## Facts

- Congress chartered the Second Bank of the United States in 1816 as a federally incorporated entity.
- Ohio enacted a statute imposing a tax on the Bank’s in-state operations and authorized state officials to collect it.
- State agents, acting under the direction of Ohio Auditor Ralph Osborn, entered the Bank’s Ohio branch and seized $120,000 in specie; $20,000 was later returned, leaving $100,000 disputed.
- The Bank filed an equity action in federal circuit court against Osborn and other Ohio officials seeking to enjoin enforcement of the tax statute and to obtain restitution of the seized funds.
- The circuit court enjoined the officials and ordered the money returned; the officials appealed to the Supreme Court.

## Issues

1. Whether Congress may constitutionally confer federal circuit-court jurisdiction over suits “by and against” the federally chartered Bank as cases “arising under” federal law within Article III.
2. Whether an injunction and restitution action against state officers enforcing a state tax law is barred by the Eleventh Amendment as a suit against the State.
3. Whether Ohio’s tax on the Bank and the resulting seizure of the Bank’s funds are unconstitutional, and whether equitable relief is available to stop enforcement and recover specific funds.

## Decision

- The Supreme Court (Marshall, C.J.) affirmed the decree for the Bank.
- The Bank’s charter provision authorizing it to sue and be sued in federal circuit court was valid; suits involving the Bank fall within Article III as arising under federal law.
- The Eleventh Amendment did not bar the suit because the State was not a party of record; state officers could be restrained from enforcing an unconstitutional law.
- Ohio’s tax and seizure interfered with a federal instrumentality and were unconstitutional; the Bank was entitled to injunctive relief and restitution of the seized funds.
- Justice Johnson dissented, disputing that the federal charter alone sufficed to make all Bank litigation arise under federal law.

## Legal Principles

- Congress may place within federal judicial power suits involving a federally chartered entity when the federal incorporation supplies a sufficient federal element for Article III “arising under” jurisdiction.
- A suit against state officers to prevent enforcement of an unconstitutional state law is not barred by the Eleventh Amendment when the State is not named as a defendant.
- States may not tax or otherwise obstruct a federally created instrumentality; attempts to do so are invalid under the Supremacy Clause principles applied to federal instrumentalities.
- Federal courts in equity may enjoin state officers from enforcing unconstitutional measures and may order return of specific funds wrongfully taken under such measures.

## Conclusion

The Court held that federal courts could hear suits involving the federally chartered Bank, that the Eleventh Amendment did not prevent injunctive and restitutionary relief against Ohio officers enforcing an unconstitutional tax, and that Ohio’s tax-and-seizure scheme unlawfully interfered with a federal instrumentality.


Osborn v. Bank of the United States, 22 U.S. 738 (1824)