The daily exchange. [volume] (Baltimore, Md.) 1858-1861, 1858-07-28
IMPORTANT DECISION
DELIVERED By THE HON. ROBERT y. MARTIN
SPECIAL JUDGE

I The Mayor and city Council Of Baltimore vs.
Henry Watson,-The question involved in this case
the power of the Municipal Government to levy
a tax upon the Stock issued by the State-s one of
general interest in the community and the follow
ing clear and forcible opinion of Judge MARTIN
will be received with unusual attention, as coming
from gentleman of such eminent legal ability:
The tax in controversy in this case was imposed
by the Mayor and City Council of Baltimore in
pursuance of an act of the General Assembly of
Maryland of the first of April, 1S4l. The tax was
laid on the State Stock of the defendant; and the
first question presented for my consideration is that
which relates to the power of the State to tax its
own Stock; or to state the question precisely
the power of the State, when imposing a tax upon
of its citizens, to estimate this Stock as part
of his estate, it being declared by the 18th Article
of the Bill of Rights that "Every person in the
State, (paupers excepted, persons holding prop
erty therein, ought to contribute his portion of
public taxes for the support of the Government,
cording to his actual worth in real personal es-
tate This is question that lies at the foundation
of the case for if the State has right to tax its
own Stock. this is power which it could not COM
municate to the city of Baltimore. 1t is question
not of eXpediency, but of power, and it is one the
Importance of which it is difficult to overstate.
The taxing power, part of the legislative pow
er, operates upon all the persons and property be-
longing to the body polite. AS this Stock
was acquired by the holder, it constituted part of
his estate. 1t was property. Its nature could not
be changed by the fact that it was created by the
State. The right by which the defendant held it,
as well as any other property to which he might be
entitled, was qualified right; it was in the nature
of this right that it should contribute to the sup
port of the Government, to whom the owner owed
allegiance, and by whose laws this property
protected AS property, this Stock was then le-
gtimate object of taxation and the validity of the
Act imposing this tax can only be disputed upon
of three grounds.
LIST. That the State has expressly surrendered its
taxing power, qHOdd this Stock. Or,
I'd. That there has been REIMBURSEMENT of it,
by implication. Or,
Sd. That by the imposition of this tax, the State
has impaired the obligation of the contract existing
between itself and the Stakeholder, and that it to
be treated violation of the tenth section of the
first Article of the Constitution of the United
States, which prohibits State from passing any
law impairing the obligation of the contract.
l. Has there been an express surrender of this
power by the State? The Acts of 1888 chap. 49,
and 1888 chap. 1856, reserve to the State no power
to tax this Stock but there is to be found in those
Acts, no express surrender of the power. The
statutes silent upon this subject. And although
1t is true State can, for what may be regarded a
valuable consideration, surrender this power is
sometimes done in the case of bank for bonus,
it is not pretended that there was in reference to
this stock any act resembling an express surrender
OF the taxing power by the State.
z. Was there surrender of this power by i'm
plication?
In a transaction of this nature between individ-
uals, the argument in support of an implied relin-
punishment of the power would be irresistible. But
the answer to the argument on this branch of the
case is, that there is such thing the abandon
ment or diminution of the taxing power, by impli-
cation. 1t is a vital power, and the renquish-
ment of it by implication cannot be predicated
of the State. The Constitution of the United
States is framed upon this supposition. By that
Constitution the whole commercial power of the
nation is placed in the hands of Congress. The
| imposition of duties upon imports and eX
ports, as an instrument by which commerce
| Ill
ly regulated, might we'll have been supposed to
have been carried by the grant of the Commercial
| power, and implicitly relinquished by the States
But such theory is rejected by the trainers of the
CONSTITUTION and the States are expressly prohibit
ed from taxing imports or exports. In the thirty
| third number of the Federdlist, in paper written
| by Mr.. Hamilton it is said
''That the individual States would, under the pro
posed constitution, retain an Independent and un
comfortable authority to raise to any extern
OF which they may stand in need, by every kind o
taxation, except duties on imports and exports. -
Rejecting the idea that there could be surrender
OF the taxing power between the States, and the
| United States, by implication.
| The whole theory of our government is ncon
sistent with the idea that there ought to be either
grant of power, or REIMBURSEMENT of power by
implication, except in cases Of necessity. There
| certain auxiliary powers which Congress NAV eX.
ercse, and these are called implied powers. Blu
by the Constitution of the United States, there il
| granted to Congress the right to pass all law!
which shall be necessary and proper for carrying
| into execution the foregoing powers, and when al
auxiliary power is used, necessary and proper tt
carry into execution any Of the specified pow
ers, it is covered by this express grant. | do not
mean to say, that the power 60 pass any law, which
might be necessary and proper to execute the
granted powers, would not be implied in the alb
sence OF any express grant, but | refer to it, as
manifestation of the anxiety of the trainers of tn,
Constitution to guard against the use of implied
powers.
1quote the opinion of Mr.. Chief Justice Marshall
in the of the Providence Bank, and Billings 4
Peters SCI, on the question to the surrender by
implication of any portion of the taxing power BY
State. He says:
"We will not say that State may not relinquisl
the taxing power; that consideration sufficient,
valuable to induce partial release of it, may no
exist, but as the whole community is interested il
retaining 1t undimnished, that community has
| right to insist that its abandonment ought not t.
be presumed in case in which the deliberat
purpose of State to abandon it does not appear.
quote also the language of Mr. Chief Justic
fancy in the case of the Charles River Bridge
against the Warren Bridge, II Peters SAT, VIII
says:
"a State ought not to be presumed to surrende
this power, because, like the taxing power, tn
whole community have an interest in preserving i
undiminished.'
And we have thus khe opinions of two of the frs
legal minds of the age, rejecting the proposition
that there can be surrender of the taxing powe
g. Does the imposition of this tax i'm pair the oh
legation of the contract between the State and tn
stakeholder?
l think not. The practice of the State is to de
duct from the interest due to the stakeholder te
cents in the hundred dollars in payment of its ia
bill. This is Objectionable because it is designa
ton, by the State of the fund out of which the ia
is to be paid. The tax payer shouldbe at liberty
pay the tax out of any fund at his command. TIL
more regular and legal mode of proceeding. woul
be to pay the interest, and then to collect the tax
in this case; and this IS to be considered hay
ing been done, for the purpose of testing the ques
ton of power.
The State undertakes by the creation of thi
stock, to pay the principal at the time stipulated b
the certificates, and in the meantime to pay the in
terest And when this is done the whole civil lega
obligation of the contract is performed. The impc
siion of the tax upon this stock portion of tn
estate of the holder, the representative of money
and liable to contribute to the support of the Coy
ernment is separate and Independent act and CO.
lateral to the contract. 1t is only exactng fror
the party the payment of debt due from him t
the State, the amount of which is measured in par
by the value of this stock.
In Ogden against Saunders, u Wheat. 800, MI
Justice Thomson saws:
THAT the true import of the term obligation, a
al.