This Court cannot take original jurisdiction of a suit by a
State to enforce the statutory liability of a stockholder of a
state bank, in process of liquidation through a state officer,
where the State, although vested by its laws with legal title to
the bank's assets and to the cause of action sued on, is acting
merely for the benefit of the bank's creditors and depositors. Pp.
304 U. S.
Leave to file denied.
Page 304 U. S. 388
Upon application of the State for leave to bring an original
action, and response of the proposed defendant to a rule to show
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
The State of Oklahoma, upon the relation of its Bank
Commissioner, asks leave to bring suit in this Court to enforce the
statutory liability of a shareholder of a state bank which is in
course of liquidation.
The statutes of Oklahoma provide that the shareholders of every
bank organized under the state law "shall be additionally liable
for the amount of stock owned." Okla.Stat. 1931, § 9130. The Bank
Commissioner, when satisfied of the insolvency of a bank, may take
possession of its assets and "proceed to wind up its affairs and
enforce the personal liability of the stockholders." Id.,
§ 9172. That liability becomes due when the Bank Commissioner takes
possession of the bank, and his order finding the bank to be
insolvent is conclusive evidence of that fact. Id.,
9174. The Bank Commissioner is authorized to "prosecute all suits
necessary for the liquidation of the assets of the insolvent
corporations taken over by him," and such suits are to be brought
"in the name of the State of Oklahoma, on the relation of the Bank
Commissioner." If, after liquidation and payment in full of
depositors and creditors, any assets remain in the hands of the
Bank Commissioner, they revert to the stockholders. Id.,
Page 304 U. S. 389
The statutes further provide that:
"The State of Oklahoma, on the relation of the Bank
Commissioner, shall be deemed to be the owner of all of the assets
of failed banks in his hands for the use and benefit of the
depositors and creditors of said bank."
§ 9179. No costs are required to be paid by the
State in any suit in which the State of Oklahoma, on the relation
of the Bank Commissioner, is a party, and preference is directed to
be given in the courts of the State to all matters pending in such
The proposed complaint alleges that, in May, 1931, the Bank
Commissioner took possession of the Osage Bank of Fairfax, Osage
County, finding it to be insolvent, and proceeded to wind up its
affairs and enforce the personal liability of its stockholders;
that the defendant, R. M. Cook, was the owner of sixty-nine shares
of the capital stock of the bank of the par value of $100, and
became liable to the State of Oklahoma, upon the relation of its
Bank Commissioner, in the sum of $6,900, with interest; that the
defendant has paid the sum of $2,300 in part satisfaction, and that
the balance is due; that the Bank Commissioner has liquidated all
the assets of the bank except the claim here presented and certain
other claims against other stockholders; that dividends have been
paid to depositors and creditors amounting to ninety-one percent of
their claims, and that the enforcement of the statutory liability
of the defendant is necessary to discharge the liabilities of the
In answer to the rule to show cause why leave to bring this suit
should not be granted, the proposed defendant contends that the
cause of action is not within article 3, § 2, cl. 2, of the
Constitution, providing for the original jurisdiction of this
The purpose in creating the stockholder's liability, the
authority conferred upon the Bank Commissioner to enforce it, and
the relation of the State to its enforcement
Page 304 U. S. 390
are clearly set forth in the decisions of the Supreme Court of
Oklahoma. In State ex rel. Mothersead v. Kelly,
36, 284 P. 65, the court said:
"What is this stockholder's liability, and for whose benefit is
"It was designed solely for the benefit of creditors, and
constitutes a fund available only when the bank is insolvent and
thus rendered unable to meet its liabilities in full. The
corporation itself has no authority over the fund, and cannot
either compel its payment nor by any act on its part release the
stockholders therefrom. It amounts, for all practical purposes, to
a reserve or trust fund, to be resorted to only in proceedings in
liquidation, when necessary to meet the payment of obligations of
the corporation. It is limited to an amount equal to the par value
of the stock held and owned by each stockholder, and exists in
favor of the creditors collectively, not separately, and in
proportion to the amount of their respective claims against the
corporation. . . ."
pp. 37, 38, 284 P. 66.)
The court added that "the bank commissioner alone is empowered
by law to prosecute an action to enforce the stockholders'
p. 41, 284 P. 69. See also American
Exchange Bank v. Rowsey,
144 Okl. 172, 173, 289 P. 726;
Griffin v. Brewer,
167 Okl. 654, 655, 31 P.2d
In State ex rel. Murray v. Pure Oil Co.,
169 Okl. 507,
37 P.2d 608
referring to the provision of the statute authorizing the Bank
Commissioner to institute all suits necessary for the liquidation
of the assets of the insolvent corporations taken over by him and
providing that such suits shall be brought in the name of the
State, on the relation of the Bank Commissioner, the court
"Since the state is the proper party plaintiff by virtue of the
above statute, it may maintain the action, regardless of whether it
is the real party in interest or merely
Page 304 U. S. 391
a nominal plaintiff for the use and benefit of depositors and
creditors. An action may be maintained by one expressly authorized
by statute even though that person is not in fact the real party in
interest. Section 144, O.S.1931. . ."
