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|McCulloch v. Maryland
the Supreme Court case in which the Court ruled that Congress has "implied powers" in addition to those specified in the Constitution and that federal laws are superior to conflicting state laws
In 1816, Congress created the Second Bank of the United States, which became the depository of federal funds. The Bank operated like any other private bank -- it issued banknotes that could be used for legal tender, handled deposits and withdrawals, made loans, etc. There was one major difference, however. Rather than pay taxes on profits, the bank made loans to the federal government, a privilege not enjoyed by state-chartered banks.
In 1818 the State of Maryland passed legislation imposing taxes on all banks not chartered within the state. When James W. McCulloch (left), cashier of the Baltimore branch of the Second Bank of the United States, refused to pay the tax, Maryland sued him. After the Maryland State Court ruled against McCulloch and the State Appeals Court upheld the state court's ruling, McCulloch appealled to the United States Supreme Court. The two sides presented their arguments on February 22, 1819, with Maryland saying that Congress did not have the authority to create the Bank, and that even if it did the state had the right to tax the institution. The Court, headed by Chief Justice John Marshall, handed down its unanimous decision on March 6, 1819.
In its ruling, the Court stated that Congress did indeed have the authority to establish the Bank of the United States under the "Necessary and Proper Clause" of Article I, Section 8, which gives Congress power "to make all laws which shall be necessary and proper to carry out its other powers." And, since the Constitution expressly gives Congress the authority to tax, borrow, and regulate interstate commerce, and the Bank of the United States was created to help Congress carry out those functions, it was constitutional. The Court also ruled that the State of Maryland did not have the authority to tax the Bank due to the "Supremacy Clause" of Article VI, which puts the laws of the United States above conflicting state laws. Maryland's tax conflicted with U.S. laws because, according to the Court, any state tax on a federal institution was a tax on all U.S. citizens and only Congress had the authority to impose taxes on the nation as a whole.
The McCulloch vs Maryland decision was the first to give Congress "implied powers" in addition to those specified in the Constitution and to put federal laws above state laws, and by establishing both precedents in a single ruling places it near the top of any list of most important decisions in the history of the U.S. Supreme Court. Without it, Congress would not have had the authority to create many of the federal agencies that exist today.
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This page was last updated on 05/17/2017.