Cases That Changed the Conduct of Business

Cases That Changed the Conduct of Business
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Cases That Changed the Conduct of Business
Part 1
1. McCulloch v. Maryland (1819)
In 1819, the state of Maryland passed a law which imposed taxes on all banks which are not chartered in the state. Being a national bank, the Second Bank of the United States was the only out-of-state bank in Maryland, hence it is the only subject of the new law passed by the state. James McCulloch, head of the branch, refused to pay the tax and was subsequently sued by the state. Maryland contended that it had the power to tax all business establishments that operated within its boundaries and that Congress does not have constitutional right to establish a national bank. McCulloch was convicted of the case and was forced to pay a fine, but he filed an appeal to the Supreme Court.
The Supreme Court determined that the Constitution does not explicitly state that the Congress had the power to create banks, but it had the capacity to "lay and collect taxes; to borrow money; to regulate commerce". In these functions, a bank presents a suitable instrument that can assist the government in collecting and disbursing revenue.
Through this ruling, the Supreme Court upheld national supremacy. It meant that no entity, government or otherwise, can impede decisions made by the national government which are deemed "necessary and proper". The impact of this law to business is that national banks were finally given mandate to operate which meant it had the capacity to affect business operations. Because national banks were originally chartered to ensure a sound national currency, whatever policies it imposes to guarantee its purpose has to be followed by businesses, even when they feel that it is already becoming "predatory" or unfair.
2. Gibbons v. Ogden (1824)
Thomas Gibbons and Aaron Ogden were owners of competing companies, which operated steamboats traversing the New Jersey-New York route. Ogden, who held a state license to operate as a monopoly asked the state to prevent Gibbons, who held a federal coasting license, from traversing the route. Gibbons lost twice in the New York courts but court rulings were reversed by the Supreme Court.
The case pointed out that states did not have control over interstate commerce, they did, however, have the power for economic regulation. It also had provisions which allowed the Congress to regulate activity of interstate commerce if it had a substantial effect to the economy. For businesses which operate in different states or transactions spanning different territories, they must be aware that regulations to their operations can come not only from the state, but also from Congress. Rulings released by the Congress about interstate commerce will affect the operation of such businesses.
3. Mapp v. Ohio (1961)
In this 1961 case, the Supreme Court provided the protection against "unreasonable searches and seizures" by the...