John Marshall

“ A legal power is a right to do certain things. A power to destroy the rights of the banks is, therefore, equivalent to the actual destruction of them; because a power to destroy is a legal right to destroy. Considered in relation to its citizens, all the powers of sovereignty are legal rights.
We say, that if it is admitted that the charter is a contract, the whole controversy is admitted; because every contract necessarily excludes all power in either of the parties to destroy the rights which vest under it. A tax upon the franchise is a tax upon the contract itself. ”

“ The exercise of the one power by the states would merely incommode the general government: the exercise of the other endanger its very existence. Yet are not these subjects, judicially, of equal importance? Equally important, because equally prohibited. Are not all the prohibited subjects of equal importance, and have the states any more power to violate one prohibition than another?
It may be said that the Bank of the United States was established by a law of the general government; and that it was the supremacy of the law which rendered all conflicting laws of the states inoperative. ”

“ It is immaterial whether the legislature is restrained by a written constitution or not. The absolute rights of the constituents are not to be encroached upon, because they may not think it necessary to attempt to guard them by such instruments, which, after all, but very indifferently answer the purpose for which they are intended; but on the contrary are too often made use of, by false and forced constructions, to justify the assumption of powers which the people never meant to grant. ”

“ The mass of the community holds, in its own hands, the remedy against its own oppression, and the abuses of its rulers: but the great conservative principle of political responsibility may act very feebly, or not at all, in protecting and enforcing the particular rights and obligations of contracts against violation by the government. It is, therefore, that political rights, and the vested rights of contract and property, are placed on different bases, and protected by different sanctions. The administration of any political power must, in the nature of things, be more or less discretionary ”

“ The presumption of law is, that all the rights between the same parties, and conferred by the same grant, are to be of the same character, subject to the same tenure, and to continue during the same time. Nothing but strong language to the contrary will create a difference. That act of incorporation is a legal right, subject to no partial or direct legislation. The right to banking business is a legal right, subject to no partial or direct legislation. Why, then, is not a perpetual right to all the profits a legal right, and subject to no partial legislation? ”

“ The power of self government is a power absolute and inherent in the people. But that power cannot exist distinct from the power of taxation. If the legislature can exempt, for ever, all corporations from taxes; they can exempt all merchants, all framers, all manufacturers, or all of any other classes of the community. And, in this way, they can cut off the sources of future revenue; and can fasten and entail for ever the whole burthen of government upon any portion of the people they please. ”

“ The tax is just as effective in terms and in obligation, whether the corporation, qua proprietor, own millions or nothing; whether the capital stock be at cent per cent advance, or the capital invested in it be utterly lost and sunk in the course of trade; whether the income, in the form of dividends, be large or small, or nothing. The amount of capital stock paid in, is the unvarying standard of the duty on the bank; the actual state and condition of the bank, or of the stockholders as proprietors, enters not at all into the scheme of the duty. ”

“ What is called the obligation of a contract, is the duty which the law imposes upon a party not to disturb any of the legal rights conferred upon the other party. The extent of the rights of one party, therefore, is the measure of the obligation of the other. ”

“ It is not wholesome doctrine for private corporations to imbibe, that they are independent of the power that creates them; and that they shall be protected in setting it at defiance. Not only are their franchises and other property subject to the taxing power of states; but, so far as the public interests are affected by the action of a corporation, so far those operations must be under the control of government, whose province and paramount duty it is to provide for the public welfare. ”

“ Fletcher vs. Peck establishes the principle that a state cannot invalidate its own grant; that in making a grant, it acts as a party, and is bound as a party. 'Every grant (say the court) is, in its own nature, an extinguishment of the right of the grantor; and implies an obligation not to re-assert that right.'
The Dartmouth College case puts an end to all discussion of the question, whether a charter is a contract, and whether the public benefit derived from them is not a sufficient consideration? ”

“ To say nothing of the evident inconsequence of the conclusion from the premises, and of the inaccuracy of holding, that the constitutional incompetency of a state to lay new exactions upon its own contracts, and upon the mere abstract rights of contract, created by the state itself, is the same thing as a substantive stipulation to exempt property, in its nature an appropriate and legitimate subject of taxation; we may wonder why the axe was not applied to the root of the bank charter. ”

“ There is nothing of the social property or possession incident to partnership. Then, the property of one person is merely adopted as an arbitrary measure of the quantum of taxation on another. There is no more of indirect taxation upon the bank stock held by individuals, and thus made the arbitrary measure of taxation, than upon the lands, ships, choses in action, or other property held by the aggregate body for the benefit of the several corporations, but not comprehended in the rule of admeasurement for determining the mere quantum of taxation. ”

