Herald of the times. [volume] (Newport, R.I.) 1830-1846, 1830-04-07
OPINION
OF THE U. 8. SUPREME COURT.
In the case ofthe Pyoridence Bank, vs.. 1hos.
q. Pitman and others.

In the case Of the Prortdepce Bunk, vs.. 1hOs.
g. Pitman and Others.
This is writ of error, to a judgment
rendered in the highest Court for the
State of Rhode Island, in an action of
trespass, brought by the Plaintiff in error
against the Defendant.
/ In November, 1891, the Legislature of
Rhode Island granted charter of incor-
nor alton to certain individuals, who had
Iassociatcd themselves together, for the
purpose of forming banking company
They are incorporated by the name of
the aPresident, Directors. and company
of the Providence Bank" and have the
ordinary powers which arc supposed to-
lbe necessary for the usual objects OF
such associations.
In 1922, the Legislature of Rhode Is
.and passed an "act imposing duty on
licenced persons and others, and bodies
within the State," in which
'ainong other tfihgs, it is enacted that
there shall be paid for the use of the State,
by each and every bank within the State,
except the bank of the United States,
the sum of fifty cents on each and every
thousand dollars of the capital stock ac-
tually paid in. This tax was afterwards
augmented to one dollar and twenty five
cents.
The Providence Bank having deter
mined to resist the payment of this tax,
brought an action of trespass against the
officers by whom "a warrant of distress
was issued against and served upon the
property ofthe bank, in pursuance of the
law the Defendants Justify the taking
set out in the declaration, under the act
of Assembly, imposing the tax, to which
plea the Plaintiffs demur, and assign for
cause of demurrer, that the act is repug-
nant to the constitution of the United
States, inasmuch as it impairs the obliga-
ton of the contract, created by their
charter of incorporation. Judgment was
given by the Court of Common Pleas in
favor of the defendants which Judgment
was on appeal confirmed by the Supreme
Court of the State-that judgment has
been brought before this Court by writ OF
error.
1t has been settled that contract en-
tered into between state and an individ-
ual, is as fully protected by the prohib-
ition contained in the 10th section OF
the lst article of the Constitution, as a
contract between two individuals and
it is not denied that charter incorpora-
ting a bank is a contract. Is this con-
tract impaired, by taxing the banks ofthe
State.
This question is to be answered by the
charter itself; it contains no stipulation
promising an exemption from taxation ;
the State there has made no express con-
tract which has been impaired by the act
of which the Plaintiffs complain. No
words have been found in the charter
which in themselves would Justify the
opinion that the power of taxation was in
the view of either of the parties, and that
an exemption from it was intended,
though not eXpressed-the plaintiffs find
difficulty in showing that the charter
contains promise either express or inn
piled not to tax the bank. The elaborate
and ingenious argument which has been
urged, amounts in substance to this the
charter authorizes the bank to employ its
capitol In banking transactions for the
benefit of the stock holders it binds the
State to permit these transactions for this
object every law arresting directly the
operation ofthe bank would violate this
obligation, and would come within the
prohibition of the constitution. But as
that cannot be done circuitously which
may not be done directly the charter re-
strains the State from passing any act
which may indirectly destroy the pro-
fits of the Bank. A power to tax the
bank may unquestionably be carried to
such an excess as to take all its profits for
the use of the State, and consequently
destroy the institution. Now whatever
may be the rule of expediency, the con-
stitutionality ofameasure depends not on
the degree of its exercise, but on its prin-
ciple. A power therefore, which may jim
effect destroy the charter, is inc onsistent
with it, and is impliedly renounced by
granting it. Such power cannot be
exercised without impairing,the obligation
of the contract. Whether pushed to its
extreme point, or exercised in modera-
ton, it is the same power, and is hostile
to the rights granted by the charter
This is substantially the argument for the
Bank. The plaintiffs cite and rely on
several sentiments expressed on various
occasions by this Court in support of their
positions.
The claim of the Providence Bank is
certainly of the first impression, the pow
er taxing monicd corporations has been
frequently exercised, and has never be-
fore, so far as is known, been resisted.
Its novelty, however, furnishes no con-
elusive argument against it.