Rector v. Ashley was a United States Supreme Court case that dealt with the issue of whether a state could constitutionally tax the property of a religious organization. The case arose when the state of Arkansas attempted to tax the property of the Episcopal Church of Arkansas, which was owned by the Rector and Vestry of the Church. The Church argued that the tax was unconstitutional because it violated the First Amendment's protection of the free exercise of religion. The Supreme Court agreed with the Church, ruling that the tax was unconstitutional because it interfered with the Church's right to freely exercise its religion. The Court held that the state could not tax the property of a religious organization without violating the First Amendment. The decision in Rector v. Ashley established the principle that states cannot tax the property of religious organizations without violating the First Amendment.

In Rector v. Ashley, the Supreme Court was asked to decide whether a state law that allowed for the sale of public lands in order to fund educational institutions violated the Constitution's Contract Clause. The majority opinion held that it did not violate this clause and thus upheld the law. However, Justice Field dissented from this decision arguing that while states have broad powers when it comes to legislating on matters related to education, they do not have unlimited power over contracts already made with individuals or corporations. He argued that by allowing for these sales of public land without providing just compensation as required by the Fifth Amendment, it would effectively be taking away property rights from those who had previously purchased them and thus violating their right under contract law. Furthermore he argued that such an action could lead other states down a slippery slope where they might attempt similar actions which would ultimately undermine private property rights across America and weaken its economy as well as its legal system overall.