M'Culloch v. Maryland

In 1816, Congress chartered The Second Bank of the United States. In 1818, the state of Maryland passed legislation to impose taxes on the bank. James W. McCulloch, the cashier of the Baltimore branch of the bank, refused to pay the tax. The state appeals court held that the Second Bank was unconstitutional because the Constitution did not provide a textual commitment for the federal government to charter a bank. 

1. Did Congress have the authority to establish the bank?
2. Did the Maryland law unconstitutionally interfere with congressional powers?

Conclusion

In a unanimous decision, the Court held that Congress had the power to incorporate the bank and that Maryland could not tax instruments of the national government employed in the execution of constitutional powers. 

Pursuant to the Necessary and Proper Clause (Art. I, Section 8), Chief Justice Marshall noted that Congress possessed powers not explicitly outlined in the U.S. Constitution. Marshall redefined “necessary” to mean “appropriate and legitimate,” covering all methods for furthering objectives covered by the enumerated powers.  Marshall also held that while the states retained the power of taxation, the Constitution and the laws made in pursuance thereof are supreme and cannot be controlled by the states.