delivered the opinion of the Court.
This case is brought before this Court, by a writ of error from the court of appeals of the state of Kentucky; under the 25th section of' the judiciary act of 1789.
An action was commenced by the Bank of the Commonwealth of Kentucky, against the plaintiffs in error, in the Mercer circuit court of Kentucky, on a note for 2,048 dollars 37 cents, payable to the president and directors of the bank; and the defendants filed two special pleas, in the first of which oyer was prayed of the note on which suit was brought, and they say that the plaintiff ought not to have, &c. because the note was given on the renewal of a like note, given to the said bank; .and they refer to thé act establishing the bank, and allege, that it never received any part of the capital stock specified in the act; that the bank was authorized to issue bills of credit, on the faith of the state, in violation of the constitution of the United States. That, by various statutes, the notes issued were made receivable in discharge of executions, and if not so received, the collection of. the money should be delayed, &c.; and the defendants aver, that the note was given to the bank on a loan of its bills, and that the consideration, being illegal, was void.
The second plea presents, substantially, the same facts. To both the pleas, a general demurrer was filed; and the court sustained the demurrer, and gave judgment in favour of the bank. This judgment was removed, by appeal, to the court of appeals, which is the highest court of judicature in the state, where the judgment of the circuit court was affirmed; and being brought before this Court by writ of error, the question is presented whether the notes issued by the bank are bills. of credit, emitted by the state, in violation of the constitution of the United States.
This cause is approached, under a full sense of its magnitude. Important as have been the great questions brought before this tribunal for investigation and decision, none have exceeded, if they have equalled, the importance of that which arises in this case. The amount of property involved in the principle, is very large; but this amount, however great, could not give to the case the deep interest which is connected with its political aspect.
*312There is no principle on which the sensibilities of communities are so easily excited, as that which acts upon the currency; none of which states are so jealous, as that which is restrictive of the exercise of sovereign powers. • These topics are, to some extent, involved in the present case.
It does not belong to this Court to select the subjects of their deliberations; but they cannot shrink from the performance of any duty imposed by the constitution and laws.
The definition of the terms bills of credit, as used in the constitution, is the first requisite in the investigation of this!subject; and if this be not impracticable, it will be found a work of no small difficulty. Even in standard works on the exact sciences, the terms used áre not always so definite as to express only the idea intended. In works on philosophy there is, generally, still less precision of language. But in political compacts, more is often left for construction, than in most other compositions.
This results, in a great degree, from the elements employed in the formation of such compacts; certain interests are to be conciliated and protected; the forcé of local prejudices must be met and overcome; and habits and modes of action the most opposite, are to be reconciled. This' was peculiarly the case in the formation of the constitution of the United States. And instead of objecting to it, on account of the vagueness of seme of its terms; its general excellence, both as it regards its principles and language, should excite our admiration.
The terms bills of credit, in their mercantile sense, comprehend a great variety of evidences of debt, which circulate in a commercial country. In the early history of banks, it seems their notes were generally denominated bills of credit;,but in modern times they have lost that designation; and are now called, either bqnk bills, or bank notes.
But-the inhibition of the constitution applies to bills of credit, in a more limited sense.
It would be difficult to classify the- bills of credit, which were issued in the early history of this country. They were all designed to circulate as money, being issued under the laws of the respective colonies; but the forms were various in the different colonies, and often in the same colony.
In some cases they were payable with interest, in others without *313interest. Funds arising from certain- sources of taxation were pledged for their redemption, in some instances; in others they were issued without such a pledge. They were sometimes made a legal tender, at others not. In some instances, a refusal to receive them operated as a-discharge ¡of the debt; in others, a postponement of it.
They were sometimes payable on demand; at other times, at some future period. At all times the bills were receivable for taxes, and in payment of debts due to the public; except, perhaps, in some instances, where they had become so depreciated as to be of little or. no value.
These bills were frequently issued by-committees, and sometimes by an officer of the government, or an individual designated for that purpose.
The bills of credit emitted by the states, during the revolution, and prior to the adoption of the constitution, were hot very dissimilar from those which the colonies had been in the practice of issuing. There were some characteristics, which were common to all these bills. They were issued by the colony or state, and on its credit. For in cases where funds were pledged, the bills were to be redeemed at a future period, and gradually as the means of redemption should accumulate. In some instances, congress guaranteed the, payment of ' bills emitted by a state.
