The Piqua Branch of the State Bank of Ohio, Plaintiff In Error v. Jacob Knoop, Treasurer of Miami County

• Decision Date: 01 December 1853
• Citation: 57 U.S. 369,16 How. 369,14 L.Ed. 977
• Parties: THE PIQUA BRANCH OF THE STATE BANK OF OHIO, PLAINTIFF IN ERROR, v. JACOB KNOOP, TREASURER OF MIAMI COUNTY
• Court: U.S. Supreme Court

57 U.S. 369 16 How. 369 14 L.Ed. 977 THE PIQUA BRANCH OF THE STATE BANK OF OHIO, PLAINTIFF IN ERROR, v. JACOB KNOOP, TREASURER OF MIAMI COUNTY. December Term, 1853

THIS case was brought up from the Supreme Court of Ohio, by a writ of error, issued under the twenty-fifth section of the Judiciary Act.

In the record there was the following certificate from the Supreme Court of Ohio, which explains the nature of the case:

And thereupon, on motion of the defendant, it is hereby certified by the court, and ordered to be made a part of the record herein, that in the above entitled cause the petitioner claimed to collect, and prayed the aid of the court to enforce the payment of, the tax in the petition mentioned, under an act of the General Assembly of the State of Ohio, passed March 21st, 1851, entitled 'An act to tax banks, and bank and other stocks,

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the same as other property is now taxable by the laws of this State,' a certified copy of which is filed as an exhibit in this cause, marked 'A.' The said defendant, by way of defence to the prayer of said petitioner, &c., set up an act, entitled 'An act to incorporate the State Bank of Ohio, and other banking companies,' enacted by the General Assembly of the State of Ohio, February 24th, 1845, a certified copy of which is filed as an exhibit in this cause, marked 'B;' under which act the defendants organized, and became and was a branch of the State Bank of Ohio, exercising the franchises of such bank prior to and ever since the year 1847; and that the defendant claimed that, by virtue of the operation of said act last mentioned, the State of Ohio had entered into a binding contract and obligation, whereby the State of Ohio had agreed and bound herself not to impose any tax upon the defendant, and not to require the defendant to pay any tax for the year 1851, other or greater than six per cent. on its dividends or profits, as provided by the sixtieth section of the said act of February 24th, 1845. And it is further certified, that there was drawn in question in said cause the validity of the said statute of the State of Ohio, passed March 21st, 1851, herein before mentioned, the said defendant claiming that it was a violation of the said alleged agreement and contract between the State of Ohio and the said defendant, and on that account repugnant to the Constitution of the United States, and void; but the court here held and decided: 1st. That the sixtieth section of said act of February 24th, 1845, to incorporate the State Bank of Ohio, and other banking companies, contains no pledge or contract on the part of the State not to alter or change the mode or amount of taxation therein specified; but the taxing power of the General Assumbly of the State of Ohio over the property of companies formed under that act is the same as over the property of individuals. And, 2d. That whether the franchises of such companies may be revoked, changed, or modified, or not, the act of March 21st, 1851, upon any construction, does not impair any right secured to them by the act of 1845, and is a constitutional and valid law. And it is further certified, that the decision of the question as to the validity of the said statute of 1851, was necessary to the decision of said cause, and the decision in the premises was in favor of the validity of said statute. The court do further certify, that this court is the highest court of law and equity of the State of Ohio in which a decision of this suit could be held. And it is ordered, that said exhibits A and B be made parts of the complete record in this cause.

The contents of exhibits A and B are stated in the opinion of the court.

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The case was argued by Mr. Stanberry and Mr. Veriton, for the plaintiff in error, and by Mr. Spalding and Mr. Pugh, for the defendant in error.

The points made by the counsel for the plaintiff in error were the following:

1st. That the Piqua branch of the State Bank of Ohio is a private corporation.

The principle governing this point is, that if the whole interest of a corporation do not belong to the public, it is a private corporation. Angell & Ames on Corporations, §§ 31 to 36 inclusive; Dartmouth College v. Woodward, 4 Wheat. 636; Baily v. Mayor of New York, 3 Hill, 531; Bank United States v. Planters' Bank of Georgia, 9 Wheat. 907; Miners' Bank v. United States, 1 Greene, 553; Bonaparte v. Camden & Amboy R. R. Co. 1 Bald. 222.

2d. The act of the 24th of February, A. D. 1845, providing for the creation of this private corporation, became, by its acceptance, a contract between the State and the corporators, which contract is entitled to the protection of that clause of the Constitution of the United States which prohibits the States from passing any law impairing the obligation of contracts.

