What was the Dartmouth College Case Really About

We learn in law school that before the American Revolution, Dartmouth College came into existence via a royal charter granted in the year 1769 by King George. Subsequently, a falling out occurred between the President of the College, John Wheelock, and the Board of Trustees. To resolve the dispute, the New Hampshire legislature asserted its authority and amended the Charter of 1769 to expand the size of the board of trustees. The new board of trustees then reinstated Wheelock as President. The old board sued, arguing that the New Hampshire legislature had no right to amend the Charter of 1769. Eventually the case found its way to the Supreme Court which ruled in favor of the old board. The lesson to be learned: corporate charters are both contracts and property protected by the Contracts clause of the Constitution; if you are a state legislature, reserve in the charters you grant, the right to later amend them. And in modern scholarship, the opinion is primarily cited for Marshall two sentence description: 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.” This paper provides a fuller account of the Dartmouth College case and Marshall’s opinion therein, tracing the Dartmouth College controversy back to its roots in pre-revolutionary America. The Dartmouth College case highlights key aspects of the American story: the centrality of religion and the struggle for religious tolerance; the centrality of private property and the tension between majority rule and vested property rights; the ongoing battle to properly define the public and private realms; and the simmering competition for power and authority between the Supreme Court and other branches of the federal government, and between the Supreme Court and state legislatures. All of these aspects of the American story played out in the Dartmouth College case against the differing visions of the Federalists and the Democratic-Republicans, and against the backdrop of the Yazoo land controversy. Moreover, the early history of Dartmouth College is a case study in the nature of wealth creation and business leadership before and after the Revolution. Dartmouth college was founded by Eleazar Wheelock, a key participant in the Great Awakening, who, as what we would now call an entrepreneur, used religion and governmental grants to create both personal wealth and an important institution. Eleazar’s successor in control of Dartmouth College – his son John - illustrates the not uncommon shortcomings of second-generation leadership; John’s missteps and personal failings alienated his board and key constituents. The resulting battle for control of Dartmouth College played out over nearly a decade before its resolution in the famous Supreme Court case . Thus, as the paper explores, the Dartmouth College case, viewed from this larger perspective, offers a unique lens on the early evolution of the American experiment in democracy and the emergence of new form of private property – the corporation. Finally, the paper explores the motives and rationale for the three opinions in the Dartmouth College case, shedding new light on what those opinions meant to the authors and should mean in the context of modern debates about the proper role and responsibility of natural persons, the three branches of the federal government, state legislatures, and the modern corporation.