They were, pernaps, never convertune into gold and- silver, immediately on their emission; as they were issued to supply the pressing pecuniary wants of the government, their circulating as money was indispensable. The necessity which required their emission, precluded the possibility of their immediate redemption.
In the case of Craig et al. v. The State of Missouri, 4 Peters, 410; this Court was called upon, for the first time, to determine what constituted a bill of' credit, within the meaning of the constitution. A majority of the judges in that case, in the language of the Chief Justice, say, that “bills of credit signify a paper medium, intended to circulate between individuals, and between government and" individuals, for the ordinary purposes of society.”
A definition so general as this, would certainly embrace every description of paper which circulates as money.
Two of the dissenting judges on that occasion,' gave'a more definite, though, perhaps, a less accurate meaning, of the terms bills of credit.
By one of them it was said, “ a bill of credit may, therefore, be *314considered a bill drawn and resting merely on the credit of the drawer, as contradistinguished from a fund constituted or pledged, for the payment of the bill.” And, in the opinion of the other, it is said, “ to constitute a bill of credit, within the meaning of the constitution, it must be issued by a state, and its circulation, as money, enforced by statutory provisions. It must contain a promise of payment by the state generally, when no fund has been appropriated to enable the holder to convert it into money. It must be circulated on the credit of the state; not that it will be paid on presentation, but that the state, at some future period, ori a time fixed or resting in its own discretion, will provide for the payment.”
These definitions cover a large class of the bills of credit issued and circulated as money, but there are classes which, they do not embrace; and it is believed that no definition, short of a description of each class, would be entirely free from objection; unless it be in the general terms used by the venerable and lamented Chief Justice.
The- definition, then, which does include all classes of bills of credit emitted by the colonies or states; is, a paper issued by the sovereign power, containing a pledge of its faith, and designed to circulate as money.
Having arrived at this point, the next inquiry in the case is whether the notes of the Bank of the Commonwealth were bills of credit, within the meaning of the constitution.
The first section of the .charter provides, that the bank shall be established in the name and behalf of the commonwealth of Kentucky, under the direction of a president and twelve directors, to be ehosen by joint ballot of both houses of the general assembly, &c. The second provides that the president and directors of the bank,-and their successors in pffice, shall be a. corporation and body politic, in law and in fact, by the name and style of the president and directors of the Bank of the Commonwealth of Kentucky, and shall be capable, in law, to sue and be sued, to purchase and sell every description-of property.
In the third section it is declared, that the stock of the bank shall be exclusively the property of the commonwealth of Kentucky, and that no individual shall own any part of it.
The fourth section authorizes the president and directors to issue notes, &c.; and in the fifth section it is declared, that the capital stock *315shall be two millions of dollars, to be paid as follows: “all moneys hereafter paid into the treasury for the purchase of the vacant land of the commonwealth; all moneys paid into the treasury for the purchase of land warrants; all moneys received for the sale of vacant lands west of the Tennessee river, and so much of the capital stock owned by the state in the Bank of Kentucky:” and as the treasurer of the state received these moneys from time to time, he was required to pay the same into the bank.
The bank was authorized to receive moneys on deposite, to make loans on good personal security, or on mortgages; and by the ninth section, the bank was prohibited- from increasing its debts beyónu double the amount of its capital.
Certain limitations were imposed on loans to individuals, and the accommodations of the bank were to be apportioned dmong the different counties-of the state..
The president was required to make* a report to each session of the legislature. The notes were to be made payable in gold and silver, and were receivable in payment of taxes and other debts due to the state. . All mortgages .executed to the bank, gave to it a priority. By a supplementary act it was provided, that the president and -directors might issue three millions of dollars.
In 1821, an act was passed, authorizing the treasurer.of the state to receive the dividends of the bank.
The notes issued by the bank were in the usual form of bank notes, in which the Bahk of.'the Commonwealth promised to pay to the bearer on demand, the sum specified on the face of the note.
There is no evidence of any part of the capital having been paid into the bank; and as the pleas, to which the demurrers were filed, aver that no part of the capital was paid, the fact averred is admitted on the record.
It is to be regretted that any technical point arising on the pleadings should be relied on in this case; which involves principles and interests of such deep importance. Had the .bank pleaded over and stated the amount actually paid into it by the state, under the charter; the ground on which it stands would have been strengthened.
