Bank of Augusta v. Earle

The citation for this case is 38 US 519. It was argued January 30-February 1, 1839 and decided on March 9, 1839 by an 8-1 vote with Chief Justice Roger B. Taney writing the majority opinion. “Three banks chartered outside of Alabama bought bills of exchange in that state and sued the makers of the bills when the makers refused to pay the bills on the grounds that foreign banks were not authorized to do business in Alabama.” [Kermit L. Hall, ed., The Oxford Guide to United States Supreme Court Decisions, p. 21]

In his ruling, Chief Justice Taney wrote, “It has, however, been supposed that the rules of comity between foreign nations do not apply to the states of this Union, that they extend to one another no other rights than those which are given by the Constitution of the United States, and that the courts of the general government are not at liberty to presume, in the absence of all legislation on the subject, that a state has adopted the comity of nations towards the other states as a part of its jurisprudence or that it acknowledges any rights but those which are secured by the Constitution of the United States. The Court thinks otherwise. The intimate union of these states as members of the same great political family, the deep and vital interests which bind them so closely together, should lead us, in the absence of proof to the contrary, to presume a greater degree of comity and friendship and kindness towards one another than we should be authorized to presume between foreign nations. And when (as without doubt must occasionally happen) the interest or policy of any state requires it to restrict the rule, it has but to declare its will, and the legal presumption is at once at an end. But until this is done, upon what grounds could this Court refuse to administer the law of international comity between these states? They are sovereign states, and the history of the past and the events which are daily occurring furnish the strongest evidence that they have adopted towards each other the laws of comity in their fullest extent. Money is frequently borrowed in one state by a corporation created in another. The numerous banks established by different states are in the constant habit of contracting and dealing with one another. Agencies for corporations engaged in the business of insurance and of banking have been established in other states and suffered to make contracts without any objection on the part of the state authorities. These usages of commerce and trade have been so general and public and have been practiced for so long a period of time and so generally acquiesced in by the states that the Court cannot overlook them when a question like the one before us is under consideration. The silence of the state authorities while these events are passing before them shows their assent to the ordinary laws of comity which permit a corporation to make contracts in another state. But we are not left to infer it merely from the general usages of trade and the silent acquiescence of the states. It appears from the cases cited in the argument, which it is unnecessary to recapitulate in this opinion, that it has been decided in many of the state courts — we believe in all of them where the question has arisen–that a corporation of one state may sue in the courts of another. If it may sue, why may it not make a contract? The right to sue is one of the powers which it derives from its charter. If the courts of another country take notice of its existence as a corporation so far as to allow it to maintain a suit and permit it to exercise that power, why should not its existence be recognized for other purposes, and the corporation permitted to exercise another power which is given to it by the same law and the same sovereignty, where the last mentioned power does not come in conflict with the interest or policy of the state? There is certainly nothing in the nature and character of a corporation which could justly lead to such a distinction and which should extent to it the comity of suit and refuse to it the comity of contract. If it is allowed to sue, it would of course be permitted to compromise, if it thought proper, with its debtor; to give him time; to accept something else in satisfaction; to give him a release; and to employ an attorney for itself to conduct its suit. These are all matters of contract, and yet are so intimately connected with the right to sue that the latter could not be effectually exercised if the former were denied.” [38 US 519, 590-591]

Basically, while states have a sovereignty, other states within the United States are not foreign nations to each other. The individual states of the United States are not independent. This concept undercuts the primary reasoning underpinning the view that a state could unilaterally secede from the United States.


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