Dartmouth College v. Woodward

The Dartmouth College Case, the Contract Clause, and the Creation of the Private Sector

Editors’ Note: Mark D. McGarvie continues HistPhil’s forum marking the bicentennial of the Dartmouth College v. Woodward case. The material in this post is adapted from several previously published works by McGarvie, including One Nation Under Law: America’s Early National Struggles to Separate Church and State (2004); Law and Religion in American History: Public Values and Private Conscience (2016); “Disestablishing Religion and Protecting Religious Liberty in State Laws and Constitutions (1776-1833)”, in No Establishment of Religion: America’s Original Contribution to Religious Liberty (2012); and “The Dartmouth College Case and the Legal Design of Civil Society,” in Charity, Philanthropy, and Civility in American History (2003).

American culture, by 1800, had taken significant strides toward fulfilling the ideals and values of the Revolution. The old colonial system premised upon a homogeneity of Christian belief, communitarian values, and social deference had been replaced by the celebration of economic, religious, and social freedoms, equal opportunity, and personal autonomy. New laws, based on the Constitution and rooted in the primacy of individual rights, served as the catalyst for unprecedented change in post-revolutionary society.

Yet, not everyone embraced the new culture. Reverend Lyman Beecher asked during a sermon in 1812: “Did the late war [the Revolution] produce in our land no change for the worse?” Of course it had, he answered. It had fostered a diminished status of religion and its ministers, an increase in selfish business pursuits, a decline in morality and respect for parents and authority, a diminished reliance upon the Bible as the word of God, and an insensitivity to the unfortunate. He called upon all true Christians to rise up and form “a disciplined moral militia” to lead a reconquista, for God, of American society. That reconquista took the form of the Second Awakening.

William Plumer, elected governor of New Hampshire in 1812, 1816, and 1817, wrote a series of letters to the New Hampshire Patriot newspaper in 1813 in which he accused the ministers then leading the current religious revivals in that state and throughout New England of participating in a reactionary plot to destroy republicanism and overturn the American Revolution. He asserted that the clergy sought “to traduce and vilify the [republican] government, to counteract and enfeeble its measures” in pursuit of its “publicly avowed object [of] a religious establishment.”

Typical of many bright young men in late eighteenth-century America, Plumer turned away from Christianity in his twenty-first year after reading the rationalist literature of the Enlightenment. He came to see the Second Awakening as an ideological counter-revolution threatening the republican principles upon which the new nation was premised. As governor of New Hampshire, he played a crucial role in redefining the Constitutional separation of church and state through his efforts to secularize Dartmouth College, then controlled by the Congregational Church.

Perhaps the most underappreciated product of the founding era is the creation, for the first time in history, of a private sector. Simultaneously, the framers confined government to acting within a circumscribed public sphere. The need to limit the scope and power of the public sphere derived from a recognition of rights as essential aspects of human existence; to deny or limit humanity in its enjoyment of rights constituted a violation of natural law and the imposition of an artificial impediment to human progress and happiness. Therefore, the founders created a private sphere in which people remained free to pursue their rights, and a separate public sphere with limited authority to address the needs of society. The contract clause of the Constitution, Article I, § 10, served as the primary means of delineating public and private sectors. In pertinent part, the clause states: “No state shall … pass any … law impairing the obligations owing to contracts”; in other words, no perceived public interest, assertion of moral duty, or communitarian ethic shall be deemed superior to the rights of private individuals to contract for their own betterment. The contract clause garnered more support from the American people during the process of ratification than did any other provision of the Constitution.

Despite the explicit language in the Constitution creating a private sector free from governmental interference, the new states continued to utilize an old colonial model that integrated public and private sector resources to serve the needs of the public, among them infrastructure improvements, social welfare, and education. People are generally loath to change until prompted to by radical social transformations or legal compulsion. The American people, severely in debt after the war and strongly committed to their local institutions and ways of life, had little motivation to jettison a system reliant on an integration of church, government, charity, and business investment in addressing community needs.

Yet, the new law, in order to encourage individual initiatives, encouraged the formation of corporations. Created by contractual promises to use pooled money and other resources in pursuit of clearly articulated goals, corporations allowed multiple individuals to engage in business or social activities that would have been impossible for any one individual acting alone. Corporations provided a vibrant energy to the growth of the private sector that promised, in short order, to reform institutional life in America.

In the early 1800s, buoyed by Thomas Jefferson’s ascending to the presidency, liberal secularists, like Governor Plumer, who advocated a strict protection of individual liberties, sought to unravel the complex integration of public and private resources that remained from the colonial era. In state after state, the securement of the First Amendment protection of freedom of conscience served as the basis for separating church and state. Churches were removed from their roles in providing record keeping, poor relief and educational services for the community, their actions confined to the private sector. In response, private charities and private businesses comported with the new legal culture dictated by the contract clause by incorporating in order to hold property. Together, they formed the new private sector. New government offices for the provisions of public services were created to fulfill the roles once assumed by the churches.

During the late 1700s and early 1800s, colleges, in particular, faced attempts by liberal legislatures intent upon refashioning the institutions of higher education in their states. Every college in the colonial era operated largely as a seminary under church control. Yet, every college also relied upon state and private money for its support. Colonial institutions had known no distinction between public and private spheres. That changed in the late 1700s. Liberal legislatures after the Revolution took control of previously church-run schools, changed their curricula to focus on secular subjects, and removed clergymen, religious teachings, and mandatory church services from campuses.

