SMALL COLLEGES continue to teeter, some to fall.  Their students have suffered. The Legislature has taken note:  60 members have filed “An Act Relative to Education Transparency,” which requires “Massachusetts colleges and universities . . . public and private” to “produce annually a report on their fiscal health and stability.”  Failure to produce is punishable by a $100 per day fine.  Another bill requires colleges to give notice to the state Board of Higher Education of any “discussions or written agreements” to close, merge, or acquire the assets of another college, or “open a branch campus.”  The same bill directs the board to “establish sanctions or fines, not to exceed $1,000 per day, for institutions that fail to comply.”

Gov. Charlie Baker has filed his own bill.  It requires colleges that have financial risks that may result in their “imminent closure” or “jeopardize” their ability to fulfill their obligations to current and admitted students to notify the board of such risks and prepare and submit to the board, for its approval, a “contingency closure plan.”

Given the recent troubles, the timing of these bills is apt.  But the date of their filing – January 2019 – carries some historical freight:  200 years ago, almost to the day, in 1819, the US Supreme Court rejected an attempt by the New Hampshire legislature to impose its own tender mercies on a small college deep in the northern woods of that State.

Trustees of Dartmouth College v. Woodward arose when political and religious controversies of the time invaded New Hampshire and the college in Hanover founded by Eleazar Wheelock in 1769.  The college charter granted by the English crown in 1769 was to educate “youth of the Indian tribes” and “English youth and any others.”  The charter granted the trustees broad power to govern the school, provided that their actions were consistent with the general law of the English crown and the then-crown province of New Hampshire.

In 1816, the New Hampshire legislature passed “An Act to Amend the Charter and Enlarge and Improve the Corporation of Dartmouth College.”  It renamed the college “Dartmouth University” and created a new board of overseers with the power to approve or veto certain trustee votes.  In an effort to further cement state control, the act appointed as overseers the governor and lieutenant governor of Vermont and the Senate president and speaker of the New Hampshire legislature.

The act required the president of the university to report to the governor of New Hampshire about the condition of the university, including its finances, enrollment, and records.  A second act authorized the trustees to act with a reduced quorum and a smaller majority.  A third act imposed a penalty of $500 (in 1816 dollars) on anyone who obstructed the officers of the university in the performance of their duties.

Alumni sounded the alarm and supported a suit in state court.  The college trustees argued that the New Hampshire acts violated their rights under the contract clause of the US Constitution.  For counsel in its darkest hour, the college turned to alumnus Daniel Webster, then practicing on Court Street in Boston and a rising star of the Massachusetts and federal bars.  Webster played a secondary role in the case in the New Hampshire Superior Court of Judicature – the State’s highest court – which rejected the claims of the embattled college.  It held that the college was a public entity with a public mission and could be altered by legislative act.  The trustees appealed to the United States Supreme Court.

Webster argued the case over three days in March 1818 before Chief Justice John Marshall, Justice Joseph Story, and the other members of the court.  His peroration has been memorized by generations of his fellow alumni:

“This, Sir, is my case! It is the case not merely of that humble institution, it is the case of every college in our Land! It is more! It is the case of every eleemosynary institution throughout our country – of all those great charities founded by the piety of our ancestors to alleviate human misery, and scatter blessings along the pathway of life! It is more! It is, in some sense, the case of every man among us who has property of which he may be stripped, for the question is simply this, ‘Shall our State Legislatures be allowed to take that which is not their own, to turn it from its original use, and apply it to such ends and purposes as they in their discretion shall see fit!  Sir, you may destroy this little institution; it is weak, it is in your hands! I know it is one of the lesser lights in the literary horizon of our country. You may put it out! But if you do so, you must carry through your work! You must extinguish, one after another, all those great lights of science which for more than a century have thrown their radiance over our land! It is, Sir, as I have said, a small college. And yet there are those who love it! “

Other colleges awaited the decision with fear. According to William Stites of San Diego State, a congress of colleges met in Boston one month after the argument to plan further strategy.  Participants included Dartmouth, Yale, Harvard, Bowdoin, the University of Vermont, Middlebury, Williams, and Andover Theological Seminary.

Harvard showed sympathy but had an ace in the hole:  as Michael Jonas wrote in CommonWealth last fall, the Massachusetts Constitution (authored by Harvard alumnus John Adams) had specific clauses expressly protecting Harvard (“The University at Cambridge”) from encroachments by the Legislature.  And, not content to rely for its protection on its own clause (and perhaps nervous about relying on the advocacy of a graduate of an obscure, rural college), Harvard obtained a further insurance policy. While the case was pending, it elected Justice Story to its Board of Overseers and granted Story and two of his associate justices honorary law degrees.

Former US Supreme Court justice John Marshall.

On February 2, 1819, the court ruled for the college trustees, striking down the New Hampshire acts.  In an opinion by Marshall, the court ruled:  (1) the college was not a public entity, but a private one; (2) the royal charter was a contract between those who had donated to the college and the crown; (3) the college trustees were the latter-day representatives of the interest of the donors and could invoke the contract clause, which protected corporations as well as individuals; and (4) the New Hampshire acts unconstitutionally impaired the trustee’s representative rights under the clause.

The effects of the decision were immediate and national in scope.  In the field of education, in 1833, sitting as a circuit justice, Justice Story struck down a Maine law altering the charter of Bowdoin College.  Story held that the statute exceeded even the power that the legislature had reserved in the college’s original charter because it effected more than a simple alteration.

Bowdoin’s sister college in Maine — Waterville (later Colby) College – incorporated by the Massachusetts Legislature in 1813 and re-authorized by the newly-established Maine legislature in 1820 – likely breathed a sigh of relief after the Story decision.  In an ironic twist, the president of Bowdoin saved by Story in the Maine case was William Allen, the ill-fated president of “Dartmouth University” installed by the State of New Hampshire in 1816.  Further, in his recent biography of John Marshall, Joel Paul of Hastings Law has noted that after the decision “dozens of religiously affiliated private colleges sprung up throughout New England.”

And Kate Stith of Yale has theorized that the decision was a catalyst for the 19th-century birth and growth of colleges for women, Roman Catholics, and – during Reconstruction – newly freed citizens.  More broadly, in the economic realm, Paul argues that that the opinion “created the underpinnings for modern corporate law . . .  recogniz[ing] that corporate charters were contracts protected by the Constitution” and spurring an increase in for-profit corporations in the United States from 300 to more than 20,000 in the next 40 years.

Two hundred years after the decision, the recent Massachusetts bills may seem less of an existential threat than the 1816 attempted take-over of Dartmouth by the Granite State.  The Massachusetts bills – animated by the protection of students as consumers may rather be seen as the type of reasonable, prospective, and general legislation routinely upheld under the contract clause in the modern era.

But times change and new demands for governmental action may follow.  Small colleges may suddenly find themselves deeper inside what Madison called “the legislative vortex;” they might then draw a lesson from the long-ago struggle to their north. And, on that day, as they cast their wary eyes upon the State House, the colleges might take comfort from the great bronze figure dominating its front lawn – 200 years after his stirring argument, the “God-like Dan’l” keeps his watch.

Thomas A. Barnico teaches at Boston College Law School.  He is a former Massachusetts assistant attorney general.