Trustees of Dartmouth College v. Woodward
Facts
Dartmouth College was created by a 1769 charter incorporating trustees with the usual corporate powers and authority to fill vacancies in their own body. The college's funds consisted of private donations made on the faith of the charter for religious and educational purposes. In 1816, New Hampshire enacted statutes increasing the number of trustees, giving the executive power to appoint additional trustees, 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 the new statutory regime.
Issue
Whether the New Hampshire acts of 1816 altering Dartmouth College's charter violated the Contracts Clause of the United States Constitution. More specifically, the question was whether the 1769 charter of Dartmouth College was a contract protected by the Constitution and, if so, whether the state 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, founded on private donations and accepted on the faith that the funds will be managed as the charter prescribes, is such a contract; a state law impairs that contract when it substantially changes the corporation's governing structure or substitutes the state's will for the donors' and founders' arrangement.
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Years later, Georgia enacts a statute replacing the self-perpetuating board with a board whose new members are appointed by the governor. Under the majority's rule, which is the best analysis?