Veazie Bank v. Fenno

Dec. 1869.] Bank Fenno. Veazie v.

Syllabus. and the record, of and of their production the of parties, will of B. and of the John probated of record partition, the matters of one be two inquiry: could only there James/ of de- James, of the heirs William the identity respecting suit; the other, to the partition with the ceased, parties at the time he received was notice to whether there Hawley, deed from of unrecorded to Davenport the his conveyance, determine, were left to the These matters DeWitt. jury so left. and rightly suf- below the was raised the court

No upon question that deeds evidence, produced by ficiency indorse- at the indicated recorded, time plaintiff taken 1819; nor was thereon, any ment exception May, deed court, that from Davenport instruction the deed office, was recorded before proper to Hawley Witt; raised, nor was any De question from Davenport James, will William asked, or produced ruling for our con- and, no thereon- therefore, presented point sideration. no substantial error record,

We perceive below must, therefore, the court judgment

Affirmed. Bank Veazie 13th, 1866, July amendatory section the act of prior The 9th in- acts, provides revenue every ternal and which that National banking bank, association, association, State banking State pay shall a tax of any bank, ten centum on the amounts of per the notes State association, banking paid 1866, out them 1st August, after the day of lay a direct tax within the meaning does clause Con- “ ordains that stitution which direct taxes shall be apportioned among States, according to their respective the several numbers.” undertaken, Congress having exercise undisputed constitutional currency provide power, country, may whole constitution- ally of it to people appropriate secure the benefit legislation, and restrain, by enactments, may suitable the circulation of end notes, authority. its not issued under own

Statement the case. 13th, July of ten per imposed 8. The tax centum act of on the August, notes of State banks the 1st of paid out after is warranted by the Constitution. On certificate of division for Court for Maine. the Circuit The Constitution ordains that: “The shall have power— taxes, duties, “To and collect excises, lay imposts, pay debts and the common defence and wel- provide general but all States; duties, fare United and excises imposts, shall be uniform the United States. throughout “ To commerce with regulate nations, and foreign among States, and with the tribes. several Indian “ To coin the value money, thereof, and of regulate foreign (cid:127)coin.”

It also ordains that: “ Direct taxes shall the several States apportioned among . . their o numbers.” respective according

“No or other direct tax shall be unless in capitation laid, pro- to the census or enumeration hereinbefore directed to portion be made.” “ The United States powers delegated Con- by stitution, nor it to the are reserved to prohibited or to the States respectively, people.” With these in force as law, fundamental Con provisions an 13th, 1866,* act, second clause of passed, July gress 9th section of which enacts : association, bank, “That National State or every banking association, of ten State shall a tax centum on pay banking per bank, the amount of notes of State any person, banking association, used out them for circulation after the paid 1st and such tax shall be assessed and day August, paid in such manner as shall be the Commissioner of prescribed by Internal Eevenue.” cent, assessed this act a of ten was

Under per notes issued for after Bank, circulation, Veazie for its bank named in the act. day Large, Stat. Dee.

Argument for the United States. the State Veazie Bank was a chartered corporation circulation, with bank notes for Maine, to issue authority col- was the act notes on the tax and the imposed by was were issued There lected, nothing under this authority. relation bauk sustained in the case that the showing issue that its the State as financial authority agent, reference conferred with notes was or exercised any special to other than interests. private be uncon- tax,

The bank declined it to to pay alleging Fenno, aud the internal one stitutional, revenue, collector collect it, to make a distraint order to was proceeding this, in' costs, when, with order to prevent penalty claim it under An unsuccessful having bank paid protest. for re- made oh the of internal revenue commissioner bank the col- suit imbursement, against brought the court below. lector, an state- case was to that court upon

The presented agreed the a for instructions to facts, and, of jury, ment upon prayer in on three found themselves opinion the opposed judges the first two from of which—the differing others questions, recited—was form to be this: only, needing “ section of the the second clause of the 9th act Whether of the 13th of under which in his the tax July, Congress levied and collected, case was is a valid and law.” constitutional here, The case Messrs. and C. coming Reverdy Johnson the Bank, Veazie contended: Cushing,for the tax 1. That was and that it question tax, direct n hadnot been the apportioned States to the among agreeably Constitution. of the nature of

In direct taxes explanation they-relied of Adam other upou writings Smith, and largely upon American, treatises, political English economy. the act 2. That franchise imposing impaired State, had no granted by which could do law that. pass Hoar, Attorney-General Mr. United States, argued contra; he case fully, case v. The Hylton relying v. court. as conclusive United States,* question independently brief principle; recently referring published† of General Hamilton, whom case was argued, explain decided; view there a case con his of what was support firmed observed, recently, Attorney-General Pacific Insurance Company Soule.‡

