# Jefferson Branch Bank v. Skelly

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United States Supreme Court
66 U.S. 436
Jefferson Branch Bank v. Skelly
Writ of error to the Supreme Court of Ohio. The Jefferson branch of the State Bank of Ohio brought trespass in the Common Pleas of Jefferson county against Alexander Skelly, and charged in their declaration that the defendant took and carried away from the banking-house of the plaintiff, at Steubenville, a certain quantity of gold coin of the value of seven thousand dollars, and converted it to his own use. The defendant pleaded specially, in justification, that he was treasurer of Jefferson county, and, as such, required and authorized by law to collect the taxes assessed in the county of Jefferson; that taxes to the amount of $5,568 88.9-10 had been assessed upon, and were then due from, the plaintiff, which it was the duty and right of the defendant to distrain for; and that the supposed trespass consisted in making such lawful distraint. The plaintiff replied that it was a banking corporation, organized under an act of the State Legislature, entitled 'An act to incorporate the State Bank of Ohio and other banking corporations;' that, agreeably to the 60th section of said act, the plaintiff had always agreeably to the 60th section of said act, the plaintiff had always regularly and punctually paid to the properly authorized officers six per cent. of its profits; that the 60th section of the charter was a contract between the State and the plaintiff to assess or demand no other or greater taxes from the plaintiff than six per cent. on its profits; and that the taxes for which the defendant alleged that he had made the supposed distraint were assessed and demanded in pursuance of a law which was a violation of the said contract, and therefore void. The defendant rejoined, taking issue on the replication.
The question of law thus raised was, whether the State had a right to impose on the bank any taxes other than those which were stipulated for in the 60th section of the charter, the plaintiff asserting, and the defendant denying, that the section referred to was a contract which made any other or greater taxes illegal and unconstitutional. The verdict and judgment in the Common Pleas were in favor of the plaintiff for $6,292 80, with costs. The defendant appealed to the Circuit Court, where a verdict and judgment for the plaintiff were again rendered, but the judgment was arrested, and judgment finally given for the defendant. Thence the cause was taken, on the plaintiff's petition, to the Supreme Court of the State. The judges of the Supreme Court were of opinion that the said 60th section of the act of the General Assembly of Ohio of the 24th of February, 1845, entitled 'An act to incorporate the State Bank of Ohio and other banking companies,' under the provisions of which the said Jefferson branch was organized, is not a contract within the meaning, and entitled to the protection, of that clause of the Constitution of the United States which provides that 'no State shall pass any law impairing the obligation of contracts,' and that, consequently, the subsequent laws under which the increased taxes were assessed and levied were valid. The judgment of the Circuit Court was, therefore, affirmed, and thereupon the plaintiff took this writ of error from the Supreme Court of the United States.
Mr. Vinton, of Washington city, for plaintiff in error. In this case the Supreme Court of Ohio adjudged:
1st. That the 60th section of the charter of the State Bank of Ohio was not a contract between the State and the bank, within the meaning, and entitled to the protection, of that clause of the Constitution of the United States which declares that 'no State shall pass any law impairing the obligation of contracts.'
2d. That the act of the General Assembly of Ohio, of the 13th of April, 1852, under which the tax in question was assessed against the bank, was a valid law, and obligatory on the bank, anything in said 60th section of said bank charter to the contrary notwithstanding; and that, consequently, the tax assessed under said act was a valid tax, and the bank was bound to pay the same.
The identical question presented by this record has heretofore been twice before this court for decision, and twice decided, after very elaborate examination of the question by the court in each case.
The first in the order of time is the case of the Piqua Branch of the State Bank of Ohio vs. Knoop, (16 How., 369.)
In that case, a tax was assessed upon the property of the Piqua branch, under an act of the Legislature of Ohio, passed in the year 1851, which the State attempted to collect by suit.
This court then decided that the 60th section of the bank charter was a contract, and that the bank could not be otherwise taxed than in conformity to that contract, and that the act of 1851, which was in conflict with that contract, was invalid.
The other case was that of Dodge vs. Woolsey, (18 How., 331.) In that case a tax had been assessed on the Commercial Branch Bank of Cleveland, a branch of the State Bank of Ohio, under the tax act of the 13th of April, 1852, which is the same act under which the tax now in question was assessed. This court again went into an elaborate investigation of the question in that case, and again decided that the 60th section of the State Bank charter is a contract, and that the banks organized under it are subject to no other taxation, and that the act of 1852 impaired that contract, and was also invalid, so far as it was in contravention to that section of the bank charter.
If it should be contended by the defendant in error, as it was in the case of the Piqua Branch Bank vs. Knoop, and again in the case of Dodge vs. Woolsey, that the construction put upon the 60th section of the bank charter by the State court ought to be conclusive upon the courts of the United States, the answer to it will be found in the case of the Ohio Life Insurance and Trust Company vs. Debolt, (16 How., 432,) and Mechanics and Traders' Bank vs. Debolt, (18 How., 380.)
