Bank of the United States v. Planters Bank of Georgia

• Decision Date: 01 February 1824
• Parties: The BANK OF THE UNITED STATES v. The PLANTERS' BANK OF GEORGIA
• Court: U.S. Supreme Court

22 U.S. 904

6 L.Ed. 244

9 Wheat. 904

The BANK OF THE UNITED STATES v. The PLANTERS' BANK OF GEORGIA.

February Term, 1824

March 11th.

THIS cause was brought up on a certificate of a division of opinion between the Judges of the Circuit Court of Georgia, upon the questions arising in it, and was argued by the same counsel with the preceding case of Osborn v. The Bank of the United States.

March 20th.

Mr. Chief Justice MARSHALL delivered the opinion of the Court.

In this case, the petition of the plaintiffs, which, according to the practice of the State of Georgia, is substituted for a declaration, is founded on promissory notes, payable to a person named in the note, 'or bearer,' and states, that the notes were 'duly transferred, assigned and delivered' to the plaintiffs, 'who thereby became the lawful bearer thereof, and entitled to payment of the sums therein specified; and that the defendants, in consideration of their liability, assumed,' &c.

The Planters' Bank pleads to the jurisdiction of the Court, and alleges, that it is a corporation, of which the State of Georgia, and certain individuals, who are citizens of the same State with some of the plaintiffs, are members. The plea also alleges, that the persons to whom the notes mentioned in the petition were made payable, were citizens of the State of Georgia, and, therefore, incapable of suing the said Bank in a Circuit Court of the United States; and being so incapable, could not, by transferring the notes to the plaintiffs, enable them to sue in that Court.

To this plea the plaintiffs demurred, and the defendants joined in demurrer.

On the argument of the demurrer, the Judges were divided on two questions:

1. Whether the averments in the declaration be sufficient in law to give this Court jurisdiction of the cause?

2. Whether, on the pleadings in the same, the plaintiffs be entitled to judgment?

The first question was fully considered by the Court in the case of Osborne v. The Bank of the United States, and it is unnecessary to repeat the reasoning used in that case. We are of opinion, that the averments in the declaration are sufficient to give the Court jurisdiction of the cause.

2d. The second point is understood to involve two questions:

1. Does the circumstance that the State is a corporator, bring this cause within the clause in the constitution which gives jurisdiction to the Supreme Court where a State is a party, or bring it within the 11th amendment?

2. Does the fact that the note is made payable to a citizen of the State of Georgia, or bearer, oust the jurisdiction of the Court?

1. Is the State of Georgia a party defendant in this case? If it is, then the suit, had the 11th amendment never been adopted, must have been brought in the Supreme Court of the United States. Could this Court have entertained jurisdiction in the case?

We think it could not. To have given the Supreme Court original jurisdiction, the State must be plaintiff or defendant as a State, and must, as a State, be a party on the record. A suit against the Planters' Bank of Georgia, is no more a suit against the State of Georgia, than against any other individual corporator. The State is not a party, that is, an entire party, in the cause.

If this suit could not have been brought originally in the Supreme Court, it would be difficult to show, that it is within the 11th amendment. That amendment does not purport to do more than to restrain the construction which might otherwise be given to the constitution; and if this case be not one of which the Supreme Court could have taken original jurisdiction, it is not within the amendment. This is not, we think, a case in which the character of the defendant gives jurisdiction to the Court. If it did, the suit could be instituted only in the Supreme Court. This suit is not to be sustained because the Planters' Bank is suable in the federal Courts, but because the plaintiff has a right to sue any defendant in that Court, who is not withdrawn from its jurisdiction by the constitution, or by law. The suit is against a corporation, and the judgment is to be satisfied by the property of the corporation, not by that of the individual corporators. The State does not, by becoming a corporator, identify itself with the corporation. The Planters' Bank of Georgia is not the State of Georgia, although the State holds an interest in it.

It is, we think, a sound principle, that when a government becomes a partner in any trading company, it devests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus, many States of this Union who have an interest in Banks, are not suable even in their own Courts; yet they never exempt the corporation from being sued. The State of Georgia, by giving to the Bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the Bank, and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, than are expressly given by the incorporating act.

The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the Bank. The United States was not a party to suits brought by or against the Bank in the sense of the constitution. So with respect to the present Bank. Suits brought by or against it are not understood to be brought by or against the United States. The government, by becoming a corporator, lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is not derived from the charter.

We think, then, that the Planters' Bank of Georgia is not exempted from being sued in the federal Courts, by the circumstance that the State is a corporator.

2. We proceed next to inquire, whether the jurisdiction of the Court is ousted by the circumstance, that the notes on which the suit was instituted, were made payable to citizens of the State of Georgia.

Without examining whether, in this case, the original promise is not to the bearer, the Court will proceed to the more general question, whether the Bank, as endorsee, may maintain a suit against the maker of a note payable to a citizen of the State. The words of the Judiciary Act, section 11. are, 'nor shall any District or Circuit Court have cognizance of any suit, to recover the contents of any promissory note, or other chose in action, in favour of an assignee, unless a suit might have been prosecuted in such Court to recover the said contents, if no assignment had been made, except in cases of foreign bills of exchange.'

This is a limitation on the jurisdiction conferred by the Judicary Act. It was apprehended that bonds and notes, given in the usual course of business, by citizens of the same State, to each other, might be assigned to the citizens of another State, and thus render the maker liable to a suit in the federal Courts. To remove this inconvenience, the act...