McCulloch v. Maryland 1819

Reasoning of the Majority

1)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. 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. 2). In liberally interpreting the Necessary and Proper Clause, the Court rejected Maryland's narrow interpretation of the clause that the word "necessary" in the clause meant that Congress could pass only laws that were absolutely essential in the execution of its enumerated powers. Marshall also noted that the Necessary and Proper Clause is listed within the powers of Congress, not its limitations. The Court held that the word "necessary" in the Necessary and Proper Clause does not refer therefore to the only way of doing something but applies to various procedures for implementing all constitutionally-established powers: 3) 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. Because "the power to tax is the power to destroy," Maryland was unconstitutionally undermining the superior laws and institutions of the United States. 4) 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. 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.

Provision of the US Constitution at Issue

Article 1 Section 8, Clause 18 Necessary and Proper Clauses. how to interpret, broadly or narrowly

Government Action or Statute in Dispute

Does Congress have the power to charter a bank? Does the state have the power to tax a government agency?

Outcome

In a unanimous decision written by Chief Justice Marshall, the Court ruled that the Bank of the United States was constitutional and that the Maryland tax was unconstitutional. Court held that Congress had the power to incorporate the bank and that Maryland could not tax instruments of the national government employed in the execution of constitutional powers.

Major Doctrine

Marshall developed a doctrine that states may not retard, impede or burden constitutional laws enacted by congress — The power to tax, is the power to destroy — This falls under burdening constitutional laws enacted by Congress — The Maryland tax is a punitive tax on a federal instrumentality, and is therefore unconstitutional. — This is a good example of court saying "yes" and legitimizing a controversial act of the federal government — Very important action for the court to say yes — The state's rights argument had been about popular sovereignty — Popular sovereignty was then used to justify the powers of the national government; people forming the national government is the true reciprocity of the sovereignty of the people, and thus had precedent over state sovereignty — Also important because Maryland asking the court to strike down an act of congress as unconstitutional concedes that court has power of judicial review. emphasized Congresses power to tax and spend for the general welfare of the public but demonstrated the discretion of Congress to make other laws necessary and proper to carry out their enumerated powers. In addition, the concept federal supremacy is present as the state law could not inhibit the federal statute establishing a Bank of the U.S. 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.

Alternative Solution

Maryland argued that the tax was perfectly constitution, because they states are co-equal sovereignties with federal government, and that they have the power to tax people, including the federal government. Marshall could have upheld this opinion that the states and the federal government were co-equal sovereignties. Second argument: The second bank was unconstitutional as it was not a necessary and proper institution to carry out the power of congress, and is therefore unconstitutional — Maryland was pushing for a narrow interpretation of the clause. Marshall could have agreed with the narrow interpretation of the Constitution.

Facts

The First Bank of the United States had been Chartered for 20 years, Congress then chartered the Second Bank In 1816. In 1818, the state of Maryland passed legislation to impose taxes on the bank. James W. McCulloch, the cashier of the Baltimore branch refused to pay the tax. A lawsuit ensued and the case was appealed to the Maryland Court of Appeals. The court of appeals upheld Maryland's argument that because the Constitution was specifically silent on the subject of whether the United States government could charter a bank, the Bank of the United States was unconstitutional. The case was then appealed to the United States Supreme Court.