Noble State Bank v. Haskell

Background

A state law required payments from corporations that were created by the state if they wanted to continue carrying on the banking business. The statute was challenged, and the case reached the Court. Mr. Justice Holmes delivered the opinion and considered a petition asking permission to file an application for rehearing. The Court noted the practical importance of the question and the strong arguments about the wisdom of the law, but said it would not revisit the decision.

Reasoning

The central question was whether the required payment amounted to an unconditional taking of property. The Court cited earlier cases to show that some public uses can look private if viewed only in their immediate effect, and said this case fits that pattern. The Court explained that its discussion of the state’s police power was meant to interpret what had been done in the past, not to expand the power in new ways. Critically, the Court observed there was no unconditional taking here because the payment could be avoided by leaving the banking business; the charge was only a condition for continuing to operate as a corporation created by the state. For those reasons, the Court held that such a condition could be imposed and denied leave to file a rehearing petition.

Real world impact

The ruling confirms that a state can make continued participation in the state-created banking business contingent on a payment. It leaves questions about the wisdom of that policy to the political process rather than resolving them on constitutional grounds.