Angela Pait

Dartmouth College v. Woodward

Procedural History

In 1815, the legislature of New Hampshire attempted to invalidate or alter Dartmouth's charter in order to reinstate the College's deposed president, placing the ability to appoint positions in the hands of the governor, adding new members to the board of trustees, and creating a state board of visitors with veto power over trustee decisions. This effectively converted the school from a private to a public institution. The College's book of records, corporate seal, and other corporate property were removed. The trustees of the College objected and sought to have the actions of the legislature declared unconstitutional.

Legal Issue

 Did the New Hampshire legislature unconstitutionally interfere with Dartmouth College's rights under the Contract Clause?

Facts of Case

In 1816, the New Hampshire legislature attempted to change Dartmouth College a privately funded institution into a state university. The legislature changed the school's corporate charter by transferring the control of trustee appointments to the governor. In an attempt to regain authority over the resources of Dartmouth College, the old trustees filed suit against William H. Woodward, who sided with the new appointees.

Statement of Rule

The decision ruled in favor of the College and invalidated the act of the New Hampshire Legislature, which in turn allowed Dartmouth to continue as a private institution and take back its buildings, seal, and charter. The majority opinion was, predictably, written by Marshall. The Court ruled that the College's corporate charter qualified as a contract between private parties, the King and the trustees, with which the legislature could not interfere. Even though the United States are no longer royal colonies, the contract is still valid because the Constitution says that a state cannot pass laws to impair a contract. The fact that the government had commissioned the charter did not transform the school into a civil institution. Chief Justice Marshall's opinion emphasized that the term "contract" referred to transactions involving individual property rights, not to "the political relations between the government and its citizens.

Bridget Tognazzini

April 10, 2009

Dartmouth College v. Woodward

Facts of the case: Dartmouth College got its charter to become a college in 1769, pre-constitution. In 1815, thirty years later, the trustees of Dartmouth canned the president. The state of New Hampshire tried to make legislation so that he would be reinstated and the college would be in control of the state and a state facility. The trustees took the state to court stating that it was unconstitutional.
Core constitutional issue: Was the state of New Hampshire allowed to dissolve a charter the preceded the constitution, and therefore allowed to appoint new members to the trustees and take control of the college, constitutional under the contract clause, article 1 section 10?
Ruling of the Court: 6-1, the charter granted to the trustees is a contract within the meaning of that clause of the constitution, article 1 section10, which declares that no State shall make any law impairing the obligation of contracts. The charter was not dissolved by the revolution.
Majority opinion: Chief Justice Marshall's opinion stressed that the term "contract" referred to transactions involving individual property rights, not to "the political relations between the government and its citizens.” The Court ruled that the College's charter qualified as a contract between private parties with which the legislature could not interfere, the contract is still valid because the Constitution says that a state cannot pass laws to impair a contract. The fact that the government had commissioned the charter did not transform the school into a civil institution.

Concurring opinion: Washington and Story concurred separately, they both agreed with Marshall in long winded concurrence which Livingston and others agreed with, the basic rational was that the charter was legal and the state could not come in and take over because they wanted control of the board. 
Dissenting opinion: Duvall, dissented without opinion.

Greg Brown

                                                                                                                       04-10-2009

Charles River Bridge Company v. Warren Bridge Company

     In 1785, the state of Massachusetts granted a charter to the Charles River Bridge Company which allowed it to build a bridge between the cities of Charleston and Boston.  The c ompany would then charge a fee to people who used the bridge for a period of forty years.  In 1792, the charter was extended for another seventy years.  In 1828 the state allowed the Warren Bridge Company to build a bridge next to the existing bridge.  A fee would be charged just long enough to pay for its construction.  The fee could not be charged for any longer than six years.  Charles River Bridge Company asked for an injunction to stop construction of the new bridge. Eventually the bridge was built, Charles River then sued the state for relief alleging that the state violated the contract it held with the state to provide the only bridge to link the two cities.  The state supreme court denied their request and it was appealed to the US Supreme Court.

     In a 5-2 decision the court ruled that the state of Massachusetts did not violate the charter with Charles River Bridge Company.  It ruled the plaintiffs were not promised that they would have the only bridge.  The court continued by saying “the object of government is to promote happiness and prosperity of the commu nity”.  “A state ought never to be presumed to surrender that power”.  Therefore there should not be an assumption that the state would give those obligations away for a period of seventy years.

     Justice Story offered a dissenting brief stating that because the state of Massachusetts granted a charter for seventy years, it implied that Charles River would provide the sole bridge.  He felt by allowing Warren Bridge Company to build the second bridge, it ruined the charter of Charles River.  If the state had no intention of allowing an exclusive charter to Charles River, they should have stated so.  He felt by allowing the second bridge Massachusetts knowingly impaired the charter and the ruling should favor Charles River Bridge Company.

Student Name: Amanda Hinshaw

Date: 4-07-09

Brief: United States Trust Company v. New Jersey

            The facts in this case revolve around a compact between New York and New Jersey.  A 1062 compact between the two states limited the amount of money the New York and New Jersey Port Authority could use to subsidize public transportation.  Then in 1974, fearing an energy crisis and hoping to persuade people to use more public transportation, the two state legislatures repealed the compact.  As a bondholder and trustee the United States Trust Company was harmed by the repeal and filed suit with New Jersey’s Superior Court.  The Trust Company claimed the repeal was a violation of the Contract Clause.  Their argument was dismissed by virtue of the repeal serving as a reasonable action under the police power of New Jersey’s state government.  The decision was affirmed by New Jersey’s Supreme Court.  Finally, the Trust Company appealed the case to the United States Supreme Court.