In it was contended that The States reply, United Hylton v. alone, one which was a tax on adjudged point carriages tax, not a was direct and that from the dicta of judges, in the it was obvious what case, that the question great were direct taxes considered. crudely bar, at the these views of the which arguments The. counsel maintained, are not presented, respective of both sides of the case views from fully being presented court, in tbe and in the dissent bench, opinion it. from

The CHIEF JUSTICE delivered the of the court. opinion financial exi- necessity adequate provision created the late rebellion, to the ad- gencies suggested ministrative and departments of legislative government and taxation important changes systems currency had hitherto These more or less prevailed. changes, shown administrative took distinctly recommendations, form and substance in have now to acts. Ve legislative within a'limited those cir- consider, which relate to range, notes and the taxation of circulation. culating At the the rebellion the medium beginning circulating consisted almost of bank notes issued numerous entirely independent corporations under State variously organized of various of and credit, legislation, degrees very unequal resources, administered often with and not unfre- great, with little and skill, The acts quently, prudence, integrity. in of then force, Congress, or dis- receipt prohibiting * Dallas, 171. History In The of Republic, by C. Hamilton. John † Wallace, 433. 7‡ Dec. Yeazie of the court. National the transactions

bursement, government,' the laws of the States silver, of except anything gold demand, in coin of bank notes on the redemption requiring circula and silver from prevented disappearance gold coin; then, tion. There no National was, currency except there National was other no any general* regulation imposed no taxation was National legislation; form on the State bank circulation. the emission notes first act authorizing 17th, for circulation was that of

Treasury Department July The notes issued under this act were notes, treasury 1861.† on demand in coin. The amount authorized payable was and was increased the act $50,000,000, February to 12th, $60,000,000. 1862,‡ banks December, 1861,

On the the State suspended 31st this time the war expenses specie payment. .Until had been coin, referred just paid demand.notes to; continued be afterwards, for some time to and, phid in coin, in these if redeemed were notes, which, received not. coin in duties. payment 1862,§ on the 25th a new Subsequently, February, became policy necessary consequence suspension ' was condition of the The. country, adopted. hitherto as has issued, stated, 538 Bank Veazie the court. at a rate interest, in and coin coin, bonds payable bearing and the acts which were cent., not less than five by per to be lawful and a declared them authorized, money legal tender. for the

This issued by currency, directly government war and other could not, disbursement of the expenditures, of taxation. object obviously, proper the act 1863, But on the 25th February, authorizing associations* was in for the which, National passed, banking the ex first time years, during many Congress recognized a tax imposing currency. By pediency duty cent, was this act a of two on the tax per annually imposed it. after, circulation of the associations authorized Soon by similar but 3d, 1863,† the act of March lighter by cent, on the circulation one was imposed per annually and of in certain to their two capital, State banks proportions cent, associa excess; the National on the per .tax'on rates. tions w'as reduced to the same Both acts also taxes on imposed capital deposits, which need not be noticed here.

At a later the act of date, 3d, June was 1864,‡ by the act of 25th, 1863, substituted for February authorizing of tax on associations, National the rate circulation banking was amount it, continued whole applied the shares of their stockholders also to taxa subjected States; afterwards, a few the act of tion days by 1864,§ and means for June provide ways support the tax on the circulation the State government, banks also at the same annual rate of was continued one cent., before, but payment per required monthly instalments of of one with cent., one-twelfth per monthly each from State bank amount circulation. reports can be doubted that the of this It hardly object provision inform authorities amount of was to of the exact proper with a view to its circulation, paper money regulation law. 3d, 1863, Large, Act March Stat. at 13 Ib. 111. Id. § Id. 712. ‡

Dec.

