Commentary by Jon Roland
This case can be considered one of the first major departures from strict
Jeffersonian construction of the Constitution, and it laid the basis for a long
train of further departures that continues to plague constitutional
jurisprudence to this day. However, it is also an example of how bad cases
badly argued produce bad precedents. Although we might consider CJ Marshall to
have wrongly decided the case, a large part of the problem is that neither side
argued competently in support of a correct interpretation of the Constitution.
First, governments can but usually do not create corporations. Their
incorporators do, although a government or another corporation can in principle
be an incorporator like any individual. And the limited liability of their
shareholders arises from public notice that they are dealing with a limited
liability corporation, which public notice is delivered by calling themselves a
"corporation" or some name with the same meaning. What a government
does is grant a monopoly for the use of the name of the corporation, which
would otherwise have to identify itself in ways that could distinguish it from
other corporations with the same name, as by specifying the incorporators, date
and place of incorporation, etc. (Yes, I know this doctrine flies in the face
of much jurisprudence, but that conflicting jurisprudence is wrong.)
As to whether the federal government had and has the power to incorporate a
bank or other corporation, I would say that it does -- on federal territory to
which Congress has been ceded exclusive jurisdiction under I.8.17. That is,
some group of persons could incorporate a bank on such territory and the
federal government, being the only government available, could grant a monopoly
on the use of the name.
But the federal government did not and does not have the power to create a
private monopoly, or to empower a private organization to act as a federal
agency. Executive power must be delegated only to individuals under a chain of
command that culminates in the presidency. In other words, they must be public
employees, executing federal laws. Not a bank performing banking functions.
So a bank could be incorporated in the District of Columbia, but it could
not be granted monopoly powers, or the status of a federal agency. Could it
open branches in other states? Yes, if banks incorporated in one state could
open branches in other states, then so could a bank incorporated in the
District of Columbia.
Now to the issue of the case. Could the State of Maryland tax the bank
incorporated in the District of Columbia? Yes, but only on the same basis as it
could tax any bank incorporated in Maryland or in another state. Equal
protection of the laws. No state taxation of interstate commerce.
So CJ Marshall got it mostly wrong in his opinion, but the State of Maryland
was wrong, too. The proper decision was to reduce the tax on the bank to the
same rate it would have been if it had been incorporated in Maryland, applied
only to its assets and operations within Maryland, and to refund to the bank
any taxes paid in excess of that. Maryland demanded it all, and got nothing,
and in doing so created a terrible precedent.
The most pernicious and wrong statement in this opinion, which is really just dictum, is this:
Is it true that this is the sense in which the word "necessary" is always used? Does it always import an absolute physical necessity so strong that one thing to which another may be termed necessary cannot exist without that other? We think it does not. If reference be had to its use in the common affairs of the world or in approved authors, we find that it frequently imports no more than that one thing is convenient, or useful, or essential to another. To employ the means necessary to an end is generally understood as employing any means calculated to produce the end, and not as being confined to those single means without which the end would be entirely unattainable.
CJ Marshall may have been correct that in common parlance "necessary" does not always mean strictly necewssary. But it does in the legal English of 1787, in which the Constitution was written, and in the common law tradition that provided the language of the Constitution, and the rule of construction that powers always be construed as narrowly as possible.
The Constitution was not written in the common English of 1819, but in the legal English of Coke and Blackstone, and basing any decision on that is either evidence of ignorance or wilful disregard for that legal English.
It is also an error, as a matter of grammar, to examine only the word ‚necessary‚ without examining the purpose for which it is necessary, ‚carrying into execution‚. Marshall ignored that and substituted the alleged intended results of the authors of the legislation, which goes beyond ‚carrying into execution‚ a delegated power.
The common law rules of construction are not fictions, but are expressed in longstanding maxims of law:
Potestas stricte interpretatur. A power is strictly interpreted.
In dubiis, non pr√¶sumitur pro potentia. In cases of doubt, the presumption is not in favor of a power.
For a legislative enactment, the meaning of a delegated power is the intersect of the meanings an enactment had for the majority it took to adopt it. If the intersect is null then there is no delegation of authority.
If ‚necessary‚ meant only ‚convenient‚ for one ratifier, and ‚strictly necessary‚ for enough of the ratifiers to make a majority, then the latter prevails, and even if the outlier is included in the majority, the intersect of ‚convenient‚ and ‚strictly necessary‚ is ‚strictly necessary‚.
They were the rules accepted by almost all of the Founders, part of the background of law they shared. We can find explicit incorporation by reference to it in the Eighth Amendment:
... no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.
And implied by the Ninth:
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
The Eighth Amendment might only only explicitly apply to facts tried by a jury, but the Founders were not going to limit common law rules of construction to one kind of case just because they only mention one kind.
One can find the canons of construction in the writings of such jurists as Bracton, Britton, Fleta, Coke, Blackstone and others. The first maxim above is quoted from Bouvier‚s Law Dictionary (1856). See also Francis Bacon, The Elements of the Common Lawes of England (1630).
Under Art. I Sec. 8 Cl. 17 it was proper for Congress to charter a bank on DC territory, which would protect a monopoly on its name, and enforce its charter among its shareholders. It was also proper to enter into a contract with that or any other bank to hold deposits of funds of the United States. Those are incidentals. What is not incidental is granting the bank the privileges of a federal agency in all of its operations, including its private commercial operations, and exempt it from state taxes or regulations if it opened a branch in that state.
