McCulloch v. Maryland is a case decided on March 6, 1819, by the United States Supreme Court in which the court recognized the federal government's implied powers under the U.S. Constitution's Necessary and Proper Clause. The court determined that the United States had the authority to establish a federal bank and that no state had the right to impose a tax on the federal bank.[1]
HIGHLIGHTS
Why it matters: Justice Marshall’s decision argued that the U.S. Constitution's Necessary and Proper Clause allows for the federal government to exercise certain implied powers, such as the power to create a national bank, beyond those powers explicitly stated in the U.S. Constitution. To read more about the impact of McCulloch v. Maryland, click here.
Background
Congress in 1816 chartered the Second Bank of the United States. The bank, controlled by private stockholders, held federal funds and could issue notes. Rather than paying taxes, the bank loaned the federal government money and thus aimed to regulate the market value. Under this arrangement, the federal bank did not pay the taxes that applied to state banks.[2]
When the 1818 depression caused some state banks to close, many shuttered banks blamed the Second Bank of the United States. In response, the Maryland General Assembly in 1818 passed a law that required all bank notes in the state to be stamped by the state treasury, know as the Western Shore Territory, or be subject to a $15,000 annual tax. The tax exclusively affected the Second Bank of the United States—the only bank not chartered in the state. James William McCulloch, a cashier of the Baltimore Branch of the Second Bank of the United States, went on to issue federal bank notes without the Western Shore Territory stamp and without paying the state tax. Private citizen John James filed suit against McCulloch, arguing that he had violated the state law.[2]
Representation for the state of Maryland argued in state court that the U.S. Constitution was silent on the subject of banks and, therefore, did not prohibit the state from levying taxes against the Second Bank of the United States. The state further argued that the federal government exceeded its authority when it chartered the bank. The state court ruled in favor of Maryland and the Maryland Court of Appeals affirmed the lower court ruling.[2]
McCulloch appealed to the United States Supreme Court.
Oral argument
Oral argument was held from February 8, 1819, through March 3, 1819. The case was decided on March 6, 1819.[1]
Decision
The Supreme Court decided unanimously to reverse the Maryland Court of Appeals' decision. Justice Marshall wrote the majority opinion for the unanimous court.[1]
Opinion
Majority opinion
The court unanimously reversed the lower court's decision, determining that Congress could establish a bank and that Maryland could not impose taxes on the federal bank. The opinion also espoused the doctrine of judicial review. According to Marshall, who authored the decision, "the constitution and the laws made in pursuance thereof are supreme...they control the constitution and laws of the respective states, and cannot be controlled by them."[1] Lastly, the court ruled that by taxing the bank, Maryland was violating constitutional sovereignty by levying a tax against the United States, when, as a state, it only had the power to tax its citizens.[2]
Implied powers
Justice Marshall further emphasized that the states could not interfere with the federal government’s implied powers under the U.S. Constitution. Marshall wrote, “The Government of the Union, though limited in its powers, is supreme within its sphere of action.”[1]
Moreover, Justice Marshall argued that the framers of the U.S. Constitution intended that the federal government exercise the document's explicit and implied powers without the interference of the states. He wrote, “It must have been the intention of those who gave these powers to insure, so far as human prudence could insure, their beneficial execution.”[1]
Justice Marshall also described what he considered to be the nature of limited government. He argued that the written U.S. Constitution limited government power by enumerating and defining specific authority:
| “ | The government of the United States is of the latter description. The powers of the legislature are defined and limited; and that those limits may not be mistaken, or forgotten, the constitution is written. To what purpose are powers limited, and to what purpose is that limitation committed to writing, if these limits may, at any time, be passed by those intended to be restrained? The distinction between a government with limited and unlimited powers is abolished if those limits do not confine the persons on whom they are imposed, and if acts prohibited and act allowed, are of equal obligation.
[3] |
” |
Finally, Marshall argued that implied powers with legitimate ends not prohibited by the U.S. Constitution were constitutional. He wrote, “Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional.”[1]
Judicial role in interpreting constitutional powers
Marshall argued that it was the duty of the judiciary to understand the powers granted in the U.S. Constitution. Marshall argued that the judiciary must determine the constitutionality of laws by comparing laws with constitutional grants of power:
| “ | If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its invalidity, bind the courts, and oblige them to give it effect? Or, in other words, though it is not law, does it constitute a rule as operative as if it was a law? This would be to overthrow in fact what was established in theory; and would seem, at first view, an absurdity too gross to be insisted on. It shall, however, receive a more attentive consideration. It is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases, must of necessity expound and interpret that rule. If two laws conflict with each other, the courts must decide on the operation of each.
