Dodge v. Woolsey
Dodge v. Woolsey is a significant U.S. Supreme Court case from 1856 that addressed the interplay between state taxation and contractual rights. The case arose in Ohio, where a bank, chartered under state law, was subjected to a new tax regime that replaced a previous arrangement allowing the bank to pay a fixed percentage of its profits instead of standard taxes. John Woolsey, a shareholder of the bank, contested this new tax, arguing that the original charter constituted a binding contract which the state was infringing upon. The Supreme Court, in a 6-3 decision, upheld Woolsey's position, affirming the idea that contractual obligations must be honored even when state laws change. This ruling emphasized the importance of contract rights and laid a foundation for future legal interpretations regarding contractual provisions. Although the Court later clarified that such contractual protections should be specific to individual contracts rather than generalized statutes, the decision in Dodge v. Woolsey remains a notable affirmation of contractual freedom in the context of state authority.
Dodge v. Woolsey
Date: February 6, 1856
Citation: 59 U.S. 331
Issues: Contracts; injunctions
Significance: The Supreme Court’s ruling that the state of Ohio’s attempt to collect a tax from a bank chartered in its state constituted a breach of contract exemplifies the nineteenth century view of contracts and federalism.
Justice James M. Wayne wrote this 6-3 decision upholding an injunction against the collection of a tax by the state of Ohio on one of the banks chartered in the state. This bank was chartered under an Ohio statute pursuant to the state constitution that allowed it to pay 6 percent of its profits instead of paying taxes. That constitution and law were replaced in 1851 by a new law levying a higher tax than the old percentage of the profits, and John Woolsey, a bank shareholder, sued to enjoin collection of the tax on grounds that the original charter represented a contract that was being infringed by Ohio. The Court upheld this view of the contract and the injunction, although the Court later ruled that such a contractual provision had to be specific to a contract and not just a part of a general statute. However, Dodge was never overturned.