Opinion of the court. taken first direction was step issue circula the act July 1862,* prohibiting one dollar or person of notes under by any corporation. tion next, to was the and it was act referred followed The just the act of March 3d, 1865, later amenda by some months acts, internal revenue the sixth section of of the prior tory “that National association, every provides, banking shall of association, or State tax bank, banking pay State on the of centum amount the notes of State ten per after association, State out them bank, banking paid 1st of July, day 1866.”† re-enacted, was with a same more extended The provision on the 13th of in these 1866, words: July, application, “ association, bank, State or State National Every banking association, shall ton centum on pay per banking bank, of notes State the amount kny person, and circulation, association used for out paid banking and such tax shall after the first them day August, manner as shall be such assessed prescribed paid the Commissioner Internal Revenue.”‡ last now of this drawn provision The constitutionality the recent brief statement legislation question, has been made for the in a purpose of Congress placing its clear scope bearing, especially light developed It will seen that when cited. the provisions just was bank circulation first' in 1863, adopted policy taxing discriminate for, was inclined to rather than Congress banks; circulation the State that when against, furnished with a had National sufficiently the couutry issues of States notes and of United National currency by the discrimination decid- notes, turned, very bank direction. turned, opposite edly us before whether or is, The now not the question general on State banks or cent., ten National tax of imposed per of individuals or and has instrument, framed always experienced when to determine their courts called upon by meaning. Constitution, however, intent of the The seems general administered, The General Con- Government, by plain. Confederation, had been reduced to the gress verge for revenue necessity by relying upoii impotency States, on the and it was object requisitions leading of the to relieve the Constitution to adoption government, from it, be under this and confer necessity, organized it to revenue the taxation of by ample power provide per- sons and And is from the clearer, dis- property. nothiug cussions in the and Convention the discussions which pre- final ratification ceded number by necessary States, than the to to purpose power to the give Congress, taxation of in its fullest everything except exports, extent. also, This is from the terms in purpose apparent, “ The taxing power power to granted. and lay duties, taxes, excises, collect to imposts, debt pay for the common defence welfare provide general States.” More United words could comprehensive not have been used. are another Exports only provision from excluded its application.

Dec. v. Bank’ of the court. limitations, from certain virtual are, indeed, arising There It would itself. undoubt Constitution the principles exercised an if so impair be abuse of the edly power existence independent, self-government* separate inconsistent with the or if exercised ends limited Constitution. of power grants as to And there are directions the mode of exercising or other If sees fit capitation, impose power. Congress census; if laid in to the tax, must be direct proportion excises, duties, determines to impose imposts, Congress States, These be uniform must United throughout are limitations of rules power. pre- are strictly They It still the mode which it shall be exercised. scribing of taxation, may extends exports, every object except it extends, to which taxation, every object applied such measure as determine. may thus to Con- The comprehensiveness power, given least, serve to the absence may explain, gress, even define, members of the Convention attempt words used debate, certainly the terms of the grant. describe the whole it was intention of power, be conferred. The Convention that the whole should words, definition of became therefore, unimpor- particular tant. observation, that this however said, indeed,

It just may in its cannot be application power, general, grant to the rules which different of taxes applied descriptions are directed to be laid and collected.

Direct must be laid and taxes collected the rule of duties, excises must be laid imposts, apportionment; collected under the i*ule uniformity. Much has the diversity opinion always prevailed upon what are direct it taxes? to answer Attempts question, to the definitions of economists reference have been political made, but without results. The enu- frequently satisfactory meration of the different kinds taxes which was

* County v. Wallace, Oregon, Lane 73. 7 of the court. made with was little very probably authorized impose to their work Adam speculations. reference great first treatise the on Smith, political comprehensive economy- had then been recently published; English language, are work, there which refer in this though passages between direct and indirect difference taxa- the characteristic which affords valuable there tion, nothing light “ direct taxes” in use of words the Constitution. to resort therefore, are to historical obliged, evidence, We of the words in the seek the use and meaning relations to of those whose government, opinion warranted them in with au- means knowledge, speaking thority. considered in this

And, light, meaning applica- taxes, direct to us rule, as to appears tion of quite clear. shown in as we act of Con- is, thiuk, distinctly It every on the subject. gress these sum was laid acts,

In each United upon gross amount was total apportioned several their numbers of States, according respective inhabitants, the last census. as ascertained preceding Having was made for the of the tax provision imposition apportioned, its total act, sum. specified subjects fixing direct tax when the first was 1798, In total imposed, dollars;* at two millions of was fixed in 1813, amount direct tax was fixed at of the second three amount millions;† third at six millions, the amount 1815, in 1816, an annual was made tax;‡ provision making annual the tax was repealed repeal first act and the 1815, section of the total amount was fixed at three millions for that No other year dollars.§ direct when a 1861, until direct tax was tax of imposed twenty annual; n and made of dollars laid millions but the pro 14th, 1798, Act of July Large, Stat. 2d, 1813, Act of 3 Ib. 53. August July 9th, Act of Id. 164. ‡ § 5th, 1816, Act of March Id. 255. 5th, Act of 12 Ib. August n v. Fenno. Bank Veazie Dec. 1869.] the court. tax, and no except was suspended, it annual making vision instance, each In ever was apportioned. first laid that States, the consti among was sum apportioned total on the rates, assessed and was prescribed rule, tutional 1798,* 1813,† 1815,‡ These subjects, of the tax. subjects lands, dwelling-houses, were 1816,§ improvements, lands, dwelling- slaves; 1861, improvements, were assessed slaves 1798, act of Under houses only. each; acts, under other according cents on at fifty valuation assessors. occu- contracts, review shows that property,

