Supreme Court of the United States · 1819 · Constitutional Law
Constitutional LawContracts ClauseCorporate ChartersContracts Clausecharter as contractprivate corporationeleemosynary corporationcollege charter
Facts
Dartmouth College was created by a 1769 charter incorporating twelve trustees, granting them the usual corporate powers, and authorizing them to fill vacancies in their own body. The charter was accepted, and property contributed for the benefit of the college was conveyed to and vested in the corporation. In 1816, New Hampshire enacted statutes increasing the number of trustees, giving the state executive power to appoint the additional members, and creating a board of overseers with authority to inspect and control important acts of the trustees. The majority of the trustees refused to accept the amended charter and sued to recover corporate property held under authority of the new statutes.
Issue
Whether the New Hampshire acts of 1816 altering Dartmouth College's charter violated the Constitution of the United States by impairing the obligation of a contract. This depended on whether the 1769 charter of Dartmouth College was a contract protected by the Contracts Clause and, if so, whether the statutes impaired that contract.
Rule
The Contracts Clause protects contracts respecting property or some object of value that confer rights enforceable in court. A charter creating a private eleemosynary corporation, accepted and acted upon so that property is conveyed on its faith, is a contract for the security and disposition of property; a state may not, without assent, substantially alter the corporation's essential governance or transfer control from the charter-designated trustees to the government, because such alteration impairs the obligation of that contract.
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One of 10 multiple-choice questions for this case. Pick an answer to see why.
In 1895, the legislature of Maine chartered Pine Harbor Academy in Portland after Julia Mercer and several other donors promised land and cash for a school to be governed by 10 self-perpetuating trustees named in the charter. The academy accepted the charter, received the donated property, and has operated ever since on private gifts and tuition. In 2026, Maine enacted a statute adding 8 trustees appointed by the governor and requiring approval by a new state-selected review board for major academic and financial decisions.
If the academy challenges the statute under the Contracts Clause, which is the strongest argument?
Explanation. The majority treated the charter of a private eleemosynary corporation as a contract when it was accepted and property was conveyed on its faith. The key impairment was not merely a change in details, but the transfer of essential governance from charter-designated trustees to state-controlled actors. The public value of education does not make such an institution public, and trustees may assert the rights represented in the corporation even without personal beneficial ownership.