In the gubernatorial campaign of 1816, Republican candidate William Plumer made the debate over the future of Dartmouth College a campaign issue and called for legislative reform of the college’s charter. The Jeffersonians saw colleges as ideally serving broader social roles and educating a broader range of students than they had in the colonial era. Plumer decried the seminarian aspects of American higher education, finding the teaching of dead languages irrelevant “to the pursuits and business of this life” and the ecclesiastical emphasis of many schools “hostile to our republican system.” Specifically referring to Dartmouth, he said: “When the government of our college apply [sic] to the people or the legislature for aid, they [sic] represent the college as a public institution.” He promised, if elected, to have the legislature take control of Dartmouth and institute reform, emphasizing a curriculum useful in daily life, religious freedom, and open availability to rich and poor alike. Upon winning election, Plumer implemented his agenda through legislation.

The trustees of the college refused to accede to the legislation and took actions that ultimately resulted in a lawsuit that embroiled the campus and the State of New Hampshire in a debate over the role of religion in education and in society. Evangelical students pilloried the ideas of Enlightenment-era humanism as not only at the root of liberal changes to the curriculum, but also of student drinking, rowdiness, and irreverence toward God. Daniel Webster, who would later represent the College in its lawsuit, argued that religion was vital to both democracy and education: “The altar of our freedom should be placed near the altar of our religion.” Conversely, the largest newspaper in the state criticized the school’s commitment to a strong presence for religion on the campus as constitutive of the “insidious attack upon religious liberty” that “shock public feeling and call for public reprehension.”

The case ultimately reached the Supreme Court, where Chief Justice John Marshall rendered the opinion. Early in his opinion, Marshall defines the central issue in the case in terms of a public-private distinction. Resolving this issue, Marshall finds that private property “both real and personal which had been contributed for the benefit of the college, was conveyed to and vested in, the corporate body.” Further, he finds that that property was used to manage the college consistent with the intentions and parameters expressed in the corporation’s charter. Reaching a tentative conclusion, based solely on the nature of the corporation’s property, Marshall contends that “[i]t is then, an eleemosynary, and as far as respects its funds, a private corporation.”

However, the state argued that a corporation’s purpose, in this instance, the support of the government’s interest in education, is more determinative of the corporation’s nature than the source of its funds. Marshall, therefore, could not rest upon his finding that “as far as respects its funds,” Dartmouth was a private corporation. Recognizing the state’s argument, he asks of Dartmouth: “Do its objects stamp on it a difference character?” In answer, he responds, “no.” Marshall defines public institutions not by the purposes they address, but as being part of the “civil government.” Marshall also asserts that the act of incorporation does not subject a corporation to perpetual control by the state. Incorporation served as a contract between the state and a private entity that protected the autonomy of the private entity in the form of a corporation. Incorporation allows the new entity, as “an artificial being,” “the mere creation of law,” to attain “immortality” and “individuality; properties by which a perpetual succession of many persons are considered as the same and may act as a single individual.” Marshall asserts:

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.

The fact that Dartmouth College was once perceived by the state to be an organ of public service does not, Marshall said, create a presumption that the donors to the college intended to serve the legislature’s determination of the interests of the people of New Hampshire. To the contrary, the only reasonable conclusion is that they intended their gifts to address the interests and purposes of the college as determined by the trustees consistent with the charter. To protect the property interests of the donors, as well as of the corporation, the charter, a form of contract, cannot be subject to revision or manipulation by the state. Marshall writes: “The corporation is the assignee of their [the donors’] rights, stands in their place, and distributes their bounty, as they would themselves have distributed it, had they been immortal.” The corporation, then, forms the means by which the donors addressed their goals, and is not a tool of the state legislature to be used to serve state interests. Incorporation allows many individuals to come together to exert greater influence as a group than they ever could separately; and to do so perpetually, without restrictions from government that would be equally as unlawful were they asserted against individuals. In overturning the legislative action restructuring the college, Marshall relies on the contract clause of the Constitution to assert that legislative perceptions of the public good cannot overcome the rights of individuals expressed in contracts.

After the Dartmouth College decision, government could not rely upon private sector institutions, be they philanthropic associations or churches, to address public perceptions of societal needs. These were now private sector institutions free to pursue their own individual goals. The public-private distinction required states to define their priorities more carefully. No longer could states comfortably delegate to private concerns the responsibility for educating young people, caring for the poor, or creating roadways because states could no longer exercise control over how these private concerns fulfilled their duties. To continue to rely on private concerns after 1819 risked creating educational, welfare, or infrastructure systems significantly at odds with legislative perceptions of the public interest.

The case was a pyrrhic victory for the church. In protecting Dartmouth College’s authority as an incorporated Christian school, the Court recognized religion as belonging in the private sector. It issued no direct judgment on the merits of religion in society, but nonetheless resolved the debate raging over that issue by clearly asserting that churches and church schools were private and not public institutions. The separation of church and state, completed everywhere except in New England by 1819, ultimately reached the northeastern states through the court’s clarification of the contract clause as a delineation of private and public sectors.

-Mark D. McGarvie

Mark McGarvie is currently Research Scholar at the Institute of Bill of Rights Law and Visiting Professor at the Marshall-Wythe School of Law, College of William and Mary.

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