Briscoe v. Bank of Kentucky

A provision of the Constitution forbids the states from issuing "bills of credit", coining specie, or making "any Thing but gold and silver Coin a Tender in Payment of Debts". Coins were cumbersome, and they were often in short supply in the West; as such, the states searched for ways to sidestep the constitutional prohibition. In 1820, the state of Kentucky established the Bank of the Commonwealth of Kentucky and authorized it to issue and circulate banknotes. The bank's officials were selected by the Kentucky legislature; its stock was wholly owned by the state; all state funds were deposited into the bank; its dividends were placed into the state treasury. The bank loaned the banknotes it had issued, which could also be used to pay state taxes, to borrowers. John Briscoe took out a loan from the bank and received payment in banknotes. He defaulted, and the bank sued to collect the debt. Briscoe maintained that the banknotes were bills of credit since they were only pieces of paper whose value stemmed from the state's full faith and credit. He argued that, since the bank was in effect an agent of the state, its issuance of banknotes was unconstitutional. The bank's attorney, Henry Clay, was tasked with explaining why the Court's recent decision in Craig v. Missouri (1830), in which a 4–3 majority had struck down loan certificates issued by Missouri as unconstitutional bills of credit, did not foreclose his arguments. He argued that the bank was not part of the state but instead a separate corporation to which the constitutional prohibition did not apply. The Kentucky courts ruled in the bank's favor, and Briscoe appealed to the Supreme Court, citing Craig. Only a single justice from the Craig majority – Justice Joseph Story – remained on the bench. == Decision ==

The Court rendered its decision on February 11, 1837. By a 6–1 vote, the justices ruled in favor of the bank, upholding Kentucky's law. Justice John McLean, who had dissented in Craig, delivered the majority opinion. He opined that no previous case had "exceeded", and few had "equalled, the importance of that which arises in this case". Story, the protégé of Marshall, evoked the late chief justice's spirit by stating that "Mr. Chief Justice Marshall is not here to speak for himself" but that, if he had been, he would have ruled against the bank. == Legacy ==

The decision in Briscoe demonstrated the Taney Court's divergence from the Marshall Court. It illustrated the Taney Court's embrace of Jacksonian principles of states' rights and opposition to national control of banking. but it is of little significance today due to broad federal control of the financial system. Scholars have been divided in their views of the Briscoe ruling. the legal historian James Willard Hurst characterized the majority opinion as an "unconvincing attempt" that was "devastated" by Story's dissent. By contrast, the legal scholar David P. Currie in 1985 described Briscoe as "a hard case in which the opposing opinions dealt intelligently with the competing considerations". == References ==