McCulloch v. Maryland McCulloch v. Maryland, 17 U.S. 316 , was a
landmark decision by the Supreme Court of the United States.
The state of Maryland had attempted to impede operation of a branch of the Second Bank of
the United States by imposing a tax on all notes of banks not chartered in Maryland.
Though the law, by its language, was generally applicable to all banks not chartered in Maryland,
the Second Bank of the United States was the only out-of-state bank then existing in Maryland,
and the law was recognized in the court's opinion as having specifically targeted the
U.S. Bank.
The Court invoked the Necessary and Proper Clause of the Constitution, which allowed
the Federal government to pass laws not expressly provided for in the Constitution's list of
express powers, provided those laws are in useful furtherance of the express powers of
Congress under the Constitution.
This case established two important principles in constitutional law.
First, the Constitution grants to Congress implied powers for implementing the Constitution's
express powers, in order to create a functional national government.
Second, state action may not impede valid constitutional exercises of power by the Federal
government.
Background On April 8, 1816, the Congress of the United
States passed an act titled "An Act to Incorporate the Subscribers to the Bank of the United
States" which provided for the incorporation of the Second Bank of the United States.
The Bank first went into full operation in Philadelphia, Pennsylvania.
In 1817, the Bank opened a branch in Baltimore, Maryland, and transacted and carried on business
as a branch of the Bank of the United States by issuing bank notes, discounting promissory
notes, and performing other operations usual and customary for banks to do and perform.
Both sides of the litigation admitted that the President, directors, and company of the
Bank had no authority to establish the Baltimore branch, or office of discount and deposit,
other than the fact that Maryland had adopted the Constitution of the United States.
On February 11, 1818, the General Assembly of Maryland passed an act titled, "an act
to impose a tax on all banks, or branches thereof, in the State of Maryland, not chartered
by the legislature": James William McCulloch, head of the Baltimore
Branch of the Second Bank of the United States, refused to pay the tax.
The lawsuit was filed by John James, an informer who sought to collect one half of the fine
as provided for by the statute.
The case was appealed to the Maryland Court of Appeals where the state of Maryland argued
that "the Constitution is silent on the subject of banks."
It was Maryland's contention that because the Constitution did not specifically state
that the federal government was authorized to charter a bank, the Bank of the United
States was unconstitutional.
The court upheld Maryland.
The case was then appealed to the Supreme Court.
Supreme Court decision The Court determined that Congress did have
the power to create the Bank.
Chief Justice Marshall supported this conclusion with four main arguments.
First, he argued that historical practice established Congress' power to create the
Bank.
Marshall invoked the first Bank of the United States history as authority for the constitutionality
of the second bank.
The first Congress enacted the bank after great debate and that it was approved by an
executive "with as much preserving talent as any measure has ever experienced, and being
supported by arguments which convinced minds as pure and as intelligent as this country
can boast."
Second, Chief Justice Marshall refuted the argument that states retain ultimate sovereignty
because they ratified the constitution.
"The powers of the general government, it has been said, are delegated by the states,
who alone are truly sovereign; and must be exercised in subordination to the states,
who alone possess supreme dominion."
Marshall contended that it was the people who ratified the Constitution and thus the
people are sovereign, not the states.
Third, Marshall addressed the scope of congressional powers under Article I.
The Court broadly described Congress' authority before addressing the necessary and proper
clause.
Marshall admitted that the Constitution does not enumerate a power to create a central
Bank but said that this is not dispositive as to Congress's power to establish such an
institution.
Chief Justice Marshall wrote, "In considering this question, then, we must never forget,
that it is a constitution we are expounding."
Fourth, Marshall supported the Court's opinion textually by invoking the Necessary and Proper
Clause, which permits Congress to seek an objective that is within its enumerated powers
so long as it is rationally related to the objective and not forbidden by the Constitution.
In liberally interpreting the Necessary and Proper clause, the Court rejected Maryland's
narrow interpretation of the clause, which purported that the word "necessary" in the
Necessary and Proper Clause meant that Congress could only pass those laws which were absolutely
essential in the execution of its enumerated powers.
The Court rejected this argument, on the grounds that many of the enumerated powers of Congress
under the Constitution would be useless if only those laws deemed essential to a power's
execution could be passed.
Marshall also noted that the Necessary and Proper Clause is listed within the powers
of Congress, not the limitations.
The Court held that for these reasons, the word "necessary" in the Necessary and Proper
Clause does not refer to the only way of doing something, but rather applies to various procedures
for implementing all constitutionally established powers.
"Let the end be legitimate, let it be within the scope of the constitution, and all means
which are appropriate, which are plainly adapted to that end, which are not prohibited, but
consist with the letter and spirit of the constitution, are constitutional."
This principle had been established many years earlier by Alexander Hamilton:
Chief Justice Marshall also determined that Maryland may not tax the bank without violating
the Constitution.
The Court voided the tax on the grounds that it was unconstitutional.
The opinion stated that Congress has implied powers that need to be related to the text
of the Constitution, but need not be enumerated within the text.
This case was a seminal moment in the formation of a balance between federalism, federal power,
and states' powers.
Chief Justice Marshall also explained in this case that the Necessary and Proper Clause
does not require that all federal laws be necessary and proper and that federal laws
that are enacted directly pursuant to one of the express, enumerated powers granted
by the Constitution need not comply with the Necessary and Proper Clause, holding that
the clause "purport to enlarge, not to diminish the powers vested in the government.
It purports to be an additional power, not a restriction on those already granted."
Later history McCulloch v. Maryland was cited in the first
substantial constitutional case presented before the High Court of Australia in D'Emden
v Pedder (1904), which dealt with similar issues in the Australian Federation.
While recognizing American law as not binding on them, the Australian Court nevertheless
determined that the McCulloch decision provided the best guideline for the relationship between
the Commonwealth federal government, and the Australian States, owing in large part to
strong similarities between the American and Australian constitutions.