[3] |
” |
Marshall wrote that the Supreme Court must consider whether the law or the U.S. Constitution should be upheld in such conflicts. He wrote, “So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformably to the law, disregarding the constitution; or conformably to the constitution, disregarding the law; the court must determine which of these conflicting rules governs the case. This is of the very essence of judicial duty.”[1]
Marshall proceed to argue that the U.S. Constitution was superior to any ordinary act of legislation, and that the U.S. Constitution’s superiority should govern a case concerning a conflict between the two. He wrote, “If, then, the courts are to regard the constitution, and the constitution is superior to any ordinary act of the legislature, the constitution, and not such ordinary act, must govern the case to which they both apply.”[1]
Legacy
McCulloch v. Maryland extended Congress' authority by recognizing implied powers pursuant to the Necessary and Proper Clause of Article I, Section 8 of the Constitution.[2]
- Federalism
- Necessary and Proper Clause
- John Marshall
- McCulloch v. Maryland Decision
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Reproduction courtesy of the Library of Congress
McCulloch v. Maryland (1819)In McCulloch v. Maryland (1819) the Supreme Court ruled that Congress had implied powers under the Necessary and Proper Clause of Article I, Section 8 of the Constitution to create the Second Bank of the United States and that the state of Maryland lacked the power to tax the Bank. Arguably Chief Justice John Marshall's finest opinion, McCulloch not only gave Congress broad discretionary power to implement the enumerated powers, but also repudiated, in ringing language, the radical states' rights arguments presented by counsel for Maryland.
At issue in the case was the constitutionality of the act of Congress chartering the Second Bank of the United States (BUS) in 1816. Although the Bank was controlled by private stockholders, it was the depository of federal funds. In addition, it had the authority to issue notes that, along with the notes of states' banks, circulated as legal tender. In return for its privileged position, the Bank agreed to loan the federal government money in lieu of taxes. State banks looked on the BUS as a competitor and resented its privileged position. When state banks began to fail in the depression of 1818, they blamed their troubles on the Bank. One such state was Maryland, which imposed a hefty tax on "any bank not chartered within the state." The Bank of the United States was the only bank not chartered within the state. When the Bank's Baltimore branch refused to pay the tax, Maryland sued James McCulloch, cashier of the branch, for collection of the debt. McCulloch responded that the tax was unconstitutional. A state court ruled for Maryland, and the court of appeals affirmed. McCulloch appealed to the U.S. Supreme Court, which reviewed the case in 1819.
In a unanimous opinion written by Chief Justice Marshall, the Court ruled that the Bank of the United States was constitutional and that the Maryland tax was unconstitutional. Concerning the power of Congress to charter a bank, the Court turned to the Necessary and Proper Clause of Article I, Section 8, which expressly grants Congress the power to pass laws "necessary and proper" for the execution of its "enumerated powers." The enumerated powers of Congress include the power to regulate interstate commerce, collect taxes, and borrow money. Said the Court famously, "let the ends be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adopted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional." In other words, because the creation of the Bank was appropriately related to Congress's legitimate power to tax, borrow, and regulate interstate commerce, the Bank was constitutional under the Necessary and Proper Clause.
Second, the Court ruled that Maryland lacked the power to tax the Bank because, pursuant to the Supremacy Clause of Article VI of the Constitution, the laws of the United States trump conflicting state laws. As Marshall put it, "the government of the Union, though limited in its powers, is supreme within its sphere of action, and its laws, when made in pursuance of the constitution, form the supreme law of the land." Because "the power to tax is the power to destroy," Maryland was unconstitutionally undermining the superior laws and institutions of the United States.
Finally, the Court held that the "sovereignty" (political authority) of the Union lies with the people of the United States, not with the individual states that comprise it. The United States, not a simple alliance of states, is a nation of "constitutional sovereignty" with its authority resting exclusively with "the people" who created and are governed by the Constitution. To the Court, "the government of the Union is a government of the people; it emanates from them; its powers are granted by them; and are to be exercised directly on them, and for their benefit." Maryland's tax, however, violated constitutional sovereignty because it acted as a levy against all the people in the United States by a state accountable to only some of the people.If Marbury v. Madison (1803) "promised" that the Supreme Court would exercise great authority in shaping the laws of the land, McCulloch v. Maryland fulfilled that promise for the first time. Arguably no other decision has so profoundly defined national power. In one case, the Court expanded Congress' powers to include those implied by the Constitution, established the inferior status of the states in relation to the Union, and set the constitutional sovereignty of the federal government. McCulloch remains today a fundamental and binding bedrock of American constitutional law.
| AUTHOR'S BIO | ||
| Alex McBride is a third year law student at Tulane Law School in New Orleans. He is articles editor on the TULANE LAW REVIEW and the 2005 recipient of the Ray Forrester Award in Constitutional Law. In 2007, Alex will be clerking with Judge Susan Braden on the United States Court of Federal Claims in Washington. | ||