The case revolved around Dartmouth College, a private institution chartered by King George III in 1769. The New Hampshire state legislature attempted to transform the college into a public institution, altering its charter and replacing the existing trustees with a new board appointed by the state. The original trustees sued, arguing that the state's actions violated the College's contractual rights under its charter.
The Supreme Court, under Chief Justice John Marshall, ruled in favor of Dartmouth College. The Court held that the college's charter was a contract, protected by the Contract Clause of the U.S. Constitution (Article I, Section 10, Clause 1), which prevents states from impairing the obligation of contracts. Marshall's opinion broadened the definition of "contract" to include corporate charters, significantly impacting the relationship between states and corporations.
The decision had far-reaching consequences:
* Strengthened private property rights: It protected the rights of private institutions from government interference.
* Limited state power: It restricted the ability of states to alter contracts, even those granted under state authority.
* Boosted corporate power: By establishing charters as contracts, it provided corporations with greater legal protection and stability.
* Influenced the development of corporate law: The decision helped shape the legal framework for corporations in the United States, setting precedents for future cases regarding corporate charters and state regulation.
In essence, *Dartmouth College v. Woodward* established a crucial precedent for protecting contracts against government interference, significantly impacting the development of American corporate law and the balance of power between states and private entities.