This personal have never been like, and the by Congress regarded pations, that of direct tax. It has been as supposed proper subjects as an to this observa- must be considered exception slaves is rather than real. As apparent tion. exception But tax, were slaves subjects capitation proper persons, tax; in the Constitution as direct is described which some, the laws of if not most of the were, by they property descendible classed as real heirs. Under property, first would be tax of as a view, subject they tax; would latter, under -the subject capitation taxation of the other That the latter realty. years taken of the acts view was that framers after 1798, when it is that in considered, becomes probable, highly value held, where slaves were much of the States would into have attached to land otherwise slaves. passed If, valued indeed, the land had been without the only slaves, have to much land would heavier subject propor- in those States than States tional where there imposition slaves; no for the each proportion imposed without determined reference to by population, on which it was to be assessed. the subjects valued, slaves were under the acts re- fact, then, as some have to, far from showing, supposed, ferred as a personal property proper object regarded 9th, 1798, Large, 1 Stat. at July Act of 22d, 3 Ib. 26. July Act Id. 166. Id. 255. § ‡ Opinion of the court. Constitution, direct taxation under the shows that Con- only after for the slaves, taxation, gress, regarded purposes as realty. be therefore, that in the may affirmed, practical rightly

.It construction direct taxes the Constitution by Congress, have been on and limited to taxes land and appurtenances, taxes on taxes. polls, capitation this consideration,

And construction' is entitled to great in absence of to it in the adverse especially anything con- discussions of Convention which framed" and of the which ratified, ventions the Constitution. discussions,

What does those on the appear sup contrary, Madison us,* the construction. Mr. informs that Mr. ports asked was the of direct taxa precise what King meaning On tion,-and no one answered. another the ques day, when taxation, tion of to' both representation proportioning inhabitants, the white three-fifths of the slave was under “ Mr. case a consideration,. tax, Ellsworth said: In poll there would no be- and, doubtless difficulty;” speaking taxation, direct he went on to “The'sum observe: allotted a to State levied without may difficulty, according used in State for its own All this plan raising supplies.” doubtless shows as to the true uncertainty meaning tax; term direct an indicates, also, understanding direct were taxes such as by may capitation,-and levied nn onlands and valuation appurtenances;-or, by perhaps, assessment of lists. For personal property upon general these from .which the time States subjects raised their usually supplies. principal This view received sanction two years court before the of the enactment first law direct taxes imposing eonomine. Term,

During February constitutionality of 1794, act .the came under imposing duty carriages-, States.† consideration the case of The Hylton v. United the United brought Suit States by Daniel Hyl- against

* 3 Madison Papers, Dallas, Dec. Eenno. of the court. for not re- the act by recover

ton, imposed penalty for the 'on a number carriages, duty turning paying his own the defendant for use. conveyance kept persons, of the tax, for the law did provide apportionment The the law was unwar- tax, if it was a direct and, confessedly The in the case, Constitution. ranted only question not the was a direct tax. whether or therefore,' was, case was one of expectation, great general in its It interest was felt determination. was argued, tax, Hamilton, Lee, Attorney-General, support recently Secretary tax, Treasury; opposition Campbell, District, Attorney Virginia Inger- soll, Attorney-General Pennsylvania.

theOf who then filled this bench, Ellsworth, justices and Wilson Paterson, members, aipd had conspicuous members, of the Constitutional and each Convention, had three taken in the discussions to direct tax- part relating Ellsworth, the ation. Chief sworn into office Justice, that heard the whole morning, declined having argument, not in the decision. part senior taking Associate Cushing, Justice, been from having prevented, at- by indisposition, also refrained from tending argument, an expressing The other delivered their opinion. in judges opinions suc- cession, in commission youngest the first, delivering the oldest the last. all held that tax on

