Osborn v. Bank of the United States, 22 U.S. 738 (1824)
When Congress authorized the bank to sue and be sued in federal court, this conferred federal subject matter jurisdiction.
Based on allegations that the Bank of the United States had violated Ohio law, the Ohio legislature passed a law that levied an annual tax of $50,000 on each of the bank's offices of discount and deposit in Ohio. The bank sought and received an injunction in federal court that would prevent Osborn, the state auditor, from enforcing the law against the bank. The bank later brought another complaint on the grounds that Osborn and Harper, one of his employees, had seized $100,000 from one of the bank's Ohio offices in violation of the injunction. The federal court ordered Osborn to return the money with interest, but Osborn responded that the court lacked jurisdiction under either statutory or constitutional grounds. He claimed that the state court should have exclusive jurisdiction, since the case was based primarily on the common law of contracts rather than a federal question.Opinions
- John Marshall (Author)
- Bushrod Washington
- Thomas Todd
- Gabriel Duvall
- Joseph Story
- Smith Thompson
The case implicates the federal law that incorporated the Bank of the United States and opened it to being sued in federal courts. Federal courts would have an overly limited scope of jurisdiction if they could hear cases that arose entirely from only federal laws, treaties, or the Constitution. Congress has the power to give original or appellate jurisdiction to federal courts as it sees fit, except in those areas where the Constitution has given original jurisdiction to the U.S. Supreme Court. Even though principles of state law may be involved, a federal court still may hear the case because federal law is an essential component of it. All the actions of the bank are controlled by federal law.
- William Johnson, Jr. (Author)
Jurisdiction in federal courts is appropriate not when it is a mere possibility that a question of federal law will arise, but only when the case thoroughly involves a U.S. law, such as the patent rules. General principles that may involve federal laws do not give rise to original jurisdiction. The power of the federal courts would extend too broadly if that practice is followed.Case Commentary
Courts are generally reluctant to order another branch of government to conduct its operations in a certain way, mindful of the separation of powers doctrine. This is especially difficult when it is not clear who would be harmed by the allegedly wrongful conduct in the future.
U.S. Supreme CourtOsborn v. Bank of the United States, 22 U.S. 9 Wheat. 738 738 (1824)
Osborn v. Bank of the United States
22 U.S. (9 Wheat.) 738
The act of incorporation of the Bank of the United States gives the circuit courts of the United States jurisdiction of suits by and against the bank.
This provision in the charter is warranted by the Third Article of the Constitution, which declares that
"The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority."
The exemption of the State from suability, no objection to the proceedings against its officers, for executing an unconstitutional law.
The decision of the Court in M'Culloch v. Maryland reviewed and confirmed.
It is unnecessary for an attorney or solicitor who prosecutes a suit for the Bank of the United States or other corporation to produce a warrant of attorney under the corporate seal.
Whatever authority may be necessary for an attorney or solicitor to appear for a natural or artificial person, it is not a ground of reversal for error in an appellate court that such authority does not appear on the face of the record. It is a formal defect which is cured by the statute of jeofails and the thirty-second section of the Judiciary Act of 1789, ch. 20.
In general, the answer of one defendant in equity cannot be read in evidence against another. But where one defendant succeeds to another, so that the right of the one devolves on the other and they become privies in estate, the rule does not apply.
Where the defendant is restrained by an injunction from using money in his possession, interest will not be decreed against him.
An injunction will be granted to prevent the franchise of a corporation from being destroyed, as well as to restrain a party from violating it by attempting to participate in its exclusive privileges.
In general, an injunction will not be allowed, nor a decree rendered, against an agent where the principal is not made a party to the suit. But if the principal be not himself subject to the jurisdiction of the court (as in the case of a sovereign state), the rule may be dispensed with.
A court of equity will interpose by injunction to prevent the transfer of a specific thing which, if transferred, will be irretrievably lost to the owner, such as negotiable securities and stocks.
The circuit courts of the United States have jurisdiction of a bill brought by the Bank of the United States for the purpose of protecting the Bank in the exercise of its franchises, which are threatened to be invaded, under the unconstitutional laws of a State, and, as the State itself cannot, according to the Eleventh Amendment of the Constitution, be made a party defendant to the suit, it may be maintained against the officers and agents of the State, who are intrusted with the execution of such laws.
A State cannot tax the Bank of the United States, and any attempt on the part of its agents and officers to enforce the collection of such tax against the property of the Bank may be restrained by injunction from the circuit court.
The bill filed in this cause, was exhibited in the court below, at September term, 1819, in the name of the respondents, and signed by solicitors of the court, praying an injunction to restrain Ralph Osborn, Auditor of the State of Ohio,
from proceeding against the complainants, under an act of the Legislature of that State, passed February the 8th, 1819, entitled
"An act to levy and collect a tax from all banks, and individuals, and companies, and associations of individuals, that may transact banking business in this State, without being allowed to do so by the laws thereof."
