Osborn v. President, Dirs. & Co. of Bank

22 U.S. (9 Wheat.) 738 (1824)



Congress can incorporate or create a Bank because it is an instrument which is "necessary and proper" for carrying on the fiscal operations of government.


The State of Ohio enacted a statute providing that complainant, the Bank of the United States, was pursuing its operations contrary to state law. The State levied a tax on the bank and authorized the state auditor to seize the levied tax. Despite an injunction obtained by complainant, the auditor's agent forcibly removed from complainant a sum of money and delivered it to the state treasurer. Complainant sued to enjoin defendants from paying away the money and to require them to restore the money. The state court directed defendants to repay the amount seized with interest, and defendants appealed.


Can Congress incorporate or create a Bank?




The court first held that the clause in complainant's act of incorporation was consistent with the Constitution. The creation of the complainant was within the Necessary and Proper Clause; and because the state law imposing the tax on complainant was unconstitutional, the circuit court correctly ordered defendants to repay the money being held in the state treasury, regardless of the premise that they were allowed by law to take the same.

The whole opinion of the Court, in the case of M'Culloch v. The State of Maryland, is based on the notion that the Bank is "necessary and proper for carrying into effect the powers vested in the government of the United States." It is not an instrument which the government has found already established and has adapted to its purposes; but one which was established in its present state - for national purposes only. It is capable of transacting both private and public businesses. While it is used by the government to effect fiscal operations, it also transacts with individuals for its own advantage. The appellants want to distinguish between this trade and its agency for the public. While they seem to admit the right to preserve this corporate existence, they deny the right to protect it in its commercial trade and business. Congress can make the inanimate body, and employ it as an instrument for the conveyance of the nation’s treasure, if it can be so employed, but cannot breathe into it the vital spirit which alone can bring it into useful existence.

Note: This case has been superseded by statute as stated in Mudd v. Yarbrough 786 F. Supp. 2d 1236 (2011).

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