Bank v. Supervisors
| Decision Date | 01 December 1868 |
| Citation | 7 Wall. 26,74 U.S. 26,19 L.Ed. 60 |
| Parties | BANK v. SUPERVISORS |
| Court | U.S. Supreme Court |
THIS case—brought here by the Bank of New York—differed from the preceding in two particulars: (1) That the board of supervisors, which in the other cases allowed and audited the claims of the banking associations, refused to allow the claim made in this case; and (2) That the exemption from State taxation claimed in this case, was of United States notes, declared by act of Congress to be a legal tender for all debts, public and private, except duties on imports and interest on the public debt, while in the other cases it was of certificates of indebtedness. These United States notes, as is sufficiently known at the present, had become part of the currency of the country. Their form (with certain necessary variations for different denominations, place of payment, &c.) was thus:
The mandamus in the State court was directed, in the case now before the court, to the board of supervisors, instead of to the officers authorized to issue bonds, as in the cases just preceding.
The judgment in the Court of Appeals sustained the action of the board refusing to allow the exemption set up, and the case was brought here by writ of error to that court.
Messrs. O'Connor and O'Gorman, in support of the judgment below:
1. The exemption of the public debt of the United States from taxation by State authority, rests only upon that clause of the Constitution which authorizes Congress 'to borrow money on the credit of the United States.'
2. The purpose and effect of the acts authorizing the notes in question was to create a new kind of money in the United States paper money—which was to be a substitute for a metallic currency. The issuing of these notes was neither more nor less than the creation, by right or without it, of a conventional money. The notes were intended to be money, and in practice have become the only lawful money in use.
3. The government did not, really and in fact, contract by these notes to pay the bearer on demand or at any time. The notes were made by the act a legal tender in payment of all debts, including (with a small exemption) the government's own, and of course when presented for payment, similar notes being a legal tender in discharge of them, the debt would be discharged by a delivery of new notes of the same kind. The notes were promises to make other promises, to be renewed ad infinitum. There is really no debtor nor creditor in respect of them. There is no loan or evidence of loan.
As far as the credit of the United States was involved in the issue of these notes, no greater responsibility was assumed than is assumed by any government in coining or otherwise affixing a stamp to metal, and affixing to it a certain nominal value; although by mixing or debasing the metal, its real value, in use or exchange, may have been totally destroyed. The acts in question did but endeavor to confer a prescribed value on certain stamped paper, which they compelled the citizens of the United States to take in payment of all debts due, or to become due by the government to them, or by them to the government, or to one another.
By this means, instead of borrowing money, Congress made money, and rendered borrowing unnecessary.
The protection from State interference accorded by the Constitution to the exercise by the government of the power of borrowing cannot be invoked in such a case.
4. The acts of Congress relating to the financial operations of the government during the civil war, afford evidence that Congress did not intend that the notes in question should be exempt from State taxation.1
Messrs. Peckham and Burrill, contra.
The CHIEF JUSTICE delivered the opinion of the court.
The general question requiring consideration is whether United States notes come under another rule in respect of taxation than that which applies to certificates of indebtedness.
The issues of United States notes were authorized by three successive acts. The first was the act of February 25, 1862;2 the second, the act of July 11, 1862;3 and the third, that of March 3, 1863.4
Before either of these acts received the sanction of Congress the Secretary of the Treasury had been authorized by the act of July 17, 1861,5 to issue treasury notes not bearing interest, but payable on demand by the assistant treasurers at New York, Philadelphia, or Boston; and about three weeks later these notes, by the act of August 5, 1861,6 had been made receivable generally for public dues. The amount of notes to be issued of this description was originally limited to fifty millions, but was afterwards, by the act of February 12, 1862,7 increased to sixty millions.
These notes, made payable on demand, and receivable for all public dues, including duties on imports always payable in coin, were, practically, equivalent to coin; and all public disbursements, until after the date of the act last mentioned, were made in coin or these notes.
In December, 1861, the State banks (and no others then existed) suspended payment in coin; and it became necessary to provide by law for the use of State bank notes, or to authorize the issue of notes for circulation under the authority of the national government. The latter alternative was preferred, and in the necessity thus recognized originated the legislation providing at first for the emission of United States notes, and at a later period for the issue of the national bank currency.
Under the exigencies of the times it seems to have been thought inexpedient to attempt any provision for the redemption of the United States notes in coin. The law, therefore, directed that they should be made payable to bearer at the treasury of the United States, but did not provide for payment on demand. The period of payment was left to be determined by the public exigencies. In the meantime the notes were receivable in payment of all loans, and were, until after the close of our civil war, always practically convertible into bonds of the funded debt, bearing not less than five per cent. interest, payable in coin.
The act of ...
To continue reading
Request your trial
-
Blodgett v. Holden
...4 Wheat. 316, 4 L. Ed. 579; Osborn v. Bank, 9 Wheat. 738, 6 L. Ed. 204; Weston v. Charleston, 2 Pet. 449, 7 L. Ed. 481; Bank v. Supervisors, 7 Wall. 26, 19 L. Ed. 60), or by the federal government upon state bonds, notes, or government agencies (see Fifield v. Close, 15 Mich. 505; Collector......
-
James v. Dravo Contracting Co
...v. Com'rs of Taxes & Assessments New York City, 2 Black 620, 17 L.Ed. 451; Bank Tax Case, 2 Wall. 200, 17 L.Ed. 793; Bank of New York v. Supervisors, 7 Wall. 26, 19 L.Ed. 60; Home Savings Bank v. Des Moines, 205 U.S. 503, 27 S.Ct. 571, 51 L.Ed. 901; State of Missouri ex rel. Missouri Ins. C......
-
Fed. Land Bank of St. Paul v. Bismarck Lumber Co.
...1341. The exercise of this protective power in relation to state taxation has many illustrations. See, e. g., Bank of New York v. Supervisors, 7 Wall. 26, 31, 19 L.Ed. 60;Choate v. Trapp, 224 U.S. 665, 668, 669, 32 S.Ct. 565, 566, 56 L.Ed. 941;Smith v. Kansas City Title [& Trust] Co., supra......
-
Helvering v. Gerhardt Same v. Wilson Same v. Mulcahy 8212 781 1938
...or enlarge it beyond the point where, Congress being silent, the Court would set its limits. New York ex rel. Bank of New York v. Supervisors, 7 Wall. 26, 30, 31, 19 L.Ed. 60; see Thomson v. Union Pacific Railroad, 9 Wall. 579, 588, 590, 19 L.Ed. 792; Shaw v. Gibson-Zahniser Oil Corp., 276 ......