As the notes of the bank were receivable in payment for land, and land warrants, and perhaps constituted no inconsiderable part of the circulation of the state; the natural operation would be for the treasurer to receive the notes of the bank, and pay them over to it, as *316a part of its capital. This would be to the bank equal to a payment in the notes of other banks, as it/would lessen the demand against it; leaving to the bank the securities on the original discounts.
-The notes of this bank, as also the notes of the bank of Kentucky, by an act of the legislature, weic required to be received in discharge of all executions by plaintiffs; and if they failed to endorse on the executions, that they would be so received; further proceedings on the judgments were delayed two years.
On the part of the plaintiffs in error, it is contended, that the provision'in the constitution, that “ no state shall coin money,” “emit bills of credit,” or make any thing but gold and silver coin a tender in payment of debts,” are three distinct- lowers which are inhibited to the states; and that if the bills of the Bank of the Commonwealth were substantially made a tender, by an act of the legislature of Kentucky, it must be fatal to the action of the bank in this case.
It is- unnecessary to consider on this head, whether the above provision of the act of the legislature, making these notes receivable in discharge of executions, is substantially a tender law; as such a question, however it might arise on the execution, cannot reach the obligation given to the bank. If the legislature of a state attempt to make the notes of any bank a tender, the act will be unconstitutional; but such, ¡attempt could not affect, in any degree, the constitutionality of the bank. The act referred to in the present case, was hot connected with the charter of the bank. So far as this act has a bearing on the bills issued by this' bank, and' may tend to show their proper character, it may be considered.
But the main grounds on which the counsel for the plaintiffs rely, is, that tire Bank of the Commonwealth, in emitting the bills in question, acted as the agent of the state; and that, consequently, the bills were issued by the state.
That, as a state is prohibited from issuing bills of credit, it cannot do indirectly, what it is prohibited from doing directly.
That the constitution intended to pl^ce the regulation of the currency under the control of the federal’government; and that the act of Kentucky is not only in violation of the spiriCof the constitution, but repugnant to its letter.
These topics have been ably discussed at the' bar, and in a printed argument on behalf of the plaintiffs.
That by the constitution, the currency, so far'as it is composed of . *317gold and silver, is placed under the exclusive .control of congress, is clear; and it is contended, from the inhibition on the states to emit bills of credit, that the paper medium was intended to be made subject to the same power.
If this argument be correct, and the position that a state cannot do indirectly, what it is prohibited from doing directly, be a sound one; then it must follow, as a necessary consequence, that all banks incorporated by a state are unconstitutional. And this, in the printed argument, is earnestly maintained; though it is admitted not to be necessary to sustain the ground assumed for the plaintiffs. The .counsel of the pláintiffs, who have argued the case at the bar, do not carry the argument to this extent.
This doctrine is startling, as it strikes a fatal blow against the state banks; which have a capital of near four hundred millions of dollars, and which supply, almost the entire circulating medium of the' country. But, let üs for a moment examine it dispassionately.
The federal government is one of delegated powers. All powers 'not delegated to it, or inhibited to the- states, are reserved to the states, or to the people.
A state cannot emit bills of credit; or, in other words, it cannot issue that description of paper to answer- the purposes of money, which was denominated, before the adoption of the constitution, bills of credit But a state may grant acts of incorporation for the attainment of those objects which are essential to the interests of society. This power is incident, to sovereignty; and there is no limitation in the federal constitution, on its exercise by the states, in respect to the incorporation of banks.
At the time .the constitution was adopted, the Bank of North America, and the Massachusetts Bank, and some others, were in operation. It cannot, therefore, be supposed that the notes of these banks were intended to be inhibited by the constitution; or that they were considered as bills of credit, within the meaning of that instrument. In fact, in many of their most distinguishing characteristics, they were essentiálly different from bills of credit, in any of the various forms in which they were issued.
If, then, the powers not delegated to the federal government, nor denied to the states, are retained by the states or the people; and by a fair construction of the terms bills, of credit, as used in the constitution, they do not include ordinary bank notes: does it not follow *318that the power to incorporate banks to issue these notes may be exercised by a .state?
A uniform course of action, involving the right to the exercise of an important power by the state governments, for half a century; and this almost without question; is no unsatisfactory evidence that the power is rightfully exercised. But this inquiry, though embraced in the printed-argument does not belong to the case, and is abandoned at the bar.
