The trustees of Dartmouth College split into two factions. One wished to continue the college as a private institution; the other wished the State of New Hampshire to take over. The latter faction won support in the legislature which passed a law changing Dartmouth College to Dartmouth University, a state institution. The highest court of New Hampshire declared th is action legal. An appeal was made to the Supreme Court.

Marshall accepted the contention of the lawyers opposing the State of New Hampshire, one of whom was Daniel Webster, that the original charter granted by the king to the trustees of Dartmouth College in 1769 was a contract. This charter remained in force after the Revolution as a contract between the State of New Hampshire and the Dartmouth trustees. Under powers denied to the states, the Constitution provides that no state shall "pass any law impairing the obligation of contracts." Thus, a direct conflict was established between a clause in the Constitution and a law of New Hampshire. The Supreme Law of the Land Clause directs that state laws in conflic with the Constitution must be declared null and void. Dartmouth remained a private college.

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