dissenting.
One of the errors assigned to the decree of the court below is: That the State of Nebraska has no power to subject to taxation, for State purposes, the road-bed, rolling stock, and other property necessary for the use and operation of the complainants’ road; and whether the State has such power is the controlling questiou in this cause. In my judgment, no such power exists, and my opinion is based upon the principles established in the cases of McCulloch v. Maryland,† and Osborn v. The United States Bank.‡ Those principles, as summed up by Chief Justice Marshall himself, in the later case of Weston v. The City of Charleston,§ were as follows:
1. “That all subjects to which the sovereign power of a State extends, are objects of taxation; but those over which it does not extend are, upon the soundest principles, exempt from taxation.”
2. “ That the sovereignty of a State extends to everything which exists by its own authority, or is introduced by its permission; but not to those means which are employed by Congress to carry into execution powers conferred on that body by the people of the United States.”
8. “ That the attempt to use the power'of taxation on the means employed by the government of the Union in pursuance of the Constitution, is itself an abuse, because it is the usurpation of a power.which the people of a single State cannot give.”
’ 4. “ That the States have no power by taxation, or otherwise, to retard, impede, burden, or in any manner control *39the operation of the constitutional laws enacted by Congress, to carry into execution the powers vested in the General government.”
If we needed an example to show that the application of these principles extends to such a case as the present, we could not frame oue more to the purpose' than that of the United States Bank, in respect to which they were announced in the cases, referred to. The parallel between it and the Union Pacific Railroad is striking, and, for the purposes of the question, complete. In the case of the bank a corporation was created, with full banking powers. The capital stock was mostly subscribed by individuals, the. government reserving an interest of seven millions out of thirty-five. Its affairs were managed by twenty-five directors, of whom five were appointed by the President of the United States, by. and with the advice and consent of the Senate. The powers of the directors were defined and restricted by the charter. The Secretary of the Treasury was authorized, from time to time, to call upon the bank for a statement of its affairs. Por the privileges and benefits conferred, the bank was required to pay to the United States a bonus of $1,500,000. The books of the bank were to be always open to the inspection of a committee ,of either house of Congress, appointed for that purpose. Penalties and forfeitures were imposed for the breach of certain limitations and directions; and, finally, the bills and notes of the bauk were to be receivable in payment of public dues; the public moneys were to be deposited in the bank and its branches, unless the Secretary of the Treasury should otherwise order;' and, on his requisition, the bank was to give the necessary facilities for transferring the public funds from place to place within the United States, and for distributing the same in payment of the public creditors, without charging commissions or exchange.* Here, then, was a corporation, constituted maiuly of private individuals, created by Congress, established by its aid, regulated by its laws, amenable to its *40committees and to tlie executive department, and subservient to the uses and purposes of the government, in executing and carrying out a particular part of its constitutional functions.
Now in all of these respects, except the single one of ownership of a portion of its capital stock, the Union Pacific Railroad presents a parallel case. The corporation is the creature of Congress; it receives large aid from the General government, both in donations and loans; the President appoints two of its directors; and all the operations of the company in laying, constructing, and working its railroad and telegraph lines, as well as its rates of toll, are subject to regulations imposed by its charter, and to such further regulations as Congress may hereafter- make. On failure to comply with the terms and conditions of the charter, or to keep the road in repair and use, Congress may assume the control and management thereof, and devote the income to the use of the United States. Annual reports are to be made to the Secretary of the Treasury. The loan of the United States to the company, amounting to many millions, is a lien on all the property, and on failure to redeem it, the Secretary of the Treasury is authorized to take possession of the road, with all its rights, function's, immunities, and appurtenances, for the use and benefit of the United States; and, finally, all the grants made to the company are declared to be upon the condition that, besides paying the government bonds advanced, the company shall keep the railroad and telegraph lines in repair and use, and shall at all times transmit dispatches and transport mails, troops, and munitions of war, supplies and public stores for the government, whenever required to do so by7 any department thereof; and that the government shall have the preference at rates not to exceed those charged to private parties, and payable by being applied to the payment of the bonds aforesaid; and in addition to all this control of Congress, and the obligations and liabilities of the company7, Congress reserves the right to add to,-alter, amend, or repeal the charter.
In these provisions we see the same close connection be*41tween the government and the corporation, the same control reserved by the former, the same or an equal interest in the scheme, and a like creation of means for carrying into execution the powers conferred upon Congress. In the one' case, the object was to facilitate the financial transactions of the government, and the bank was used as a means to that end; in the other, the object is to establish a National post-road for the mails, and a telegraph line for the transmission of intelligence, and to facilitate government transportation of every kind between the East and the West, as well as to promote and regulate the commerce bet ween those sections; and the railroad company is used as a means to these ends.
