Briscoe v. Commonwealth Bank of Kentucky

Briscoe v. Commonwealth Bank of Kentucky 36 U.S. Pet. 257 (1837) was a case in the Supreme Court of the United States in which the court rejected Briscoe's Argument and held that the Commonwealth Bank of Kentucky could issue its own bank notes, and that was constitutional.

Facts of the Case

"Kentucky authorized a state owned and operated bank to issue bank notes that circulated as currency. The bank gave Briscoe the notes in exchange for a promissory note. Briscoe failed to repay, so the bank sued him. Briscoe claimed that the bank (and thus Kentucky) had violated the Constitution."

Question

"By issuing notes and currency, did the bank violate the constitutional prohibition in Article I Section 10 that "[n]o State shall...emit Bills of Credit"?"

Final Vote

6 - 1 with Justice Story Dissenting

Dissent:

"When this causd was formerly argued before this Court,'a majority of the judges, who then heard it, were decidedly of opinion that the act of Kentucky establishing this bank, was unconstitutional and void; as amounting to an authority to emit bills of credit, for and on be- half of the state, within the. prohibition of the constitution of the United States. In principle it was thought to be decided by the case of Craig v..The State of Missouri, 4 Peters' R. 410. Among that majority was the late Mr. Chief Justice Marshall; a name never to be pronounced without revereice. The cause has been again argued, and precisely upon the same grounds as at the former argumefit. A majority of my brethren; have now pronounced the act of Kentucky to be constitutional. I dissent from that opinion: and retaining the same opinion which I held at the first argument, in common with the Chief Justice, I shall now proceed to state the reasons on which -it is founded. I offer no apology for this apparent exception to the course which I have generally pursued, when.I have had the misfor- tune to differ from my brethren, in maintaining silence; for in truth it is no exception at all, as upon constitutional questions I ever thought it my duty to give a public expression of my opinions, when they differed from that of the Court.

The first question miturally arising in the case is, what is the true interpretation of the clause of the constitution, that "no state shall emit bills of credit." In other words, Wvhat is a bill of credit, in the sense of the constitution? After the decision of the-case of Craig v. The State of Missouri, I had not supposed, that "this was a matter which could be brought into contestation, at least unless the authority of that case was to be overturned; and the Court were to be set adrift from its former moorings. The Chief Justice, in delivering the opinion of the Court upon that occasion, in answer to the very inquiry said; "To emit bills of credit, conveys to the mind the idea of issuing paper, intended to circulate through the community for its ordinary purposes as money, which paper is redeemable at a future day. This is the sense in which it has been always understood." 'Again: "The term has acquired an appropriate meaning; and bills, of credit signify a paper medium, intended to circulate between individuals, and between government and individuals, for the ordinary purposes of society." Again: "If the prohibition means any thing, if the words are not empty iounds, it must comprehend the emission of any paper medium by a state government, for the purposes of common circulation." One should suppose that this language was sufficiently exact and definite to remove all possible doubt upon the point: and it has"the more'weight, because it came from one, who was himself an actor in the very times when bills of credit constituted the currency of the whole country; and whose experience justified him in this exposition.

But, it seems, that this definition is not now deemed satisfactory, or to be adhered to; and .a new exposition is sought, which, in its predicaments, shall not comprehend the bills in question. The arguments of the learned counsel for the bank, on the present occasion have, as it appears to me, sought for a definition, which shall exclude any perils to their case; rather than a definition founded in the intention and language of the constitution.

It appears to me, that the true nature and objects of the prohibition, as wdll as its language, can properly be ascertained only by a reference to history; to the mischiefs existing, and which had existed when the constitution was formed; and to the meaning then attached to the phrase "bills of credit," by the people o.f the United States.

If we look into the meaning of the phrase as it is found in the British laws, or in our own laws, as applicable to the concerns of private individuals, or private corporations, we shall find that there is no mystery about the matter; and that when bills of credit are spoken of, the words mean negotiable paper, intended to pass as cur- rency, or as money, by delivery or indorsement. In this sense, all bank notes, or, as the more common phrase is, bank bills, are bills of credit. They are the bills of the party issuing them, on his credit, and the credit of his funds; for the purposes of circulation as currency or money. Thus, for example, as we all know, bank notes payable to the bearer, (or when payable to order, indorsed in blank,) pass in the ordinary intercourse and business of life, as money; and circulate, and are treated as money. They are not, indeed, in a legal and exact sense, money; but, for common purposes, they possess the at- tributes, and perform the functions of money. Lord Mansfield, in Miller v. Rice, 1 Burr. 457, speaking on the subject of bank notes, observed, "that these notes are not like bills of exhange, mere secu- rities, or documents for debts, and are not so .esteemed; but are treated as money, in .the ordinary course and trarsactions of credit and of business, by the general consent of mankind: and on pay- ment of them, whenever a receipt is required, the receipts are always given as for money, not as for securities 6r notes." And, indeed, so much are they treated as money, that they pass by a will which bequeaths the testator's cash, or money, or property.

In confirmation of what has been already stated, it may be re- marked, that in the charter of the Bank of Engiand, in 5th and 6th William and Mary, ch. 20, see. 28, an express provision is made, by which the bill or bills obligatory, and of credit, of the bank, are de- dared to be assignable and negotiable. Similar expressions are to be found in the many acts of the American States, incorporating -banks; as has been abundantly shown in the citations at the bar"

Briscoe v. Commonwealth Bank of Kentucky
Supreme Court of the United States
Argued January 27, 1837 Decided February 11, 1837
Full case name	JOHN BRISCOE AND OTHERS v. THE PRESIDENT AND DIRECTORS OF THE BANK OF THE COMMONWEALTH OF KENTUCKY
Citations	26 U.S. 257 (more) 9 L. Ed. 709, 1837 U.S. LEXIS 178
Argument	Oral argument
Opinion announcement	Opinion announcement
Case history
Prior	In error to the court of appeals to the state of Kentucky
Holding
The bills of credit were issued by the bank, not the state, therefore it was constitutional
Court membership
Chief Justice Roger B. Taney Associate Justices Joseph Story · Smith Thompson John McLean · Henry Baldwin James M. Wayne · Philip P. Barbour
Case opinions
Majority	McLean, joined by Marshall, Thompson, Baldwin
Dissent	Story
Laws applied
Article I, Section 10 (state bill of attainder, ex post facto law, or bills of credit)

References

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