The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
J q (JOINT COMMITTEE OF BOTH HOUSES THE GEJVERAL ASSEMBLY OF OHIO, ON THE COMMUNICATION OF THE AUDITOR OF STATE I3ponthe subject of the proceedings OF THE BANK OF THE UNITED STATES, AGAINST THE OFFICERS OF STATE, IW THX BKITKD STATES' d i C U I T COURT. COJVJfU.YICATED BTTHB V'1- Governor of O\\io^ for l\\e cotvsidevatiau "'-. OF THE NEW-HAMPSHIRE LEGISLATURE. £f CONCORD: * FBHTTBD B T HILL AND MOOR*, JtrNs, 1W1* J A i / ^ . / v>w- Digitized by ) Digitized by Google From the papers submitted to the committee, it appears, that in the month of September 1819, the Bank of the United States exhibited a bill in chancery, before the circuit court of the U. S. then sitting at Chillicothe, against Ralph Osbon> Auditor of the state of Ohio, and obtained, in that court an order of injunction against him, prohibiting him as Auditor from performing the duties enjoined upon him by the " Act to levy and collect a tax from all banks and individuals and companies and associations of individuals, that may transact banking business in this state, without being authorised te do do by the laws thereof." It further appears, that the Auditor not being satisfied; before the time appointed by law for him to act, that an injunction had been ordered, issued his warrant ie conformity to the law, under which the tax imposed by law was collected and paid into the state treasury; It further appears, that the circuit court of the U. States, at their last term, adjudged that this act of official duty was a contempt of court, for committing which they awarded a writ of attachment against the Auditor, returnable to Jan. term next It appears, also, that at the September term last, upon the application of the. bank of the Uni* Digitized by Google ted States, an order 'was made, allowing them to file an amended and supplemental bill, making Samuel Sullirafl, the Treasurer of state, a defendant, " 05 present Treasurer efOhio, and in his pri~ vate <md individual character ;" and also making Hiram Mirick Curry, late Treasurer, and John L» Harper, the officer that collected the tax, defendants* Upon the filing of which amended and supplementary bill, a further order of injunction wa$ made, prohibiting the Treasurer of state from "negotiating, delivering over, or in any manner parting with op disposing of'1 the money collected for tax, and paid into the state treasury according to law* And it further appears, that besides these proceedings, an action of trespass at the suit of the iBank of the Uaited States, was commenced and made returnable to the last September term of the same circuit court, against Ralph Osborn, iohn JL Harper, Thomas Orr, James M'Collister, John C. Wright and Charles Hammond, in which the plaintiffs have filed a declaration, charging, »moog other things, the taking and carrying away the same sum of money in the proceedings in chancery specified, under color and pretence of the law of Ohio. Whatever attempt may be made to character-* ise this proceeding as a controversy between individuals, it is evident that its practical effect is to make the state a defendant before the circuit court of the United States. In every thing but the name, the state is the actual defendant No Digitized by Google other interest but that of the state is involved. In every stage of the enquiry, the rights, interests and powers of the state only are presented for adjudication. The final process must operate direct up* 6n the state, and, if effectual, must derange totally the official accounts both in the Auditor's and Treasurer's departments ; for if there be a specific decree, as prayed for in the supplemental bill, * specific execution may be sent into the state treasury, to carry that decree specifically into effect. Nor is it only in its practical effect, that the real character of this proceeding is to be perceived. ft is distinctly Avowed in the body of the bill, both by naming the General Assembly of Ohio, as the offending party, and by calling on the court to re* strain the Auditor of state from performing official acts in his official character. And, in fact, it Would seem, from the foundation upon which the injunction was allowed, both on the first and second application, that the court must have regard* ed it as substantially a proceeding against the state. AH judicial proceedings are founded upon facts established judicially* The transactions of individuals are verified by testimony judicially taken. But the proceedings of states and governments are regarded as of public notoriety, to be received upon the evidence of general h story. When an individual applies for an injunction against another individual, his application is never regarded, unless the matter alleged in his petition be established Digitized by Google 6 by hid own affidavit, or that ofothers. The court never restrains an individual in the exercise of hi& supposed rights? upon the naked suggestion of another. The law of Virginia, of Kentucky and of Ohio alike requiresr that before any injunction shall be granted, the judge or cpurt granting it, shall be satisfied by affidavit, at th? foot of the bill,, or by other means, that the allegations in the bill are true. The practice of the federal court, and fed* eral judges in Ohio, has been to require proof. No injunction has been granted upon mere suggestion, until that against Ralph Qsbern, Auditor of state ; no otjber injunction has been granted upon mere suggestion, but that against Samuel Sullivan, Treasurer of fetatfe. Both these injunctions were granted instantly, upon application by bill alone without any proof being offertd or required, that *m? single allegation contained in, the bill,, was true. This 4e]parturb from the common course of proceeding tan be accounted for and vindicated upon but one ground: that the party*substantially a defendant was a sovereign state, all of whose proceedings Were matters of public notoriety, of which the court was informed without proof io the ordinary mode. By the original provisions of the constitution of the United States, the federal judiciary were empowered to take cognizance of controversies be* tween a state and citizens of another state : but by the "same instrument this jurisdiction was vest, ed exclusively in the supreme court. A state nev- Digitized by er could be held to answer or made amenable be* fore a circuit court of the United States. By the eleventh amendment to the constitution, this power to call a state to answer before the supreme court; at the suit of a citizen was wholly taken from the federal jiiidiciary.—It is perfectly clear that before this amendment to the constitution was made, the circuit court of the United States could Ttot have.entertained jurisdiction of a suit in equity, . enjoining the state officers from executing the state laws, in a case of the direct action of the state sovereignty, like that for the collection of taxes. The principal, and not the ministerial agent is always the proper defendant in such a suit That principal, being directly and personally amenable in the supreme court, his case could pot be drawn to a tribunal that had no jurisdiction ov^er the principal, by instituting a suit against the agetit alone* The state, before the amendment, couM be sued in equity before the supreme cburt of the United States, and could, in a proper case, be there enjoined. In that court only, could a state be prohibited ffem carrying her laws into operation. For that very reason her officer could not be enjoined in a circuit court. It would be to subject the interest and rights of the state to the decision of a tribunal that had no jurisdiction to decide upon them, and where the state could not be admitted a defendant to defend them- It is therefere a strange doctrine, to maintain that an amend, aent to the constitution, expressly forbidding the k Digitized by 8 judge* so to construe the conatitutioD* as tQ call state* before tbe supreme courts as. defendants,, at tbe suit of individuals, is to operate as Testing the circuit courts with power to do that indirectly which they never had any direct power to do* The amendment was intended to proteot the. states from a direct responsibility, upon process before the supreme court; the oply tribunal before which they were then liable to be called to answer By the construction now attempted* this amendment is macje to vest the circuit c^urt with a jurisdiction equally effective against the state, though indirect in its form of proce&diag. It effects oathing but the degradation and huxniliation of the states. Instead of the di&Haction of being called to defend its rights before the highest judicial tribunal of the nation, the state is reduced to the faxel of the most ordinary citizen, and made an&werable in an inferior tribunal Instead of enjoying tj*e privilege of managing directly itt oym ' apd absolutely cortfroliqg it muat submit to tho co^equq^oe^ of bl«odi«g i& interests, with thefcipaklityw trift^hoi^ o | ^ e r » , and muftt be coocUvfed hy it dexUiw made, ,ia a east, which it is jn th* power of tfhcw tft «MPH|e as they please. The compaiUee art that s^b was sot ^o^JAPtof tte and that such is m constitution. It k afsorted, that tbifr aft dftfewbois } :thtt Digitized by although thp state cannot be sited* yet persons remain responsible, and may be made subject to every proper process* It has heretofore been deemed a sound maxim in ethics* that whatever could not be lawfully done directly, coold not bo justly effectedi by indirect means* If this maxim be regarded* as the state never could bcf directly proceeded against in the circuit court, without a violation of the constitution ; every indirect mode of proceeding ought to be considered inadmissible ; but io fact, and substantially, this is not a proceeding against individuals. A csart of chancery proceeds against the per-* 6oo, and against the subject: in technical language, tit personam titd in rem. The proceeding in this case, is not against Ralph Osborn, and Samuel SulTivatf, for any matter ia which they have an individual or personal concern. It is only in the performance of official duties, that the process of the tourt interferes to control them; it Was not for himself, orapoft his individual account, that Ralph Osbarn, issued his warrant, to collect a tax from the bank ©f the United States. It was for the state? and: in his character as Auditor, that he act^ d ; it is trot in the transaction of individual business, or upon bis owfr contracts, that Samdel Sullivan w forbler to* dispose of, or part with, particular fondsi He is inhibited from paying away money received by him as treasurer, held by him atfsucny and for the disbursement of which he is officiafTy responsible! to the state. 2 * Digitized by 10 A state in the abstract is an intangible entity like a corporation ; in substance, it is a community of individuals; it can only act by individual agents? and its power of action is completely destroyed, when these agents are restrained from acting. It is solemn trifling to admit that a state cannot be sded in the circuit court, and at the same time insist, that every agent that the state employs may be controlled and restrained from performing his official functions, by the same circuit court. The auditor of state is a ministerial.agent in the executive department of the government; it is his duty to superintend the collection of the revenue ; he acts direct for the whole people upon each; in every one of his official acts, be exercises a portion of the sovereign power ; and when he is restrained from acting officially, it is the sovereign power of the state that is restrained. Injunctions to stay proceedings in the courts of law, are founded upon a different principle. They act upon the party and not upon the court, and call in question the conduct of the party, not the justice, or integrity of the judges. The people, too frequently called the government, never iatend that one individual shall use their power to do injustice to another. Courts of chancery are instituted, not to control the courts of law, but to con. trol individuals, who may have obtained unconscionable advantages in the law courts. The proceedings of the chancery courts, is the act oi the people 5 but it does not operate upon the people Digitized by G00gk _.