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concern with commerce, or with imports or exports. It has been suggested, indeed, in the argument, that as the legatee resided abroad, it would be necessary to transmit to her the proceeds of the portion of the estate to which she was entitled, and that the law was therefore a tax on exports. But if that argument was sound, no property would be liable to be taxed in a state, when the owner intended to convert it into money and send it abroad. The judgment of the state court was clearly right, and must be affirmed.

NATHAN v. LOUISIANA.

(8 Howard, 73-83. 1849.)

Opinion by MR. JUSTICE MCLEAN.

STATEMENT OF FACTS.-This suit is brought before us by a writ of error to the supreme court of Louisiana.

By an act of the legislature of Louisiana, of the 26th of March, 1842, entitled "An act relative to the revenue of the state," it is provided, in the ninth section, that "each and every money or exchange broker shall hereafter pay an annual tax of $250 to the state, in lieu of the tax heretofore imposed on them." The defendant below having failed to pay the tax for two years, a suit was brought against him in the district court of the state, in which a judgment for $500 was rendered. That judgment, on an appeal to the supreme court of the state, was affirmed. The defense made was, that the sole business of the defendant was buying and selling foreign bills of exchange, which are instruments of commerce, and that the tax is repugnant to the constitutional power of congress "to regulate commerce with foreign nations and among the several states."

§ 1035. A state law which imposes a tax upon money or exchange brokers is not repugnant to the power conferred upon congress by the constitution to regulate commerce, though such broker deal in foreign bills of exchange exclusively.

This is not a tax on bills of exchange. Under the law, every person is free to buy or sell bills of exchange, as may be necessary in his business transactions; but he is required to pay the tax if he engage in the business of a money or an exchange broker. The right of a state to tax its own citizens for the prosecution of any particular business or profession within the state has not been doubted. And we find that, in every state, money or exchange brokers, venders of merchandise of our own or foreign manufacture, retailers of ardent spirits, tavern-keepers, auctioneers, those who practice the learned professions, and every description of property not exempted by law, are taxed. As an exchange broker, the defendant had a right to deal in every description. of paper, and in every kind of money; but it seems his business was limited to foreign bills of exchange. Money is admitted to be an instrument of commerce, and so is a bill of exchange; and, upon this ground, it is insisted that a tax upon an exchange broker is a tax upon the instruments of commerce. What is there in the products of agriculture, of mechanical ingenuity, of manufactures, which may not become the means of commerce? And is the vendor of these products exempted from state taxation, because they may be thus used? Is a tax upon a ship, as property, which is admitted to be an instrument of commerce, prohibited to a state? May it not tax the business of ship building, the same as the exercise of any other mechanical art? and also the traffic of ship-chandlers, and others, who furnish the cargo of the ship and the necessary supplies? There can be but one answer to these questions. No one

can claim an exemption from a general tax on his business, within the state, on the ground that the products sold may be used in commerce.

§ 1036. Bills of exchange not imports nor exports.

No state can tax an export or an import as such, except under the limitations of the constitution. But before the article becomes an export, or after it ceases to be an import, by being mingled with other property in the state, it is a subject of taxation by the state. A cotton-broker may be required to pay a tax upon his business, or by way of license, although he may buy and sell cotton for foreign exportation. A bill of exchange is neither an export nor an import. It is not transmitted through the ordinary channels of commerce, but through the mail. It is a note merely ordering the payment of money, which may be negotiated by indorsement, and the liability of the names that are on it depends upon certain acts to be done by the holder when it becomes payable. The dealer in bills of exchange requires capital and credit. He generally draws the instrument, or it is drawn at his instance, when he is desirous of purchasing it. The bill is worth more or less, as the rate of exchange shall be between the place where it is drawn and where it is made payable. This rate is principally regulated by the expense of transporting the specie from the one place to the other, influenced somewhat by the demand and supply of specie. Now the individual who uses his money and credit in buying and selling bills of exchange, and who thereby realizes a profit, may be taxed by a state in proportion to his income, as other persons are taxed, or in the form of a license. He is not engaged in commerce, but in supplying an instrument of commerce. He is less connected with it than the ship-builder, without whose labor foreign commerce could not be carried on.