Mr. Murray, of Ohio, for defendant in error. Does the 60th section of the act passed February 24, 1845, entitled 'An act to incorporate the State Bank of Ohio and other banking companies,' constitute a contract, within the meaning of the 10th section of the first article of the Constitution of the United States, between the State and the banking companies organized under said act, as to the rate of taxation to which such banking companies shall be subjected?
This precise question has heretofore been submitted to this court, and by it decided in the affirmative. Piqua Branch, &c., vs. Knoop, (16 How., 369.) But it can hardly be claimed that this one decision, made by a divided court, the majority only agreeing in the conclusion arrived at, but wholly disagreeing as to the reasons therefor, so far settled this question that it is no longer an open one. A renewal of this decision is asked for because the question is one as to the construction of the constitution and laws of the State of Ohio, and it is the duty of this court to follow the construction given by the Supreme Court of that State. O. L. I. & T. Co. vs. Debolt, (16 How., 431;) Elmendorf vs. Taylor, (10 Wheaton, 150-9;) Swift vs. Tyson, (16 Peters, 1-18;) Shelby vs. Guy, (11 Wheaton, 361;) Luther vs. Borden, (7 How., 40;) Neves vs. Scott, (13 How., 271;) Raymond vs. Longworth, (14 How., 78-9;) United States vs. Morrison, (4 Peters, 137;) Green vs. Neal, (6 Peters, 291.)
The State of Ohio had, under the constitution of 1802, no power to exempt property from taxation so as to bind subsequent Legislatures. An act of incorporation, when accepted, can only constitute a contract between the grantor and grantees as to those rights, privileges, &c., which it was in the power of the grantor to grant. The whole doctrine of contracts, as resulting from an accepted charter, is based on the fact that the King of England had no power to revoke a charter or patent which he had once granted, and which had been accepted and acted upon by the grantees. The King never did grant, and had no power to grant, exemption from taxation, either in whole or in part, any more than he could have divested the Government of its right of eminent domain. Any grant of either would have been beyond his power, and void. Consequently it could have formed no part of any valid contract with his grantees. The Legislature of a State, then, even if they have succeeded to a certain extent to the prerogative of the King, have no power to make a grant of rights and privileges which it was not in the power of the King to grant; and if their right to make a contract, which cannot be revoked by a subsequent Legislature, is based upon the power of the King of England in similar cases, it must be taken subject to all the restrictions and limitations which apply to his exercise of this power. But the Legislature of Ohio, at the time of passing the tax law of April 5, 1859, and the prior laws changing the rule of taxation prescribed by the 60th section of the act of February 24, 1845, was inhibited from passing the same.
At the time of the passage of this act of February 24, 1845, there was upon the statute-book of Ohio, in full force, an act passed March 7, 1842, (Ohio Law, vol. 40, p. 70,) which provided, that all subsequent corporations, whether possessing banking powers or not, were to hold their charters subject to alteration, suspension, and repeal, at the discretion of the Legislature. Now, if the Legislature in this act of February 24, 1845, had provided in express terms that said act and all rights, privileges, franchise, etc., thereby granted, should not, for a given term of years, be subject to alteration, repeal, or suspension, then it might, with some show of reason, be claimed that the prior act of March 7, 1842, was repealed by implication-a mode of repeal, however, which is never favored; but inasmuch as nothing of that kind is contained in said act, we are bound to presume that it was intended to be made in all respects subject to all general acts then in force having reference to corporations of a similar nature. This 60th section of the act of 1845, in several respects, is wholly wanting in those ingredients which are indispensable requisites to a contract.
That it was designed by the Legislature to constitute a contract between the State and banking companies organized thereunder, as to the rate of taxation to which they should be subjected during their existence, will not be presumed.
The contract, if one exists, must be contained in the express terms of the act itself; it must appear therein so plainly and obviously as to be beyond doubt; and if any other construction of the terms of the act than that which makes it a contract can be reasonably given to it, that construction will be adopted. Providence Bank vs. Billings, (4 Peters, 561;) Charles River Bridge vs. Warren Bridge, (11 Peters, 420;) Debolt vs. O. L. I. & T. Co., (1 O. St. Rep., 573;) United States vs. Arredondo, (6 Peters, 738;) Mills vs. St. Clair County, (8 How., 581;) Perrine vs. C. & D. C. Co., (9 How., 185;) Cincinnati College vs. The State, (19 Ohio Rep., 110;) Richmond Railroad Co. vs. Louisiana Railroad Co., (13 How., 81;) Lebanon Bank vs. Mangan, (4 Casey, 452;) Parker vs. Commonwealth, (6 Barr, 411;) Bank Pa. vs. Commonwealth, (7 Harris, 152;) Mott vs. Pennsylvania Railroad Co., (30 Pa. St. Rep., 24.)
Neither does it follow that by the language used by the Legislature in this 60th section, it was intended or designed to create a permanent measure or system of taxation. Preble County Bank vs. Russell, (1 O. St. Rep., 313;) Bank of Columbia vs. Okley, (4 Wheaton, 234;) Young vs. Bank of Alexandria, (4 Cranch, 397;) Crawford vs. Bank of Mobile, (7 How., 297;) B. & S. Railroad Co. vs. Nesbit, (10 How., 396.)
Mr. Justice WAYNE.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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