They was not a direct carriages within the tax, Constitution. Chase, Jus- meaning tice, was inclined to think that the direct taxes contemplated Constitution, are a two: only capitation or tax, poll a tax on land. He doubted whether a tax aby general assessment of can be personal included within property Paterson, term direct tax. who had taken a leading part in the Constitutional Convention, went more into fully sense which the words, the power giving taxation, were used that In the course of this body. examination he said: “ taxes, Whether direct in the sense of the Constitution, other than tax a comprehend any and tax capitation tax, on VIII. YOL. Bank' of the court. If for instance, is a

laud, point. Congress, questionable mass, tax, generally should things aggregate the rule Union, then, in perhaps, the States all pervade if an the most be proper, especially would of apportionment from the This practice was to intervene. appears assessment asa have been considered direct.tax. of some of States n Whether of the United under the Constitution so, it it some but as is before difficulty; a matter decisive court, it would improper give any opinion a entertained doubt that the it. I never principal upon —I that the framers of the Con will not only objects say — as within the rule of stitution contemplated hilling appor tax and a tax land.”* on tionment, capitation his concurred Iredell, J., opinion delivering length, gen- and Paterson. Chase Wilson in the views Justices erally the same when effect, general bad his expressed opinion circuit, and did not now repeat decision upon giving the. nor Justice Ellsworth Neither Chief Justice Cushing them. inif, a case dissent; it cannot be supposed expressed any had differed from an- those so their important, judgments not have would nounced, that an given opportunity the de- them an order for participate reargument cision. as the assumed, therefore, unanimous

It be may safely uot a direct court, carriages judgment be taken established tax. And further may taxes, that the words direct used Paterson, testimony Constitution, only capitation taxes, comprehended taxes on land, and taxes on perhaps personal property the various and assessment of valuation descrip- by general within the several States. tions possessed follows that the to tax without It necessarily power appor- extends to all other Taxes on other tionment objects. objects direct, are included under the heads of taxes not im- duties, be and must laid and collected the rule excises, posts, under is a The tax consideration bank uniformity. * Dallas, Dec. v. of the court.

circulation, well classed the head of bo under may very not, duties. in the it is sense of the Constitution, Certainly a direct tax. It cate said come within same may as taxation the tax on incomes of insurance com gory which this at the last Of Pa court, term, case panies, Insurance not to a Company Soule*held be direct tax. cific it, Is a a then, tax on franchise a State, which granted the reserved Congress, upon any powers principle exempting States from be held to must impairment by’taxation, have no and collect? authority lay

Wo do not that there not be such tax. It say may may be admitted the reserved as States, such lights law’s,to execu- effect to laws right pass give through tive action, to administer and to justice courts, through all employ necessary legitimate agencies purposes are not government, proper subjects taxing But it cannot be admitted that fran- pow'er Congress. chises a State are taxa- granted by from necessarily exempt ; tion for are franchises often valuable and property, very productive property; wdien not conferred for the pur- effect to some pose reserved giving State, seem power be its properly objects taxation other property. inBut the case before us the object of taxation not the franchise of the bank, created, or contracts property made and issued under the to issue franchise, bank bills. A railroad in the exorcise of its company, corporate franchises, issues bills freight receipts, lading, pas- tickets; and it cannot be senger doubted that the organiza- tion of railroads quite to the State important as the of banks. But organization it will hardly questioned that these contracts of the are objects of company taxation within the powers and not Congress, exempted by any relation to the State which the charter of the granted rail- road. And it seems difficult distinguish taxation of notes issued for circulation from the taxation of these rail- road contracts.' Both of contracts descriptions are means

* 7 Wallace, Bank Opinion of the court. them; both, issue to the corporations of profit be made to the think, public we contributory may properly revenue. case us

It is that the tax before insisted, however, and so excessive as to indicate a excessive, purpose the franchise of the bank, to Congress destroy part therefore, the constitutional is, beyond power Congress. first answer to this is that the cannot The judicial pre- of the limi- scribe legislative departments government to. the exercise of its tations The powers. acknowledged be exercised to tax may oppressively upon persons, power not to the responsibility courts, but legislature whom its members are elected. So if people heavily tax bears a a or a class upon corporation, particular for that cannot, reason of corporations, only, pronounced Constitution. contrary answer which vindicates

But there is another equally and the wisdom power Congress. under doubted that

It cannot be Constitution the a circulation of coin is provide given Congress. the uniform practice it is settled by And government decisions, constitution- Congress by repeated may of bills of emission authorize the credit. It is not im- ally to decide whether the here, quality tender, legal portant debts, can constitutionally imparted payment bills; that there cán it is be no say, enough these ques- them;, ofthe to eimt to make tion of the power government itself; of debts to to fit receivable them payment them who see fit to use in all those them use transac- for commerce; to their for to make provide redemption; tions in value and and con- them currency, description, uniform useful, for These venient circulation. until powers, ' were only partially exercised. occasionally recently, called, have full, into however, Lately, activity, undertaken to' has arid for the supply currency entire country. methods of this adopted supply currency in the first of this part It explained opinion.

briefly now. Dec. Yeazie Eenno. Davis, Nelson, JJ., dissenting.