Angell & Ames on Corp. §§ 31, 469, 767; Dartmouth College v. Woodward, 4 Wheat. 636; Gordon v. Appeal Tax Court, 3 How. 145; West River Bridge v. Dix, 6 How. 531; Planters' Bank of Mississippi v. Sharp, 6 How. 326-7; East Harford v. Hartford Bridge Company, 17 Conn. 93; New Jersey v. Wilson, 7 Cranch, 164; Fletcher v. Peck, 6 Cranch, 88; Terrett v. Taylor, 9 Cranch, 43; Town of Pawlett v. Clarke, 9 Cranch, 292; Wales v. Stetson, 2 Mass. 143; Enfield Toll Bridge v. Conn. River Co. 7 Conn. R. 53; McLoren v. Pennington, 1 Paige, Ch. R. 107; 2 Kent's Com. 305, 306; Greene v. Biddle, 8 Wheat. 1; University of Maryland v. Williams, 9 Gill. & Johns. 402; Bayne v. Baldwin, 3 Smedes & Marsh. (Miss.) R. 661; Aberdeen Academy v. Mayor of Aberdeen, 13 Smedes & Marsh. R. 645; Young v. Harrison, 6 Georgia R. 130; Coles v. Madison county, Breese (Ill.) Rep. 120; Bush v. Shipman, 4 Scam. (Ill.) R. 190; The People v. Marshall, 1 Gilman (Ill.) R. 672; State v. Hayward, 3 Richardson (S. C.) R. 389; Baily v. Railroad Co. 4 Harrington (Del.) R. 389; LeClercq v. Gallipolis, 7 Ohio, 217; State v. Com'l Bank of Cincinnati, 7 Ohio, 125; State v. Wash. Soc. Library, 9 Ohio, 96; Michigan Bank v. Hastings, 1 Doug. (Mich.) R. 225; Bank of Pennsylvania v. Commonwealth, 19 Pennsylvania Rep. 151; Hardy v. Waltham, 9 Pick. 108.

3d. The right of a State to tax the property of a private corporation

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(such as a bank) or to tax any specified property of private persons may, by legislative contract, be wholly relinquished, commuted, or limited to an agreed amount, and no State law can impair the validity of such contract.

Angell & Ames on Corp. §§ 469-472 inclusive; Gordon v. Appeal Tax Court, 3 How. 133; Gordon's Ex'rs v. Baltimore, 5 Gill, 231; Bank of Cape Fear v. Edwards, 5 Iredell, 516; Bank of Cape Fear v. Deming, 7 Iredell, 516; Union Bank of Tennessee v. State, 9 Yerger, 490; State of New Jersey v. Bury, 2 Harris, 84; Gordon v. State, 1 Zabriskie, 527; Johnson v. Commonwealth, 7 Dana, 342; Bank of Illinois v. The People, 4 Scam. 304; Williams v. Union Bank of Tennessee, 2 Hump. 339; Atwater v. Woodbridge, 6 Conn. 223; Osborne v. Humphrey, 7 Conn. 335; East Hartford v. Hartford Bridge Company, 17 Conn. 93; State v. Com'l Bank of Cincinnati, 7 Ohio Rep. 125.

In the absence of adjudicated cases to establish the right of the legislature of a State thus to relinquish, commute, or limit the amount of taxation, it might and ought to be inferred from the uniformity and extent of its exercise by the States from their earliest history to the present time.

In the case of Briscoe v. Bank of Kentucky, 11 Pet. 318, the court say, 'that a uniform course of action involving the right to the exercise of an important power by the State governments for half a century, and this almost without question, is no unsatisfactory evidence that the power is rightly exercised. Cin., Wil. & Zanesville R. R. Co. v. Com'rs. Clinton Co. 21 Ohio Rep. 95.

In accomplishing the lawful purposes of legislation, the choice of means adapted to the end must be left exclusively to the discretion of the legislature, provided the means used are not prohibited by the Constitution. Cin., Wil. & Zanesville R. R. Co. v. Com'rs. Clinton Co., 21 Ohio Rep. 95.

4th. The plaintiff in error claims that by the sixtieth section of the act of 24th of February, 1845, the State, by contract, (and not by legislative command) fixed and agreed upon the time, manner, and amount of taxation to be imposed upon and paid by said bank, which contract is mutually binding on the parties, and cannot be changed or abrogated by either without the consent of the other.

This last proposition involves an into pretation of so much of said law as relates to the subject of taxation in two aspects:

1. Whether the sixtieth section be a contract on the subject of taxation, as claimed by the plaintiff in error, or a law dictating and commanding the amount of taxation, as claimed by the defendant in error.

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2. If it be a contract, whether it was temporary and depending on the will of the legislature, or permanent, and to remain in force during the term of the charter.

The court lay down the doctrine in Charles River Bridge v. Warren Bridge, 11 Pet. 545, that in the construction of statutes creating corporations, the rules of the common law must govern in this country; and in the same opinion, at page 548, the court say, that the rules of construing a statute which surrenders the taxing power, are the same as those that apply to any other affecting the public interest.

In the case of the Sutton Hospital, Lord Coke lays down the rule of the common law in the construction of charters in the following terms, namely, 'That the best exposition of the King's charter is upon the consideration of the whole charter to expound the charter by the charter itself, every material part thereof being explained according to the true and genuine sense, which is the best method.' The rule of interpretation is laid down by the Supreme Court in Charles River Bridge v. Warren Bridge, 11 Pet. 549. Also, by Judge Story, in his dissenting opinion, at page 600. Also, in case of...