^ ^ 11 themselves, in and through the courts of law. It only withdraws the subject from the judgment of the people in their law court, to their judgment in their court of chancery, upen the principle that adequate justice cannot be administered elsewhere. This injunction operates through the Auditor, upon the whole people of the state. He is their agent; his acts are their acts; he proceeds under their direction, and for their sole benefit. They are responsible for his errors, and are bound t o . protect him from unjust responsibility. If the injunction was intended, and did in fact* operate upon Ralph Osborn alone, his resignation or removal from office, would render it unavailing. His successor in office, would be at liberty to act, notwithstanding the injunction. But that this was not the intention, and is understood not to be the effect of this injunction, is placed beyond all doubt. The bill prayed not only, that Ralph Osborn, Jluditor of state, but that all others whom it coBcerned, should be enjoined—and so the order of injunction was made. The court have judicially de \ dared, that this order did not extend to Ralph Osborn and his agent alone ; but to all who might act upon the subject By resigning his office, after notice of an application for tbo injunction, Ralph Osborn would have ceased to have any concern in the subject of it. Yet we are distinctly given to understand, that his successor in office was DigitizedbyGoOgle 12 ebjoined, as well as everj other agent or officer whom the law might appoint to perform any duty connected with the collection prohibited j This fact, alone, would seem decisive, that the proceeding is not personal against Ralph Osborn, but is direct against t|re Auditor of state. It is charged in the supplementary biH, that the money collected was delivered to Hiram Mirrick Currey, to keep upon deposit, and by him delivered to Samuel Sullivan, to keep in like manner *, it is also charged, that at the time of receiving the money, Currey was treasurer of the state of Ohio, and at the time of delivering it to Sullivan, he was the successor of Currey; and the bill prays that Currey, as late treasurer, and Sullivan, as present treasurer, and also in their individual capacities, may be made defendants ; the bill also prays, that Sullivan may be enjoined from disposing of the specific monies, received by him upon account of the tax. This injunction too, is granted, upon the suggestions contained in the bill without. any evidence that the money was paid to Sullivan, as alleged. This proceeding is not merely personal against the treasurer, it is direct against the subject; and that subject is money in the state treasury, received by the treasurer as revenue of the state ; receipted for as such, and as such carried into • his official accounts. But this is not a proceeding against the state ; because the complaints allege, that the ( nature and character of the whole trans < Digitized by Google 13 action, forbids the supposition that the money was received by the defendants, in the capacity of Treasurer.' Thus the court are called to determine the whole transaction, to be illegal; and then to invest themselves with jurisdiction to reach the specific funds, by shutting their eyes to the real facts of the case, and supposing a state of things that never did exist When a state was liable to be sued' before the supreme court, the process issued against the state, and the court directed a service to be made upon the governor, for the time being. If the proceedings in the present case are correct, it is now sufficient to issue process against the person who may happen to be treasurer, • and name him both as treasurer and as an individual, and upon such pro* cess, at the mere suggestion of a complaint, prohibit him from using, for the benefit of the state, any moneys paid to him officially, which it may be alleged were collected illegally. In due' season a decree may be passed, for the specific restitution of the money thus claimed, and this decree will bind the treasurer, that may be in office when it is pronounced, and subject him to the responsibilities of a defendant. If he refuse to pay the money, the court may attach him for a contempt; if he does pay it without a legislative appropriation* he is liable upon his bond, and subject to impeachment. Such might have been the consequence of a judgment against a state, in the supreme court; and it was no doubt an apprehension of such result, Digitized by Google J4 that induced the amendment to the constitution* forbidding the federal courts to call a state before them as.a defendant, at the suit of an individual. It is evident that the principle of the proceed* ing secures to the federal tribunals every power supposed to be taken from them b j the amendment If the Auditor of state can be enjoined from acting officially; if the treasurer can be decreed to pay back money received as revenue, upon the doctrine that the court consider them wrong doers, there is no case of the exercise of state power that may not be [completely controlled. The legislature levy a tax. The federal court are called upon, and upon motion, adjudge it to be contrary to the constitution of the United States: they regard the collector as a wrong doer, and enjoin him from collecting it. The tax is collected and paid into the state treasury; the federal court are applied t o : they pronounce the tax unconstitutional : the collection a trespass: the state Treasurer a bailee for the claimant, and decree a restitution of the amount. The Legislature of the state enact a law for the punishment of crimes : an individual is convicted under its provisions, and imprisoned in the penitentiary. He complains that, the law under which he is convicted, is repugnant to the constitution of the United States. He calls upon the federal court for redress. The court decide the law'to be unconstitutional, the conviction illegal, the keeper ef the penitentiary a trespasser, and order the prisoner to be discharged. Digitized by 15 Ib such a proceeding they keep the state entirely out of view, and regard it as a mere personal matter. They shut their eyes to the real state of facts, and assert' that the nature and character of the whole transaction forbid the supposition9 that the state cogld have had any 'agency or concern in the imprisonment. In this manner the states may be placed at the foot of the federal judiciary, as well in its administration of criminal justice, as in its fiscal concerns. In granting an injunction against the Auditor of state in the first instance, and in awarding an attachment against him for disobedience to that injunction, the federal circuit court in Ohio, have unequivocally asserted a jurisdiction over the state and its officers, in the collection of revenue. The circumstances, under which the attachment was ordered, admonish us that the jurisdiction thus asserted, will be without reluctance enforced. The Auditor will be fined or imprisoned, or both, for executing his official duty ; and the state must either acquiesce in the correctness of the proceeding, and avert the consequence by retracing their steps; or, regarding it as an encroachment upon their just authority, must prepare to take such a stand against it, as the constitution and a just regard to their rights may warrant. The committee conceive that the proceeding in this case by bill in chancery and injunction against the Auditor and Treasurer, is to every substantial purpose a process against the state. The Auditor Digitized by Google 16 and Treasurer are defendants in name and in form only, and can only be made and regarded as defendants to evade the provisions of the constitution. From the view they have taken of the subject, the conclusion seems inevitable, that the federal court have asserted a jurisdiction which a just construction of the constitution does not warrant. And the committee conceive, that to acquiesce in such an encroachment upon the privileges and authority of the state, without an effort to defend them, would be an act of treachery to the state itself, and to all the states that compose the American Union. The committee are aware of the doctrine, that the federal courts are exclusively vested with jurisdiction to declare, in the last resort, the true interpretation of the constitution of the United States. To this doctrine, in the latitude contended for, they never can give their assent. Eyery court of justice where they'have jurisdiction over the parties to the suit, and the subject of controversy, are of necessity invested with power to decide every question upon which the rights of the parties depend. And their decision is conclusive, unless a superior court be invested with ju. risdiction to review it. On this subject the pow* ers of the federal and of the state judiciary are precisely the satae. These powers are not founded upon any express constitutional provision; but result from the very nature of written constitutions, and judicial duty. Digitized by Google 17 Among other things, the constitution of the l i nked States declares, that * no state shall pass any bill of attainder, eti post facto law, or law impairing the obligation of contracts.9 A defendant prosecuted for a crime before a state court, may insist that the law upon which he is accused is ex post facto. If the state court decide in his faror, it is conclusive ; because there is no law authorising the federal court to review it. If the decision be against him, it is for the same reason conclusive* N e person cap be criminally prosecuted before the federal courts for the violation of a state law. No appeal or writ of error from the decision of a state court, in a state prosecution, lies to the federal court. The interpretation of that provision of the constitution of the United States, which declares that no state shall pass an ex post facto law, is now exclusively vested in the state courts. Nor can the federal courts ever be* vested, under the constitution, as it now stands, with effective juris, diction to interpret and enforce this provision. They cannot be empowered to take the administration of criminal justice from before the state courts, in the incipient stages of a prosecution. And a writ of error after judgment, would clearly be a suit at law, in which the state must be defendant, and would come directly within the terms of the amendment. In this case, then, the federal courts cannot now pronounce an effective judicial decision. They cannot possess themselves of jurisdiction over the 3 . • : • digitized by n parties* upon whom an; decision the; might make, cduld operate. Yet individuals ma; contrive some feigned action, or make some feigned issue, and* present to the federal court for decision a case, calling upon tliem, and thus empowering tbem to decide that upon a particular state offacts, the operation of a state law would be ex post facto within tbe meaning of the provision of the constitution of the- United States. A decision thus obtained, Would be entitled to respect, as the opinion of eminent meo, but never could be regarded as a judicial declaration of the law of the land. Bj: an express provision of the constitution'of the United States, a provision introduced purposely to effect that object,, the states, in any controversies they may have with individuals, are placed beyond