"The protection of depositors of insolvent state banks is a
distinct economic policy of the state. . . . Insofar as the object
of this action is to further the established economic policy of the
state, the state may be said to have a real interest created by its
governmental policy, as distinguished from a mere nominal interest,
even though the pecuniary benefits of the litigation, if ultimately
successful, go to the depositors and creditors of the insolvent
"The statute (section 9173, supra,
) which authorizes
the state to be a party plaintiff names the bank commissioner as
the proper officer to institute legal actions and carry out this
economic policy. . . ."
"The nature of the powers vested by law in the bank commissioner
have been many times considered by this Court, and their exclusive
character recognized. . . ."
"It was legislative intent that litigation of this character
should be instituted and conducted under the direct supervision of
the bank commissioner through the staff of legal assistants
provided by law for that purpose, and not by the Governor nor
through independent action."
pp. 509-512, 37 P.2d 610.
Again, in Richison v. State ex rel. Barnett,
537, 539, 56 P.2d 840
843, the court observed:
"Under the provisions of article 6, chapter 40, O.S.1931
(section 9168 et seq.
), the state has assumed exclusive
jurisdiction and control of the affairs of insolvent banking
institutions. By operation of law, the bank commissioner is the
officer through which the state liquidates the assets and winds up
the affairs of such institutions. While engaged in the performance
of such statutory
Page 304 U. S. 392
duties and functions, the bank commissioner is performing duties
for the benefit of certain members of the public who were
depositors in such institution."
The state court has also held that the statute of limitations
does not run against the State in an action to enforce the
statutory liability of the stockholders. State ex rel. Shull v.
159 Okl. 4, 12 P.2d 1106
And the same rule applies to actions on promissory notes and other
claims taken over by the Bank Commissioner as assets of an
insolvent bank. White v. State,
94 Okl. 7, 220 P. 624;
Lever v. State,
157 Okl. 162, 11 P.2d
; Richison v. State ex rel. Barnett, supra.
May the State, through its Bank Commissioner, invoke our
original jurisdiction to prosecute claims of this character for the
benefit of creditors?
To bring a case within that jurisdiction, it is not enough that
a State is plaintiff. Florida v. Mellon, 273 U. S.
, 273 U. S. 17
Nor is it enough that a State has acquired the legal title to a
cause of action against the defendant, where the recovery is sought
for the benefit of another who is the real party in interest.
New Hampshire v. Louisiana, New York v. Louisiana,
108 U. S. 76
those cases, provision was made by statutes of New Hampshire and
New York for the assignment to the the obligations of another
State. Thereupon it became the duty of the Attorney General of the
State, if in his opinion the claim was a valid one, to bring suit
in the name of the State in this Court in order to enforce
collection. The money collected was to be held in trust, as stated,
and to be paid over to the assignor of the claim. Id.,
108 U. S. 77
108 U. S. 79
The States, respectively, acquired title to bonds of the Louisiana
and filed in this Court bills in equity in the name of the State to
enforce recovery. The bills were dismissed. The fact that the
effort was made to use the name of the complainant States in order
to evade the application of the Eleventh Amendment
Page 304 U. S. 393
was undoubtedly a controlling consideration, but that
consideration derived its force from the fact that the State was
not seeking a recovery in its own interest, as distinguished from
the rights and interests of the individuals who were the real
The underlying point of the decision was that, in determining
the scope of our original jurisdiction under clause 2 of § 2 of
article 3 of the Constitution, we must look beyond the mere legal
title of the complaining State to the cause of action asserted, and
to the nature of the State's interest. So, when it appeared in a
later case that a State, invoking the original jurisdiction of this
Court to enforce the bonds of another State, was the absolute owner
of the bonds and was prosecuting the claim upon its own behalf,
this Court took jurisdiction. South Dakota v. North
Carolina, 192 U. S. 286
There, the Court found that, while the State of South Dakota
acquired by gift the bonds of North Carolina, there could not be
"any question respecting the title of South Dakota." They were not
held, the Court said, by the State as representative of individual
owners as in the case of New Hampshire v. Louisiana,
108 U. S. 76
the motive which induced the transaction was not deemed to "affect
its validity or the question of jurisdiction." The case was thus
one "directly affecting the property rights and interests of a
pp. 192 U. S. 314
192 U. S.
In determining whether the State is entitled to avail itself of
the original jurisdiction of this Court in a matter that is
justiciable (see Massachusetts v. Mellon, 262 U.
, 262 U. S.
), the interests of the State are not deemed to be
confined to those of a strictly proprietary character, but embrace
-sovereign" interests which are "independent of
and behind the titles of its citizens, in all the earth and air
within its domain." Georgia v. Tennessee Copper Co.,
206 U. S. 230
206 U. S. 237
Thus, we have held that a State may sue to restrain the diversion
of water from
Page 304 U. S. 394
an interstate stream (Kansas v. Colorado, 206 U. S.
