38 U.S. 519, 10 L. Ed. 274 (1839)
The three cases consolidated before the Supreme Court in 1839 arose from writs of error to the Circuit Court for the Southern District of Alabama.1 The lead case, Bank of Augusta v. Joseph B. Earle, involved a Georgia-chartered bank that had authorized its agent Thomas M'Gran to purchase bills of exchange in Mobile using funds derived from Georgia transactions.2
M'Gran discounted a bill in Alabama for the bank's benefit and to remit the proceeds northward.3 Similar transactions formed the basis of the New Orleans and Carrollton Railroad Company case, submitted on the same arguments, and the Bank of the United States v. Primrose case, which featured parallel purchases by agents of that federally chartered institution.4
The defendant in the lead case defended upon facts admitted by the plaintiffs, contending that the Georgia corporation could not lawfully exercise its powers in Alabama.5 The circuit court accepted that defense in the Bank of Augusta matter and entered judgment for the defendant, prompting the writs of error.6 Counsel for the several banks argued the appeals while opposing counsel represented Earle and Primrose.7
Although the records contained minor factual variations, none altered the core legal questions of corporate capacity and Alabama policy.8
Whether a corporation chartered by the legislature of Georgia could lawfully exercise its power to purchase bills of exchange through an agent in the state of Alabama?9
A corporation is an artificial being created by statute.10 It possesses only the powers conferred by its charter.11 It may exercise those powers in another state only to the extent permitted by the comity of nations among the states, provided the contracts are not repugnant to the policy of the forum state.12
Yes. The Bank of Augusta was incorporated by Georgia with authority to purchase bills of exchange.13 Its agent Thomas M'Gran held funds derived from Georgia discounts and used them to purchase the bill in Mobile for the bank's benefit.14 The charter authorized foreign bills without geographic restriction, and the purchase was therefore within the powers Georgia could confer.15
Under the comity of nations and among the states, such contracts are valid unless the forum state has declared a contrary policy.16
The Georgia corporation could lawfully exercise its charter power in Alabama by comity.17
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Justice McKinley dissented on the ground that the law of nations cannot supply validity to contracts that state charters and Alabama law do not authorize.18 He maintained that states possess no national power after the Constitution and that the comity of nations has no application among the states because they surrendered national powers to the federal government.19 Alabama's constitution and bank charters establish an exclusive policy reserving banking privileges, including exchange dealings, to institutions conforming to its specific requirements.20
The majority's use of comity improperly allowed federal courts to presume adoption of foreign charters without legislative action by Alabama, thereby invading the legislative domain reserved to the states.21
Whether contracts made by corporations chartered in one state to purchase bills of exchange in Alabama were valid and binding on the parties?22
Yes. Agents of the Bank of Augusta, the New Orleans and Carrollton Railroad Company, and the Bank of the United States used corporate funds to purchase the bills in Mobile pursuant to charter authority that permitted dealings in exchange without geographic limitation.26 Alabama had repealed its earlier statute restricting unauthorized bank notes and had not enacted any law expressly barring foreign corporations from purchasing exchange.27 Its courts had already extended comity by permitting foreign corporations to sue, and the same principle supported enforcement of the contracts made here.28
The contracts were valid and binding on the parties.29
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Justice Baldwin delivered an opinion assenting to the judgment of the Court on principles which were stated at large in the opinion.30 This opinion was not delivered to the reporter.31 He therefore joined the result reached by the majority without separate elaboration of the grounds for decision.32
By assenting to the judgment, Justice Baldwin endorsed the majority's conclusion that the contracts were valid under principles of comity among the states, recognizing the capacity of corporations chartered in one state to make contracts in another when not contrary to the policy of the forum.33
Whether the constitution and laws of Alabama prohibited corporations chartered in other states from making contracts to purchase bills of exchange within Alabama?34
No. Alabama's constitution restricts the legislature's power to charter banks and reserves stock and control to the state, but it does not address foreign corporations or declare a policy against their purchase of exchange.37 The 1827 statute prohibiting unauthorized bank notes was repealed, and no later law barred foreign banks from buying bills.38 Judicial decisions in Alabama had already recognized comity by allowing foreign corporations to sue.39 The Court therefore could not infer a prohibition from speculative fiscal interests alone.40
The constitution and laws of Alabama did not prohibit the contracts.41
Related opinions on this issue
Justice McKinley dissented, contending that Alabama's constitutional banking provisions, by reserving capital, control, and profits to the state and by chartering only conforming institutions, established a clear policy that excluded all non-conforming bank capital from dealing in exchange.42 He argued that the majority's presumption of comity improperly transferred legislative power to the federal judiciary.43 Alabama's constitution created a comprehensive scheme that the legislature alone could modify, and no such modification had occurred.44
Because the foreign banks' charters did not conform to Alabama's requirements, their contracts violated the state's policy and could not be enforced under any principle of comity.45
Whether the three cases involving the Bank of Augusta, the New Orleans and Carrollton Railroad Company, and the Bank of the United States presented materially different facts affecting the validity of the contracts at issue?46
Minor factual variations among consolidated cases do not affect the decision when the core transactions and legal questions are identical.47
No. The records showed only minor differences in the precise origin of funds or the identity of the corporate plaintiff.48 Each case involved an out-of-state corporation using an agent and corporate funds to purchase a bill of exchange inside Alabama and then suing to enforce the contract.49 These variations did not alter the legal issue of corporate capacity or Alabama policy.50
The three cases did not present materially different facts affecting validity.51