the jurisdiction of the federal courts. It would seem, incontrovertible, that the amendatory article placed the states, and the United States, in a relation to each other, different from that in which they stood under the original constitution. Different in this, that, in all cases, where the states could Dot be called to answer, in the federal courts, these courts ceased to be a constitutional tribunal to investigate and determine their pdwer and authority, under the constitution of the United States. The duty of the courts to declare the law, terminated with their authority to execute it Tfee committee conceive, that such is the true and that such is the settled construction of the . j Digitized by Google 19 constitution; settled by an authority, paramount td all ©thel^ and from which there daxijbe.no appeal ; tire authority of the peopfo thejmelves. Soeariy as the year 1708, the states, yft .the people, were called to declare their opinions'tipon the question iavbhring the relative rights and powNhegoTennttefttrf fbe "United 'States, and governments of the separate v*t*tes. JIn the month *f iWamber, tff *hat;yew, ibt state of 1 " ^hat J the Beretal «tate^€ompdMng4h«a tTdfted ^States 6f Aurerica, are nbtiunitt-d on the princi^ govpaet mider the constitatwfl'for^e^t M Vtii mevdaxtitts tifeftrto, tiiejr eori^titi^d a *-«rtd ftftMtibiMt fobspedal purposes, ^tditfhat gchrcflrmneiit certain atffihite pt>ff ers, Te"hetifogV&h stttteitoitt^Hhe TfesSatiary ttaasi of ^ Hgfct to AMt t^wn stff ^dr^nmedt: atlfl 4faat * ^hensw-rcrthe generalgdv^rDment afeum^firun" delegated powers, its acts are unauthotititfve, •« f oj6 iBttd'-tf Ho^forcfe; tbaTto this cotapadt, e>ch ^ state acctfteS as arftate,and is an iriCegfal p a r ^ u its co-states fornring, as to itself, the 6flier party; "that the gorernment created by Ais compact ^ wan not ipaderthe etclusiye or'final judge'df'ttte "extent of the powers delegated to lfgetf, since u that would have made its discretion, and not.'&e «corifetifatioh, t]he mature of its power- Bat "that as in all 6ttaafr dale^ rf cdm^Ct '«V0$ |>at- Digitized by Google 20 " ties haying no common judge, each party has an "$qual right to* judge for itself, as well of infractions, as of the mode and measure of redress." •In the month of December, of the same year, 1798, the legislature of Virginia resolved: " That this assembly doth explicitly and per" emptorily declare, that it views the powers of * the federal government, as resulting from the u compact to which the states are parties, as lim" ited by the plain sense and intention of the instrument constituting that compact; as no far* " ther valid than they are authorized by the grants " enumerated in that compact; and that in cas« *4 of deliberate, palpable, and dangerous exercise " of other powers, not granted by the said com".pacty the states who are parties thereto, have " the right, and are in duty bound, to interpose,, w for arresting the progress of the evil and for " maintaining within their respective limits, the " authorities, rights, and liberties appertaining to "tfaem." It cannot be forgotten, that these resolves, and other? connected with them, were occasioned by tfye acts of congress commonly called the aliea and sedition laws, and by certain decisions in the federal circuit courts recognizing the obligatory force of the common law, as applicable to federal jurisprudence. The resolutions of Virginia were submitted to the legislatures of the different states—Delaware, Rhode-Island, Massachusetts, the senate of New- Google 21 York, Connecticut, New-Hampshire and Vermont, returned answers to them, strongly reprobating their principle, and all but Delaware and Connecticut, asserting, that the federal judiciary were N exclusively the expositors of the federal constitu-, tion. In the Virginia, legislature these answers were submitted to a committee, of which Mr. Madison was chairman, and in January, 1800, this committee jnade a report, which has ever since been considered the true text book of republican principles. , .' N In that report, the claim that the federal judiciary is the exclusive Expositor of the federal constitution is taken up and examined. The committee say : " But it is objected that judicial authority is to 44 be regarded as the sole expositor ot the constitution, in the last resort; and it may be asked 44 for what reason the declaration by the general 44 assembly, supposing it to be theoretically true, " could be required at the present day, and in so " solemn a manner. "On this objection it might be observed, first; 44 that there may be instances of usurped power, 41 which the forms of the constitution would never "draw within the control of the judicial departm e n t ; secondly, that if the decision of the ju"diciary be raised above the authority of the sove44 reign parties to the constitution, the decisions of 44 the other departments, not carried by the forms 44 of the constitution before the judiciary, must be Digitized by Google *equaHy*authoritative andfinal,with the decisions of that department. Sut the proper answer to " the objection 1s, that Jhe resolution of the Gener"al Assembly relates to those^ great and eitraor. tt dinarjr oases h which all the Tories of the conv stitution may prove ineffectual against infractions ".dangerous to the essential rights of ihe parties « to it 'the resolution supposes, that dangerous ^powers not delegated, may not only be usurped ** an& executed %j the other department?, but thstt * the jutticidtdepartments also may exercise or sanc"Mondangcrous powers beyond the grant ofth* ?o*iu ^stitution; and uttlMATB To'ttra dowsTrrirrfen, To CONSEQUENTLY THAT THE BRIGHT OP THE PARTIES ** JUDGE WHETHERTHE COMPACT HAS IJBftN DANGfiR^ OUSLT VIOtATEP, MUST EXTEND TO VIOLATIONS SY ONE "l)EUl6ATEli AUTHORITY !AS WELL AS *Y 6 ANOTHER, BT THE JUDICIARY AS WELL AS BY THE EXECUTIVE OR '** LEGISLATWE!" ^"However true, therefore, it may be ihat the ^JuBicial 'department is, in afl fjueationfi subpitted ** to it *by the forms of ^tbe constitution, to decide u in the last resort; this resort must necessarily be ^deeiie3 the last in relation to the authorities of ^ ihet>tbei^ departments 6f the goYeTnment; mot in " relation to the rights of the parties to the conu stitutioiiai compact/from Which the judicral as W i 1 : ^ i ^ th^ir tfceaathor«ity a^egdti^it; ^iril ftfe c^ridufrisnce of this i Digitized by 23 be^on* the possiblo oC any rightful' Pemadyy tb* ray consti. eft Massa*hii«*t9> R M M b t a r i * . the New-York, New-ftampshire and and the answer tt»ttees# t^ of ?ii^ibiia% W^PS a £reqt aadconstitutioiral appeal ta= tbe states an* t^ the people,, upoa i l » gnent qo«stio»at iesuci Tb» appeal was eWided hy Ae- presiifenfSttl dod othw «Jectibot of 14HXL 1%^ states and #ft& people reeogoiaetf and s^rawd tfee doctrines of Kentucky aa* Virginia^ by affect ing a Mttl ebaog« in the admiQktvatiw of tht f& «ral gw^Poraeftt. In tb« p»rfcw of ©J conyicted under the se^rtioolaw, and in the f«aee of hi* fiae, fbe new admrowtFatkw q r ocalfy recognized the. AecbTon and the authority of the s<a!e^ and of th* poopkt. Thus baa the quctetiefi, whether the fe^bral oourls are tbo sole expositors o f the oonBtkutieo of the United States in A e hmt resort, or whether the states, u as in all other cases, of compact among parties IraTingiio common judjge^ have an eqaat right Jo interpret that constitution for tbe4&sei?eg* where their sovereign rights are mrafred, beefe decided against the prevention of the federal judges by the people thcTHselres, the true^source of all legitimate power. In tile opinion of th« committee, the high au- Digitized by Google 24 thority of this precedent, as well as the clear right of the case, imposes a duty upon the state, from which it canoot shrink without dishonor. So Jon* as one single constitutional effort can be made tosave them, the state ought not to surrender its rights, to the encroaching pretentions of the cir* cuit court But justice should ever be held sacred. Pride and resentment are alike poor apologies for perseTerance in error. If it were admitted that the proceedings of the federal court against the state, through iti officers, are not warranted by the constitution* still, if the state has commenced in error, it should abandon the controversy. Before, therefore, we determine upon the course we ought to pursue, it is necessary to review and examine the ground upon which we stand. The bank of the United States established an office of discount and deposit, at Cincinnati, in this state, which commenced banking in the spring of the year 1817. The legislature met in December following, and upon the 13th day of December, a resolution was proposed in theHouse ot Representatives, and adopted, appointing a committee to enquire into the expediency of taxing such branches, -as were, or might be established within this state. The committee reported against the expediency of levying such a tax ; but the house of representatives, reversed their report by a majority of 37 to 22. A substitute for their report was then offered, asserting the right of the state to levy such a tax, I Digitized by 25 , and the expediency of doing it at that time. The constitutional right of the state to levy such a tax, was carried by 48 to 12, and the expediency of proceeding to levy the tax, by S3 to 27. A bill assessing a tax, was reported to the house, and passed to be engrossed for a third reading and final passage, and upon the third reading, was postponed to the second Monday of December, 1818. After this solemn assertion of the right to tax, and when a bill for that purpose wa« pending before the house of representatives, the bank proceeded to organize a second office of discount and deposit, at Chiilicothe in this state* which commenced banking in the spring of the year 1818. In January 1819, the legislature enacted the law levying the tax, and postponed its execution until the September following, that the bank might have abundant time so to arrange their business, as not to come within the provisions of the taxing law. At the period of adopting these measures, the constitutional right of the state, to levy the tax, was doubted by none, but those interested in the bank, or those who expected to derive pecuniary advantages, for themselves or their friends, by the location of branches. It seemed impossible that a rational, disinterested and independent mind could doubt. During the existence of the old bank of the United States, the state of Georgia had asserted this right of taxation, and actually collected the tax. The bank brought a suit, to recover back the money, in the federal circuit Digitized by Google 26 court of Georgia. Thitsuit w*s bought before the supreme c*urt, upon a question not directly involving the power of taxation. The supreme eotirtdcoidedthe" point before them, in favor of the hank, but upon such grounds, that the wit was abandoned and the tax submitted to. When th* charter #f the present bank was enacted, it wa$ known that the states claimed, and had practically asserted the power of taxing it, yet no exemption from the operation of the power is stipulated by Congress. The natural inference from the silence of the charter upon this point, would seem to be, that the fiower of the states was recognized, and that Congress were not disposed to inter-* fdre with it. * The Constitution of the United States had distinctly expressed, in what cases the taxing power t>f the states should be restrained. No maxim of legal construction is better settled, and more universally acknowledged, than, that express limitations of power, either in constitutions or in statutes, are distinct admissions that the power exists, and may be exercised in every other case, than those expressly limited. With a knowledge of these facts and doctrines in their minds, that