The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1878-04-26
loan q state Tex the Coupons Of Her
| onsis n go

Can d State Tex the Coupons Of Her
Bcnds Z 80
This question was 10 effect recently de-
cided by the Supreme gonrt Of tile United
states In the case OF aiirrou es.. I he City
of Charleston MURRAY,a foreigner, held
about S35, 900 in the registered stock of the
city Of Charleston, bearing six per cent. in
terest, payable quarterly. The city I'M
posed 4 tax Of two per cent. on all its debt,
and directed tho tax to be retained oittaof
the interest;to be paid the creditor IL PAID
MURRAY the four per cent. on his stock and
retained the wo-per-cent. tax. 'Thereupon
MURRAY sued the city to recover the
amount OF the interest due him thus re-
tanned as tax. The Supreme Court Of
South Carolina decided that the city could
collect the tax because the State had
given her power TO tax all property. MUIR
RAY appealed to the Supreme Court OF the
United States, which, after considering the
preliminary question Of jurisdiction, went
on to say that the State of South Carolina
having by statute given the city the right
to tax all property the city, in exercising
this power was in substance and in fact
exercising the power and authority OF the
State, and the question, therefore, really
was, whether the State had the right to tax
her own debts or to give authority to city
to tax debts OF that city. We quote the
opinion OF the Court on this point as very
interesting and as deciding the identical
question which our Court Of Appeals has
had before it:
No. 95.-Murray Us. city Council Of
Charleston.
We come, then, 70 the question whether
the ordinances decided by the Court to be
valid old impair the obligation Of the city's
contract with the plaintiff. The solution
Of this question depends upon correct I'M
derstanding OF what that obligation was.
Dv the certificates of stock, or city loan,
held BY the plaintiff, the city assumed to pay
| to him the sum mentioned in them, and TO
pay six per cent. interest in quarterly pay
ments. The obligation undertaken, there
fore. was both TO pay the interest at the rate
specified and to pay it 10 the plaint!T. Such
was the contract, and such was the whole
| contract. 1t contained no reservation or
restriction OF the duty described. But the
city ordinances, if they can have any force,
change both the form and effect OF the Tn-
aertakine. They are the language OF the
promissor. In substance they say to
the creditor: "True, our assumption
was to pay to you quarterly a sum
OF money equal TO six per cent.
per annum on the debt we owe you. Such
was our express engagement. But we now
! lessen our obligation. Instead OF paying
all the interest to you we retain a part for
| ourselves, and substitute the part retained
| for part of what weseXprcssly promised
YOU" Thus applying the ordinances TO the
contract it becomes asvery different thing
from what 1t was when it was made, and
the change is effected by legislation, by or
dinances Of the city, enacted under asserted
authority Of laws passed by the Legislature.
| That By such legislation the obligation Of
| the contract is impaired is manifest enOu9 H.,
unless it can be held there was some implied
reservation Of q right in the creditor to
change its terms, right reserved when the
contract was made-unless some power was
withheld, not expressed or disclosed, but
which entered into and limited the express
undertaking. But how that can below
an express contract can contain an implica-
ton or consist with reservation directly
contrary to the words OF the instrument
has never yet been discovered.
1t has been strenuously argued on behalf
of the defendant that the State OF South
Carolina and the City Council OF Charleston
possessed the power OF taxation when the
contracts were made; that by the contracts
the city did not surrender this power; that
therefore the contracts were subject to its
possible exercise, and that the city ordi-
nances were only an eXertion OF it. we
are told the power of State to impose
taxes upon subjects within its jurisdiction
is unlimited with some few exceptions,
and that it extends to everything that exists
by its authority or is introduced by its per-
mission. Hence it is inferred that the con-
tracts OF the city Of Charleston were made
with reference to this power and in subor-
dinatlon to it.
All this may be admitted, but it docs not
meet the case OF the defendant. We dc not
question the existence OF q State power to
levy taxes as claimed, nor the subordination
OF contracts to it, so far as it is unrestralned
by constitutional limitation. But the power
is not without limits, and one of its lmita-
tions is found in the clause Of the Federal
Constitution that no State shall pass law
impairing the obligation OF contracts. A
change OF the expressed stipulatlons Of a
contract, or a relief Of debtor from strict
and literal compliance with It's require
ments, can no more be effected by an
exertion Of the taxing power than it
can be bv the eXertlon Of any other
power OF State Legislature. The con-
stitutional provision against impairing con-
tract obligations is limitation upon the
taxin gpower as we'll as upon all legisla-
ton, whatever form 1t may assume. Indeed,
attempted State taxation is the mode most
frequently adopted to affect contracts con-
trary to the constitutional inhibition. 1t
most frequently calls for the exercise Of our
supervisory power. 1t may, then. safely
be affirmed that no State, by virtue Of its
taxing power, can say to debtor, &" You
need not pay to your creditor all Of what
you have promised TO him. You may satisfy
your duty to him by retaining part for
Yourself, or FOR some municipality, or for
the State treasury" Much less can city
say, We Will tax our debt to you, and In
virtue of the tax withhold a part for our
| own use.
What, then, is meant by the doctrine that
contracts are made with reference to the
taxing power resident in the State, and in
subordination to it Is it meant that when
4 person lends money to Il State, Or to a
municipal division OF the State having the
power OF taxation, there is in the contract
a tact reservation of a right in the debtor
| TO raise contributions out of the money
promised to be paid before payment /?
That cannot be, because if it could
| the contract lin the language OF Alex
| andcr Hamiiton) would "involye two
| contradictory thugs: an obligation TO do