The original charter for the Rice Institute was drawn from an indenture written by William Rice in 1891 and stated that the institute would be open to "white inhabitants of Houston and Texas" for "free tuition". The trustees of the Rice Institute petitioned the courts in February 1963 to change the charter to enable the admission of students of color and to charge tuition. The Rice Board of Trustees was unanimous in supporting this suit, claiming that such actions were necessary in order to carry out William Marsh Rice's primary intent to establish an educational institution of the first class. Rice President Kenneth Pitzer was also in full support of this initiative. Rice was unable to compete for grant funding because it did not charge tuition to students, and was under increasing pressure by the civil rights movement to admit students based on merit and without regard to race. Rice was among the last of the southern colleges and universities to admit students of color.

In summer 1963, two Rice alumni, John B. Coffee and Val T. Billups filed a petition intervening in the suit and challenging the trustees' position. In January 1964, a group of Rice University alumni filed a petition supporting the trustees' position and opposing Coffee and Billups. Later that month, Coffee and Billups filed an amended petition further outlining their points.

The case went to District Judge William M. Holland's court on Feb. 10, 1964 and a verdict favorable to Rice was handed down on March 9, 1964.

Later in 1964, the first civil court of appeals affirmed District Judge William M. Holland's ruling. In 1965, the first civil court of appeals dismissed an appeal by two Rice alumni, John B. Coffee and Val T. Billups (begun in summer 1963), ruling that the two men had no justifiable interest in the case. Coffee and Billups then appealed to the Texas Supreme Court, who sent the case back to the appeals court, claiming it should heard the case in the first place.

Tuition was charged to students who could afford it beginning in 1965. In fall 1965, Rice's first two African American undergraduate freshmen were admitted and began classes. One of them was a woman, Jacqueline McCauley of Houston. However, Rice's first African American student was actually admitted in 1963, when Raymond Lewis Johnson was admitted to the Math Department in pursuit of a master's degree. As part of these changes to the charter, Rice Institute became known as Rice University.

Prior to this charter lawsuit, Rice did on occasion ignore the Caucasian rule and admit male students of color, including Charles S. Chan of Houston who graduated in 1941 with a B.S. in architectural engineering.

In October 1966, the appeals court upheld Judge Holland's 1964 ruling in favor of Rice Institute. In February 1967, the Texas Supreme Court denied a writ of error in the lawsuit filed by alumni Coffee and Billups.

A 1982 lawsuit over the charter provision requiring all seven trustees to live in Houston was overturned. Further amendments to the charter were made in 1998, enabling the expansion of the Board of Trustees from seven to a maximum of twenty-five and allowing Rice to incur debt by borrowing money or using tax-free bonds to finance large projects such as construction.

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