a confidence in the power of the state, to levy this tax, should be almost universal, is what every intelligent man would expect. But after the law was enacted, that levied the tax, and before the time of its taking effect, the Supreme Court of the U. S. in the case of Maryland and ty'Colloch, decided, that ed by G o o g l e Digitized by / the states itere debarred by the constitution %>f thfe United States, from asseBsing or letyfag any such tax. And upon tbe promulg&tron of this && ctsion it is maintained that it became thfe doty at the stale and its officers to acqtfiefcce, atod trfeat theactdfthelegislature a* a <tead letter. Tbe committee hare e&nsiderfcd this portion, and aVe riot satisfied that it is a cofifcct bfiei It has been ah-eadyfehewn^tbat sobe t t e iiffi amendment to the constitution tbe separate itati% as partiefe to the compact «f umoB, ar^ dot subject tb the jurisdictton 6f tbt federal cttltts, Uftod q d ^ tions involving their power awd alrtottrity as reign states. Not being tobjtitt \6 th«k* tiorij no state can be contfccted by tbe opirribtts of these tribunal : but thefe ifrfe qtifeititttisJh respect to which thefd isrtc*cbditrtoh judge, and therefor^ the state hafe a right to jttflje foi1 ftstelf. It by th^ management of a party, and through t&6 inadvertence of Cdnnivance f>( a ^ate, a: cfad* be presenting to ttre supreme coirflt of tfc^ gtafeisfor4decwibh, im^o>tant and interesting queitioris of state power, aiid state" authdnty, upon no just prniiciple, ought the stated to be concluded, By atiy decfeittn hadtfpdtisuch a case. The committee art dfearfy of opinion, that such is the true' character of the case, passed tipoh the world by ttfetiUe of B^Cofloch is. Marylani It wa^ 6hc6 remarked, by a most profound politician, that Words are things; and the observation is most dn^WstiohaWy a correct one. This case, dig- Digitized by Google 28 nified with the important and high sounding title of "MCollock vs* the state of Maryland" when looked into, is found to be an ordinary quitam action of debt, brought by a common informer, of the name of John James; and it is throughout an agreed case, made expressly for ^the purpose of obtaining the opinion of the supreme court of the United States, upon the question, whether the states could constitutionally levy, a tax upon the bank of the United States. This agreed case was manufactured in the summer of the year 1818, and passed through the county court of Baltimore county, and the court of appeals of the state of Maryland, in the same season so as to be got upon the docket of the supreme court of the United States, for adjudication, at their February term, 1819. It is only by the management and concurrence of parties, that causes can be thus expeditiously brought to a final hearing in the supreme court. < |? It must be, remembered, that through the extravagant and fraudulent speculations, of those entrusted with conducting the concerns of the bank, it stood at the close of the year 1818, upon the very brink of destruction. At this critical juncture of its affairs,it was a manoeuvre of consummate policy to draw from the supreme court of the United States a decision, that the institution itself, was constitutionally created; and that it was exempt from the taxing power of the states. This decision served to prop its sinking credit; and if it inflicted a dangerous wound upon the authority Digitized by Google 29 of the states, both with the haak, and with John James this might be but a minor consideration. It is truly an alarming circumstance, if it be in the power of an. aspiring corporation, and an unknown and obscure individual, thus to elicit opinions, compromiting the vital interests of the states that compose the American Union* It is not however either in theory or in practice the necessary consequence of a decision of the supreme court, that all, who claim rights of the same nature with those decided by the court, are required to acquiesce. There are cases, in which the decisions of that tribunal have been followed* by no effective consequence. In the case of Marbury vs. Madison, the supreme court of the United States decided, that William Marbury was entitled to his commission as a justice of the peace for the District of Columbia ; that the withholding of this commission by President Jefferson, wasviolative of the legal vested right of Mr. Marbury. Nptwithstanding this decision, Mr* Marbury never did obtain his commission: the person appointed in his place continued to act: his acts were admitted to be valid, and President Jefferson retained his standing in the estimation of the American people. The decision of the supreme court proved to be totally impotent and unavailing. So, in the case of Fletcher vs. Peck, the supreme court decided, that the Yazoo purchasers from the state of Georgia, were entitled to the Digitized by Google 30 land*. * Bat the decision availed them npthing, tnr lets as a make-weight in effecting a compromise* These tfro cases are evidence, that in great questions of political rights, and political powers, a decision of the supreme court of the U. Stales* is not eondusive *f the rights decided by it. If the United States stand justified, in withholding a commission, when the court adjudged it to be the party's right j if the United States might, without reprehen&ioD, retain possession of the Yaaoo lifter the supreme court decided that they th* property ef the purchasers froiii Georgia, purely the state of Okio ought not to be condemned because she did not abandon her solemn* legislative acts, as a dead letter, upbrt the promuU gfartidn of an opinion of that tribunal. This opinion is now btfot* as, and the committee cotfceivfc that it id the duty af this General Assembly, calmly to etamirte the principles and reasoning updw which it is founded. Much deference is due to thd respectable individuals by whom it way formed; and more tf> the high station they o«cojqr in the government. Although their opinion id not admitted to have the force of absolute aothority, yet a course of proceeding pronounced by suck eminent statesmen and lawyers to be unconstitutional, ought not to be lightly and unadvisedly adopted. It is not perceived, that the power of the state to tax the officers of the bank of the United States established within their jurisdiction, is necessarily Digitized by 31 connected with the question, whether congress have, or hare not, the qonstitutionai power to create a corporation. This power may safely be admitted, if, at the time of making this *diiaissioa, we clearly comprehend tfae priociplfcs tipon which the corporation js to bei instituted. 44 A corporation," says chief justice Marshall, in the case of Dartmouth College, u k an artificial 44 being; invisible, intangible, and existing only in 44 contemplation of Jaw. Being the mere creature 44 of law, it possesses only those properties, which 44 the charter of its creation confers upon it,'either 44 expressly, or as incidental to its very existence. "These are such as are supposed-best calculated 4 * to effect the objects for which it was created. ." Among the most important, are immortality, and, * if the expression may be allowed, individuality : " properties by which a perpetual succession of 44 many persons are considered as the same, and <f may act as a single individual. They enable a " corporation to manage its own affairs, and to hold 44 property without the perplexing intricacies, the "hazardous and endless necessity of perpetual con" yeyances for the purpose of transmitting it from 44 hand to hand. It is chiefly for the purpose of 44 clothing bodies of men, in succession, with these "qualities, and capacities, that corporations are in44 vented and are in use. By these means a per44 pe.tual succession of individuals are capable of 44 acting for the promotion of the particular object, "like one immortal being. But this being does Digitized by Google 32 " not share in the civil government of the country, " unless that be the purpose for which it was cremated. Its immortality no more confers on it "political power, or a political character, than im." mortality would confer such power, or charter* " upon a natural person. It is no more a state i&" strument than a natural person exercising the "same powers would be." To this definition of a corporation, the commit, tee iee no reason to object: and when the true character of a private banking company is correctly understood, there seems to be no cogent reason why it may not be incorporated by congress upon the principles here defined. Banking, where the capital is owned by an association of individuals, is a private trade, carried on by the individuals constituting the company, for their own profit. A mercantile company trade in produce and merchandize: a banking company trade in money, promissory, notes and bills of exchange. Both may carry on their trade without a charter of incorporation : the trade of both may be regulated by the law of the state, in which they are located ; and a charter of incorporation may be conferred upon either, without changing the character of their business, or clothing them with any portion of political power. It is competent for the government of the United States to make contracts with an association of individuals, as well as with a single person. The Secretary of the treasury may be . authorised to Digitized by J3 employ an unincorporated banking company, to take charge o£ and transmit from place to place, tb/public revenue. For the performance of this service, he may stipulate a compensation; but he cannot be authorised to barter a privilege inconsistent with the lams'of-the state, where the company is located, by way of compensation for services to be performed. If such banking association be prohibited by the laws of the state, a contract with the general government cannot suspend the operation of those laws. If such banking association be subject to state taxation, they cannot be exempted from tbeir responsibility by a contract with the United States. But a capacity to transact its associate concerns in a legal and artificial .name ; a capacity to exist by perpetual succession, notwithstanding the natural death of the individuals.; a capacity to sue, and a liability to be sued, without abatement, by the death of any one of the parties ; an exemption from personal responsibility for the company debts,and conferring a separate character upon the company funds, 30 as to preserve them distinct from the individual property of the members of the company, are not privileges incompatible with state laws. And if investing a private company with these privileges, may conduce to the public convenience and the public safety, in making contracts to receive and transmit the public monies; conceding that congress are empowered, under the constitution, to confer these privileges, as a consideration for the 5 Digitized by 34 performance of the services agreed upon, and for the purposes of public good, cannot possibly compromit the safety of the states. If their charter of incorporation confer upon the Bank of the United States no other privileges, than are here enumerated, it is manifest, that win every other respect, their property and business "stand upon the same footing with that of other* individuals. It Was in this light, that a charter incorporating a bank, was%contemplated by the first founders of the Bank of the United States. The power of establishing themselves where they pleased, without respect to the state authority, was not claimed by the old bank, nor did they arrogate to themselves any federal character or any privilege, which did not appertain to them as individual citizens. No new or Extended privileges are conferred, by its charter, Upon the present institution. It is created a private corporation of trade, M as much so