Canal and Banking Company v. New Orleans was a United States Supreme Court case that dealt with the issue of taxation. The case involved the Canal and Banking Company of New Orleans, which was a corporation chartered by the state of Louisiana. The company was being taxed by the city of New Orleans on its property, which the company argued was unconstitutional. The Supreme Court ultimately sided with the Canal and Banking Company, ruling that the city of New Orleans had no authority to tax the company's property. The Court held that the power to tax was a power reserved to the states, and that the city of New Orleans had no authority to tax the company's property. The Court also held that the tax was an unconstitutional burden on the company's property, as it was not based on any rational basis. The Court's decision in this case was significant, as it established the principle that the power to tax is a power reserved to the states, and that cities and other local governments do not have the authority to tax property. This decision has been cited in numerous subsequent cases, and has been used to support the principle that the power to tax is a power reserved to the states.

In Canal and Banking Company v. New Orleans, the Supreme Court was tasked with determining whether a state legislature had the authority to pass laws that would affect private contracts between individuals or companies. The majority opinion held that such legislation was unconstitutional as it violated the Contracts Clause of the Constitution which prohibits states from passing any law impairing existing contracts. However, Justice Field dissented from this decision arguing that while he agreed with much of what was stated in the majority opinion, he believed there were certain circumstances where a state could interfere with an individual contract if it served some public purpose or benefit. He argued that when this is done for reasons other than simply benefiting one party over another then it should be allowed under due process principles and not be considered unconstitutional interference by government into private affairs.