It would be necessary and proper to exempt the Union funds held in the bank from taxation, but not the profits the bank might make on them, or its other commercial operations.
Congress only had a power to charter a bank on territory over which it had exclusive legislative jurisdiction, such as within the District of Columbia. But chartering a private company does not make that a government instrumentality to which the Supremacy Clause can be properly applied, especially if it does business outside the jurisdiction of Congress.
Now if the bank had been contracted to exercise delegated powers, such as collect taxes, impose regulations, or deliver mail, on state territory where Congress does have some subject matter jurisdiction to do those things, to the extent it did those things it would be an instrumentality, and exempt from taxation. However, if it accepted private deposits from the public, made private or commercial loans, then it should be subject to the same taxes any other bank would be, on those private operations.
It is not necessary and proper to extend an immunity to all the operations of a commercial entity just because it contracts to perform some job for the government. A general store does not become exempt in all of its business because it also hosts a post office in one part of the store.
The correct decision would have been that Maryland could impose the same tax on the Maryland branch of the National Bank as it imposed on other banks in Maryland, no more or less, but not on Union funds such banks might hold on deposit, or on their operations to administer those deposits.
The main problem with the decision is with the way Marshall worded his opinion, which might be considered only dictum, but which opened the floodgates for later judges to seize on it to extend powers from strictly necessary and proper to make a defined effort to anything that might be convenient to get a policy outcome that the legislators might have sought to achieve, which has been what has happened with the line of decisions that stem from it.
In a letter to Spencer Roane, Sep. 2, 1819, an opponent of the opinion in McCulloch, James Madison condemned the opinion, saying
... what is of most importance is the high sanction given to a latitude in expounding the Constitution which seems to break down the landmarks intended by a specification of the Powers of Congress, and to substitute for a definite connection between means and ends, a Legislative discretion as to the former to which no practical limit can be assigned.
But it was anticipated I believe by few if any of the friends of the Constitution, that a rule of construction would be introduced as broad & as pliant as what has occurred. And those who recollect, and still more those who shared in what passed in the State Conventions, thro‚ which the people ratified the Constitution, with respect to the extent of the powers vested in Congress, cannot easily be persuaded that the avowal of such a rule would not have prevented its ratification.
This was the basis for both the wrong expansion of the meaning of "necessary" and, by failure to examine the original meaning of "carrying into execution", expansion of "execution" from making an effort to getting a desired result. It is perhaps the single greatest error in constitutional construction in the history of the Supreme Court.
And CJ Marshall was clearly wrong about the federal government being supreme
within its "sphere of action". The Constitution does not contain
delegations of spheres of action. It contain delegations of powers, and powers
that are only to make certain kinds of efforts, not to get desired results, limited even within their spheres of action, as well as prohibited outside of them.
Where such expansive construction has led
Now to another question. Whether a power delegated to government has as
necessary and proper implied powers the power to impose penalties for
violations. The answer is that in the absence of a specific delegation of
criminal powers, that is, the powers to disable the rights of life, limb, or
liberty, the only powers that are implied to enforce a power are civil, that is
disablement of the right to property. In other words, it might impose fines,
and confiscate property to pay them, but not throw anyone in prison, or flog
them, or hang them. Civil and criminal penalties are distinct powers, and the
one cannot be inferred from the other.
So the only powers to disable life, limb, or liberty for offenses against
its law on state territory were for (1) counterfeiting [I:8:6], (1) treason
[III:3:2], (3) piracy and felonies on the high seas [I:8:10], and (4) offenses
against the laws of nations [I:8:10], (These last two are sometimes combined
into one, but they are distinct.) and (5) violation of lawful military or
militia orders, including the call-up [I:8:14]. Subsequent amendments have
added a few subjects: (6) enslavement [Amd. 13], (7) violation of civil rights
by a state agent [Amd. 14], (8) abridgement of someone's right to vote based on
race, color, or previous servitude [Amd. 15], (9) abridgement of someone's
right to vote based on sex [Amd. 19], (10) abridgement of someone's right to
vote based on nonpayment of a tax [Amd. 24], and (11) abridgement of someone's
right to vote based on his or her age if he or she is age 18 or over [Amd. 26].
That still leaves federal territory under I.8.17, where the federal
government has broad police powers, similar to those of a state, although as in
a state, not unlimited powers. It also has broad powers under IV.3 to organize
a (non-state-ceded) territory, but not to exercise police powers there. That
is, it can create jurisdictions which can then make their own laws, but the
powers thus exercised would derive from the people of those jurisdictions, not
from Congress. (Yes, I know this is also against established jurisprudence, but
once again, established jurisprudence is wrong on a great many matters.)
So does the federal government have the power to impose criminal penalties
for, say, perjury or obstruction of justice on state territory? Only if it is
essential to prosecution for violation of a violation of a statute authorized
under one of the delegated penal powers above. In other words, one could be
prosecuted for perjury in connection with a violation for counterfeiting, but
not in connection with some other violation which was not itself punishable
with a criminal penalty, such as a firearms violation.
Contents | Text