as if the franchises were invested in a single person." But it has received its chartered privileges from the government of the United States, and therefore it is, that it is exempt from state taxation. If "the committee have been able to understand the opinion of the supreme court, this consequence is deduced from the five following propositions ; First-—The government of the Union, though limited in its powers, is supreme within its sphere of action. I I Digitized by G 0 0 g I e J 35 Second— It is of the very essence of supremacy, to remove all obstacles to its action within its own sphere, and so to modify every power vested in subordinate governments, as to exempt its own operations from their influence. Third—A power to create, implies a power to preserve. Fourth—A power to destroy, if wielded by a different hand, is hostile to, and incompatible with, these powers to create and to. preserve. Fifth—Where this repugnancy exists, that authority which is supreme must control,not yield to that over which it is supreme. These propositions are plausible and imposing : but when carefully examined, and applied to the subject under consideration, it is conceived, tbat no one of them can be sustained, to the extent here laid down. At the threshold of the enquiry, we demand, what is meant by the assertion, that " the governtnent of the Union is supreme within its sphere of action ?" If this observation is applied to a subject, where no question of conflicting power arises, its truth may be safely admitted; and the proposition is equally applicable to the states. In the same sense, each state is equally, ( supreme within its sphere of action.' In regulating our foreign trade, the government of the Union is supreme, and in establishing the modes of conveyance and the canons of descent, each state is equally supreme. Digitized by Google 36 But this proves nothing upon either side, when the relative powers and authorities of the rgeneral and state governments are drawn into discussion. The power to establish light houses, beacons, buoys and public piers, is within the sphere of action of the government of the Union: but,in practice, this power has never been considered supreme. It has always been exercised with the assent of the states, and within cessions of territory made by them. The Cumberland road was laid out and constructed by the government ot the Union; consequently the power to do it, is considered within their sphere of action* Yet this power was not claimed as supreme. It was only exercised with the assent and approbation of the states through which the road was made. Murder is an offence against all government : yet the government of the U. States cannot punish murder, unless it be committed in the army or navy, upon the high seas, or within their forts and arsenals, or other places where they exercise exclusive jurisdiction. Except in the cases specified, the murder of an officer of the United States cannot be distinguished from an ordinary homicide. A judge of the federal courts, a marshal, a collector of the revenue, a post master, a member of either house of congress,the President or Vice-President, may be murdered, and if the respective states refuse to interpose their authority to punish the perpetrator, he must escape' with impunity. A Digitized by.Q0PgI^ : ... : j 37 This government,though supreme within its sphere of action, cannot protect the lives of its public functionaries, by the punishment of those who may assail them. It can assert no jurisdiction, unless violence be offered to them in their official characters, and in the performance of official duties. It may be answered to this, that the punishment of murder is not within their sphere of action. True. But how futile is it to talk of a government being supreme ; which is not invested with this, the most common and ordinary mode of preserving its existence. It is supreme over individuals, in cases entirely subject to federal cognizance. But is it supreme over the states ? It cannot coerce them either to elect senators in congtess, or electors of President and Vice-President. A combination between one half of the states, comprising one third of the people only, possess the power of disorganizing the federal government, in all its majesty of supremacy, without a single act of violence. It is expressly inhibited by the constitution, front which this supremacy is derived, from calling the states as defendants before its courts. It cannot save from punishment one single citizen whom the state authorities have condemned. It is neither supreme to save, or to punish; in what, then, doe's this supremacy consist, in which the separate states are not also supreme ? In one thing only; and that is, the exercise, by the federal courts, of appellative jurisdiction, in cases, and between parties, made subject to their jurisdiction, by the constitu- tion* But the states, as parties, are not subject to their jurisdiction ; but are expressly exempt from it, and, therefore, over the states and upon questions involving the extent of their powers aqd authority, the government of the Union i$ not*supreme* It cannot according to the hypothesis of the second proposition, remove u\l obstacles to its action, and so modify the powers of the state governments, as to exempt its own operations from their influence. . Is this second proposition sustainable upon any acknowledged principle of constitutional law ? It is certainly a doctrine of portentous import, when connected, as it necessarily must be, with the proposition that precedes i t : It claims, as an attribute of the government of the Union, a p*wer to MODIFY every power vested in the state governments, so »B to remove all obstacles to its own action, and exempt its own operations from their influence. According to this doctrine, the states are not coparties to the compact of union, as asserted in 179S by the states of Kentucky and Virginia, and established in 1800, by the American people* The rights, powers and authorities of the states are not immutably established by constitutional provisions v but are subject to modification, in order to give scope for the action of the government of the Union. The two propositions stand in a perfectly natural and logical connection, though not thus arranged b the opinion : Digitized by S9 « The government of the Unioto, though limited, in its powers, is supreme within its sphere of ftotion." "It is of the very (essence of supremacj to re* move all obstacles to its action within its own sphere, afld so to modify every power vested in subordinate governments, as to exempt its own operations from their influence." Therefore, we may very properly add the c w sequent, it is competent for the government of the union, to remove all obstacles to its action, by so modifying the powers of the state governments, as to exempt its own operations, from their influence. If the postulates be admitted, this consequent is inevitable. ' This result will hardly be contended for id explicit terms; it asserts a supremacy no where recognized in the constitution. The powers retained by the s'tates, cannot be modified by the government of the union. To modify, is to change, of give a new shape, to the power modified ; and if the«goverbment of the union can give a new char, acter to the powers reserved by tbfe states, for the purpose of Removing obstacles to their own power of action, there must soon be an ebd to the state governments. The government of the union asserts, an exclusive authority in itself to determine its own sphere of action. On this point it is as supreme, as upon any other. So soon as it has resolved that the exercise of any power appertains to it, that power assumes the character of supremacy, Digitized by 40 and removes by modification, puts down before its march, every power previously supposed to be vested in the states, that may present any obstacle to its action. Thus the government of the union, may, and undoubtedly will progressively draw all the powers of government into the vortex of its own authority. Against these doctrines, the committee conceive, that it is the duty of the states to enter their most solemn protest. The committee do not admit, that supremacy is an attribute, either of the government of the union, or of the state governments. Supremacy is an attribute of the people, and an attribute of the laws. In relation to the governments, the people are supretoe,and the laws supreme over individuals. Government is tut the medium through which the supreme power acts: the government of the union is the medium through which the American people act, upon particular subjects, that concern their interests and their welfare: the governments of the states are the medium, through which the same people act, upon other subjects, equally interesting and important to them; these two mediums of a&ion, are only brought into collision by the usurpations of one or the other. Neither is invested with power to render its encroachments permanent, by a modification of the powers of the other. While moving within its proper litpits, neither can present an obstacle to the action of the other: both must proceed harmoniously. In respect to each other, neither is supreme, neither 4i ^ 1Fb<i gorermnt&nt off tire mron, tmd rfie gorremttyentstrf tbe separate istates, aTe alike flue property and the Agencies iof the wfcofe American people. "This "pritocipJe is t t e bk$e trad bouA , *of f be Aiiierfcan'ltorotj. * T h e itoird pt-oposiiliou is, *« Iteft a pow^r ^ tttfepower t»^sre«erve.*' to iht %o\Trnment of ttre wtiott and the incorporation of the bank tff Ihe ^JniteA S t ^ e s , life pi«%pesitiotH k the broad sense *£ its attempted 1q %«nk rf t t e Gutted Statea **>rpora*ioa tot tnad%. ftolitfeat political poif^er ; it gires ^HCHQH t j , and w^httig Bawe, The prevteiofa ttat the baok may esrtfeblifih branches in the Mate* and territories wben <airiy construed, cab otdy to regarded as giving corporate capkoity to *6 «O4 and tkis is the otiiy provtsiou «f the charier, that by any colorable mterprelation, ean bewoderstood to vest them trith ft setny aHFiee ^rf poitticil power* Thelegiil fecirfty and capacity conferred fey the cfeafter, if cofislittttiobaJfydrfifated^ are pt^s«rved in existence by the r^ry law that originates thete* They become prrrate vested rights, and are pTe^ se^fYed by the same utihrersal law^ that protect* in* dividual rights, afld individual contracts. But the trade and busmess of the bank ttttf the franchises cobfetred to aid in carrying them oft, are 6 Digitized by Google 4* separate and distinct matters. To lend money and drive a trade in bills pf exchange, and gold and silver bullion, are not corporate franchises. These trades exist, independent of the charter* and may be pursued by individuals, without an act of incorporation. It is nrot the business itself, but the particular method of conducting it, that is created by the act of Congress, incorporating the bank of the United States, Natural persons are clothed with an original^ in^ herent capacity, to make contracts, and to acquire property. In a corporation, this capacity is artifi* ciaL In ether respects, natural persons and corporations or legal persons, stand upon the same .principles. The power of making contracts, enjoyed byracUviduals,is subject to the regulations of law; the property acquired by individuals is liable to taxation for the support of those laws, that originate and protect it; private corporations of trade, . upon every maxim of justice and common sense^are subject to the same regulations and exactions* The employments, professions, business and trade of natural persons may be taxed as such, and ' laws for this purpose, are not considered as violative of individual rights, or as incompatible with the existence and preservation of trade, business and