            The core constitutional issue in this case revolves around the Contract Clause of the United States Constitution.  More specifically, the question facing the Supreme Court justices is whether or not the state of New York and the state of New Jersey violated the United States Constitution’s Contract Clause by retroactively repealing the 1962 compact between the two states that limited the Port Authority’s ability to subsidize public transport.

            The Court’s holding in this case was in favor of the United States Trust Company.  The ruling was that the repeal of the 1962 compact violated the United States Constitution’s Contract Clause.  The judgment of the Court reversed the decisions of the New Jersey Superior Court and the New Jersey Supreme Court.

            The majority opinion in this case was delivered by Justice Blackmun.  Justice Blackmun stated that states, under their police power, have to be able to regulate without worrying about private contracts because if so, people could claim immunity from that regulation by creating private contracts to protect them by not allowing the state to break those contracts.  However that state power to change or break contracts has it limitations.  The state legislation must have reasonable and appropriate conditions justifying their need to tamper with contracts.  In this particular case, the state of New Jersey claimed that the goals of the repeal, environmental protection by conserving energy through increased use of public transportation, were necessary public benefits that outweighed any harm the Trust Company may have faced.  Justice Blackmun responded stating that the Court did not accept such a utilitarian comparison between public good and private loss.  Therefore the state may not refuse its financial responsibilities because it wishes to use the finances for public good instead of its creditors’ private welfare.  The repeal could only be allowed if the impairment to the Trust Company was necessary.  To determine if it was necessary the Court had to review the conditions surrounding the repeal.  The justification provided by New Jersey was that it had exceeded the state’s permitted deficits so the extra revenue from an increased toll on bridges and tunnels was the only way to finance a shift toward more public transportation usage.  The Court denied this justification, arguing New Jersey could have utilized less dramatic measures and accomplished the goal without removing the limitations entirely.  They also could use alternative means to persuade less automobile usage and more public transportation usage.  Furthermore the need for public transportation in metropolitan areas was well known before the limit was put in place in 1962.  Since the repeal was neither necessary nor appropriate, the repeal was found to violate the Contract Clause of the United States Constitution and was ruled invalid.

            Justice Brennan delivered the dissenting opinion along with Justices White and Marshall.  They argue that the Court has previously ruled the Contract Clause ineffectual to bind states to contracts.  It would be understandable if the change in view of the clause matched public policy but placing the clause as a regulation of the bond market frustrates wise legislative policy and is unnecessary.  Furthermore, the Contract Clause was meant to protect private parties entering into contract for economic transactions with one another, not involving states.  Finally, the financial welfare of the United States Trust Company is adequately overseen by both the bond marketplace and the political process, so the Constitution’s role is limited in this matter.

Constitutional Law

Case Brief #9

The Contract Clause

Hally Kirby

Case Brief: United States Trust Company v. New Jersey (1977)

Facts of the Case: The Port Authority was established in 1921 by a bi-state compact to effectuate "a better co-ordination of the terminal, transportation and other facilities of commerce in, about and through the port of New York.” The Port Authority was conceived as a financially independent entity, with funds primarily derived from private investors. The preamble to the compact speaks of the "encouragement of the investment of capital," and the Port Authority was given power to mortgage its facilities and to pledge its revenues to secure the payment of bonds issued to private investor. In 1962, a statutory covenant made by the two States, New York and New Jersey, had limited the ability of The Port Authority of New York and New Jersey to subsidize rail passenger transportation from revenues and reserves. On the verge of an energy crisis, legislatures from both states repealed the 1962 covenant. The United States Trust Company filed suit claiming that the statutory repeal was a violation of the Contract Clause.

Constitutional Issue: In repealing the 1962 agreement, did the states violate the Contract Clause?

Ruling of the Court: The Courts held that the Contract Clause of the United States Constitution prohibits the retroactive repeal of the 1962 covenant. First, it cannot be said that total repeal of the covenant was essential; a less drastic modification would have permitted the contemplated plan without entirely removing the covenant's limitations on the use of Port Authority revenues and reserves to subsidize commuter railroads. Second, without modifying the covenant at all, the States could have adopted alternative means of achieving their twin goals of discouraging automobile use and improving mass transit. Appellees contend however, that choosing among these alternatives is a matter for legislative discretion. But a State is not completely free to consider impairing the obligations of its own contracts on a par with other policy alternatives. Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well.

Concurring Opinion: Chief Justice Burger- “In my view, to repeal the 1962 covenant without running afoul of the constitutional prohibition against the impairment of contracts, the State must demonstrate that the impairment was essential to the achievement of an important state purpose. Furthermore, the State must show that it did not know and could not have known the impact of the contract on that state interest at the time that the contract was made. So reading the Court's opinion, I join it.”

Dissenting Opinion: Chief justice Brennan- those decisions established the principle that lawful exercises of a State's police powers stand paramount to private rights held under contract. Today's decision, in invalidating the New Jersey Legislature's 1974 repeal of its predecessor's 1962 covenant, rejects this previous understanding and remolds the Contract Clause into a potent instrument for overseeing important policy determinations of the state legislature. At the same time, by creating a constitutional safe haven for property rights embodied in a contract, the decision substantially distorts modern constitutional jurisprudence governing regulation of private economic interests. I might understand, though I could not accept, this revival of the Contract Clause were it in accordance with some coherent and constructive view of public policy. But elevation of the Clause to the status of regulator of the municipal bond market at the heavy price of frustration of sound legislative policymaking is as demonstrably unwise as it is unnecessary. The justification for today's decision, therefore, remains a mystery to me, and I respectfully dissent.