Bank of the United States v. Planters' Bank of Georgia

Supreme Court of the United States · 1824 · Civil Procedure

22 U.S. 904 (1824)

Updated July 29, 2026

Civil ProcedureFederal jurisdictionEleventh AmendmentAssignee clauseCorporationsstate as corporatorsovereign immunityoriginal jurisdiction

Facts

The Bank of the United States filed a petition, used in place of a declaration under Georgia practice, on promissory notes payable to a named person "or bearer." The petition alleged that the notes were duly transferred, assigned, and delivered to the Bank, making it the lawful bearer entitled to payment. The Planters' Bank of Georgia pleaded that Georgia was a member of the corporation, that some other members were citizens of the same state as some plaintiffs, and that the original payees were Georgia citizens who could not have sued the bank in federal circuit court. The Bank demurred to that plea.

Issue

Does federal jurisdiction fail because the State of Georgia is a corporator in the defendant bank, thereby making the state a party or triggering the Eleventh Amendment? Does jurisdiction also fail because the notes were originally payable to Georgia citizens and were later transferred to the Bank, invoking the Judiciary Act's restriction on suits by assignees?

Rule

A state is not a party to a suit against a corporation merely because it holds an interest as a corporator; to make the state a party for constitutional original-jurisdiction purposes, the state must be a party on the record as a state. When a government becomes a partner in a trading company, it divests itself, as to that company's transactions, of its sovereign character and takes the character of a private citizen. The Bank of the United States may sue in the federal circuit courts under the right conferred by its charter without regard to citizenship, so the Judiciary Act's assignee limitation does not defeat that charter-based right.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Frontier National Bank, a federally chartered bank whose charter authorizes it to sue in any federal circuit court, files a debt action in federal court in Savannah against Magnolia River Bank, a Georgia corporation. Georgia owns 35% of Magnolia River Bank's shares, but the only defendant named on the record is Magnolia River Bank.

Magnolia River Bank moves to dismiss, arguing the suit is really against Georgia and therefore barred by the Eleventh Amendment. How should the court rule?

Explanation. The controlling rule is that a state is not a party to a suit against a corporation merely because it is a corporator. The majority reasoned that the judgment runs against corporate property, not the property of the individual corporators, and that the state does not identify itself with the corporation simply by becoming a member of it. Because Georgia is not a party on the record as a state, the Eleventh Amendment does not bar the suit.