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An action whereby the The Citizens’ Savings and Loan Association of Cleveland filed suit against
Topeka City over bonds sold by the city to support a local business that built bridges.
Contained within this action was the Supreme Court taking notice that when a government issues bonds,
implied within that power is the fact that the same government must collect revenues (taxes) to pay
those debt instruments.
However, the Court also took notice that, “We have established, we think, beyond cavil that there
can be no lawful tax which is not laid for a public purpose. It may not be easy to draw the line in all
cases so as to decide what is a public purpose in this sense and what is not.”
The Court then proceeded to determine whether the bonds issued in this case were issued for a public
purpose. The Court affirmed the lower courts and agreed that no such purpose existed.
Full text: The Citizens’ S&L
Assoc. of Cleveland v. Topeka City, 87 U.S. 655 (1874) |