consists of of United States of the notes of coin, notes, the National banks. Both of notes descriptions may described as of credit, bills for both are furnished properly both are issued on the credit of the by government; and the for the re- government; government responsible both; as to the demption first primarily description, default of the as immediately upon to the second. bank, When these bills be made shall coin, convertible into will of the this holder, will, .the currency perhaps, satisfy wants of the ato community, respect medium, circulating mixed can be devised’. perfectly any currency'that in the exercise of thus,

Having constitutional undisputed undertaken to the whole powers, provide currency it cannot be country, questioned consti- may, Congress secure the benefit it to the tutionally, people by appro- denied;the end, To this priate has legislation.' tender to coins, has quality legal foreign provided by law of counterfeit against and base coin imposition end, To same community. Congress may restrain, suitable enactments, circulation as money notes not issued under its own' Without this authority. uniform, secure, its indeed, power, sound and attempts for the must be currency futile. country Viewed in this as well as in the other light, of a light duty on contracts or we cannot doubt the property, constitution- of the tax under ality consideration.

The three certified questions from the Circuit Court of the District of Maine'must, therefore, answered

Affirmatively. Mr. Justice with NELSON, whom Mr. Justice concurred DAVIS, dissenting. I am unable to concur of a opinion majority (cid:127)

court in this case.

The Yeazie Bank was incorporated by. legislature the State of Maine, with a capital $200,000, and was invested with the of a customary powers insti- banking ; tution and, among others, power receiving deposits, Veazie Bank Davis, JJ., Nelson, dissenting. notes or bills for circulation. paper, issuing discounting constitutional the State to create these in- authority invest them with full stitutions, banking powers, useful denied.. bo to recur for a But, few hardly may moments to the of this source authority. The tenth amendment to the Constitution is as follows:

“ The to the United States the Con- powers delegated States, nor it to the are reserved stitution, prohibited On respectively, States into people.” looking Constitution, it will be found that there is no clause or either which reasonable expressly, provision implica- tion, Federal Government, which delegates nor it to prohibits belonged origiually the discussions on the of the creation them. In of subject States, in the first the first Bank of the United Congress, of in and 1791, in the no Cabinet ques- Washington, the was made as to the of State banks. tion constitutionality and which divided the existed, doubt that opinion The only of the eminent statesmen of whom day, the most many of in the formation Consti- had just participated largely then which wore tution, the under engaged government not a whether or con- was, possessed in Congress organizing, a to institution banking current power incorporate States? United a in Hamilton,

Mr. his celebrated National bank report discusses at some the House of Representatives, length whether not it would be to sub- expedient the question, in located America, the Bank of North Philadelphia, stitute a charter from the of which had accepted legislature And, new a bank. place organizing Pennsylvania, a new came the conclusion to he organize finally although as to the ille- intimation, a there is not one, suggestion, of this bank. or unconstitutionality gality 25th, bank, February act passed The incorporating other by the Congress, establishment 1791, prohibited to the State banks. said charter, but its nothing during the in the act is contained incorporating likeA prohibition of a The constitutionality of theUnited Bank States Dec. Veazie Bank v. Eenno. Nelson, Davis, JJ.,

Opinion of dissenting. bank incorporated .first settled by Congress by judg ment of this court in McCullochv. The State Maryland, In that case both counsel the court recog nize the of banks legality incorporated constitutionality the States.

The Bank of United States.was constitutionality discussed, decided in the ease of Osbornv. United again And, States in connection with this, was argued Bank.† a and decided in the case of Bank point States The.United both, Planters’ which was common Georgia, was, cases. The whether the Circuit Courts of question States had United suit, jurisdiction brought United States Bank the Planters’ Bank of against Georgia,' State, that and in State was a incorporated by stockholder.‡ held in cases it had.

The court both the adop Since down Constitution, tion of the act of present Congress, us, and the case and in now before question Congress has whether been, courts the State banks con institutions, stitutional but whether had the power conferred on it establish National bank. As we have was closed said, question judgment of this court v. The State At the Maryland. McCulloch there Constitution, time of were four adoption and in existence in each of operation State banks —one New York, Massachusetts, the States Pennsylvania, The one in had been char Philadelphia Maryland. originally Confederation, but the took a charter tered subsequently by The framers of the Pennsylvania. under the State Con therefore, familiar with these were, State banks, stitution as circulation of their and were paper money; the also of the that States, the was so with practice common, familiar were credit, which bills issued the to issue bills State, by credit, on its owu and intended to circulate cur exclusively a future redeemable at the day. They guarded rency, people evils of this the of the State practice governments against * Wheaton, 9 316. Id. 738. Ib. 904. 4 ‡ 552 Davis, Nelson, JJ., dissenting. “ the that article, section of first in the tenth

by provision credit,” and, in the same sec- bills of “emit no shall” State abuse of State paper money tion, any guard against “nor make words: anything in gold banks following As debts.” bills of in a tender and silver coin payment of the abolished, money paper credit were thus entirely or medium to was the only currency circulating banks State have had could any this application, prohibition left silver, was the except gold only currency, took from this all coercive paper The States. prohibition alone to stand credit of and left it circulation, upon banks. irredeemable the banks no an currency,