employments. No just principle is perceived, upon which these laws should receive a different interpretation, in their application to the trade and business of a private corporation. According to the definition of corporation heretofore given, the corporate franchises of the bank Digitized by Google 43 of the United States, invest the stockholders witk immortality and individuality, with a capacity to act like one immortal being, to perpetuate their existence ; to manage their own affairs, to hold property, and transmit it from hand to hand as a natural person could. These franchises are con-i ferred by the government of the Union, to enable the company to conduct the business of lending' money, and the trade in bills of exchange, and gold and silver bullion, with convenience and security ; but the business and trade to be conducted, are not corporate franchises, and are not cremated by an act of congress. A tax assessed upon the business of the company, does not touch their corporate franchises, however it may affect their convenience or their profit. This power to preserve, as asserted by the court, and applied to the subject before them, is not asserted for maintaining and preserving the corporate franchises of the bank; but tor the purpose of giving to these corporate franchises action and employment every where, independent of state laws, and beyond the control of state legislation. Whep fairly traced t<\ its consequences, the doctrine asserted amounts to this ; that a corporation created by the government of the Union is clothed with supreme authority, to conduct its business, without respect to the existing laws of the states and free from any apprehension of those that may be enacted. A most serious objection to this doctrine, is, that it asserts the power to preserve, not as pertaining Digitized by Google t* Ae g6*erw»*iit of tlfcuaioo* to fc* employed QU not. at the discretion of coegress$ but 3* incidental to the eha*terr and to h* secured to, the paaj tyt the jodjoial p*w*r aktne* The committee cone**?* that thf ptwav bj, special priviUge* apd cxemptk)Bst ar% power* of the. sawae claas and descriptioa; both a w feyst lalire powers.to be coivferre^ OF withheld afe ths discretion of the kgislattwe^ m& tf^VQ & ehartec of tDcorpoiajtiom stipulatoft BO ^ e i e l and exemptions^ none cai> W s«ppoaei " Being the. mere ercatwe of kt% il poseesaes « K IJT those propertica-coai^red ^rwslf OR a* incidental ta iti r*igf Had epngre^ iatended to o«empt tbe from the taxing power of/ fcbe atatfi^aih^ eieaii^ of preserving ft$ existence, a piroviaion Cor that piwpose: should, have been introduced iota thfc abarter. The po^er to make this provision would hay* Been examined before the charter was created,, and the intention of congpesa would haye been, maor ifeated. ThepeopWand t ^ att^ea VUNA(L havQ been apprised of the pretei^iona «f t^he bant before it got foot hold among them, and .before it iad T established a,monied influence le support itself ITverj privilege claimed by the when inserted in the charter, has received sanction of tjie legislative autbprity, and is open to the, examination of all. But te invent them, with unknown and latent privilege taauy. extent tha£ Digitized by Google 45 the supreme court may deem eewement, to serve, not only their corporate franchises, but the most beneficial us<* of th*m» is undoubtedly a new doctrine, as applied to corporations,ami as 4angei> ous. aa it is poveL, This Compaq have claimed that the states cannot tax their corporate operation or the profits arising from them: and the stjpgem* <jourt have sustained their claim as * privilege aectissary t* preserre their 'fgisteocd. By their charter,* they ar$ authorised to employ officers, clerks, and «t* vants. Should the company claim t© send slates wto Ohio, itpd, employ them in their branches, as 9ervmt&, the committee woukj coneetve the ciaial its well founded^ aod.as bkely to be sustained, as the exemption froca taxation. It standa upon tto sa^e principle. If th» states may control, the company, m the einpjoys&erit of servants, they may embarrass its apeFatione^ and impede a free and unrestrained exercise and enjoyment of their corporate faculties* By the laws of Ohio, a promise to pay the debt of another is Qot obligatory unless made in writing : but the charter of this company is silent as to the mode of binding parties that contoaet with them; they may ctaitn that this taw of contracts applied to individuals only, and cannot touch them without narrowing the beneficial use of the faculty conferred upon them by congress ; who shall say that this claim may not be sustained ? In short*, who can undertake, with any hope of success, to enumerate the privileges and exemp- Digitized by 46 tions to which, upon this doctrine, the bask are entitled ? • It is important to glance at ttte train of implications with which this doctrine is connected. The power to create tfye bank, implies the power to preserve it. This power to create is, itself, derived by implication. It is found among the subsidiary powers, as incident to the choice of means for the administration ef the government. This implied power to create, is made the foundation for further implication; it implies the power to; preserve ; and again, of.necessity, the power to pre* serve, implies a choice in selecting the means of preservation; and upon the doctrine of the courts all these powers arc aupremd, to the operations of mrbicb, the constitutioos and laws of the states can oppose no obstacle. It is certainly, difficult to see the point where these implications terminate, or to name the power which they feaveto the states unimpaired* . ^ > The government of the union have no authority, by the express provisions of the constitution, to in. terfere with the law of contracts. They have found authority to institute a Bank, or .in other words to create a private corporation of trade, and with the power to create, they have possessed themselves of power to preserve, not th^ corporation they have created, but the business in which the corporation have engaged. This business ex* tends over the whole region of vcontract, either direct in negociating loans of money,and purchasing Digitized by Google 47 and selling billsof exchange, and gold and silrer bullion, or indirect in receiving and disposing of merchandize and real estate, pledged or mortgaged for debts previously contracted. From the aid of this corporation, the states may withdraw their law of conveyances, or, as applied to their dealings, the states may introduce provisions regulating contracts, which the corporation may deem obstructions to the enjoyment of their corporate trade. From this-doctrine,, t^hat the power to create, im* pHes the power to preserve,.congress may derive a power to frame a new law of contracts, and devise a new system of conveyances, suitable to the beueficial enjoyment of the trade of this corperation; and this new system in the supremacy of its action may disregard both fundamental laws, and establish maxims of jurisprudence. The government of the union wa^ not instituted to protect individual rights,or to redress individual wrongs; but this power to preserve the trade, business and property of a corporation created by themselves, invests them with power to frame a code of criminal law, for the punishment of those who violate the property of the bank, and thus draw into the federal courts, the ordinary administration of criminal justice. This is already attempted in the provision for punishing those wh6 counterfeit the notes of the bank, and upon the doctrine asserted, may be extended to cases/of larceny, burglary, or robbery upon their corporate , property. No doctrine has ever yet been adyan- Digitized by 48 tbat draws to the government ol the umott such a host of powers: node that contains such potency for " rending info shreds * the author*. ity of the states. Those who clairii for the government of the union, the power of creating cor* porations, hold that u one may be created in rela* tion to the collection of the taxes, or to the trade with foreign countries,"of between the states, or with the Indian tribes ; because it is the province of the general government to regutate those objects, and because it h incident to a general sovereign or le« gislative power to regulate a thing to employ afl the means which relate to its regulation to the best advantage." The power to create all these corporations, upon the principle asserted, implies the power to preserve them. And the power to preserve, implies a power in the government of the union to bargain with eompanies for monopolies of trade and exemptions from taxation : to place such companies above the power of the states, as means employed by themselves, which they have a right to use to (he best advantage. In the discussion of this subject, an extraordinary, and the most miraculous efficacy, is given to the terms "employment of means." And k is worthy td remark that fro effort is made to explain their true import, or the sense ia which they are used. We are told that the collection of taxes, and the safe keeping of, and transmission of money from place to place, is an end, or object of government, and thai the bank is a convenient means of attacking this end; but it is not the charter or corporate Digitized by Google 49 franchise that is used or employed for this purpose; it ig the individuals that compose the company, as an aggregate body, that are thus used, and the cor* porate franchise bestowed upon them by the government i& conferred to enable them to transact their own business, and perform this service for the government, with greater security and convenience. At this moment the government of the union employs the Franklin Bank of Columbus, to receive and pay out the public monies, and while thus employed, this bank is used as a means of government, but being thus used, is not supposed / to invest if with any privilege peculiar to the public functionaries. The government, alHts machinery and officers, are but the means of the people for attaining the great ends declared in the preamble to the constitution. Every person employed under the, constitution, from the President of the United States to the postboy that carries the mail, partakes of this character of means: the law that the President is bound to see faithfully executed, and the horse that the pest-boy rides, are alike, in a certain sense, means of the government: but. in respect to privileges and exemptions, no man ever supposed them to stand upon the same footing. Those who hold offices direct under government, may be regarded as principal means ; those who are employed by contract, as incidental or subsidiary* The first class compose, as it were, a part of the government direct; are entrusted with the exer> 7 v Digitized by Google 50 tji&eof some portion of political power, and arfe clothed with privileges and exemptions attached to their official stations. Those engaged by contract to perform services, have no official character, and consequently cannot claim the exemptions attached to public office. Thus a deputy postmaster is an officer under the government, invested witty privileges, and subject to disabilities attached to his office : but a contractor to carry the mail, has no such character ; yet both are means, used by government under thc_constitutional authority," to establish post offices and post roads." The bank of the United States is not a mean of the government of the union, in the same sense with the mint and the post office; but in the same sense with contractors to supply public stores, or tp carry the mail. The director, assayer, chief coiner, engraver, treasurer, melter and refiner of the inint are public officers, so are the postmaster general, and deputy postmasters. They cannot hold their offices and