It seems to me that unless we are prepared to overrule the decisions referred to, we must apply the same law to this' case which was applied to the United States Bank. I trust we are not prepared to overrule those decisions. Whilst no one disputes the general power of taxation in the States, which is so elaborately set forth in the opinion of the majority, it must be conceded that there are limits to that power. The States cannot tax the powers, the operations, or the property of the United States, nor the means which it employs to carry its powers into execution. The government of the United States, within the scope of its powers, is supreme, and Cannot be interfered with or impeded in their exercise.
The case differs loto.codo from that wherein the government enters into a contract with an individual or corporation to perform services necessary for carrying on the functions of government — as for carrying the mails, or troops, or supplies, or for building ships or works for government use. In those eases the government has no further concern with the contractor.than in his contract and its execution. It has no concern with his property or his faculties independent of that. How much he may be taxed by, or what duties he may be obliged to perform towards, his State is of no consequence to the government, so long as his contract and its execution are uot interfered with. In that case the con*42tract is the means employed for carrying into execution the powers of the government, and' the contract alone, and not the contractor, is exempt from taxation or other interference by the State government.
But where the General government creates a corporation as a means .of carrying out a national object, that corpbratioft and its powers, property, and faculties, employed in accomplishing the service, are the instrumentalities by which the government effects its objects. Hence the corporation is not taxable by State authorit}". And it matters not that private individuals are interested for their private gain in the stock of the corporation. Such individual interest may be taxable by itself, but the corporation and its property and operations cannot be, without interfering with the agencies used by the government for the accomplishment of its objects.
This distinction between private corporations performing services for the government and public corporations created by the government for the purpose of carrying on its operations, and the consequences resulting therefrom, are forcibly drawn by Chief Justice Marshall in Osborn v. The United States Bank. He says:
“ The foundation of the argument in favor of the right to tax the bank is laid in the supposed character of that institution. The argument supposes the corporation to have been originated for the management of an individual concern, to be founded upon contract between individuals, having private trade and private profit for its great end and principal object. If these premises were true, the conclusion drawn from them would be inevitable. This mere private corporation, engaged in its own business, with its own views, would certainly be subject to the taxing power of the State, as any individual would be; and the casual circumstance of its being employed by the government in the transaction of its fiscal affairs woqM no more exempt its private business from the operation'of that power than it would exempt the private business of any individual employed in the same manner. But the premises-are not true. The bank is not *43considered as a private corporation, whose principal object is individual trade and individual profit, but as a public corporation, created for public and national purposes. That the mere business of banking is, in its own nature, a private business, and may be carried on by individuals or companies, having no political connection with the government, is admitted; but the bank is not such an individual or company. It was not created for its own sake, or for'private purposes. It has never been supposed that Congress could create such a corporation. The whole opinion of the court in McCulloch v. Maryland is founded on and sustained by the idea that the bank is an instrument which is necessary and proper for carrying into effect the powers vested in the government of the United States. It is not an instrument which the government found ready made, and has supposed to be adapted to its purposes, but one which was created in the form in which it now appears for national purposes only. It is, undoubtedly, capable of transacting private as well as public busiuess. While it is the great instrument by which the fiscal operations of the government are effected, it is also trading with individuals for its own advantage. The appellants endeavor to distinguish between this trade and its agency for the public, between its banking operations and those qualities which it possesses in commou with every corporation, such as individuality, immortality,” &c.
The suggestion .of Chief Justice Marshall in the above quotation, that Congress cannot create any corporations except for public and national purposes, is worthy of particular notice. The inference is obvious, that any corporation rightfully created by Congress, being necessarily public and national in its object, is beyond the reach of State taxation. That suggestion, it is true, was made in reference to a corporation established for business purposes within the States of the Union. And in such a case, it is evident that the proposition must be true, namely, that Congress cannot 'create a corporation except for a public and national purpose. But in a Territory of the United States, Congress is supreme, and is the fountain of local as well as public and national *44law. It usually exercises its municipal powers, over such Territories by the agency of Territorial governments. But it is not obliged to do this. It might exercise them directly, for the greater power includes the less. As the source of municipal legislation in the Territory of Nebraska, therefore, Congress undoubtedly could have established local and private corporations for manufacturing, mining, financial, and other business purposes, the same as it has been accustomed to do in reference to the District of Columbia, prior to the recent establishment of a legislature therein. Now, any such private and local corporations created by Congress in a- Territory, would cease to be United States corporations when such Territory became a State. The}7 would then become subject to State control by reason of not possessing a national character. A quo warranto from the State courts could be issued for the repeal of their charters in case of forfeiture for misfeasance or non-feasance. The admission of a Territory as a State would be a virtual assignment by Congress of all control over such institutions to the State as the proper successor in the municipal sovereignty. But this would not be the case with regard to corporations of a public and national character, such as Congress could have created if the Territory had been- a State at the time. They will remain United States corporations, subject to Congressional, and not to State control.
