It can require no argument to prove that the circumstances of this case
constitute a contract. An application is made to the Crown for a charter
to incorporate a religious and literary institution. In the application it
is stated that large contributions have been made for the object, which will be
conferred on the corporation as soon as it shall be created. The charter
is granted, and on its faith the property is conveyed. Surely in this
transaction every ingredient of a complete and legitimate contract is to be found.
The points for consideration are:
On the first point, it has been argued that the word contract, in its
broadest sense, would comprehend the political relations between the
government and its citizens, would extend to offices held within a state for
state purposes and to many of those laws concerning civil institutions, which
must change with circumstances and be modified by ordinary legislation;
which deeply concern the public, and which, to preserve good government, the
public judgment must control-that even marriage is a contract, and
its obligations are affected by the laws respecting divorces; that the clause in
the Constitution, if construed in its greatest latitude, would prohibit these
laws.
Taken in its broad, unlimited sense, the clause would be an unprofitable and
vexatious interference with the internal concerns of a state, would
unnecessarily and unwisely embarrass its legislation, and render immutable
those civil institutions which are established for purposes of internal
government, and which, to subserve those purposes, ought to vary with
varying circumstances. That as the framers of the Constitution could never
have intended to insert in that instrument a provision so unnecessary, so
mischievous, and so repugnant to its general spirit, the term contract must be
understood in a more limited sense. That it must be understood as intended
to guard against a power of at least doubtful utility, the abuse of which had
been extensively felt; and to restrain the legislature in future from violating
the right to property. That anterior to the formation of the Constitution, a
course of legislation had prevailed in many, ii not in all, of the states which
weakened the confidence of man in man and embarrassed all transactions
between individuals by dispensing with a faithful performance of
engagements.
To correct this mischief, by restraining that power which produced it, the
state legislatures were forbidden to pass any law impairing the
obligation of contracts, that is, of contracts respecting property, under
which some individual could claim a right to something beneficial to himself
and that since the clause in the Constitution must in construction receive
some limitation, it may be confined, and ought to be confined, to cases of this
description; to cases within the mischief it was intended to remedy.
The provision of the Constitution never has been understood to embrace other
contracts than those which respect property, or some object of value, and
confer rights which may be asserted in a court of justice. It never has been
understood to restrict the general right of the legislature to legislate on the
subject of divorces. Those acts enable some tribunal not to impair a marriage
contract but to liberate one of the parties because it has been broken by the
other. When any state legislature shall pass an act annulling all marriage
contracts, or allowing either party to annul it without the consent of the
other, it will be time enough to inquire whether such an act be constitutional.
The parties in this case differ less on general principles, less on the true
construction of the Constitution in the abstract than on the application of
those principles to this case and on the true construction of the charter of
1769. This is the point on which the cause essentially depends. If the act of
incorporation be a grant of political power, if it create a civil institution to be
employed in the administration of the government, or if the funds of the
college be public property, or if the state of New Hampshire, as a government,
be alone interested in its transactions, the subject is one in which the
legislature of the state may act according to its own judgment, unrestrained
by any limitation of its power imposed by the Constitution of the United
States.
But if this be a private, eleemosynary institution, endowed with a capacity to
take property for objects unconnected with government, whose funds are
bestowed by individuals on the faith of the charter; if the donors have
stipulated for the future disposition and management of those funds in the
manner prescribed by themselves, there may be more difficulty in the case,
although neither the persons who have made these stipulations nor those for
whose benefit they were made should be parties to the cause. Those who are
no longer interested in the property may yet retain such an interest in the
preservation of their own arrangements as to have a right to insist that those
arrangements shall be held sacred. Or, if they have themselves disappeared,
it becomes a subject of serious and anxious inquiry whether those whom they
have legally empowered to represent them forever may not assert all the
rights which they possessed, while in being; whether, if they be without
personal representatives who may feel injured by a violation of the compact,
the trustees be not so completely their representatives, in the eye of the law,
as to stand in their place, not only as respects the government of the college
but also as respects the maintenance of the college charter.
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. These are such as are supposed best
calculated to effect the object for which it was created. Among the most
important are immortality, and, if the expression may be allowed,
individuality; properties by which a perpetual succession of many persons are
considered as the same, and may act as a single individual. They enable a
corporation to manage its own affairs and to hold property without the
perplexing intricacies, the hazardous and endless necessity of perpetual
conveyances for the purpose of transmitting it from hand to hand. It is chiefly
for the purpose of clothing bodies of men, in succession, with these qualities
and capacities that corporations were invented and are in use.
By these means, a perpetual succession of individuals are capable of acting
for the promotion of the particular object, like one immortal being. But this
being does not share in the civil government of the country, unless that be the
purpose for which it was created. Its immortality no more confers on it
political power, or a political character, than immortality would confer such
power or character on a natural person. It is no more a state instrument than
a natural person exercising the same powers would be.