A state cannot do that, which the federal constitution declares it shall not do., It cannot coin money. Here is an act inhibited in terms so precise that they cannot be mistaken. They are susceptible of but one construction. -And it is certain that a state cannot incorporate any number of individuals, and authorize them to coin money. Such an act would be as much a violation of the constitution, as if the money were coined by an officer of the state, under its authority. The act being prohibited, cannot be done by a state, either directly, or indirectly.
And the same rule applies as to the emission of bills of credit by a state. The terms used here are less specific, than those which relate to coinage. Whilst no one can mistake the latter,' there are great differences of opinion as to the construction of the former. If the terms in each case were equally definite, and were susceptible of but one construction, there could be no more difficulty in applying the rule in the one case than in the other.
The weight of the argument is admitted, that a state cannot, by any device that may be adopted, emit bills of credit. But the question arises, what is a bill of credit within the meaning of the constitution? On the answer of this, must depend the constitutionality or unconstitutionality of the act in question.
A state can act only through its agents; and it would be absurd to say, that any act was not done by a state which was done by its authorized agents.
To constitute a bill of credit within the constitution, it must be issued by a state, on the faith of the state, and be designed to circulate as money. It must be a paper which circulates on the credit of the state; and is so received and used in the ordinary business of life.
The individual or committee who issue the bill, must have the power to bind the state; they mpst act as agents, and of course do not incur any personal responsibility, nor impart, as individuals, any *319credit to the paper. These are the leading characteristics of a bill of credit, which a state cannot emit.
Were the notes of the Bank of the Commonweálth, bills of credit, issued by the state?
The president and directors of the bank were incorporated, and vested with all the powers usually given to banking institutions. They were .authorized to make loans on personal security, and 6n mortgages of real estate. Provisions were made, and regulations, common to all banks; but'there are other parts of the charter which, it is contendedj- show that the president and directors acted merely as agents of the state.
In the preamble, of the act, it is declared to be “expedient and beneficial to the state, and the citizens thereof, to establish a bank-on the funds of the state, for the purpose of discounting paper and making loans for longer periods than has been customary;- and for the relief of the distresses of the community.”
The president and directors were elected by the legislature. The capital of the bank belonged to the state, and it received the dividends.
These and other parts of the charter, it is argued, show, that the bank was a mere instrument of the state to issue bills; and that, if .by such a device, the provision of the constitution may be evaded, it must become a nullity.
That there is much plausibility and some force in this argument, cannot be denied; and it would be in vain to assert that on this head, the case is clear of difficulty.
The preamble of the act to iiicorpbrate the bank, shows the object of its establishment. It was intended to “relieve the distresses of the community;” and the same reason was assigned, it is truly said, for the numerous emissions of paper money, during the revolution, and prior to that period.
To relieve the distresses of the community, or the wants of the government, has been the common reason assigned for the increase of a paper medium, at all times and in all countries. When a measure of relief is determined on, it is never difficult to find plausible-reasons for its adoption. And it would seem in regard to this sub1 ject, that the present generation has profited but little from the experience of past ages.
The notes of this bank, in common with the notes of all other banks in. the state, and indeed, throughout the Union, with some ex*320ceptions, greatly depreciated. This arose from various causes then existing; and which, under similar circumstances, must always produce the samé result.
The intention of .the legislature in establishing the bank, as expressed in the preamble, must be considered in- connection w;ith every. part of the act; and the question must be answered, whether the notes of the bank were bills of credit within the inhibition of the constitution.
Were these notes issued by the state?
Upon their face, they do. not purport to be issued by the state, but by the president and directors of the bank. -They promise to pay to bearer on demand the sums stated.
Were they issued on the faith of the state?
The notes contain no pledge of the faith of the state, in any form. They purport to have been issued on the credit of the funds of the bank, and must haVe been so received in the community.
But these funds, it is said, belonged to the state; and the promise to pay on the face of the notes was -made by the president and directors, as agents of the state.
They do hot assume to act as agents, and there is no law which authorizes them to bind, the state. As in, perhaps, all' bank charters, they had the power to issue a certain amount of notes; but they determined the time and circumstances which should regulate these issues.
. When á state emits bills of credit, the amount to be issued is fixed by law, as also the fund out of which they are to be paid, if any fund be pledged for their redemption; -and they are issued.on the credit of the state, which' in some form appears upon the face of the notes, or by the signature of the person who issues them.
As to the funds of the Bank of the Commonwealth, they were, in. part only, derived from the state. The capital, it is true, was to be paid by the state; but in making loans, the bank was required to take good securities; and these constituted a fund, to which, the holders of the notes could look for payment, and which could be made legally responsible.