It was longer that its were under including, frequently, obligation, circulation, in their to redeem stockholders, paper gold banks were at The State left in the counter. silver, Constitution, untouched other by any condition pro- by were As a established vision. consequence, gradually had not or all of the most encroached inor other interfered way legislated against, for more than acts of of a with, three-quarters -Congress, century —from in addition to above

But, State recognition their came banks, constitutionality directly question case of Briscoe v. The Bank this court before Kentucky.* Commonwealthof discussed, case was most both counsel elaborately The court, after the fullest consideration, and the court. held charters that the States possessed power grant was incident to banks; that the sovereignty; in the Federal Constitution was no limitation on its there The cotirt observed exercise the States. that-the Bank of America and of some were Massachusetts, others, North time o'f adoption Constitution, operation the notes these it could'not be banks and that supposed inhibited that instrument, intended to be or, Peters, 553 Dec. v. Veazie Bank JJ., Nelson, Davis, dissenting. as bills of credit within its considered they meaning. in concurred this Mr. Justice All the except judgment, judges The decision was affirmed in case Story. Woodruff Alabama;† Bank v. The Trapnall;* Barrington v. State Curran Arkansas.‡ his Kent observes, Mr. Justice Story, Chancellor Constitution,§ on seems to Commentaries opinion of the from the that independent practice, long-continued Constitution, time of would the States adoption a sound not, construction of if the Constitution, was res be authorized to question integra, banks incorporate with a circulate power inasmuch bank.paper currency, are from expressly prohibited He coining money. cites the of Mr. opinions Webster, of the Senate of the States, United of Mr. Dexter, Secretary formerly War, the same side. But the observes, that Chancellor if not the equal, of Mr. greater, authority Hamilton, earliest of the Secretary cited in Treasury, may support aof different and the opinion; sense and uni contemporary form of the nation are decisive practice He question. further observes, bills of prohibition (of credit) does not extend bills emitted by individuals, singly collectively, whether associated under a private agreement banking as was the case with purposes, the Bank of New York, prior to its earliest charter, which was in the winter of 1791, or under a charter of acting so incorporation, as the State long lends not its credit, or or coercion to obligation, sustain the circulation. In the case of Briscoev. The Bank the Commonwealth he

Kentucky, observes, that this question put rest by opinion court, that there was no limitation in the Constitution on the of the States power to incorporate banks, and their notes were not intended nor were considered as n bills credit.

The constitutional thus estab- being ‡ 19, Howard, 10 205. 13 Id. Id. p. Vol. § 1 Kent’s Commentaries, A, p. marg. note n 10th ed. v. Benno. Nelson, Davis, JJ., dissenting. of to create incontrovertible State lished banking authority, whether or not the the next tax institutions, is, question with the of can bé enjoyment consistently question- upheld, this power. 1866,* declares, of that the 13th, act July

The Congress, of ten on the amount their shall centum per banks State pay n notes,, bank, used of or other the notes any person, out them after the 1st Au circulation, and-paid for a to there is also tax of tax, In addition this 1866. gust, all to centum dividends stockh annum, five upon per. per of one besides a one olders,† twenty-fourth duty per and the all same centum, upon deposits, monthly' monthly, This makes an the the ag upon capital duty bank.‡ cent, of some sixteen per imposed annually upon gregate tax the ten observed, centum per these banks. It will a tax on is not the bills in circulation property upon are not the in circulation bills prop the institutions. The and, of the account of bank, the debts their erty, to the debit are side. credits, debits and placed Certainly, no has made both discovery taxing yet government as credit, debit this of a account, sides of property If both these items could taxable person corporation. this a National be made available for debt purpose, heavy neither, alarm, as it need not create any very great respects of the for time country, its the industry pressure being, is There or of its duration. debts possible nothing them in this from the respect debts of a bank distinguish discounted received of individuals or The paper persons. bank, notes in is circulation property for as is individuals received such, taxed property their notes that bemay outstanding.- (cid:127) cannot banks a imposition upon upheld neither could it have been so intended. It is, property; upon mode which the or faculties powers simply, are banks, taxation, and, subjected which, incorporate, maintainable, annihilate those powers. if may § § 146, Large, 9. 13 Id. p. Stat. § Ib. ‡ Dee. Nolson, JJ., Davis, dissenting.