If, then, a natural person, employed by individuals in the education of youth,
or for the government of a seminary in which youth is educated, would not
become a public officer, or be considered as a member of the civil government,
how is it that this artificial being, created by law for the purpose of being
employed by the same individuals for the same purposes, should become a
part of the civil government of the country? Is it because its existence, its
capacities, its powers are given by law? Because the government has given it
the power to take and to hold property in a particular form, and for particular
purposes, has the government a consequent right substantially to change that
form or to vary the purposes to which the property is to be applied? This
principle has never been asserted or recognized and is supported by no
authority. Can it derive aid from reason?
From the fact, then, that a charter of incorporation has been granted, nothing
can be inferred which changes the character of the institution or transfers to
the government any new power over it. The character of civil institutions does
not grow out of their incorporation but out of the manner in which they are
formed and the objects for which they are created. The right to change them
is not founded on their being incorporated but on their being the instruments
of government, created for its purposes. The same institutions, created for the
same objects though not incorporated, would be public institutions and, of
course, be controllable by the legislature. The incorporating act neither gives
nor prevents this control. Neither, in reason, can the incorporating act change
the character of a private, eleemosynary institution.
From this review of the charter, it appears that Dartmouth College is an
eleemosynary institution, incorporated for the purpose of perpetuating the
application of the bounty of the donors to the specified objects of that bounty;
that its trustees or governors were originally named by the founder and
invested with the power of perpetuating themselves; that they are not public
officers, nor is it a civil institution, participating in the administration of
government, but a charity school, or a seminary of education, incorporated for
the preservation of its property, and the perpetual application of that
property to the objects of its creation.
Yet a question remains to be considered, of more real difficulty, on which
more doubt has been entertained than on all that have been discussed. The
founders of the college, at least those whose contributions were in money,
have parted with the property bestowed upon it, and their representatives
have no interest in that property. The donors of land are equally without
interest so long as the corporation shall exist. Could they be found, they are
unaffected by any alteration in its constitution, and probably regardless of its
form, or even of its existence. The students are fluctuating, and no individual
among our youth has a vested interest in the institution, which can be
asserted in a court of justice. Neither the founders of the college nor the youth
for whose benefit it was founded, complain of the alteration made in its
charter or think themselves injured by it. The trustees alone complain, and
the trustees have no beneficial interest to be protected. Can this be such a
contract, as the constitution intended to withdraw from the power of state
legislation? Contracts, the parties to which have a vested beneficial interest,
and those only, it has been said, are the objects about which the Constitution
is solicitous, and to which its protection is extended.
According to the theory of the British constitution, their Parliament is
omnipotent. To annul corporate rights might give a shock to public opinion,
which that government has chosen to avoid; but its power is not questioned.
Had Parliament, immediately after the emanation of this charter, and the
execution of those conveyances which followed it, annulled the instrument, so
that the living donors would have witnessed the disappointment of their
hopes, the perfidy of the transaction would have been universally
acknowledged. Yet then. as now, the donors would have had no interest in the
property; then, as now, those who might be students would have had no
rights to be violated; then, as now, it might he said that the trustees, in
whom the rights of all were combined, possessed no private, individual,
beneficial interest in the property confided to their protection. Yet the
contract would at that time have been deemed sacred by all. What has since
occurred to strip it of its inviolability? Circumstances have not changed it. In
reason, in justice, and in law, it is now what it was in 1769.
This is plainly a contract to which the donors, the trustees, and the Crown (to
whose rights and obligations New Hampshire succeeds) were the original
parties. It is a contract made on a valuable consideration. It is a contract for
the security and disposition of property. It is a contract on the faith of which
real and personal estate has been conveyed to the corporation. It is then a
contract within the letter of the Constitution, and within its spirit also,
unless the fact that the property is invested by the donors in trustees for the
promotion of religion and education, for the benefit of persons who are
perpetually changing, though the objects remain the same, shall create a
particular exception, taking this case out of the prohibition contained in the
Constitution.
It is more than possible that the preservation of rights of this description was
not particularly in the view of the framers of the Constitution when the
clause under consideration was introduced into that instrument. It is
probable that interferences of more frequent recurrence, to which the
temptation was stronger and of which the mischief was more extensive,
constituted the great motive for imposing this restriction on the state
legislatures. But although a particular and a rare case may not, in itself, be of
sufficient magnitude to induce a rule, yet it must be governed by the rule,
when established, unless some plain and strong reason for excluding it can be
given.
It is not enough to say that this particular case was not in the mind of the
Convention when the article was framed, nor of the American people when it
was adopted. It is necessary to go further and to say that, had this particular
case been suggested, the language would have been so varied as to exclude it,
or it would have been made a special exception The case, being within the
words of the rule, must be within its operation likewise, unless there be
something in the literal construction so obviously absurd, or mischievous, or
repugnant to the general spirit of the instrument as to justify those who
expound the Constitution in making it an exception.
