McCulloch v. Maryland

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Following is the case brief for McCulloch v. Maryland, Supreme Court of the United States,(1819)

Case Summary of McCulloch v. Maryland:

  • Congress passed an act incorporating the Bank of the U.S. and opened up a branch in Maryland.
  • Maryland passed a state law that would impose a tax on the federal Bank, which at the time was the only bank in Maryland. The Bank refused to pay the tax and a lawsuit followed.
  • Both the trial court and Maryland Court of Appeals found for the state. McCulloch appealed to the United States Supreme Court.
  • The Court held Congress had the power to establish a Bank under the general welfare clause to “tax and spend” and the state tax could not inhibit the superior federal statute.

McCulloch v. Maryland Case Brief

Statement of the Facts:

Congress passed an act in 1816, which incorporated the Bank of the U.S. A branch was opened in Maryland, in 1817 and in 1818, the state legislature passed an act imposing a tax on all out of state banks doing business in Maryland. The act, general in nature, only affected the U.S. Bank because it was the only bank operating in Maryland. The head of the Maryland branch, James McCulloch, refused to pay the tax resulting in a lawsuit later appealed to Maryland’s Court of Appeals. The court upheld Maryland’s claim that since the Constitution was silent on whether the U.S. could charter a bank, establishing such a bank was unconstitutional.  McCulloch then appealed to the United States Supreme Court.

Procedural History:

McCulloch brought suit against the state of Maryland.  The state of Maryland prevailed and McCulloch appealed to the Maryland Court of Appeals. The court affirmed the lower court’s decision. McCulloch then appealed to the United States Supreme Court.

Issue and Holding:

Does Congress have implied power through the Constitution to establish a bank? Yes.
If Congress does have such implied power, may the individual state tax the federal bank? No.

Rule of Law or Legal Principle Applied:

Under the Constitution, Congress has specifically been delegated the power to tax and spend for the general welfare of the public, in addition to make such other laws as it deems necessary and proper to carry out these enumerated powers. Federal Laws are supreme to conflicting state laws.

Judgment:

The judgment of the Maryland Court of Appeals is reversed.

Reasoning:

Under the Constitution, Congress has the power to charter the Bank of the U.S. Ultimately this power is derived from the grant of power to Congress to “tax and spend” for the general welfare. In addition, Congress has also been provided general powers under the necessary and proper clause, which states Congress can make laws it deems necessary and proper to carry out these enumerated powers. The function of the necessary and proper clause is not to limit but expand Congresses power.  Here, Congress decided that the necessary and proper method of raising revenue to carry out its enumerated taxing and spending power was to charter the bank of the U.S.

Since the Bank was created by federal statute, Maryland may not tax the Bank because federal laws have supremacy over state laws. As it follows, a federally created institution may not be inhibited by an inferior state law. Since the Bank of the U.S. serves the entire nation, it is inappropriate for it to be controlled by a single part of the nation, through a state tax.

Concurring and Dissenting opinion:

The unanimous opinion was written by Chief Justice Marshall.

Significance:

McCulloch v. Maryland not only 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.

Student Resources:

http://www.pbs.org/wnet/supremecourt/antebellum/landmark_mcculloch.html
https://www.law.cornell.edu/supremecourt/text/17/316