This act, after reciting that the Bank of the United States pursued its operations contrary to a law of the State, enacted, that if, after the 1st day of the following September, the said Bank, or any other, should continue to transact business in the State, it should be liable to an annual tax of 50,000 dollars on each office of discount and deposit. And that, on the 15th day of September, the Auditor should charge such tax to the Bank, and should make out his warrant, under his seal of office, directed to any person, commanding him to collect the said tax, who should enter the banking house, and demand the same, and if payment should not be made, should levy the amount on the money or other goods of the Bank, the money to be retained, and the goods to be sold, as if taken on a fieri facias. If no effects should be found in the banking room, the person having the warrant was authorized to go into every room, vault, &c. and to open every chest, &c. in search of what might satisfy his warrant.
The bill, after reciting this act, stated, that Ralph Osborn is the Auditor, and gives out, &c. that he will execute the said act. It was exhibited in open court, on the 14th of September, and, notice of the application having been given to the defendant,
Osborn, an order was made awarding the injunction on the execution of bonds and security in the sum of 100,000 dollars, after which, a subpoena was issued on which the order that had been made for the injunction was endorsed by the solicitors for the plaintiffs, and a memorandum, that bond with security had been given by the plaintiffs was endorsed by the clerk, and a power to James M'Dowell to serve the same was endorsed by the Marshal. It appeared from the affidavit of M'Dowell, that both the subpoena and endorsement were served on R. Osborn early in the morning of the 15th. On the 18th of the same month of September, a writ of injunction was issued on the same bill, which was served on R. Osborn and on John L. Harper. The affidavit of M'Dowell stated that he served the writ on Harper while on his way to Columbus with the money and funds on which the same were to operate, as he understood, and that the writ was served on Osborn before Harper reached Columbus.
In September, 1820, leave was given to file a supplemental and amended bill, and to make new parties.
The amended bill charges, that, subsequent to the service of the subpoena and injunction, to-wit, on the 17th of September, 1819, J. L. Harper, who was employed by Osborn to collect the tax, and well knew that an injunction had been allowed, proceeded by violence to the office of the Bank at Chilicothe, and took therefrom 100,000 dollars, in specie and bank notes, belonging to, or in deposit with, the plaintiffs. That this money
was delivered to H. M. Curry, who was then Treasurer of the State, or to the defendant, Osborn, both of whom had notice of the illegal seizure, and paid no consideration for the amount, but received it to keep it on safe deposit. That Curry did keep the same until he delivered it over to one S. Sullivan, his successor as Treasurer. That neither Curry nor Sullivan held the said money in their character as Treasurer, but as individuals. The bill prays, that the said H. M. Curry, late Treasurer, S. Sullivan, the present Treasurer, and R. Osborn, in their official and private characters, and the said J. L. Harper, may be made defendants; that they may make discovery, and may be enjoined from using or paying away the coin or notes taken from the Bank, may be decreed to restore the same, and may be enjoined from proceeding further under the said act.
The defendant, Curry, filed his answer, admitting that the defendant, Harper, delivered to him, about the 20th of September, 1819, the sum of ninety-eight thousand dollars, which, he was informed and believed, was a tax levied of the Branch Bank of the United States. He passed this sum to the credit of the State, as revenue, but, in fact, kept it separate from other moneys, until January or February, 1820, when the moneys in the Treasury were seized upon by a committee of the House of Representatives, soon after which he resigned his office, and the moneys and bank notes, in the bill mentioned, still separate from other moneys in the Treasury, came to the hands of S. Sullivan, the
present Treasurer, who gave a receipt for the same.
The defendant, Sullivan, failing to answer, an attachment for contempt was issued, on which he was taken into custody. He then filed his answer, and was discharged.
This answer denies all personal knowledge of the levying, collecting, and paying over the money in the bill mentioned. It admits that he was appointed Treasurer, as successor to Curry, on the 17th of February, 1820, and that he entered the Treasury on the 23d, and began an examination of the funds, among which he found the sum of ninety-eight thousand dollars, which he understood was the same that is charged in the bill; but this was not a fact within his own knowledge. He gave a receipt as Treasurer, and the money has remained in his hands, as Treasurer, and not otherwise. The sum of ninety-eight thousand dollars remains untouched, out of respect to an injunction said to have been allowed by the circuit court, on a bill since dismissed. He admits the sum in his hands to correspond with the description in the bill, so far as that description goes, and annexes to his answer a description of the residue. He has no private individual interest in the money, and holds it only as State Treasurer; admits notice, from general report, and from the late Treasurer, that the said sum of ninety-eight thousand dollars was levied as a tax from the Bank, and that the Bank alleged it to be illegal and void.
The cause came on to be heard upon these answers, and upon the decrees nisi, against Osborn and Harper, and the Court pronounced a decree
directing them to restore to the Bank the sum of 100,000 dollars, with interest on 19,830 dollars, the amount of specie in the hands of Sullivan. The cause was then brought, by appeal, to this Court.