On what safe and intelligible ground can this exception stand? There is no
expression in the Constitution, no sentiment delivered by its
contemporaneous expounders which would justify us in making it. In the
absence of all authority of this kind, is there, in the nature and reason of the
case itself, that which would sustain a construction of the Constitution not
warranted by its words? Are contracts of this description of a character to
excite so little interest that we must exclude them from the provisions of the
Constitution as being unworthy of the attention of those who framed the
instrument? Or does public policy so imperiously demand their remaining
exposed to legislative alteration as to compel us, or rather permit us, to say
that these words, which were introduced to give stability to contracts, and
which in their plain import comprehend this contract, must yet be so
construed as to exclude it?
Almost all eleemosynary corporations, those which are created for the
promotion of religion, of charity, or of education, are of the same character.
The law of this case is the law of all. In every literary or charitable
institution, unless the objects of the bounty be themselves incorporated, the
whole legal interest is in trustees and can be asserted only by them. The
donors, or claimants of the bounty, if they can appear in court at all, can
appear only to complain of the trustees. In all other situations, they are
identified with, and personated by, the trustees; and their rights are to be
defended and maintained by them. Religion, charity, and education are, in
the law of England, legatees or donees, capable of receiving bequests or
donations in this form. They appear in court and claim or defend by the
corporation.
The opinion of the Court, after mature deliberation, is that this is a contract,
the obligation of which cannot be impaired without violating the Constitution
of the United States. This opinion appears to us to be equally supported by
reason and by the former decisions of this Court.
We next proceed to the inquiry whether its obligation has been impaired by
those acts of the legislature of New Hampshire to which the special verdict
refers.
By the Revolution, the duties as well as the powers of government devolved
on the people of New Hampshire. It is admitted that among the latter was
comprehended the transcendent power of Parliament, as well as that of the
Executive Department. It is too clear to require the support of argument that
all contracts and rights respecting property remained unchanged by the
Revolution.
The obligations, then, which were created by the charter to Dartmouth
College were the same in the new that they had been in the old government.
The power of the government was also the same. A repeal of this charter at
any time prior to the adoption of the present Constitution of the United
States would have been an extraordinary and unprecedented act of power,
but one which could have been contested only by the restrictions upon the
legislature to be found in the constitution of the state. But the Constitution of
the United States has imposed this additional limitation, that the legislature
of a state shall pass no act impairing the obligation of contracts.
It has been already stated that the act to amend the charter, and enlarge
and improve the corporation of Dartmouth College increases the number
of trustees to twenty-one, gives the appointment of the additional members to
the executive of the state, and creates a board of overseers to consist of
twenty-five persons, of whom twenty-one are also appointed by the executive
of New Hampshire, who have power to inspect and control the most
important acts of the trustees.
On the effect of this law, two opinions cannot be entertained. Between acting
directly and acting through the agency of trustees and overseers, no essential
difference is perceived. The whole power of governing the college is
transferred from trustees, appointed according to the will of the founder,
expressed in the charter, to the executive of New Hampshire. The
management and application of the funds of this eleemosynary institution,
which are placed by the donors in the hands of trustees named in the charter
and empowered to perpetuate themselves, are placed by this act under the
control of the government of the state. The will of the state is substituted for
the will of the donors in every essential operation of the college.
This is not an immaterial change. The founders of the college contracted, not
merely for the perpetual application of the funds which they gave to the
objects for which those funds were given; they contracted, also, to secure that
application by the constitution of the corporation. They contracted for a
system, which should, as far as human foresight can provide, retain forever
the government of the literary institution they had formed in the hands of
persons approved by themselves.
This system is totally changed. The charter of 1769 exists no longer. It is
reorganized; and reorganized in such a manner as to convert a literary
institution, molded according to the will of its founders and placed under the
control of private literary men, into a machine entirely subservient to the will
of government. This may be for the advantage of this college in particular,
and may be for the advantage of literature in general, but it is not according
to the will of the donors, and is subversive of that contract, on the faith of
which their property was given.
In the view which has been taken of this interesting case, the Court has
confined itself to the rights possessed by the trustees, as the assignees and
representatives of the donors and founders, for the benefit of religion and
literature. Yet it is not clear that the trustees ought to be considered as
destitute of such beneficial interest in themselves as the law may respect. In
addition to their being the legal owners of the property, and to their having a
freehold right in the powers confided to them, the charter itself countenances
the idea that trustees may also be tutors with salaries. The first president
was one of the original trustees; and the charter provides that in case of
vacancy in that office the senior professor or tutor, being one of the
trustees, shall exercise the office of president until the trustees shall make
choice of, and appoint a president.
According to the tenor of the charter, then, the trustees might, without
impropriety, appoint a president and other professors from their own body.
This is a power not entirely unconnected with an interest. Even if the
proposition of the counsel for the defendant were sustained; if it were
admitted that those contracts only are protected by the Constitution, a
beneficial interest in which is vested in the party, who appears in court to
assert that interest; yet it is by no means clear that the trustees of
Dartmouth College have no beneficial interest in themselves. But the Court
has deemed it unnecessary to investigate this particular point.
It results from this opinion that the acts of the legislature of New Hampshire,
which are stated in the special verdict found in this cause, are repugnant to
the Constitution of the United States; and that the judgment on this special
verdict ought to have been for the plaintiffs. The judgment of the state court
must therefore be reversed.