“ The first and seventh sections of the charter evidently contemplate the ownership of property by the bank in its corporate capacity. The real estate and the profits of the capital stock, previous to a dividend, may be considered as belonging to the bank. But the capital stock itself is as much the property of a stranger as of the bank. There cannot well be two entire owners to the same property. The stockholders have the property, and the corporation the management of it. The corporation is not even the trustee: for it has not the legal estate, and no power to sell. ”

“ In the present case, we shall attempt to show that there is a necessary implication that the state should neither exercise nor possess the power of destroying any of the rights conferred by the contract. We do not confine the proposition to one mode of destroying those rights; but we mean to contend that all modes in which sovereign power can exert itself were necessarily excluded. The taxing power is undoubtedly of vital importance, though not more so than many others. It is indispensable to the support of government, and so are nearly all the powers which sovereignty usually exercises. ”

“ All powers, the court said, over which the sovereign power of a state extends, are subjects of taxation. The sovereignty of a state extends to every thing which exists by its own authority, or is introduced by its permission; but does it extend to those means which are employed by congress to carry into execution powers conferred on that body by the people of the United States? ”

“ How can a legal power exist which it is unlawful to use, or a legal right which cannot be exercised? Physical powers may exist, the action of which is prohibited: but legal powers exist only in action. They are contemplated only with a view to their exercise. ”

“ The case of land purchased from the state being liable to taxation, in common with the land of other individuals, is put as an argument, in point, against us. No one ever imagined that a change in the condition of the land, from public to private domain, necessarily annexed any pre-eminent privileges to it. So we admit, without qualification, that all property held by the bank, by virtue of its charter, is taxable in common with other property of the like description. ”

“ If the power of taxation is inconsistent with the charter, because it may be so exercised as to destroy the object of which the charter is given; it is equally inconsistent with every other charter, because it is equally capable of working the destruction of the objects for which every other charter is given. If the grant of a power to trade in money to a given amount, implies an exemption of the stock in trade from taxation, because the tax may absorb all the profits ”

“ It is not the mere quantum of the injury to the grantee, nor the degree in which the terms and conditions of the contract are transgressed, that determines the rightfulness of the act. Once admit a discretionary power, in any degree, as resulting from the relation of the parties, and not from the limitations of the contract, and it can be nothing but an unlimited discretion. The granted liberties and faculties cannot be afterwards clogged with any new conditions or incumbrances, that may either stop or retard their action; neither a molehill nor a mountain, can be raised in their path. ”

“ A prohibition not to steal leaves the natural person with the physical power of violating the injunction: but does it not destroy the legal power? The powers of the states are all legal powers. They have no physical or natural powers. ”

“ All the legislative power which the state has a right to exert, is remedial in its character, furnishing remedies for or against the corporations, and imposing penalties for violations of their contract. The same power might have been exercised over the Dartmouth college, and the same authority is constantly exercised in all the states, over corporations of their own creation. ”

“ It is said by the writers on the subject of corporations, that such capacities and qualities as are necessary to the creation and legal being of a corporation, and such only, are incidents of the corporation. But it cannot be said that an exemption from taxes is necessary to the existence of a corporation, especially a moneyed corporation. A corporation is as competent to pay duties imposed upon it as brokers, or retailers, or distillers, or auctioneers, or any other individuals or companies of any other trade, craft, or profession ”

“ An objection somewhat novel is started, which goes to limit and restrict, instead of enlarging, state power, by denying its competency to make such a contract as we say it has made in this case. The state cannot, it seems, alienate or part with its sovereign power, in whole or in part. Taxation is an incident of its highest sovereign power, and cannot be aliened by contract; therefore, a contract to exempt any particular person or species of property from taxation is void. ”

“ In relation to individual parties under the law, it will be conceded that no such power can exist. In relation to sovereign parties under the constitution, is not the rule necessarily the same? Is not the dominion of the constitution over the states the same, as to its nature and extent, as that of the law over individuals? ”

“ Nor, if this were practicable, would it be a wise or salutary system of taxation. It is certainly wiser and better to draw revenue from surplus income, than from the immediate products of labour and industry; from commodities and trades which administer to the pleasures or the vices of men, from the luxuries and superfluities, than from the necessaries of life. And thus the United States government began with duties on distilled spirits, on stills, on vendors of wines and spirits, on various articles of luxury, and on banks ”

“ which ought seldom, if ever, to be decided in the affirmative, in a doubtful case.' 'The opposition between the constitution and the law should be such, that the judge feels a clear and strong conviction of their incompatibility with each other.' And in the Dartmouth College case, 4 Wheat. ”

“ The great object of an incorporation is to bestow the character and properties of individuality on a collective and changing body of men. This capacity is always given to such a body. Any privileges which may exempt it from the burthens common to individuals, do not flow necessarily from the charter, but must be expressed in it, or they do not exist. ”

“ Thus, should the public good require the suppression of a paper currency, certainly the government would have a right to suppress it, although, in doing so, they would destroy the banks whose paper composes that currency. ”