Nathan v. Louisiana - 49 U.S. 73 (1850)
U.S. Supreme Court
Nathan v. Louisiana, 49 U.S. 8 How. 73 73 (1850)
Nathan v. Louisiana
49 U.S. (8 How.) 73
A tax imposed by a state upon all money or exchange brokers is not void for repugnance to the constitutional power of Congress to regulate commerce.
Foreign bills of exchange are instruments of commerce, it is true, but so also are the products of agriculture or manufactures, over which the taxing power of a state extends until they are separated from the general mass of property by becoming exports.
A state has a right to tax its own citizens for the prosecution of any particular business or profession within the state.
Banks deal in bills of exchange, and this Court has recognized the power of a state to tax banks, where there is no clause of exemption in their charters.
On 26 March, 1842, the State of Louisiana passed an act to increase the revenue of the state, the ninth section of which provided 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."
On 3 February, 1845, Isaac T. Preston, the Attorney General of the state, filed a petition in the District Court of the First Judicial District stating that A. M. Nathan was justly indebted to the petitioner in the sum of $250, for pursuing or having lately pursued, within the year 1843, the business of a money and exchange broker. The petition then prayed that he might be cited to appear and answer and be condemned to pay; also that he might answer the following interrogatories under oath, viz.:
"Were you a broker, as above stated, in 1843?"
"Did you or not receive brokerage or commissions?"
"State clearly the nature of the same; whether received in money transactions."
The same process was pursued to collect the tax for 1844.
On 19 April, 1845, the two suits were consolidated and the defendant answered as follows:
"The defendant for answer denies generally all the allegations in the plaintiff's petition contained. And further answering, he says, that so much of such parts of 'an act to increase the revenue of the state,' under and by virtue of which this suit is brought to recover of this defendant the tax thereby imposed upon the business of a money and exchange broker, and especially the ninth section thereof, particularly referred to in the plaintiff's petition, so far as the said section and act impose a tax on that part of the business of a money and exchange
broker which consists in buying and selling exchange, the same is contrary to and in violation of so much and such parts of the Constitution of the United States as give to Congress the exclusive power to regulate commerce, and prohibit to the states all interference with the power so granted, and forbid them to impose, without consent of Congress, any duty on imposts or exports."
"And so far as the said section and act imposes a tax on that part of the business of a money and exchange broker which consists in buying and selling money or foreign coin, or other currency, the same is contrary to and in violation of so much and such parts of the Constitution of the United States as gives to Congress the exclusive power 'to coin money, regulate the value thereof, and of foreign coin.'"
"And so far as said section imposes a tax, not uniform in amount with other state taxes on occupations, respondent avers that the same is contrary to so much of the treaties, laws, and Constitution of the United States as reserve and guarantee to the inhabitants of Louisiana all the rights, advantages, and immunities of citizens of the United States, particularly that of uniform taxation, and to so much of said Constitution as reserves to the people of the several states all powers not delegated to the states respectively, or to the Union."
"Wherefore he prays, that the plaintiff's demand be dismissed with costs and for all other and general relief which his case may require."
"RICHARD HENRY WILDE, Defendant's Attorney"
"A. K. JOSEPHS"
"H. H. STRAWBRIDGE"
A. M. Nathan, defendant, for answer to the interrogatories to him propounded in the above entitled suit, says:
"I was a money and exchange broker in 1843 and 1844; I received a brokerage or commissions on money and bills of exchange sold by my agency."
"I will state clearly the nature of the same. My business, like that of money and exchange brokers in general, consists exclusively in negotiating and effecting for others the purchase and sale of exchange on other states or foreign countries. During the thirty years that I have been a money and exchange broker, I believe -- nay, I am certain -- that I have never, as such, sold a single bill drawn from one point of Louisiana on another. "
"I make myself acquainted with the current market value of exchanges. The purchasers and the sellers both resort to me for information on the state of the market of exchanges, and make me their common agent in the purchase and sale of bills, which are purchased for the purpose of making remittances to foreign parts, and usually so remitted immediately. On and out of the price of each bill I receive a percentage or commission, varying from one-fourth to one eighth of one percent, which is commonly paid on settlement. It is the same in money transactions."
"[Signed] A. M. NATHAN"
On 7 June, 1845, the district court decreed that the State of Louisiana should recover of the defendant, A. M. Nathan, the sum of five hundred dollars, and costs of suit.
An appeal was had to the Supreme Court of Louisiana, which, on 15 December, 1845, affirmed the judgment of the district court. The defendant sued out a writ of error, and brought the case up to this Court.