Opinion of to tax the No questions authority person all bodies of and of other banks, corporate property are artificial the same as that of individuals. State, They the associated means of real bodies, pecuniary representing which constitute their business capital, persons, thus invested is with taxation, open subject property all the real and A tax State. property, personal, is to be uni- which, the Constitution, property, affords full form, of the Federal scope taxing and is consistent with of the States government, the-power and, to create the in our sub- banks, only judgment, of taxation, this to these institu- ject government, are liable. tions we have seen, As of this the forepart opinion, power

. banks was not surrendered to the to Federal incorporate States; but reserved to the Government, and it follows that or them, the Constitution itself should protects protect them, encroachment from this As to the any upon right. powers reserved, the States are as thus as en- before supreme they Union, into the tered are entitled to the unrestrained exercise of them. The as to the taxation of the question and faculties is not powers new belonging governments in this court. bonds of the Federal Government have held to be from exempt taxation. Be- Why? wore issued cause under the they the Constitution power to borrow the tax would bo a money, tax upon as and, there can be no limitation to the extent power; tax, the to borrow power So, in the might destroyed. of the instance United States or notes, as tenders, legal called, are issued under constructive they to issue power as credit, no is bills in the express power Constitu- given are from tion, State taxation for a like exempt reason in the as case of bonds; and, we learn from government of the court in this that one further is opinion case, step and that taken, is, that the notes of the National banks are to be as bills of issued credit, regarded indirectly by and it follows, course, this, from that the government; as used instruments issue and banks circulation put (cid:127) Nelson, Davis, JJ., dissenting. are notes,

these also "Weare not exempt. complaining this. Our to show how it is purpose important of the reserved that protection proper rights should these from Fed- exempt powers prerogatives and how fatal their if taxation, eral existence, permitted. even if this could be as one And, also, regarded under still, the decisions above réferred to, upon property, be a tax it would faculties of .the States upon powers therefore, banks, create these and, unconstitutional. that the decision true, It strikes at the present only banks, to create but no can fail to see person power affects involved to create de- any'other principle such as railroads, manu- scription corporations, turnpikes, and others. companies, facturing faculties of the This "State taxation,of powers gov- esseutial to their which are and to ernments, sovereignty, and administra- efficient and independent management for the first advanced affairs, is, time, their internal tion It finds Federal no attribute of authority. an support early history government, countenance founded statesmen who it. of the illustrious These opinions from abstained encroachment scrupulously statesmen States; and, within reserved these rights them States. limits, sustained supported sovereign of this as to tax of purpose We heavy say nothing, banks, ten of which we sixteen centum per upon some the States cannot but imposed regard Indeed, concealed, purpose scarcely to create them. court, Na- namely, encourage opinion the burden add, It is sufficient tional banks. banks, these has has fatal to proved while it tax, encouraged if we are at States; and, liberty those of judge have act, an from the consequences followed, purpose far that these too conse- not, say,, perhaps, going intended. quences notes just called and were demand in notes, on coin. The treasury payable issue of bills act now authorized the for circulation passed notes, under the' name of United States made payable bearer, payable demand, expressed this amount $150,000,000; amount of increased by of which $50,000,000 acts to $450,000,000, were- subsequent issued reserve, held in for a to be only special as to their and under directions withdrawal special purpose, after the until close of the from circulation. n notes, These into, receivable at convertible war, par were always 27th, 1854, small notes in the suppress See the act of Dis- December Columbia, Large, trict of 10 Stat. at 599. Ib. Large, 12 Stat. Ib. 338. 345. § ‡ 532; 3d, of March Ib. July 11th, Act of act Ib. n

Notes

out notes State banks banks paying Large, 3d, March 12 Stat. at Act of 14 Id. 146. 13 Ib. 484. ‡ Veazie Bank Opinion of the court. used for to the Constitution circulation, repugnant States. United so far In act of support position Congress, is re- tax, as it of this for the collection provides levy have been two Constitution, propositions pugnant with much force earnestness. argued tax in and has tax, The first is that the is a direct question not been States apportioned among agreeably Constitution. a fran- The second is that the act the tax imposing impairs State, chise has no power granted law that intent or effect. with pass any first of these will be first The examined. propositions with the terms used in difficulty defining accuracy clause of the which confers the Constitution was felt in the taxation Convention which upon Congress,

Case Details

Case Name: Veazie Bank v. Fenno

Court Name: Supreme Court of the United States

Date Published: Dec 13, 1869

Citation: 75 U.S. 533

Court Abbreviation: SCOTUS