22 U.S. 738 (1824)
In February 1819 the Ohio legislature enacted a statute imposing an annual tax of fifty thousand dollars on each office of discount and deposit maintained by any bank transacting business in the state without authorization under Ohio law.1 The statute authorized the state auditor to issue warrants for collection of the tax.2 Those warrants permitted entry into banking houses and seizure of money or goods to satisfy the levy.3
The Bank of the United States filed a bill in equity in the circuit court for the district of Ohio at the September term 1819.4 The bill named Ralph Osborn, the state auditor, as defendant and sought an injunction to restrain enforcement of the tax statute against its operations.5 On September 14, 1819, the circuit court awarded a preliminary injunction upon the posting of a one hundred thousand dollar bond.6 Subpoena and injunction writs were served on Osborn and on John L. Harper, whom Osborn had employed to collect the tax.7
On September 17, 1819, after service of the writs, Harper forcibly entered the Bank's office in Chillicothe and seized one hundred thousand dollars in specie and notes.8 The funds were delivered to H. M. Curry, then treasurer of Ohio.9 Curry held them separately until his resignation in early 1820, at which point the money passed to his successor, S. Sullivan.10 An amended bill added Curry, Sullivan, and Harper as defendants.11 It sought discovery, restoration of the funds, and further injunctive relief.12
Curry answered admitting receipt of approximately ninety-eight thousand dollars from Harper.13 He credited the sum to the state but kept it separate.14 Sullivan, after initially failing to answer and being held in contempt, admitted finding the separate sum upon taking office and holding it untouched.15 The circuit court entered decrees against Osborn and Harper and directed restoration of the funds with interest on a portion of the specie.16 The defendants appealed the decree to the Supreme Court.17
The Supreme Court requested argument on whether the Bank's charter conferred jurisdiction on the federal circuit courts and whether Congress possessed constitutional authority to grant such jurisdiction.18
Whether the act of incorporation of the Bank of the United States confers jurisdiction on the circuit courts of the United States over suits by and against the Bank?19
The act of incorporation expressly provides that the Bank shall be made able and capable in law to sue and be sued in any circuit court of the United States, thereby granting those courts jurisdiction over actions involving the Bank.20
Yes. The charter language directly authorizes suits by the Bank in federal circuit courts without requiring additional proof of jurisdictional facts beyond the charter itself.21 The established facts show that the Bank filed its bill in equity in the circuit court for the district of Ohio at the September term 1819, naming the state auditor as defendant and seeking injunctive relief against enforcement of the Ohio tax statute.22 That filing occurred pursuant to the express grant in the federal charter, and the circuit court exercised jurisdiction by awarding a preliminary injunction and later entering a decree for restoration of the seized funds.23
The act of incorporation therefore confers jurisdiction on the circuit courts of the United States over suits by and against the Bank.24
Related opinions on this issue
Justice Johnson dissented from the majority's broad construction of the Bank's charter.25 He argued that the language granting the Bank capacity to sue and be sued was the standard incorporating clause that merely confers ordinary corporate powers and does not enlarge federal jurisdiction beyond constitutional limits.26 Drawing on the precedent in Bank of the United States v. Deveaux, he maintained that jurisdiction requires an actual case arising under federal law as pleaded on the record rather than the mere possibility that a federal question might arise in the future.27
In his view, the majority's approach would allow Congress to expand federal judicial power far beyond the design of Article III by incorporating entities with generalized rights to sue in federal courts.28 He therefore dissented on the jurisdictional holding while concurring only in the modification of the decree regarding interest.29
Whether Congress may constitutionally authorize the Bank to sue in federal circuit courts?30
Article III extends the judicial power to all cases arising under the laws of the United States, and a suit by the Bank arises under federal law because the Bank's corporate existence, rights, and powers are created by and depend upon its federal charter.31
Yes. The Bank's charter is a law of the United States that creates the corporation and supplies every faculty it possesses, including the right to acquire property and make contracts.32 In the established facts the Bank's cause of action required determination of its right to operate free from the Ohio tax, a question that necessarily turns on the validity and effect of the federal charter.33 Because that federal question forms an original ingredient of the suit, Congress may constitutionally vest the circuit courts with jurisdiction even though state-law issues may also appear.34
Congress therefore possesses constitutional authority to authorize the Bank to sue in federal circuit courts.35
Related opinions on this issue
Justice Johnson rejected the proposition that every suit by a federally chartered corporation automatically arises under federal law.36 He insisted that jurisdiction must rest on the actual nature of the cause as pleaded rather than on the abstract possibility that a federal question could someday be raised.37 He warned that the majority's approach would allow Congress to funnel countless state-law disputes into federal courts through minor statutory provisions or by creating corporations with generalized rights to sue in federal tribunals.38
He concluded that such an expansive reading would effectively transfer almost every subject from state to federal courts, contrary to the constitutional design.39
Whether the Eleventh Amendment bars a suit in equity against state officers to restrain enforcement of a state tax statute and to recover funds seized under that statute?40
The Eleventh Amendment prohibits suits against a state as a party of record but does not bar actions against individual state officers who act under color of an unconstitutional state statute.41
No. The established facts demonstrate that the suit named only the auditor, his agent Harper, and the successive treasurers as defendants; the state of Ohio never appeared as a party on the record.42 The amended bill sought discovery, restoration of specific funds, and injunctive relief against those officers personally, and the circuit court proceeded to judgment against them.43 Because the Eleventh Amendment applies only when the state itself is a party of record, the suit against the officers remains within the jurisdiction of the federal court.44
The Eleventh Amendment therefore does not bar the suit against the state officers.45
Whether the circuit court properly awarded injunctive relief and ordered restoration of seized funds against the state auditor and his agents?46
A court of equity may enjoin state officers from enforcing an unconstitutional statute that threatens irreparable injury to a franchise and may order restoration of specific funds that would otherwise be lost if transferred or commingled.47
Yes. The established facts establish that Harper seized one hundred thousand dollars after service of the injunction, that the funds were kept separate by Curry and later by Sullivan, and that the money remained identifiable when the amended bill was filed.48 Equity properly intervened because the Ohio statute was designed to destroy the Bank's franchise in the state and because dissipation of the specific funds would have left the Bank without an adequate remedy at law.49 The circuit court's decree directing restoration of the ninety-eight thousand dollars still in Sullivan's hands and the remaining two thousand dollars from Osborn and Harper therefore rested on sound equitable principles.50
The circuit court properly awarded injunctive relief and ordered restoration of the seized funds.51
Whether interest may be charged on funds that defendants were restrained by injunction from using?52
Interest may not be awarded on funds that a court has restrained the defendants from using, because the injunction itself prevents the productive employment of the money and the decree proceeds on the assumption that the restraint was valid.53
No. The established facts show that the circuit court issued a preliminary injunction on September 14, 1819, and that the defendants thereafter held the seized money under court order without using it.54 The circuit court nevertheless included interest on the specie portion of the funds.55 Because the injunction forbade any use of the money, charging interest would be inconsistent with the premise that the restraint was lawful and would penalize the defendants for obeying the court's own command.56
Interest therefore may not be charged on funds that defendants were restrained by injunction from using.57