The Union Pacific Railroad was authorized to be constructed entirely in Territories then belonging to the United States. But the work was public and national in its character, and the corporation was a public and national corporation, as much so as would be a company created by Congress to construct a railroad from New Orleans to New York, through the old or long-admitted States. The circumstance,' therefore, that the road was originally authorized in the United States territory, does not detract from the importance of Chief Justice Marshall’s suggestion in its bearing upon the case in hand. The very fact that the charter of the company can stand at all as a Congressional instead of a State charter, which has not been seriously questioned, is proof *45of its national character; for without such national character it would cease to be subject to national control.
That Congress has the power under the Federal Constitution to create and establish such a corporation for such purposes of a national character was demonstrated by the unanswerable argument of Mr. Hamilton on the creation of the first National bank, and was set at rest by the equally unanswerable argument of Chief Justice Marshall in the case of McCulloch v. Maryland.
“ Although among the enumerated powers of government,” says the Chief Justice,* “ we do not find the word * bank’ or ‘incorporation,’ we find the great powers to levy and collect taxes,- to borrow money, to regulate commerce, to declare and conduct war, and to raise and support armies and navies. The sword and the purse, all the external relations, and no inconsiderable portion of the industry of the nation, are intrusted to its government. It can never be pretended that these vast powers draw after them others of inferior importance merely because they are inferior. Such an idea cau never be advanced. But it may with great reason. be contended that a government intrusted with such ample powers, on the due execution of which the happiuess and prosperity of the nation so vitally depends, must also be intrusted with ample means for their execution. The power being given, it is the interest of the nation to facilitate its execution. . . . Throughout this vast republic, from the St. Croix to the Gulf of Mexico, from the Atlantic to the Pacific, revenue is to be collected and expended, armies are to be marched and supported. The exigencies of the nation may require that the treasure raised in the North should be transferred to the South, that raised in the East conveyed to the West, or that this order should be reversed. Is that construction of the Constitution to be preferred which would render these operatious difficult, hazardous, and expensive ? . . . The government which has the right to do an act, ánd has imposed on it the duty of performing that act, must, ae*46cording to the dictates of reason, be allowed to select the means; and those who contend that it may not select any appropriate means, that one particular mode of effecting the object is excepted, take upon themselves the burden of establishing that exception. . . . The power of creating a corporation, though appertaining to sovereignty, is not, like the power of making war, or levying taxes, or of regulating commerce, a great substantive and independent power, which cannot be implied as incidental to other powers, or used as a means of executing them. It is never the end for which other powers are exercised, but a means by which other objects are accomplished. No contributions are made to charity for the sake of an incorporation, but a corporation is created to administer the charity; no seminary of learning is instituted in order to be incorporated, but the corporate character is conferred to subserve the purposes of education. No city was ever built with the sole object of being incorporated, but is incorporated, as affording the best means of being well governed. ■ The power of creating a corporation is never used for its own sake, but for the purpose of effecting something else. No sufficient reason is, therefore, perceived why it may not pass as incidental to those powers which are expressly given, if it be a direct mode of executing them.”
Now, I think it cannot be doubted at th,e present day, whatever may have been contended in former times, that the creation of national roads and other .means of communication between the States, is within the power of Congress in carrying out the powers of regulating commerce between the States, establishing postoffices and postroads, and in providing for the national defence and for military operai tious in time of war. And no one will contend that, if the creation of a corporation is a suitable agency and means of carrying on the financial operations of the government, the creation of a corporation is equally apposite as an agency and means of carrying out the objects above mentioned. This has been so forcibly stated by one of the justices of this court, in the case of The Clinton Bridge, decided in the *47Eighth Circuit, in October, 1867,* that I shall not further enlarge upon the point.
The Union Pacific Railroad Company, therefore, being a United States corporation created for national objects and purposes, and deriving its existence, its powers, its duties, its liabilities, from the United States alone; being responsible to the United States, now as formerly, for a whole congeries of duties and observances; being subjected to the forfeiture of its corporate franchises, powers, and property to the United States, and not to any individual State; being charged with important, duties connected with the very functions of the government: every consideration adduced in the cases of McCulloch v. Maryland, and Osborn v. The Bank, would seem to require that it should be exempt not only from State taxation, but from State control and interference, except so far as relates to the preservation of the peace, and the performance of its obligations and con-tracts. In reference to these and to the ordinary police regulations imposed for sanitary purposes and the preservation of good order, of course, it is amenable to State and local laws.
