Professional Documents
Culture Documents
Maryland
Background –
nd
2 Band of US is re-chartered in 1816.
Maryland imposes a “stamp tax” on paper that banks used in printing bank notes
on all banks not chartered by the state –15,000$.
James McCulloch, a cashier at the Baltimore branch refuses to pay.
Early court decisions go against McCulloch.
Question to be decided –
Does any state have the right to tax an agency of the US government?
Ruling
In Favor of McCulloch
2nd Bank of the United States is constitutional – IMPLIED POWERS
It is necessary and proper to carry out other “delegated powers” like
creation of a national currency, collecting taxes, borrowing money, etc.
Maryland does not have the power to tax the 2nd BUS bank in Maryland
because it is in violation of the “supremacy clause” of the Constitution.
This threatens the sovereignty of the national government. (Remember
the Articles!!)
Declares the Maryland stamp tax law unconstitutional.
Significance:
Trying to create a “more perfect union.”
Confirms the legitimacy of the elastic clause and validated the supremacy of the
national government over its member states.
National Gov’t supreme
Background:
• Dartmouth College founded to teach Christianity to settlers and natives.
• Granted a charter from King George III in 1769 to start the college.
• In 1816, state of New Hampshire voted to abandon old charter and take it over
as a state university.
Question to be considered:
• Did the acts of the New Hampshire State legislature placing Dartmouth under
state control, violate the US Constitution?
Arguments of two sides:
• Dartmouth side – argued by Dartmouth grad and prominent Congressmen
most associate with Mass. Claimed the state action was unconstitutional, as
the charter represents a contract which is protected by the “contract clause” of
the Constitution, which states “No state shall pass any law impairing the
obligation of contracts.” Charter from King still valid and thus the university
ought to still be private and run by trustees.
• New Hampshire – argued that the charter was no longer applicable, since the
charter had been given by the King who was no longer sovereign. New
Hampshire’s State Court had ruled in favor of the state’s right to take over the
college.
Ruling of the Court:
• With only one dissent vote the Court ruled against the New Hampshire state
legislature. The charter was a contract, and therefore ought to be protected
and therefore could not be broken by acts of legislation.
Significance
• Again this is a positive step for the national economy as it protects private
corporations from encroachments from the state.
• Court also defined corporation as being “an artificial being, invisible,
intangible, and existing only in contemplation of law. . . [the properties of
which are] supposed best calculated to effect the object for which it was
created. Among the most important are immortality and . . . individuality.”
Corporations then come to have rights and are protected by the Constitution in
this way.