• Last updated on November 11, 2022

By deciding that a state charter of a private institution was protected by the contracts clause of the Constitution, the Supreme Court enhanced protection of corporate property from interference by the states.

Early in the nineteenth century, many Republicans wanted the states to exercise more controls over a new form of economic concentration the corporation.Corporations Forces favorable to business usually desired fewer controls. Although privately owned and managed, corporations were created by legislative charters. In 1816 the Republican-dominated legislature of New Hampshire enacted three laws that changed the colonial charter of Dartmouth College and imposed a number of public controls. The Federalist-dominated trustees of the school appealed to the Supreme Court.Contracts clause;Dartmouth College v. Woodward[Dartmouth College v. Woodward]Property rights;Dartmouth College v. Woodward[Dartmouth College v. Woodward]

By a 5-1 majority, the Court declared the New Hampshire laws void because they were an unconstitutional impairment on the obligations of a contract. Writing for the Court, Chief Justice John MarshallMarshall, John;Dartmouth College v. Woodward[Dartmouth College v. Woodward] found that the college was a private corporation and that the colonial charter was a contract. The states were required to respect such vested rights of private property. In a concurring opinion, Justice Joseph Story suggested that legislatures might retain some degree of control by writing “reservations” into charters, allowing for their modification in the future.

The Dartmouth College decision promoted the expansion of business interests when they were vulnerable to attack from state legislatures. In effect, the ruling allowed the contract clause to provide most Fifth Amendment protections for private property, which at that time did not apply to the states. The legislatures, however, managed to diminish the impact of Dartmouth College by including reservation clauses, as suggested by Justice Story. Also, in Charles River Bridge v. Warren Bridge in 1837, the Court took a more limited view of contracts.[case]Dartmouth College v. Woodward[Dartmouth College v. Woodward]

Charles River Bridge v. Warren Bridge

Contracts clause

Ex post facto laws

Fletcher v. Peck

Private corporation charters

Property rights

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