As an instrument of national commerce as well as government operations, it has been regulated by Congress. Can it be further regulated by State legislation ? Can the State alter its route, its gauge, its connections, its fares, its franchises, or any part of its charter? Can the State step in between it and the superior power or sovereignty to which it is responsible ? Such an hypothesis, it seems to me, is inadmissible and repugnant to the necessary relations arising and existing in the case. Such an hypothesis would greatly derogate from and render almost useless and ineffective that hitherto unexecuted power of Congress to regulate commerce by land, among the several States. If it be declared in advance that no agency of such commerce, which Congress may hereafter establish, can be freed from local impositions, taxation, and tolls, the hopes of future free and un*48restricted intercourse between all parts of this great country will be greatly discouraged and repressed.
These considerations show how totally different this case is from that of Thompson v. The Kansas Pacific Railroad Company. That was a State corporation, deriving its origin from State laws, and subject to State regulation and responsibilities. It would be subversive of all our ideas of the necessary independence.of the National and State governments, acting in their respective spheres, for the-General government to take the management, control, and regulation of State corporations out of the hands of the State to which they owe their existence, without its consent, or to attempt to exonerate them from the performance of any duties, or the pajnnent of any taxes or contributions, to which their position, as creatures of State legislation, renders them liable.
But, it may be asked, if the States cannot tax a United-States corporation created for public and national purposes, on what principle can the General government tax local corporations created by the State governments for local and State purposes? If the States cannot tax a National bank, how can the United States tax a State bank? The answer is very manifest, and is stated b}- Chief Justice Marshall in McCulloch v. Maryland.* “The government of the Union, though'limited in its powers, is supreme within its sphere of action. This would seem to result necessarily from its nature. It is the government of all; its powers are delegated by all; it represents all, and acts for all. Though any one State may be willing to control its operations, no State is willing to allow others to control them.” Again : “It has also been insisted that, as the power of taxation in the General and State governments is acknowledged to be concurrent, every argument which would sustaiu the right of the General government to tax banks chartered by the States, will equally sustain the right of the States to tax banks chartered by the General government. But the two cases are not on the same reason. The people of all the States have *49created tbe General government, and have conferred upon it the general power of taxation. The people of all the States, and the States themselves, are represented in Congress, and, by their representatives, exercise this power. When they tax the chartered institutions of the States, they tax their constituents; and these taxes must be uniform. But when a State taxes the operations of the government of the United States, it acts upon institutions created, not by their own constituents, but by the people over whom they claim no control. It acts upon the measures of a government created by others as well as- themselves, for the benefit of others in common with themselves, The difference is that which always exists, and always must exist, between the action of the whole on a part, and the' action of a part on the whole — between the laws of a government declared to be supreme, and those of a government which, when in opposition to those laws, is not supreme.”
But it is contended that the laying of a tax on the roadbed of the company is nothing more than laying a tax on ordinary real estate, which ivas conceded might be done in the case of the United States Bank, in reference to its baukiug-house or other lands taken for claims due in the course of its business. This is' a plausible suggestion, but in my apprehension, not a sound one. In ascertaining what is essential in every case, respect must always be had to. the subject-matter. The State of Maryland undertook to tax the circulation of the United States branch bank established in that State by requiring stamps to be affixed thereto; the State of Ohio imposed a general tax of $50,000 upon the branch established therein. These taxes were declared unconstitutional and void. They impeded the operations of the bank as a financial agent. Real estate was not a necessary appurtenant to the exercise of the functions of the bank. It might hire rooms for its office, or it might purchase or erect a building.
But the primary object of a railroad company is commerce and transportation. In its case, a railroad track is just as essential to its operations as the use of a currency, or the *50issue or purchase of bills of exchange.is to the operations of a bank. To tax the road is to tax the very instrumentality which Congress desired to establish, and to operate which it created the corporation.
Besides, all that a railroad company possesses in reference to its road-bed is the right of way, and the right to use the land for the purpose of way. This is a franchise conferred by the government, and iuseparately connected with the other franchises which enable it to perform the duties for the performance of which it was created. Any estate in the land — the soil — the underlying earth — beyond this, belongs to the original proprietor; and that proprietor ip the present case.is the government itself. So that, look at it what way we will, there is no room for the taxing power of the State. The estate in the soil cannot be taxed, for that remains in the United States; the franchise of right of way and materials of track cannot be taxed, because they are essentially connected with and form a part of the powérs, faculties, and capital by which the national purposes of the organization are accomplished.
If the road-bed may be taxed, it may be seized and sold for non-payment of taxes — seized and sold in parts and parcels, separated by county or State lines — and thus the whole purpose of Congress in creating the corporation and establishing the line may be subverted and destroyed.
In my judgment, the tax laid in this case was an unconstitutional interference with the instrumentalities created by the National government in carrying out the objects and powers conferred upon it by the Constitution.
4 Wheaton, 316.
9 Id. 738.
2 Peters, 466.
3 Stat. at Large, 266.
4 Wheaton, 407.
1 Woolworth, 150.
4 Wheaton, 405.