, 206 U. S. 95
or an interference with the flow of natural gas in interstate
commerce (Pennsylvania v. West Virginia, 262 U.
, 262 U. S.
); or to prevent injuries through the pollution of
streams or the poisoning of the air by the generation of noxious
gases destructive of crops and forests, whether the injury be due
to the action of another State or of individuals. Missouri v.
Illinois, 180 U. S. 208
200 U. S. 200
496; Georgia v. Tennessee Copper Company, supra; North Dakota
v. Minnesota, 263 U. S. 365
263 U. S.
-374; Wisconsin v. Illinois, 278 U.
; 281 U. S. 281
But this principle does not go so far as to permit resort to our
original jurisdiction in the name of the State, but in reality for
the benefit of particular individuals, albeit the State asserts an
economic interest in the claims and declares their enforcement to
be a matter of state policy. In Kansas v. United States,
204 U. S. 331
State asked leave to file a bill of complaint against the United
States and others, seeking a decree adjudging the State to be the
owner, as trustee for a railway company, of certain sections of
land to the extent of a grant along the line of the railroad
through the Creek Nation in the Indian Territory. The Court said
that it appeared upon the face of the bill that the State was only
nominally a party, that the real party in interest was the railroad
company, and that our original jurisdiction "cannot be maintained."
pp. 240 U. S.
-341. The Court also held that the United States was
the real party in interest as defendant, and could not be sued
without its consent, but the other question was presented and
In Oklahoma v. Atchison, T. & S.F. Ry. Co.,
220 U. S. 277
State sought to maintain an action in this Court against the
carrier to restrain it from charging unreasonable rates within
Oklahoma. Setting forth the congressional grant under which the
railway in question was
Page 304 U. S. 395
operated, and insisting that the Company was not entitled to
charge the inhabitants of Oklahoma a greater freight rate for the
transportation of certain commodities than that authorized for
similar service in Kansas, the State alleged its interest in the
development of its communities and in the success of its
industries, and the menace to the future of the State through what
was deemed to be a violation of the conditions of the grant. But
the Court pointed out that the State was not seeking to protect a
direct interest of its own in the transportation of the commodities
in question, but was endeavoring to compel the railway company to
respect the rights of the shippers of these commodities.
pp. 220 U. S.
-287. The bill was dismissed. The Court summarized
its conclusion in these words:
"We are of opinion that the words in the Constitution conferring
original jurisdiction on this Court in a suit 'in which a state
shall be a party' are not to be interpreted as conferring such
jurisdiction in every cause in which the state elects to make
itself strictly a party plaintiff of record, and seeks not to
protect its own property, but only to vindicate the wrongs of some
of its people, or to enforce its own laws or public policy against
p. 220 U. S.
See also Louisiana v. Texas, 176 U. S.
In the instant case, the State has taken the legal title to the
assets of the insolvent bank which is being liquidated and to the
claims against stockholders by reason of their statutory liability.
But recovery is sought solely for the benefit of the depositors and
creditors of the bank. State ex rel. Mothersead v. Kelly,
supra; State ex rel. Murray v. Pure Oil Co., supra; Richison v.
State ex rel. Barnett, supra.
Constituting the State a virtual
trustee for the benefit of the creditors of the bank did not alter
the essential quality of the rights asserted or avail to confer
Page 304 U. S. 396
jurisdiction upon this Court to entertain a suit for their
enforcement. New Hampshire v. Louisiana, New York v. Louisiana,
supra; Kansas v. United States, supra; Oklahoma v. Atchison, T.
& S.F. Ry. Co., supra.
The taking of the legal title by
the State is a mere expedient for the purpose of collection.
It will be noted that the State not only undertakes to enforce
the statutory liability of stockholders but, as the State takes
title to all the assets of the insolvent bank, suits upon
promissory notes and various claims of the bank in the course of
the liquidation are to be brought in the name of the State acting
through its Bank Commissioner. The declared policy and asserted
economic interest of the State attach as well to the prosecution of
all such suits. If the contention of the State were accepted, it
would follow that suits upon claims of the bank against citizens of
other States could be brought in this Court. Many States have
statutory provisions for the liquidation through state officers of
insolvent banks, trust companies, insurance companies, etc., and
if, by the simple expedient of providing that the title to the
assets of such institutions should vest in the State and that suits
in the course of liquidation should be prosecuted in the name of
the State, resort to our original jurisdiction were permitted, the
enormous burden which would thereby be imposed upon this Court can
readily be imagined -- a burden foreign to the purpose of the
constitutional provision. These considerations emphasize the
importance of strict adherence to the governing principle that the
State must show a direct interest of its own, and not merely seek
recovery for the benefit of individuals who are the real parties in
The motion for leave to file complaint is denied.
MR. JUSTICE CARDOZO took no part in the consideration and
decision of this case.