seats in congress at the same tiwfe; they are appointed to* and take ao oath of gffice* But the workmen employed in the mint,, like contractors to carry the mail, and the drivers and riders they employ, are not public officers, nevertheless, they are necessary means in the em* ployment of government The stockholders in the bank of the United States, the president and directors of that institution, arq not public ofc ficers, even the directors appointed by the government, are destitute of public character. They are* Digitized by Google 5V eligible to seats in congress, which is conclusive ev» idence upon this point: and it is a monstrous do<> trine to maintain, that corporations created by the government of the union, in point of privilege and exemption, are principal means of government, not to be distinguished from the officers of the mint, and the post office, while everj member and officer of such corporations are eligible to seats, both in the congress of the union, and the legislatures of the several states. By this doctrine, the great principle of separating the departments of government is completely broken down. Collectors of revenue, officers of the customs, In* dian agents, receivers of public monies under the government of the union, may become legislators J and judges in their own case, both in the general and state governments. This consequence alone , would seem sufficient to expose the unsoundness of the doctrine asserted. r It is singular, that in the very elaborate opinion' which the committee have been engaged in examining, no definition should be given of the true character of the bank : bat that, like the terms " employment of means,'9 it should be left to doubtful and various interpretations. It is a public institution, or a private corporation of trade. If the forv mer, with the privileges of office, the corporators must be subject to the disabilities of office. If the latter, like any other individual, or bank, employed by the government of the union, its trade and * business must be regulated by state laws, and sub-* Digitized by Google 52 ject t* state exactions. In support of their position, that it is a private corporation of trade, the committee can adduce a judicial opinion delivered in the supreme court itself. " For instance, says Mr. Justice Story, a bank created by the government for its own uses whose stock k exclusively owned by the government, is, in the strictest sense, a public corporation. So is an hospital>fcreated and endowed by the government for general charity. But a bank whose stock is owned by private persons, is « private corporation, although it is erect* ed by the government and its objects and operations partake of a public nature. TJie same doctrine may be affirmed of insurance, canal, bridge, andl turnpike companies. ID all these cases, the uses may, in a certain sense, be called public, but the corporations are private ; as much so indeed as if the franchises were vested in a single person" , W e have seen that by the employment of natural persons or state banks, to perform,those services stipulated to be .performed by the bank ^of the United States, they become to a certain ex* tent, means employed by the government, and yet have never .been regarded as public officers, privileged from the operation of state laws. M^y wo not, therefore, paraphrase the language pf the chief justice, and a»k,"i£ then a natural person o r "state bank, employed by the government of the "uni©n, to receive^kee'p, and pay out of the public '* monies wouldjnot become a public officer, or be * considered^ a member of Digitized by Google 55 "how is it that this artificial being, created by law, " for the purpose of being employed by the same "government, for [the same purposes, should be"come a part of the civil government of the coun" try ? Is it because its existence, its capacities, its " powers, are given by law ? Because the govern" ment has given it the power to take and to hold "property, in a particular form, and for particular "purposes, has the government a consequent right,as " overall members of the civil government it must " have, substantially to change that form, ©r to va« " ry the purposes to which the property is to be " applied? This principle has never been asserted or " recognized, and is supported by no authority." Thus reasoned the judges of the.supreme court, upon the 2d February 1819. The case of M*Colloch vs. Maryland, had not then been argued or decided. And the doctrine that the government, by chartering a private corporation of trade, placed the association upon the same foundation with the mint and the post office, had then never been recognized in a court of law, and was "supported , by no authority." If the public character of the bank of the United States, stands upon other foundation than that expressly negatived in these quotations, the committee have been unable to discov- r er i t : it is not explained or developed in the opin" ion that places them on^ a level with the mint and the post-office, and gives to their trade, in bills of exchange, and gold and stiver bullion, the same character as to the process of the federal courts. Digitized by Google , 54 When the committee deny that, " a power to. create, implies a power to preserve," they are to. be understood as denying the application of this principle, only by the case of creating corporations. A power to create a public office, necessarily implies a power to preserve that office : but a power to bestow a corporate franchise to carry on a private trade, is totally different from creating a public office; a distinction between the corporate franchise, and the business to be conducted under it, must be always borne in mind ; the power that creates a corporate franchise, for private purposes, not only cannot preserve such franchise, but cannot new-mpdel or impair it; its corporate character and existence, are as secure as the existence and personal rights of a natural person : but its trade and business, like the employments of natural persons, remain subject to regulation, by the local authorities, where it seeks to locate them. Thus a power in the states to tax, or even to prohibit a trade in bills of exchange, andjjold and silver bullion, is not a power to destroy the corporate franchises of the bank of the United States. These corporate franchisee remain, notwithstanding the exercise of this power, just as the existence and rights of an individual remain, though his business is taxed, or he is forbid to engage in certain employments. The govecnment of the union have conferred upon the bank certain capacities, for engaging in trade : but it has not and cannot confer an absolute right and power to drive this trade, in Digitized by Google M , contempt of state laws. It is made capable, but not sovereign; its capacity must be examined, net with a single eye, to the supremacy of the power that created it; but with a whole view, of what that power could confer, and what it has conferred. If the committee have succeeded in shewing, that the power which created the bank of the U# States, is not supreme, in the sense of the two first propositions; but is limited in its powers and means of preserving the bank, so as to render the third proposition untenable, the fourth and fifth propositions, which arc founded upon, and consequences derived frem the other three, must necessarily be given up : As applied to the question under discussion, however, it has been shewn, that a power to tax their trade, is not a power to destroy the corporation. It is not perceived how a power to dL minish the profits of labor and capital, by exacting a portion of their proceeds, for the support of gov. ernic&it, can be construed into a power to destroy human life, and annihilate capital. The power of taxing the bank is denied, because it might be so used, as to prevent the corporation from deriving a profitable trade, and this is deemed a power to destroy the charter, which did not originate the trade, but merely created a facility for conducting it.— But what is most singular is this, that after arriving at this conclusion, an admission is made, that at once demolishes the whole doctrine upon which it is founded. It is conceded, that each state may tax the Digitized by Google •6 stock owned by its citizens in this bank. Then it is not a public institution, exempt from state taxation, upon the great principle, that the states canpot tax the offices, institutions and operations of the government of the union. It is not that the states have no power to tax the bank ; but that this power exists only over its capital, and does net extend to its operations. What then becomes of all the labored doctrines of the opinion ? The government of the union, though supreme within its sphere of action, removing all obstacles, and *o modifying all powers, vested in subordinate governments as to exempt its ~own operations from their influence, cannot [after all, preserve what it can create. Those who advance this pretension, are compelled to admit, that, upon their own principles, a power to destroy, may be wielded by the state governments* In its utmost extent, a state tax, upon the operations of the bank, .can produce no other ntyiry, than a suspension of its business. By ceasing to trade, a tax upon business can always be avoided. Not so a-tax upon capital. Should the states of Pennsylvania,^New-York and Massachusetts combine to tax the stock in the bank of the United States, owned by their citizens, to an amount that H)ust consume the annual profits, and"*encroach upon the capital advanced, the destruction of the bank must be inevitable : for this tax upoe capital may be exacted, whether it be productive or not* The power of the states to taxrthe business of the Digitized by Google 57 bank, is denied upon the broad ground, that the power to lc«ry suck a tax is tantamount to a power to destroy the bank, and is incompatible with & power of the government of the ubion to create it Yet this power to tax the capita!, though incontestibly of greater potency to destroy the institution, is admitted to exist. x Between the point decided and tile point conceded, there is a palpable contradiction, to which sound [argument and just conclusions are never subject. Another very absurd consequence results from the decision and admission, when connected together as they are, in the opinion under consideration. A state tax ypon the stock, or/ actual capital in? Tested by its citizens in the bank, cannot reach or affect the stock owned by foreigners, or by the other states: but a tax upon the business, operates alike upon all the stockholders. Should Massachusetts tax the stock of her citizens, stock in tho bank must be worth less in Massachusetts than elsewhere. Should all the states tax the stock owned by their citizens, stock held by foreigners must be most valuable, Should one state tax the stock so as to exhaust the capital, the citizens of that state must sell oat to citizens of other states, or to foreigners. Should all the states assess such a tax, the whole stock fiiust be transferred to foreigners, or the bank annihilated. One consequence, therefore, of this admission, may be te throw the institution into the hands of foreigners j when our government will exhibit the strange speel 8 Digitized by Google 58 tacle of a company of foreign* bankers regarded as a national institution, and as such, protected by the constitution of the Union, from any of the burthens to which citizens are subject. It may be said, that this admission was unwarily made, and upon further consideration, would be retracted as inconsistent with what had beeo previously decided But the committee conceive, that this explanation is quite unsatisfactory. It has been already stated, that the constitution does, in expiess terms, declare what