95 U.S. 679 (1878), Farrington v. State Of Tennessee
|Citation:||95 U.S. 679, 24 L.Ed. 558|
|Party Name:||FARRINGTON v. TENNESSEE.|
|Case Date:||January 14, 1878|
|Court:||United States Supreme Court|
ERROR to the Supreme Court of the State of Tennessee.
The Union and Planters' Bank of Memphis is a banking corporation, doing business at Memphis, Shelby County, Tennessee, organized under a charter granted by the General Assembly of that State March 20, 1858, and amended Feb. 12, 1869, the tenth section of which provides that 'said company shall pay
to the State an annual tax of one-half of one per cent on each share of the capital stock subscribed, which shall be in lieu of all other taxes.'
Sect. 1 of an act of the General Assembly of 1869-70, c. 81, provides: 'All shares of stock in any bank, institution, or company, now or hereafter incorporated by or in pursuance of any law of this State or any other State, . . . shall be valued and assessed, and subject to taxation.'
The bank paid the said tax of one-half of one per cent for the year 1872.
Farrington was throughout that year the owner of one hundred and fifty shares of the stock of the bank, upon which the State and the county of Shelby, severally claiming the right under that act to do so, assessed against him for that year, taxes at the same rate that they were assessed and levied upon other taxable property. He resisted the payment of them, upon the ground that, by sect. 10 of the charter, the bank, its franchises and capital stock, and also the shares of stock of the individual stockholder, were subject to no taxation other than the specific sum nominated in the charter; and that the act in question impaired the obligation of the contract stipulating to accept that sum in lieu of all other taxes, and was, therefore, in violation of sect. 10, art. 1, of the Constitution of the United States.
A suit was brought to test the validity of the assessment in the Second Chancery Court of Shelby County; and it was agreed, that, in the event of a decision adverse to Farrington, judgment should be rendered against him for $60 and $180, the amount of the taxes assessed by the State and county respectively, with interest from the first day of January, 1873. If the decision should be in his favor, then the judgment should be that said taxes were illegally assessed; that said shares of stock were exempt from all other taxation except the aforesaid one-half of one per cent to the State, as provided in the tenth section of the bank's charter; and, further, that the collection of said taxes be enjoined, and such other appropriate decree rendered as the court might deem proper, in order to protect him and his assigns from taxation on said stock. Each party reserved the right of appeal. The court rendered a decree enjoining the collection of the taxes, which was reversed by
the Supreme Court of the State, on the ground that the said shares of stock were not the property or thing exempted, but other and different, ans so were not within the protection of the charter and of the Constitution of the United States; and it was adjudged that Farrington should pay to the State and the county respectively the said sums of money assessed upon his shares of stock.
Farrington thereupon sued out this writ of error.
The case was argued by Mr. H. E. Jackson and Mr. L. D. McKisick for the plaintiff in error, and by Mr. J. B. Heiskell, Attorney-General of Tennessee, and Mr. S. P. Walker, for the defendant in error.
MR. JUSTICE SWAYNE delivered the opinion of the court.
This case lies within narrow limits. The question to be decided arises under the Constitution of the United States. The ground of the discussion has been well trodden by our predecessors. Little is left for us but to apply the work of other minds. The facts are agreed by the parties, and may be briefly stated.
The Union and Planters' Bank of Memphis was duly organized under a charter granted by the Legislature of Tennessee, by two acts, bearing date respectively on the 20th of March, 1858, and the 12th of February, 1869. Since its organization, it has been doing a regular banking business. Its capital stock subscribed and paid in amounts to $675,000, divided into six thousand seven hundred and fifty shares of $100 each. Farrington, the plaintiff in error, was, throughout the year 1872, the owner of one hundred and fifty shares, of the value of $15,000.
The tenth section of the charter of the bank declares 'that the said company shall pay to the State an annual tax of one-half of one per cent on each share of the capital stock subscribed, which shall be in lieu of all other taxes.'
The State of Tennessee and the county of Shelby claiming the right, under the revenue laws of the State, to tax the stock of the plaintiff in error, assessed and taxed it for the year 1872. It was assessed at its par value. The tax imposed by the State was forty cents on the $100, making the State tax $60. The
county tax was $1.20 on the $100, making the county tax $180.
The plaintiff in error denies the right of the State and county to impose these taxes. He claims that the tenth section of the charter was a contract between the State and the bank; that any other tax than that therein specified is expressly forbidden; and that the revenue laws imposing the taxes in question impair the obligation of the contract. The Supreme Court of the State adjudged the taxes to be valid. The case was thereupon removed to this court by the plaintiff in error for review.
A compact lies at the foundation of all national life. Contracts mark the progress of communities in civilization and prosperity. They guard, as far as is possible, against the fluctuations of human affairs. They seek to give stability to the present and certainty to the future. They gauge the confidence of man in the truthfulness and integrity of his fellowman. They are the springs of business, trade, and commerce. Without them, society could not go on. Spotless faith in their fulfilment honors alike communities and individuals. Where this is wanting in the body politic, the process of descent has begun, and a lower plane will be speedily reached. To the extent to which the defect exists among individuals, there is decay and degeneracy. As are the integral parts, so is the aggregated mass. Under a monarchy or an aristocracy, order may be upheld and rights enforced by the strong arm of power. But a republican government can have no foundation other than the virtue of its citizens. When that is largely impaired, all is in peril. It is needless to lift the veil and contemplate the future of such a people. Trist v. Child, 21 Wall. 441; 1 Montesquieu's Spirit of Laws, 25. History but repeats itself. The trite old aphorism, that 'honesty is the best policy,' is true alike of individuals and communities. It is vital to the highest welfare.
The Constitution of the United States wisely protects this interest, public and private, from invasion by State laws. It declares that 'no State shall. . . pass any . . . law impairing the obligation of contracts.' Art. 1, sect. 10. This limitation no member of the Union can overpass. It is one of
the most important functions of this tribunal to apply and enforce it upon all proper occasions.
This controversy has been conducted in a spirit of moderation and fairness eminently creditable to both parties. The State is obviously seeking only what she deems to be right. The judges of her own highest court, whence the case came here, were divided in opinion.
Contracts are executed or executory. A contract is executed where every thing that was to be done is done, and nothing remains to...
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