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Osborn v. Bank of the United States Case Brief Summary | Law Case Explained

Osborn v. Bank of the United States Case Brief Summary | Law Case Explained

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

In 1875, Congress enacted federal legislation that established statutory arising-under jurisdiction. The statute was based on Article Three of the United States Constitution, which provides that federal judicial authority applies to all cases arising under the Constitution or federal law. Prior to that time, Congress created federal jurisdiction in certain specific situations. One such situation involved the Second Bank of the United States. In 1824, the United States Supreme Court for the first time addressed the scope of Article Three arising-under jurisdiction in Osborn versus Bank of the United States.

In 1816, Congress chartered the Second Bank of the United States. The bank served as the depository for federal funds while also operating as a commercial entity. The bank’s charter provided that the bank could sue and be sued in any federal circuit court. In 1819, despite the Supreme Court’s then-recent decision in McCulloch versus Maryland, which held that states may not tax the Bank of the United States, the Ohio legislature assessed a tax against the two branches of the bank that were located in the state. The bank obtained an injunction in federal court that enjoined Ohio from collecting the tax. Ohio’s auditor, Ralph Osborn, ignored the federal court’s order and instructed state agents to seize $100,000 from the bank, which they did. The federal circuit court then issued an order requiring Ohio to return the money to the bank. Ohio appealed to the United States Supreme Court.

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