subjects shall be exempt from the taxing power of the states. It was felt, that, indirectly to exempt other subjects, was unwarrantable upon all established principles of interpreting laws and constitutions. This argument was pressed, and to escape its force, the admission was made, so thai evidently it is part of the decision^ and as sjich sweeps away the grand pillar upon which the whole decision rested. If the committee have taken a correct vi^w of the subject, it would seem manifest, that in denying to the state^ a power to tax private corporations Af trade, incorporated by the government of the Union, where no doubt exists of the power to create the corporation, it becomes necessary to maintain many doctrines of very doubtful character, and dangerous tendency; while conceding to them this power, involves nothing either doubtful or dangerous. It strips such corporations of all pretensions to be regarded as instruments of government, in the same sense as the mint and the post office. \ . Digitized by 69 But it preserves untouched their corporate fran* chises, and concedes them every ri<*ht and privilege which a natural person is entitled to claim. It presents no obstruction to the legitimate action of the government of the Union; but places it, in the, establishment of private corporations of trade, upon the same foundation, as in erecting light houses and constructing roads. It is in nothing derogatory to this corporation, called the Bank of the United States, nor to the government of the Union that created it, to place its trade upon the same footing with that of a private citizen employed by the government* The contractor, to transport the mail, must use horses and carriages; without them he cannot comply with his contract. They are' means, or instruments employedbj government;^ but they are subject to state taxation as other property of the same description. This has been an universal practice, and has never been deemed any obstruction to the action of the government of the Union. The State cannot tax the transportation of the maB, without obstructing the action of the government: but were an association incorporated to transport the mail, all over* the union, with capacity to tr-ade in live stock and agricultural products, there can be no doubt but that their private trade and prop* erty would be subject to state taxation. The committee have not deemed it necessary to examine any argument founded upon a supposed abuse of power by the states.' As between states every argument of this sort is inadmissible, because it may be urged with equal force against the exercise of any power by either, and concludes to the destruction of all authority. Therg can be no doubt, but that the states will, at all times, be ready to encourage rather than repress the introduction and employment of capital within their dominion, where it tnay probably be of any general Digitized by Google advantage* Of this, the slate authorities are much more competent judges than capitalists or tfaeif agents sft a distance ean be. tt must always fc>e unwise to force capital into a country, against the sense of those who administer the government. That the bank has sustained great losses, by sending branches into this state, is now notorious; that their trade add loans hare been highly injurious to all the best interests of the state, cannot be disputed. This loss on ©ne^. hand, and injury on the oth* «r, woulcl hare been avoided, had the bank consulted the authorities of the state, instead of holding counsel with money jobbers and speculators. The committee have carefully examined t subject, and without pretending to present it in a ihe views of which it is susceptible, have urged only those w W h appear to them most prominent The result of their deliberations is that the Bank t>{ the United States is, in their opinion, ajnere priTate corporation of trade, and as such? its trade afld business must be subject to the taxing power <*f the state. In considering wjiat course the committee should recommend as proper to adopt at this time, one gtoint of difficulty has presented itself. It is urged by many, that toe tax levied and collected, is enormeus in araouit, and therefore unequal and unjust. It is readily admitted, that this allegation is not entirely unfounded, and all must agree, that it does Hot comport with the character of a state to afford any coler to accuse her of injustice. Even in the assertion o f a right, it is highly derogatory for a state to act oppressively, and all injustice is oppression. It cannot be doubted, but that the tax was levied as a penalty, ahd that it was not supposed the bank would venture to incur i t It was an &0t of temerity in them to do so, and although in this view the tax was. justly, and in the opinion 6f the committee, legally collected, yet under all Digitized by Google the circumstances of the case, the committee conceive that the state ought to be satisfied with efItecting the objects for which the law was enacted. At this time the bank can have little object in continuing its branches except to maintain the point of right, which may not be definitely settled by th e controversy. The state having refused to use the money collected, has no interest but that of Character, and an assertion of the right. If an a o commodation can be effected without prejudice to the right upon either side, it would seem to be desirable to all parties. With this view, as welt as with a view to remove, all improper impressions* the committee recommend, that a proposition of compromise be made by law* making provision, that upon the bant discontinuing the suits now prosecuted against the public officers, and giving assurance that the branches shall be withdrawn, and onljr an agency left to settle its business and collect its debts, the amount collected for tax shall be oaid without interest. But the committee conceive, that the General Assembly ought not to stop here. The reputation of the state has been assailed throughout the Uuited States, and the nature of the controversy, and her true course of conduct have alike been very much misunderstood. It behoves the General Assembly, even if a.compromise be effected, to take measures for vindicating the character of the state, and also for awakening the attention of the separate states, to the consequence that may result from t the doctrines of the federal courts, upon the questions that have arisen. And besides, as it is possible that the proposition of compromise may not be accepted, it is tho duty of the General Assembly to take ulterior measures for asserting and maintaining the rights of the state, by all constitutional means within their power. In general, partial legislation is objectionable. Digitized by Google 62 But this is no ordinary case ; and may therefore call for, and warrant extraordinary measures.— Sine* the exemptions claimed by fhe bank are sus* tained, upon the proposition that the power that created it must have the power to preserve it, there would seem to be a strict propriety in putting the creating power to the exercise of this preserving: power, and thus ascertaining distinctly, whether the executive and legislative departments of the government of the union, will recognize, sustain and enforce the doctrine of the judicial department. For this purpose, the committee recommend; that provision be made by 1 awr forbidding the keepers of our jails from receiving into their custody, any person committed at the suit of the bank of the United States, or for any injury done to them; prohibiting our judicial officers from taking acknowledgments of conveyances, where the bank is a party, or 'when made for their use, and our recorders from receiving or recording such convey^ ances ; forbidding our courts, justices of the peace, judges and grand juries, from taking any cognizance of any wrong, alleged to have been committed upon any specie? of property, owned by the bank, or upon any of its corporate rights^or privileges, and prohibiting our notaries public from protesting any notes or bills, held by the bank cr their agents, or made payable to^them. The adoption of these measures, will leave the^ bank exclusively, to the protection of the federal government, and its constitutional power to preserve it in the sense maintained by the supreme court, may thus be fairly, peaceably and constitutionally tested. Congress must be called to provide a criminal code, to punish wrongs committed upon it, and to devise a system of conveyances, to enable it to receive and transmit estates; and being thus called to act, the national legislature must Digitized by Google 63 be drawn to the serious consideration of a subject, which the committee believe demands much more attention than it has excited. , The measures proposed are peaceable and constitutional; conceived in no spirit of hostility to the government of the union, but intended to bring fairly before the nation great and important questions, which must one day be discussed, and which may now be very safely investigated. The committee conclude, by recommending the adoption of the following resolutions: Resolved by the General .Assembly of the state of Ohio) That in respect to* the powers of thegovernments of the several states, that compose the American Uteion, aod the powers of the federal government, this general assembly do recognize, and approve! the doctrines asserted by the legislatures of Kentucky and Virginia in their resolutions of November and December, 1798, and January 1800, and do consider that their principles have been recognized and adopted, by a majority of the American people. Resolved further, That this General Assembly do protest against the doctrines of the federal circuit court, sitting in this state, avowed and maintained in their proceedings against the officers of state upon account of their official acts, as being in direct violation of the J lth amendment to the constitution of the United States. Resolved further', That this General Assembly do assert, and will maintain, by all legal and constitutional means, the right of the states to tax the business and property of any private corporation of trade, incorporated by the congress of the United States, and located to transact its corporate business within any state. Resolvedfurther, That the bank of the United 64 States, is a private corporation of trade, tlid p tal and business of which, may be legally taxed in any state where they may be found. Resohedjurther, That this General AsSemEly do protest against the doctrine, that the political rights of th« separate states, that compote thp American union, and their powers as sovereign states, may be settled and determined in the supreme court of the United States, so ^s to conclude and bind them, itt cases contrived between iodividuals* and where they are bo one of then*, parties direct. Resolved further, That the Governor transmit the governors of the several states^ a copy of the foregoing [report and resolutions, to be laid before their respective legislatures, with a request from this General Assembly, that the legislature of esch state may express their opinion upon the matters therein contained. Resolved further^ That the Governor transmit a copy of the foregoing report and resolutions to the President of the United States, and to the President of the£>eaate, and Speaker of the House of Representatives of the United States, to be laid before their respective Houses, that the principles upon which this state has, and does proceed, may be fairly and distinctly understood. ' House of Representatives^ Dec'28, 182& foregoing report was approved and the resolutions adopted : Attest, 4WM. DOUGHERTY, Clerk Hguse Rep. In Senate, January 3, 1821. Report approved and resolutions adopted. Attest, RICHARD COLLINS, > . "• " Clerk Senate, Google Digitized by v