of trustees to twenty-one, gave the appointment of the additional members to the executive of the State, and created a board of overseers to consist of twenty-five persons, of whom twenty-one were also to be appointed by the executive of New Hampshire. These overseers had power to inspect and control the most important acts of the trustees.

“The Supreme Court, reversing the decision of the Superior Court of New Hampshire, held that the original charter constituted a contract between the Crown, in whom the power was then vested and the trustees of the college, which was impaired by the act of the legislature above referred to. The opinion, to which there was but one dissent, establishes the doctrine that the act of a government, whether it be by a charter of the legislature or of the Crown, which creates a corporation, is a contract between the state and the corporation, and that all the essential franchises, powers, and benefits conferred upon the corporation by the charter become, when accepted by it, contracts within the meaning of the clause of the Constitution referred to.

“The opinion has been of late years much criticised, as including with the class of contracts whose foundation is in the legislative action of the States, many which were not properly intended to be so included by the framers of the Constitution, and it is undoubtedly true that the Supreme Court itself has been compelled of late years to insist in this class of cases upon the existence of an actual contract by the state with the corporation, when relief is sought against subsequent legislation.

“The main feature of the case, namely, that a State can make a contract by legislation, as well as in any other way, and that in no such case shall a subsequent act of the legislature interpose any effectual barrier to its enforcement, where it is enforceable in the ordinary courts of justice, has remained. The result of this principle has been to make void innumerable acts of State legislatures, intended in times of disastrous financial depression and suffering to protect the people from the hardships of a rigid and prompt enforcement of the law in regard to their contracts, and to prevent the States from repealing, abrogating, or avoiding by legislation contracts fairly entered into with other parties.

“This decision has stood from the day it was made to the present hour as a great bulwark against popular effort through State legislation to evade the payment of just debts, the performance of obligatory contracts, and the general repudiation of the rights of creditors.”

As here intimated, the broad doctrine laid down in this case has been of late years considerably qualified and restricted. It has also become the practice for states making contracts by grants to which the principle of this decision could apply, to reserve power to vary or annul them, so as to leave the hands of the state free.