Argument in favor of the tax. Supreme Court of New York, for the purpose of compelling these officers to perform their alleged duties in this respect. An answer was filed, and the court by its judgment sustained the refusal. An appeal was taken to the Court of Appeals of New York, by which the judgment of the Supreme Court was affirmed. Writs of error, under the 25th section of the Judiciary Act, brought these judgments here for revision; the section* which gives such writ, where is drawn in question the validity of a statute of, or authority exercised under any State, on the ground of their being repugnant to the Constitution or laws of the United States, and the decision is in favor of such validity; or where is drawn in question the construction of any clause of the Constitution or statute of the United States, and the decision is against the title, right, privilege, or exemption specially set up, &c.;-a paragraph, this last, re-enacted by act of February 5th, 1867,† with additional words, as "where any title, right, privilege, or immunity is claimed under the Constitution, or any statute of or authority exercised under the United States, and the decision is against the title, right, privilege, or immunity specially set up, &c." Messrs. O'Connor and O'Gorman in support of the judgment below: 1. The judgment below is not subject to review here. The banks having voluntarily paid the tax, had no right to recover it, even in a regular action at law or suit in equity. There was no color of a claim enforceable by mandamus, except such as might have arisen under the State act of April 30th, 1866. The reimbursement contemplated by that act was a favor to a certain class of claimants upon its liberality. By the voluntary payment, the banks waived any exemption that might have existed. When they appeared in the State court they had no title, right, or privilege, save such as may have been conferred by the State act. The construction, import, and effect of the Constitution and laws of * 1 Stat. at Large, 85. † 14 Id. 384. Argument against the tax. the United States in respect to taxation by States, were only incidentally brought under consideration in the State court; not immediately "drawn in question," within the meaning of the Judiciary Act. 2. The exemption set up on the other side, can rest only upon the power of Congress "to borrow money on the credit of the United States." The organs whereby the Federal government carries on its operations are, we admit, exempt. But a certificate or statement of a past indebtedness -a mere chose-property in the hands of a citizen-is not a necessary instrumentality of the government. There is no particular virtue in the certificate. It affords ready proof of the debt, but does not alter its character. Is, then, issuing a certificate acknowledging a pre-existing debt, arising from the purchase of supplies or procuring of service, "borrowing money?" According to ordinary understanding it certainly is not. The term in use at the time, which would have come nearest to a description of these certificates, is "bills of credit." With these the Convention was familiar, and prohibited their issue by the States. It did not confer upon Congress power to issue them. The modes of raising means to support the government are pointed out by the Constitution. First, taxes, &c. Secondly, borrowing money. Buying on credit is not sanctioned, and was not necessary to be sanctioned. The other means were adequate so long as there was money at home or credit abroad. If the relators cannot stand upon an implication from the principles of the Constitution they must fail. Messrs. Peckham and Burrill, with whom was Rodman, contra, submitting that the jurisdiction of this court was sufficiently plain, and reiterating, enlarging, and enforcing the arguments made in recent previous cases denying the right of States to tax Federal securities held by banks,* contended that the credit of the United States, independently of the form * Bank of Commerce v. New York City, 2 Black, 620; Bank Tax Case, 2 Wallace, 200; Van Allen v. The Assessors, 3 Id. 573. Argument against the tax. in which it is used, was the matter meant to be protected, and that whatever securities or contracts were issued upon that credit were exempt from State taxation. The certificates were given to creditors having debts due ; such as the creditors were entitled to have paid. Suppose them to be paid, and the creditors then immediately to lend the money to the United States on these certificates of indebtedness; that would confessedly be a loan, and not taxable. Now the certificates are issued simply to avoid this roundabout operation, and to creditors desirous of receiving them. They extend the time of payment and bear interest. Without them the debt would be payable immediately and without interest. It is thus, in substance, a new contract and a loan. The government does not want money itself, but commodities and the services of men. It borrows only because it is easier to use the medium of exchange in its transactions than it is directly to secure commodities, services, &c., in kind. In essence, a borrowing of money and a purchase of commodities on credit are the same thing. Now, cases decide that the government's contract for the loan of money, or for the services of men, is exempt. Can any reason be shown why a contract for the purchase of commodities with an issue of a certificate of debt for them, should not be in the same position? The object in each case is the same, and the obstacles to the completion of the transaction desired by the government would be as detrimental to the public interest in one case as in the other. In all registered loans of the government, the certificates of stock are in the form of certificates of indebtedness; that is to say, they import that the United States are indebted to the persons therein named in a sum therein expressed, which is to be paid at a specified time and place, with a specified rate of interest. Some, indeed, are called by one name and some by another; but the different securities are so styled for convenience only, and not because of any difference in the essence of the obligation. They are all "securities" of the Opinion of the court. United States; or, as Mr. Justice Bouvier defines that term,* "instruments which render certain the performance of a contract." The CHIEF JUSTICE delivered the opinion of the court in all the cases. The first question to be considered is one of jurisdiction. It is insisted, in behalf of the defendants in error, that the judgment of the New York Court of Appeals is not subject to review in this court. But is it not plain, that under the act of the legislature of New York the banking associations were entitled to reimbursement by bonds of the taxes illegally collected from them in 1863 and 1864? No objection was made in the State court to the process by which the associations sought to enforce the issue of the bonds to which they asserted their right. Mandamus to the officers charged with the execution of the State law seems to have been regarded on all hands as the appropriate remedy. But it was objected on the part of those officers, that the particular description of obligations, of the tax on which the associations claimed reimbursement, were not exempt from taxation. The associations, on the other hand, insisted that these obligations were exempt under the Constitution and laws of the United States. If they were so exempt, the associations were entitled to the relief which they sought. The judgment of the Court of Appeals denied the relief upon the ground that certificates of indebtedness were not entitled to exemption. Is it not clear that, in the case before the State court, a right, privilege, or immunity was claimed under the Constitution or a statute of the United States, and that the decision was against the right, privilege, or immunity claimed? And, therefore, that the jurisdiction of this court to review that decision is within the express words of the amendatory act of February 5th, 1867? There * Law Dictionary, title "Security." 'Opinion of the court. can be but one answer to this question. We can find no ground for doubt on the point of jurisdiction. The general question upon the merits is this: Were the obligations of the United States, known as certificates of indebtedness, liable to State taxation? If this question can be affirmatively answered, the judgments of the Court of Appeals must be affirmed; if not, they must be reversed. Evidences of the indebtedness of the United States, held by individuals or corporations, and sometimes called stock or stocks, but recently better known as bonds or obligations, have uniformly been held by this court not to be liable to taxation under State legislation. The authority to borrow money on the credit of the United States is, in the enumeration of the powers expressly granted by the Constitution, second in place, and only second in importance to the authority to lay and collect taxes. Both are given as means to the exercise of the functions of government under the Constitution; and both, if neither had been expressly conferred, would be necessarily implied from other powers. For no one will assert that without them the great powers-mentioning no others-to raise and support armies, to provide and maintain a navy, and to carry on war, could be exercised at all; or, if at all, with adequate efficiency. And no one affirms that the power of the government to borrow, or the action of the government in borrowing, is subject to taxation by the States. There are those, however, who assert that, although the States cannot tax the exercise of the powers of the government, as for example in the conveyance of the mails, the transportation of troops, or the borrowing of money, they may tax the indebtedness of the government when it assumes the form of obligations held by individuals, and so becomes in a certain sense private property. This court, however, has constantly held otherwise. |