The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-12-18
THR LEGAL TENDER ACT.

Argument in the New York Bank Cases In
she Supreme COurt-Are Certificates Of In
debtedness or Legal Tender Notes Exempt
from State Taxationt
WASHINGTON, Dec. 10, 1868.
The cases which were closed to-day In the Supreme
Court OF the United States involving the question az
to whether certificates OF held by certain
New York banks, and also the still more momentoqs
question as to whether legal tender notes were ex-
empt from State taxation, win form q very
interesting contribution, by reason OF the
subtle and peculiar arguments adduced, to
the legal literature Of the country. The gist
Of the intricate arguments presented to the
court may be thus related:-In 1853 the Legislature
Of New York taxed the banks on their capital with
out allowing any deduction on account OF the invest
ment OF part OF their capital in the public loans OF
the United States government. The courts OF the
State Of New York held this taxation to be correct
but on appeal by the banks to the Supreme Court Of
the United States that tribunal declared the State
tax law to be in erect an interference with the
power OF the United States government to borrow
money, and, as such, to be unconstitutional and
void. The judgments OF the State courts were re-
versed. The State Legislature then altered the
ferent from that previously adopted the banks were
taxed their capital to the same extent before
similar course OF litigation followed this effort. The
State decided in favor OF the State tax; but
on q second appeal by the banks the Supreme Court
of the United States decided that the second act
the first. The judgments OF the State courts were
again reversed. A third device was then contrved
In order, If possible to tax the profits Of banking
like the profits OF other businesses. The Legislature
OF New York in 1866 imposed tax essentially to
the same extent as before; but in this instance the
tax was imposed not upon the banks or their CAPT.
tails, but upon the stockholders to the amount OF
their respective shares. Again. for the third time,
the same series Of itgations took place. The State
courts they had uniformly DONE enforced the State
law. But on this their third appeal to the Supreme
Court OF the United States the banks were less for
tunate. The State law was justified and the Judg-
mentS or the State courts were affirmed.
The end was not yet. Several banks had voun-
tarily or c0mpusorily paid the taxes imposed upon
them under the earlier State laws, which had been
condemned by the high court at Washington, and to
rectfy this apparent injustice the Legislature OF New
York passed an act directing that the city OF New
York refund all taxes paid by the banks on any por-
ton OF their capital which was invested in securities
OF the United States by law exempt from State
taxation. This gave rise to the question what secu.
rites paper issued by the United States possessed
this exemption The officers OF the city OF New
York admitted that the stock or bonds OF the United
States and the Treasury notes OF the United States
payable at future periods and bearing interest wer
80 exempt and accordingly they refunded the take s
paid by the banks much OF their capital
as was invested In those securities. The banks also
claimed an exemption as to SO much Of their capital
invested In two other kinds OF United States
paper:-Frst, certificates OF Indebtedness issued by
the United States government to public creditors In
satisfaction OF pre-exsting and acknowledged de-
mands against the government under the acts OF
March and u 1862 Q2th Statutes, PIP. 1852 800;
second, the bills commonly called greenbacks or
legal tenders and which in the acts Of Congress are
called 'awful money" The city officers insisted
that both of these were taxable by the State. The
State courts sustained that constructions and now,
for the fourth tme the banks have appealed to the
Supreme Court OF the United States Their cases
were opened on Monday morning and occupied
three whole days.
Thomas ii. Rodman, Wheeler Ii. Peckham and
John E. Burrlll appeared for the banks; Richard
OGorman and Charles O'Conor appeared for the
city.