The Legislature of Michigan passed an Act on 15 March, 1837,
entitled "An act to organize and regulate banking associations,"
and on 30 December, 1837, an act to amend the former act. By the
first, any persons were allowed to form associations for the
purposes of banking upon the terms specified in the law; and by the
second, the stockholders were made liable, in their individual
character, under certain circumstances, for the debts of the
association.
The associations formed under these acts are corporations within
the meaning of the Constitution of Michigan, and the acts are
unconstitutional and void.
The second section of the twelfth article of the Constitution
forbidding the legislature from "passing any act of incorporation
unless with the assent of at least two-thirds of each house," the
judgment of the legislature is required to be exercised upon the
propriety of creating each particular corporation, and two-thirds
of each house must sanction and approve each individual
charter.
The Supreme Court of the State of Michigan has so construed its
Constitution, and it is the established doctrine of this Court,
that it will adopt and follow the decisions of the state courts in
the construction of their own statutes where that construction has
been settled by the decision of their highest judicial
tribunal.
This case was formerly before this Court, on a certificate of
division in opinion between the judges of the Circuit Court for the
District of Michigan. Its facts and the reasons for its dismissal
will be found in
47 U. S. 6 How.
41.
It now came up upon the following certificate of division in
opinion.
Page 48 U. S. 813
"This case having been remanded by the supreme court on the
ground that it had not been properly certified on certain points
under the act of Congress, and the cause being brought before the
court for their consideration and decision, the opinions of the
judges are opposed on the following point:"
"Whether the banking associations organized under the act of the
Legislature of the State of Michigan entitled "An act to organize
and regulate banking associations," approved March 15, 1837, and
the amended act entitled "An act to amend an act entitled
An
Act to regulate banking associations and for other purposes,'"
approved December 30, 1837, were or were not corporations or bodies
corporate, within the meaning of the Constitution of the State of
Michigan."
Article fourth, section first, of the Constitution of the State
of Michigan is as follows: "The legislative power shall be vested
in a Senate and House of Representatives."
Section second of article twelfth of said Constitution is as
follows: "The legislature shall pass no act of incorporation,
unless with the assent of at least two-thirds of each house."
The first act referred to in the question upon which the judges
decided, namely, that of March 15, 1837, authorized any persons to
form associations for the purpose of banking upon the terms
specified in the law. It was passed by a vote of two-thirds of each
branch of the legislature.
The second act referred to provided as follows:
"That for all debts of such banking association, the directors
thereof, if such association shall become insolvent, in the first
place shall be liable in their individual capacity to the full
amount which such insolvent association may be indebted, and each
other stockholder shall thereafter be also in like manner, in
proportion to his or her amount of stock, for the payment of the
full amount of the debts of such insolvent association."
The bill filed by the Nesmiths claimed to hold the defendants
responsible, as stockholders, for the debts due by the Detroit City
Bank.
The bill was demurred to, and, upon the hearing, the division
between the judges occurred as above mentioned, and was certified
to this Court.
Page 48 U. S. 817
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
In this case, the Circuit Court for the District of Michigan
have certified that the following point arose in this case, upon
which the justices were opposed in opinion:
"Whether the banking associations organized under the act of the
Legislature of the State of Michigan, entitled "An Act to organize
and regulate banking associations," approved March 15, 1837, and
the amended act, entitled "An Act to amend an act, entitled
An
act to regulate banking associations and for other purposes,'"
approved December 30, 1837, were or were not corporations or bodies
corporate, within the meaning of the Constitution of the State of
Michigan."
This question, it appears, depends on the construction of the
Constitution of Michigan, which declares that the legislature shall
pass no act of incorporation unless with the assent of at least
two-thirds of each house.
The legislature chosen under this Constitution, with the assent
of two-thirds of each house, passed an act authorizing any persons
resident in any county in the state to form associations for
banking business, upon the terms and conditions prescribed in the
law, and declaring the stockholders in such associations to be a
body politic and corporate, by such name as they should designate
and assume, and conferring upon them the usual powers of banking
corporations.
Under this act of the legislature, an association of persons was
organized, under the name of the Detroit City Bank.
Another act was afterwards passed by the legislature, under a
power reserved in the first, to amend its provisions. And this act,
under certain circumstances, made the stockholders liable for the
debts of the association.
Page 48 U. S. 818
The complainants in this case, having become creditors of the
association, filed their bill in equity, to charge the defendants
as stockholders, under the provisions of the last-mentioned act.
And in the progress of this suit, the question arose which has been
certified as above mentioned.
If we regarded the question as an open one, a more particular
statement of the provisions of these acts of the legislature would
be necessary, and also of the transactions which led to this suit.
And the point certified would require a very careful and deliberate
examination by this Court.
But it appears that the same question has arisen in the state
courts of Michigan, and been decided in its supreme court, upon
full argument and consideration. We refer to the case of
Green
v. Graves, decided in 1844, and reported in 1 Doug. Michigan
Reports 351. In that case the court held, that the banking
associations organized under the acts of the legislature mentioned
in the certificate of division were corporations within the meaning
of the Constitution of Michigan; and that these acts were
unconstitutional and void.
The point certified is precisely the same. It relates altogether
to the construction and legal effect of the constitution of that
state, and of the two acts passed by its legislature. And it is the
established doctrine of this Court, that it will adopt and follow
the decisions of the state courts in the construction of their own
constitution and statutes, when that construction has been settled
by the decision of its highest judicial tribunal. After the
decision above mentioned, therefore, the question certified cannot
be considered as open for argument in this Court. The cases of
Groves v.
Slaughter, 15 Pet. 449, and the two cases of
Rowan v.
Runnels, 5 How. 134, in relation to the
construction of the Constitution of Mississippi, stand on very
different grounds, as will be seen by a reference to the cases.
Upon this view of the subject, it will be
Certified to the circuit court as the opinion of this Court
that the banking associations organized under the acts of the
legislature mentioned in the certificate of division were
corporations within the meaning of the Constitution of Michigan,
and that these acts of the legislature are unconstitutional and
void.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Michigan, and on the point and question on which the judges of the
said circuit court were opposed in opinion, and which was certified
to this Court for its opinion, agreeably to
Page 48 U. S. 819
the act of Congress in such case made and provided, and was
argued by counsel. On consideration whereof, it is the opinion of
this Court, that the banking associations organized under the act
of the legislature of the State of Michigan, entitled "An act to
organize and regulate banking associations," approved March 15,
1837, and the amended act entitled "An act to regulate banking
associations, and for other purposes," approved December 30, 1837,
were corporations or bodies corporate within the meaning of the
Constitution of the State of Michigan, and that these acts of the
legislature are unconstitutional and void; whereupon it is now here
ordered and decreed by this Court, that it be so certified to the
said circuit court.
