Osborn v. Bank of the United States

Brief Fact Summary

Osborn (Defendant) argued that the federal judiciary lacked jurisdiction to hear a case involving the Bank of the United States (Plaintiff).

Synopsis of Rule of Law

The federal judiciary has jurisdiction coextensive with that of Congress.

Facts

In contravention to a federal court ruling, Osborn (Defendant), a state auditor for Ohio, went to the Ohio branch of the Bank of the United States (Plaintiff) and forcibly removed a tax levy.  Federal commissioners responded by imprisoning Defendant.  The federal court ordered the money returned.  Defendant appealed, arguing that the court lacked subject-matter jurisdiction.

Issue

Does the federal judiciary have jurisdiction coextensive with that of Congress?

Held

(Marshall, C.J.)  Yes.  The federal judiciary has jurisdiction coextensive with that of Congress.  Whether the Bank (Plaintiff) falls within this coextensive jurisdiction depends on the answer to these questions: (1) did Congress give such jurisdiction, and (2) could Congress constitutionally do so?  The answer to the first question must be in the affirmative, as the statute creating the Bank (Plaintiff) gives it standing to sue and be sued in federal court.  The question then becomes whether such an enactment is constitutional.  Defendant argued that it was not because an action involving the Plaintiff may involve issues of state law, and therefore not arise under federal law, as federal cases constitutionally must in the absence of diversity.  This Court finds this analysis flawed; if the presence of a state law issue could always defeat the presence of a federal question, virtually no cases could be heard in federal court.  The better rule instead is that federal courts have jurisdiction coextensive with that of Congress.  Just as Congress can regulate in matters involving state law, federal courts can hear matters involving state law.  In this case, because the Bank (Defendant) is created under federal law, suits involving it are properly in federal court.  Affirmed.

Dissent

(Johnson, J.)  Congress may not create federal subject matter jurisdiction just by conferring the right to sue in federal court; instead, the cause of action asserted must arise under federal law.

Discussion

The prologue in the present case is rather important.  Originally, Maryland had levied a tax on the Bank of the United States (Plaintiff).  The Supreme Court, in McCulloch v. Maryland, 17 U.S. 316 (1819), held that a state had no such power to tax the federal Bank (Plaintiff), using the now-famous phrase, “The power to tax is the power to destroy.