From Disestablishment to Dartmouth College v. Woodward: How Virginia's Fight over Religious Freedom Shaped the History of American Corporations

Abstract

This article clarifies the precise connection between two early national Supreme Court decisions, the little-known Terrett v. Taylor (1815) and the landmark Dartmouth College v. Woodward (1819). The missing link between these cases is incorporation. Both disputes arose in the turmoil of post-Revolutionary disestablishment as state legislatures directly challenged the rights of colonial corporations. While Dartmouth College had been incorporated by a royal charter in colonial New Hampshire, the litigant in Terrett, a parish vestry, had been incorporated under common law in colonial Virginia. After the Revolution, Virginia's legislature disestablished the Anglican Church, disregarded its customary incorporation, revoked its post-revolutionary act of incorporation, and seized parish property. These radical policies set Virginia apart from other states and made these disputes a critical litmus test for the rights of all corporations. John Marshall opposed these policies while serving as a delegate in Virginia's legislature, and his views on these issues prefigured his opinion in Dartmouth College. Virginia's highest court upheld these policies as lawful, but the US Supreme Court's rejected them as unconstitutional in Terret. The Court's ruling in Terrett set a significant precedent for the standing of all private corporations vis-a-vis state legislatures and laid the groundwork for the Court's decision in Dartmouth College.