Weston v. City Council of Charleston
THIS was a writ of error to the constitutional court of South Carolina.
On the 20th of February 1823, the city council of Charleston passed 'an ordinance to raise supplies for the use of the city of Charleston, for the year 1823.' The ordinance provides 'that the following species of property, owned and possessed within the limits of the city of Charleston, shall be subject to taxation in the manner, and at the rate, and conformably to the provisions hereinafter specified; that is to say, all personal estate, consisting of bonds, notes, insurance stock, six and seven per cent. stock of the United States, or other obligations upon which interest has been or will be received during the year, over and above the interest which has been paid, (funded stock of this state, and stock of the incorporated banks of this state and the United States bank excepted) twenty-five cents upon every hundred dollars.'
In the court of common pleas for the Charleston district, the plaintiffs in error, in May 1823, filed a suggestion for a prohibition, as owners of United States stock, against the city council of Charleston, to restrain them from levying under the ordinances, on six and seven per cent. stock of the United States and the tax imposed under the ordinance; on the ground that the ordinance, so far as it imposes a tax on the stock of the United States is contrary to the constitution of the United States.
The prohibition having been granted, the city council applied to the constitutional court, the highest court of law in the state, to reverse the order, on the ground that the ordinance was not repugnant to the constitution of the United States; and the proceedings in the case having been removed to the said court, the said court in May term 1823, by a majority of their judges (four being in favour of the constitutionality of the ordinance, and three against it), decided that the said ordinance did not violate the constitution of the United States, in imposing a tax upon the holders of United States stock. From this decision the relators appealed by writ of error to the Supreme Court of the United States.
The error assigned in this Court was; that the judgment of the constitutional court was erroneous, in that it decided the ordinance of the city council of Charleston not to be repugnant to the constitution of the United States.
The cause was argued by Mr Hayne, for the plaintiffs in error; and by Mr Cruger and Mr Legare, for the defendants.
The counsel for plaintiffs in error submitted, that if the course of proceeding adopted by the plaintiffs in error was not approved of, by requiring a prohibition in the court of common pleas, and on the decision of the constitutional court being against them by taking the writ of error, some other mode would be employed. It was the wish of all the parties to have the decision of this Court on the question involved in the case; and a ready and entire acquiescence would be yielded to the judgment of the Court by all who were interested. It was submitted to the Court, that for the purposes of justice, the Court would give an opinion upon the matter assigned for error; and if the form in which the case had been brought up was not proper, the judgment of the Court would be equally operative, and would be yielded to by the parties, plaintiffs and defendants in error.
The subject in controversy is one of proper cognizance for this Court. It involves a most important constitutional question; the right of the states, or of state authorities, to tax the funded debt of the United States.
The subject matter of the case belongs to this Court. The soundest rule that can be adopted is, that when the matter in question belongs to the jurisdiction of the federal courts, a liberal construction in favour of the powers of the court over it, should be given.
The question in this case concerns the vital means of the nation; and the power claimed to be exercised under the ordinance, would interfere with those means on emergencies of the deepest interest. It is a constitutional question, and as such is peculiarly under the guardianship of this Court.
The writ of error is to the highest tribunal of the state of South Carolina; and the decision of that court has been in favour of the constitutionality of the ordinance; thus bringing the case fully within the 25th section of the judiciary act. Let this Court certify its opinion, and the controversy will be at an end.
On more occasions than one, when the Court has felt some embarrassment as to its jurisdiction, it has expressed an opinion upon important questions; and when the general good required a decision. United States vs. Kirkpatrick, 9 Wheaton, 720.
2. The act of congress organizing the courts of the United States, authorizes this Court to form and mould its process, so as to enforce and carry into effect the objects and purposes for which the federal courts were established. It is conceived that the writ of prohibition is a mode of exercising jurisdiction which is essential to those purposes. There is a strong analogy between the prohibition asked in this case, and those issued to district courts under the law. But if the writ of prohibition may not be adopted, and the Court should decide this case in favour of the plaintiffs in error, the case may be remanded to the court of common pleas for the Charleston district; and should that court refuse to proceed as required, the supreme court may itself enforce its judgment.
Upon the general question, the counsel for the plaintiffs in error argued, that the ordinance does not impose a tax on all public funds, but specifically on the six and seven per cent. stock of the United States. Thus there are selected, as the particular object of taxation, those debts of the government of the United States; and the sum the government has stipulated to pay for the loan is diminished to the extent of the tax. The contract of the general government is invaded, and its credit impaired. Its competency to negotiate loans may be destroyed by the admission of this power of taxation. There are two sources of revenue which are essentially the right of the general government. That of imposing duties, and that of borrowing money on the credit of the nation. The safety of the whole depends upon the free and undisturbed exercise of these powers. In peace, the first is necessary to revenue; in war, the second is vital to defence and success. If these powers and rights are not guarded and preserved, the functions and purposes of the union will be suspended and destroyed.