In the case of Briscoe v. Bank of Commonwealth of Kentucky, 11 Pet., 257 (§§ 539-558, supra), this court held that a state has power to incorporate a bank; and this power has been exercised by every state in the Union, except where it has been prohibited by its constitution. And the banks established, it is believed, have been, without exception, authorized to deal in foreign bills of exchange. And this court held, in Providence Bank v. Billings, 4 Pet., 514 (S$ 2321-24, infra), that a state had power to tax a bank, there being no clause in the charter exempting it from taxation. In the case of Bank of Augusta v. Earle, 13 Pet., 519 (CORPORATIONS, 1123-35), it was decided that the bank established in Georgia, having a right in its charter to deal in bills of exchange, could, through its agent and the comity of Alabama, buy and sell bills in that state.

If a tax on the business of an exchange broker, who buys and sells foreign bills of exchange, be repugnant to the commercial power of the Union, all taxes on banks which deal in bills of exchange, by a state, must be equally repugnant. The constitution declares that no state shall impair the obligations of a contract, and there is no other limitation on state power in regard to contracts. In determining on the nature and effect of a contract, we look to the lex loci where it was made or where it was to be performed. And bills of exchange, foreign or domestic, constitute, it would seem, no exception to this rule. Some of the states have adopted the law merchant, others have not. The time within which a demand must be made on a bill, a protest entered, and notice given, and the damages to be recovered, vary with the usages and legal enactments of the different states. These laws, in various forms and in numerous cases, have been sanctioned by this court. Indorsers on a protested bill are held responsible for damages under the law of the state where the in

dorsement was made. Every indorsement on a bill is a new contract, governed by the local law. Story's Confl. of Laws, 314. For the purposes of revenue, the federal government has taxed bills of exchangs, foreign and domestic, and promissory notes, whether issued by individuals or banks. Now the federal government can no more regulate the commerce of a state than a state can regulate the commerce of the federal government; and domestic bills or promissory notes are as necessary to the commerce of a state as foreign bills to the commerce of the Union. And if a tax on an exchange broker, who deals in foreign bills, be a regulation of foreign commerce, or commerce among the states, much more would a tax upon state paper, by congress, be a tax on the commerce of a state.

§ 1037. Taxing power of the states.

The taxing power of a state is one of its attributes of sovereignty. And where there has been no compact with the federal government, or cession of jurisdiction for the purposes specified in the constitution, this power reaches all the property and business within the state, which are not properly denominated the means of the general government; and, as laid down by this court, it may be exercised at the discretion of the state. The only restraint is found in the responsibility of the members of the legislature to their constituents. If this power of taxation by a state within its jurisdiction may be restricted beyond the limitations stated, on the ground that the tax may have some indirect bearing on foreign commerce, the resources of a state may be thereby essentially impaired. But state power does not rest on a basis so undefinable. Whatever exists within its territorial limits in the form of property, real or personal, with the exceptions stated, is subject to its laws, and also the numberless enterprises in which its citizens may be engaged. These are subjects of state regulation and state taxation, and there is no federal power under the constitution which can impair this exercise of state sovereignty.

We think the law of Louisiana, imposing the tax in question, is not repugnant to any power of the federal government, and, consequently, the judgment of the supreme court of the state is affirmed.

PENSACOLA TELEGRAPH COMPANY v. WESTERN UNION TELEGRAPH COMPANY. (6 Otto, 1-24. 1876.)

APPEAL from U. S. Circuit Court, Northern District of Florida.

Opinion by WAITE, C. J.

STATEMENT OF FACTS.- Congress has power "to regulate commerce with foreign nations and among the several states" (Const., art. 1, sec. 8, par. 3), and "to establish postoffices and post-roads" (id., par. 7). The constitution of the United States, and the laws made in pursuance thereof, are the supreme law of the land. Art. 6, par. 2. A law of congress made in pursuance of the constitution suspends or overrides all state statutes with which it is in conflict. Since the case of Gibbons v. Ogden, 9 Wheat., 1 (§§ 1183-1201, infra), it has never been doubted that commercial intercourse is an element of commerce which comes within the regulating power of congress. Postoffices and post-roads are established to facilitate the transmission of intelligence. Both commerce and the postal service are placed within the power of congress, because, being national in their operation, they should be under the protecting care of the national government.

§ 1038. The powers of congress over commerce keep pace with the progress of the country, and extend to the regulation of the telegraph as an instrument of

commerce.

The powers thus granted are not confined to the instrumentalities of commerce, or the postal service known or in use when the constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of time and circumstances. They extend from the horse with its rider to the stage-coach, from the sailing vessel to the steamboat, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth. They were intended for the government of the business to which they relate, at all times and under all circumstances. As they were intrusted to the general government for the good of the nation, it is not only the right, but the duty, of congress to see to it that intercourse among the states and the transmission of intelligence are not obstructed or unnecessarily incumbered by state legislation.

