State v. National Bank , 33 Md. 75 ( 1870 )

Maulsby, J.,

delivered the opinion of the Court.

The Act of 1853, chapter 441 re-chartered several of the banks of this State whose charters were about to expire, and amongst others, the Bank of Baltimore, since converted into a National Association under the Act of Congress of 1864, chapter 106.

The 5th section of the Act of 1853, provided that each of the banks should annually pay to the Treasurer of the State of Maryland, on the first Monday of January, the sum of twenty cents on every hundred dollars of the capital stock actually paid in, to be applied in augmentation of the Free School fund, and that if any of said banks failed to make said payment, within six months after it became payable, its charter should be forfeited, and be deemed null and void.

The 17th section did not provide a mode in which the banks, or any of them, should evidence a determination to close banking operations, or a particular means by which said operations should be closed, and the assets distributed, as seemed to be supposed in the argument of the Attorney General; but provided simply, that if the President and Directors, or a majority of the stockholders in general meeting assembled, should, at any lime, determine to close the banking operations of any of said banks, it should not bo lawful for such corporation thereafter, to resume the exercise of its banking powers and franchises.

There is no provision of the Act of 1853, restraining any of the banks incorporated by it from ceasing to exercise the powers and franchises conferred by it, at any time when the President and Directors, or a majority of the stockholders might so determine. On the contrary, the 17th section expressly recognizes the right to do so, at any time during the corporate existence authorized by the Act.

The Bank of Baltimore availed of the rights and franchises granted, and assumed the obligation to pay twenty cents on every hundred dollars of its capital stock paid in annually, so long as it should continue its existence under the authority of the Act. The franchise granted was to conduct banking operations. All other provisions of the Act were incident to the exercise of this franchise. The right of “closing its banking operations” necessarily pertained to the corporation, from the nature of its being, and, as stated, was recognized by the 17th section.

The bank was in existence under the authority of the Act of Assembly of 1853, when the Act of Congress of 1864 was passed. The latter Act was passed “to provide a National currency, secured by a pledge of United States bonds, and to provide for the redemption and circulation thereof.” It proposed to effect this by means of authorizing associations to be organized “for carrying on the business of banking.” The 5th and following sections, to 43d inclusive, provided in detail for the means and the manner in which they were to be applied. The 44th section provided, “that any bank, incorporated by special law, or any banking institution organized under a general law of any State, may, by authority of this Act, become a National association under its provisions,” and proceeded to detail the manner in which a banking institution might become organized as a National association, as in the preceding sections the manner had been detailed in which persons might organize for the same purpose.

The power of Congress to pass the Act of 1864, is not made a question in this case, which is against a defendant existing under its authority, and we are, therefore, relieved of the duty of expressing an opinion on that subject. In this opinion, we must assume the constitutionality of all those parts of the Act of 1864 which are necessarily involved in the decision of the case before us. It provided full and perfect means by which to enable the Bank of Baltimore to become changed and converted into a National association.

The record shows that, on the 13th of July, 1865, the owners of the capital stock of the Bank of Baltimore organized an association under the Act of Congress, and determined to conduct their business, from and after the first day of August, under the title of the National Bank of Baltimore, and that on the 17th day of July the Governor of the State, by his proclamation, announced that the charter of the Bank of Baltimore, as granted by the General Assembly, had been surrendered, and that its corporate powers, under said charter, would thenceforth cease.

The charter being surrendered and annulled, on what ground can the State demand the price which was payable whilst the charter continued, for the privileges granted by it?

“ The bonus imposed by the charter of banks, is not a tax on the franchises granted, but a price to be paid for the right of exercising the powers, and enjoying the immunities conferred by the charters.” 6 Gill, 288.

This suit is against the National Bank of Baltimore, to recover the bonus imposed by the Act of 1853, on the Bank of Baltimore, which has accrued and become payable, as alleged, since the change and conversion of the Bank of Baltimore into The National Bank of Baltimore.

The right to recover is not, and could not be maintained on the ground that the State is entitled to the price to be paid by the Bank of Baltimore for the right of exercising the powers and enjoying the immunities conferred by its charter. That has been surrendered and annulled. The right to recover is vested on the ground of contract, and it is contended that, by the Act of Assembly of Maryland, of 1865, chapter 144, the Bank of Baltimore was enabled to abandon its charter, and avail of the provisions of the Act of Congress, and to continue “ to use its corporate name for the purpose of prosecuting and defending suits instituted by or against it, and of enabling it to close up its affairs,” and to have all its assets, real and personal, vested in the association organized under the Act of Congress, without other transfer, on condition “that the existing laws of the State providing for taxes on the State banks, for the purposes enumerated therein, shall extend and apply to all State banks and other institutions, availing themselves of the provisions of this Act, when they shall have become banking institutions under the Act of Congress, and all sums required by the charter of said institutions and banks to be paid to the State, shall continue as heretofore to be paid,”

The money sued for was- payable to the State under the Act of 1853, as a price for the right of exercising the powers and enjoying the immunities of the State charter. When that charter was surrendered and annulled, the money could no longer be payable for that right. If the duty of continuing to pay it could be imposed on the new association created by the Act of Congress, and existing under its authority, it could only be by virtue of power in the State to impose it as a tax. It is clear that it could be demanded only as payment for a right granted by the State, or as a tax imposed by the State. It is clear that the State had no power to impose it as a tax.

In McCulloch vs. The State of Maryland, 4 Wheaton, 316, the Supreme Court said: “ The State governments have no right to tax any of the constitutional means employed by the Government of the Union to execute its constitutional powers,” and “the States have no power, by taxation or otherwise, to retard, impede, burden, or in any manner, control the operations of 'the constitutional laws enacted by Congress to carry into effect the powers vested in the National Government.”

And in Howell vs. State, 3 Gill, 14, our own Court of Appeals said: “State sovereignty extends to everything which exists by its own authority, or is introduced by its permission, but nob to those means employed by Congress to carry into execution powers conferred by the Constitution of the United States.”

The prayers of the plaintiff below rested on the ground of contract, and were addressed to the point, that it ought to be left to the jury, on all the facts and circumstances of the case, to find an implied agreement by the defendant, to pay the money sued for. It could not be competent to.the jury to find an implied contract by the defendant to pay to the State a bonus for the privileges and franchises of defendant's charter. No charter from the State was in existence. The defendant derived the franchises and privileges which it enjoyed from the Act of Congress. It would have been contrary to law for the jury to so find. So, it could not be competent for the jury to infer a promise by defendant to pay to the State a tax which the State had no right to demand. The attempt by the State to impose such a tax would be void, and there could be incumbent on the defendant no duty to pay it, on which a promise to pay could be raised by implication. In no view do we think that the jury could have been justified in finding a contract by the defendant on which the action could have been maintained, and we, therefore, concur with the Court below in the propriety of rejecting the appellant’s prayers.

(Decided 27th June, 1870.)

Judgment affirmed..