There is no warrant for this tax, to be derived from the opinion of this Court in the case of M'Cullough vs. The State of Maryland, 4 Wheaton, 316. The Court, at the close of the opinion delivered in that case, sanction a tax on property held by citizens of Maryland in the Bank of the United States, in common with other property throughout the state; but they say expressly, that 'a particular tax upon the operation of an instrument employed by the government to carry its powers into execution, is void.'
Mr Hayne presented, as a part of his argument, the opinion of Mr Justice Huger in the constitutional court; who with Nott and Bay, justices, dissented from the opinion of the majority of the court(a).
Huger, J. dissentiente.-This was an application for a prohibition to restrain the treasurer of the city of Charleston from levying a tax, imposed by a city ordinance, on six and seven per cent. stock of the United States. The words of the ordinance are: All personal estate, consisting of bonds, notes, & c. six and seven per cent. stock of the United States, or other obligations, upon which interest has been or will be received during the year, over and above the interest which has been paid, (except, &c. & c.) twenty-five cents on every $100. The prohibition was ordered. A motion is now submitted for the reversal of that order. I am unwilling, on so important a question, merely to express my dissent from the judgment of the court. It is now for the first time agitated, and ought to be fully discussed, that it might be better understood. It affects the use of a power, as essential to the general government in periods of difficulty and danger, as any other which the people have delegated to it. If the city council of Charleston can tax the stock of the United States, eo nomine, the states can; and if the states can, it is impossible not to perceive that the fiscal operations of the general government may be completely frustrated by the states. It will be in vain for congress to pass acts authorising the secretary of the treasury to borrow money, if the holders of their stock can be taxed for having done so by the states. Congress may offer ten per cent. for loans, but who will lend, if the states can appropriate the whole to their own use? Whether the states will do so or not may be problematical, but if they can do so, the risk of their doing so must be covered by the terms on which the loans will be made. There is but one substantial security for the proper administration of our governments, the immediate responsibility of the administrators thereof to the people. If, however, the people have or feel no interest in the measures of a government, its administrators are only nominally responsible; they will only be checked where they act in derogation of what is understood or felt to be the interest of their constituents. Remote interests are not seen by the better informed, and they always must present grounds for much difference of opinion, even among the best informed. It is not a sufficient guard to the powers Mr Cruger and Mr Legare, for the defendants in error, contended that a writ of error could not be sustained on proceedings in prohibition.
The taxation by a state of it § won loans would be a violation of the promises given to the lender. WOODBURY, J., in Jelison v. Lee, 3 W. & M. 376.
of the general government, that the constituents of the administrators of the state governments have a remote interest in the preservation of those powers, or in an unembarrassed exercise of them by the general government. They must not be seen, or may not be understood, and the very case before us, presents a full illustration of the truth. No government, not reyolutionary, has ever attempted to tax its own stock,  and among others, for two very satisfactory reasons. 1. Because such a tax must necessarily operate injuriously upon all future loans; and 2. Because there is in fact a violation of contract in so doing, and therefore immoral and impolitic. Under the influence of these reasons, the legislature of this state has refused to tax the stock of the United States; but it appears, that the city council of Charleston have thought differently, and have taxed it. There are, however, some very obvious reasons why the council of Charleston should be less disposed to impose such a tax than the legislature. In the first place the city of Charleston being commercial, is more within the influence of the policy of the general government than the legislature: if, therefore, the council of the city can believe it politic and just to tax the stock of the United States, can it be thought improbable that the legislature may do so? If they can do so at all, they may do so to any extent; it is equally within their power to tax twenty per cent. or one hundred per cent. as one-half per cent. What shall govern their discretion, it is impossible to foresee. A state or a few states may concur in a policy at variance with that of the government, nay in hostility to it. This, unfortunately, has been already witnessed. They may, indeed, be indisposed to dissolve the union, and declare war; when they might have no objection to counteract congress, and control its measures by the exercise of a power strictly constitutional. Seven-tenths of the stock of the United States, are owned in the cities of Boston, New York, Philadelphia, Baltimore and Charleston.
^1 The taxation by a state of it § won loans would be a violation of the promises given to the lender. WOODBURY, J., in Jelison v. Lee, 3 W. & M. 376.