The electric telegraph marks an epoch in the progress of time. In a little more than a quarter of a century it has changed the habits of business, and become one of the necessities of commerce. It is indispensable as a means of inter-communication, but especially is it so in commercial transactions. The statistics of the business before the recent reduction in rates show that more than eighty per cent. of all the messages sent by telegraph related to commerce. Goods are sold and money paid upon telegraphic orders. Contracts are made by telegraphic correspondence, cargoes secured, and the movement of ships directed. The telegraphic announcement of the markets abroad regulates prices at home, and a prudent merchant rarely enters upon an important transaction without using the telegraph freely to secure information.

It is not only important to the people, but to the government. By means of it the heads of the departments in Washington are kept in close communication with all their various agencies at home and abroad, and can know at almost any hour, by inquiry, what is transpiring anywhere that affects the interest they have in charge. Under such circumstances, it cannot for a moment be doubted that this powerful agency of commerce and inter-communication comes within the controlling power of congress, certainly as against hostile state legislation. In fact, from the beginning, it seems to have been assumed that congress might aid in developing the system; for the first telegraph line of any considerable extent ever erected was built between Washington and Baltimore, only a little more than thirty years ago, with money appropriated by congress for that purpose (5 Stat., 618); and large donations of land and money have since been made to aid in the construction of other lines (12 id., 489, 772; 13 id., 365; 14 id., 292). It is not necessary now to inquire whether congress may assume the telegraph as part of the postal service, and exclude all others from its use. The present case is satisfied, if we find that congress has power, by appropriate legislation, to prevent the states from placing obstructions in the way of its usefulness. The government of the United States, within the scope of its powers, operates upon every foot of territory under its jurisdiction. It legislates for the whole nation, and is not embarrassed by state lines. Its peculiar duty is to protect one part of the country from encroachments by another upon the national rights which belong to all.

$1039. A law granting a monopoly to a telegraph company in a certain portion of the state's territory, through which territory a line must pass to reach an important sea-port and United States arsenal, is a regulation of commerce between the states.

The state of Florida has attempted to confer upon a single corporation the exclusive right of transmitting intelligence by telegraph over a certain portion of its territory. This embraces the two westernmost counties of the state, and extends from Alabama to the gulf. No telegraph line can cross the state from east to west, or from north to south, within these counties, except it passes over this territory. Within it is situated an important sea-port, at which business centers, and with which those engaged in commercial pursuits have occasion more or less to communicate. The United States have there also the necessary machinery of the national government. They have a navy-yard, forts, custom-houses, courts, postoffices, and the appropriate officers for the enforcement of the laws. The legislation of Florida, if sustained, excludes all commercial intercourse by telegraph between the citizens of the other states and those residing upon this territory, except by the employment of this corporation. The United States cannot communicate with their own officers by telegraph except in the same way. The state, therefore, clearly has attempted to regulate commercial intercourse between its citizens and those of other states, and to control the transmission of all telegraphic correspondence within its own jurisdiction.

1040. The act of congress of July 24, 1866, prohibits state monopolies in the operation of telegraph lines.

It is unnecessary to decide how far this might have been done if congress had not acted upon the same subject, for it has acted. The statute of July 24, 1866, in effect, amounts to a prohibition of all state monopolies in this particular. It substantially declares, in the interest of commerce and the convenient transmission of intelligence from place to place by the government of the United States and its citizens, that the erection of telegraph lines shall, so far as state interference is concerned, be free to all who will submit to the conditions. imposed by congress, and that corporations organized under the laws of one state for constructing and operating telegraph lines shall not be excluded by another from prosecuting their business within its jurisdiction, if they accept the terms proposed by the national government for this national privilege. To this extent, certainly, the statute is a legitimate regulation of commercial intercourse among the states, and is appropriate legislation to carry into execution the powers of congress over the postal service. It gives no foreign corporation the right to enter upon private property without the consent of the owner and erect the necessary structures for its business; but it does provide, that, whenever the consent of the owner is obtained, no state legislation shall prevent the occupation of post-roads for telegraph purposes by such corporations as are willing to avail themselves of its privileges.

$ 1041. its operation is not limited to military and post roads of the United States which are upon the public domain.

It is insisted, however, that the statute extends only to such military and post roads as are upon the public domain; but this, we think, is not so. The language is, "Through and over any portion of the public domain of the United States, over and along any of the military or post roads of the United States which have been or may hereafter be declared such by act of congress, and over, under or across the navigable streams or waters of the United States."

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