Asher Nathan, Plaintiff In Error v. the State of Louisiana

• Decision Date: 01 January 1850
• Parties: ASHER M. NATHAN, PLAINTIFF IN ERROR, v. THE STATE OF LOUISIANA
• Court: U.S. Supreme Court

49 U.S. 73

8 How. 73

12 L.Ed. 993

ASHER M. NATHAN, PLAINTIFF IN ERROR, v. THE STATE OF LOUISIANA.

January Term, 1850

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

On the 26th of March, 1842, the state of Louisiana passed an act to increase the revenue of the state, the ninth section of which provided that 'each and every money or exchange broker shall hereafter pay an annual tax of $250 to the state, in lieu of the tax heretofore imposed on them.'

On the 3d of February, 1845, Isaac T. Preston, the Attorney-General of the state, filed a petition in the District Court of the first judicial district, stating that A. M. Nathan was justly indebted to the petitioner in the sum of $250, for pursuing or having lately pursued, within the year 1843, the business of a money and exchange broker. The petition then prayed that he might be cited to appear and answer, and be condemned to pay; also that he might answer the following interrogatories under oath, viz.:——

'Were you a broker, as above stated, in 1843?

'Did you or not receive brokerage or commissions?

'State clearly the nature of the same; whether received in money transactions.'

The same process was pursued to collect the tax for 1844.

On the 19th of April, 1845, the two suits were consolidated and the defendant answered as follows:——

'The defendant for answer denies generally all the allegations in the plaintiff's petition contained. And further answering, he says, that so much of such parts of 'An act to increase the revenue of the state,' under and by virtue of which this suit is brought to recover of this defendant the tax thereby imposed upon the business of a money and exchange broker, and especially the ninth section thereof, particularly referred to in the plaintiff's petition, so far as the said section and act impose a tax on that part of the business of a money and exchange

broker which consists in buying and selling exchange, the same is contrary to and in violation of so much and such parts of the Constitution of the United States as give to Congress the exclusive power to regulate commerce, and prohibit to the states all interference with the power so granted, and forbid them to impose, without consent of Congress, any duty on imposts or exports.

'And so far as the said section and act imposes a tax on that part of the business of a money and exchange broker which consists in buying and selling money or foreign coin, or other currency, the same is contrary to and in violation of so much and such parts of the Constitution of the United States as gives to Congress the exclusive power 'to coin money, regulate the value thereof, and of foreign coin.'

'And so far as said section imposes a tax, not uniform in amount with other state taxes on occupations, respondent avers, that the same is contrary to so much of the treaties, laws, and Constitution of the United States as reserve and guarantee to the inhabitants of Louisiana all the rights, advantages, and immunities of citizens of the United States, particularly that of uniform taxation; and to so much of said Constitution as reserves to the people of the several states all powers not delegated to the states respectively, or to the Union.

'Wherefore he prays, that the plaintiff's demand be dismissed, with costs, and for all other and general relief which his case may require.

(Signed,) RICHARD HENRY WILDE, Defendant's Attorney.

'A. K. JOSEPHS.

(Signed,) H. H. STRAWBRIDGE.'

A. M. Nathan, defendant, for answer to the interrogatories to him propounded in the above entitled suit, says:——

'I was a money and exchange broker in 1843 and 1844; I received a brokerage or commissions on money and bills of exchange sold by my agency.

'I will state clearly the nature of the same. My business, like that of money and exchange brokers in general, consists exclusively in negotiating and effecting for others the purchase and sale of exchange on other states or foreign countries. During the thirty years that I have been a money and exchange broker, I believe,—nay, I am certain,—that I have never, as such, sold a single bill drawn from one point of Louisiana on another.

'I make myself acquainted with the current market value of exchanges. The purchasers and the sellers both resort to me for information on the state of the market of exchanges, and make me their common agent in the purchase and sale of bills, which are purchased for the purpose of making remittances to foreign parts, and usually so remitted immediately. On and out of the price of each bill, I receive a percentage or commission, varying from one fourth to one eighth of one per cent., which is commonly paid on settlement. It is the same in money transactions.

(Signed,) A. M. NATHAN.'

On the 7th of June, 1845, the District Court decreed that the state of Louisiana should recover of the defendant, A. M. Nathan, the sum of five hundred dollars, and costs of suit.

An appeal was had to the Supreme Court of Louisiana, which, on the 15th of December, 1845, affirmed the judgment of the District Court. The defendant sued out a writ of error, and brought the case up to this court.

It was argued by Mr. Wilde (in a printed argument), for the plaintiff in error, and Mr. Coxe, for the defendant.

Mr. Wilde contended, that the law of Louisiana was repugnant to the Constitution of the United States, because it interfered with the exclusive power of Congress to regulate commerce.

Congress has the exclusive power to regulate commerce. The power to regulate implies the power to preserve. An unlimited power to tax is a power to destroy. A state cannot have the power to impair or destroy that which Congress has the power to preserve and regulate: therefore, a state cannot tax the instruments whereby Congress exercises its constitutional powers. 4 Wheat., 428, 432.

Exchange is a necessary instrument of commerce. 4 Wheat., 147; 13 Pet., 531, 548, 563, 606.

The mind cannot conceive the possibility of carrying on commerce, in the present state of the world, without bills of exchange.

A bill drawn in one state, on the citizen of another, is a foreign bill. Buckner v. Finley, 2 Pet., 586.

The sole business of plaintiff in error, therefore, is buying and selling foreign exchange. See answer to interrogatories.

There is not a particle of testimony that he deals in domestic exchange, or in money. The court, consequently, in adjudging against him, could only have proceeded, and did, in

fact, proceed, upon the ground that, as a dealer in foreign exchange exclusively, he was subject to the tax; and that the act imposing it was constitutional.

Now, there is no difference between taxing the article and taxing the faculty to sell it. 4 Wheat., 399; 12 Id., 444.

To tax the trade or faculty of selling bills of exchange, then, is the same thing as to tax the bills themselves.

To tax bills of exchange is to tax a necessary instrument of commerce, and taxing that without which commerce cannot not be carried on is imposing a...