Bank of the United States v. Deveaux, is an early US corporate law case decided by the US Supreme Court. It held that corporations have the capacity to sue in federal court on grounds of diversity under article three, section two of the United States Constitution.[1] It was the first Supreme Court case to examine corporate rights and, while it is rarely featured prominently in US legal history, it set an important precedent for the legal rights of corporations, particularly with regard to corporate personhood.[2]
The court ruled that corporations composed of citizens from one state may sue on behalf of those citizens in circuit court citizens from another state. The court specifies that while corporations may sue on behalf of citizens, corporations cannot be citizens.[3] In other words, the court ruled that while only citizens may sue in court, they may do so under a corporate name.[4]
Georgian Jeffersonian politicians first provoked a court case when, in 1805, they imposed a tax on the Bank of the United States' locally held capital. Many Jeffersonian Democrats strongly opposed the chartering of a national bank as a violation of states rights and wanted to see it dissolved. However, because state governments lack the power to directly legislate federal institutions under the supremacy clause, Jeffersonian Democrats in Georgia chose another route to fight back against the Bank: taxes. The lawmakers hoped that heavy taxes on the bank would drive it out of Georgia.
The Bank decided to ignore the tax in an act of civil disobedience, hoping that a conflict with the state would bring the question of corporate rights in front of the Supreme Court.
After the Bank refused to pay the new taxes, a Georgian tax collector named Peter Deveaux decided to take matters into his own hands, forcibly confiscating two boxes of silver from the Savannah branch of the Bank. The Bank sued Deveaux in Federal court, circumventing the Georgia state court for fear of bias. The case came in front of the Supreme Court, headed by John Marshall, a Federalist and supporter of the bank.
William Cranch, the Reporter of Decision of the Supreme Court, summarized the decision of the court.
Chief Justice John Marshall gave the leading decision.