Dodge v. Woolsey

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18 How. (59 U.S.) 331 (1856), argued 6 Feb. 1856, decided 8 Apr. 1856 by vote of 6 to 3; Wayne for the Court, Campbell, Catron, and Daniel in dissent. In 1845 the Ohio legislature enacted a general banking act, which authorized any bank chartered thereunder to pay the state 6 percent of its annual profits in lieu of any taxes imposed by the state. In 1851 Ohio adopted a new state constitution that in effect repealed the tax immunity in the statute of 1845. In 1853 the legislature increased the tax on banks beyond that allowed in the statute of 1845. John W. Woolsey, a citizen of Connecticut and a shareholder of a Cleveland bank, sought an injunction from a federal circuit court to prevent George C. Dodge, Cuyahoga County, Ohio, treasurer, from collecting the tax on the bank, claiming the tax unconstitutionally impaired the obligation of a contract. The “contract” was the relationship between the state and any corporation chartered under the 1845 act.

The Supreme Court upheld the injunction on the ground that the tax provision in the 1845 statute constituted a contractual obligation of the state, which it had impaired by the constitution of 1851 and the statute of 1853. Justice John A. Campbell wrote a dissenting opinion in which he denounced the arrogance of corporations and argued that the Supreme Court was unconstitutionally encroaching upon the rights of a sovereign state. Subsequent decisions of the Court, while attempting to distinguish Woolsey, severely confined the holding in that case by ruling that for a tax exemption to be valid it would have to be contained in a specific corporate charter and not in a general statute.

Robert M. Ireland

Subjects: Law.

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