In this respect the notes of this bank were essentially different from any class of bills of credit, which are believed to have been issued.
The nptes were not only payable in. gold and silver, on demand; but there was a. fund, and, in all probability, a sufficient fund, to redeem *321them. This fund was in possession of the bank, and under the control of the president and directors. But whether the fund was adequate to the redemption of the notes.issued, or not; is immaterial'to the present inquiry. It is enough that the fund existed, independent of the state, and was sufficient to give some degree of credit to the paper of the bank.
The question is not whether the iBank.of the Commonwealth had a large capital or a small one, or whether its notes were in good credit or bad: but whether they were issued by the state; and on the faith and credit of the state. The notes were received in payment of taxes, and in discharge of all debts to the state; and this, aided by the fund arising from notes discounted, with prudent management, under favourable circumstances, might' have sustained, and it is believed did sustain to a considerable extent, the credit of the- bank. The notes of this bank which are still in circulation are equal in value, it is said, to specie.
But there is another quality which distinguished these notes from bills of credit. Every holder of them could not only look to the funds of the bank for payment, but he had, in his power, the means of enforcing it.
The bank could be sued; and the records of this Court show, that while its paper was depreciated, a suit was prosecuted to judgment against it, by a depositor; and who obtained from the bank, if is admitted,, the full amount of his judgment, in specie.
What means of enforcing payment from the state had the holder of a bill of credit. It is said by the counsel for the. plaintiffs, that he’could have sued the state. But was a state liable to.be sued?
In the case of Chisholm’s Executor v. The State of Georgia, in 1792, it was decided, that a state could be sued before this Court; and this led to the adoption of the amendment of the constitution, on this subject. But the bills of credit which were emitted, prior to the constitution, are those that show the mischief against which the inhibition, was intended to operate. And we must look to that period, as of necessity we have done, for the definition and character of a bill of credit.
No sovereign state is liable to be sued without her consent. -Under the articles of confederation, a state could- be sued only in eases of boundary.
It is believed that there is no case where a suit has been brought, at any time, on bills of credit, against a state; and- it is certain that *322no suit could have been maintained, on this ground, prior to the constitution.
In the year 1769, the colonial legislature of Maryland passed an “ act for emitting bills of credit;”' in which bills to the amount of 318,000 dollars were authorized to be struck, under the direction of two. commissioners, whom the governor should appoint. .These persons were to be styled, “ commissioners for emitting bills of credit;” by that name to have succession, to sue or be sued, in all cases relative to their trust. The commissioners were authorized to make loans on good security, to draw bills of exchange on London, under certain circumstances; and they were authorized to reissue the bills issued by them.
In the year 1712, it is stated in Hewit’s History of South Carolina, the legislature of that colony established a public bank; and issued forty-eight thousand pounds, in bills of credit, called bank bills. The money was to be lent out at interest On landed or personal security.
The bills emitted under these acts are believed to bé peculiar, and unlike all other emissions under the colonial governments. But a slight examination of the respective acts will show, that the bills authorized by them, were emitted on the credit of the colonies; and were essentially different from the notes in question.
The holders of these bills could .not convert them into specie; they could bring no suit. The' Maryland bill was as follows: “ This indented bill of six dollars shall entitle the bearer hereof, to receive bills of exchange payable in London, Or gold and silver at the rate of four shillings and six pence per dollar, for the said bill, according to the directions of an act of the assembly of Maryland, dated at Annapolis:- signed by R. Conden and J. Clapham.”
If the leading properties Of the notes of the Bank of the Commonwealth were essentially different from any of the numerous classes of bills of credit, issued by the states or colonies; if they were not emitted by the state, nor upon its credit, but on the credit of the funds of the bank; if they were payable in gold and silver on demand, and the holder could sue the bank; and if to constitute a bill of credit, it must be issued by a state, and on the credit of the State, and the holder could not, by legal means, compel the payment of the bill; how can the character of these two descriptions of paper be considered as identical? They were both circulated as money; but in name, in form, and in substance, they differ.
*323It is insisted that the principles of this case were settled in the suit of Craig et al. v. The State of Missouri.
In that case the Courtxdecided that the following paper, issued under a legislative act of Missouri, was a bill of credit, within the meaning of the constitution:
“ This certificate shall be receivable' at the treasury, or any of the loan offices of the state of Missouri, in the discharge of taxes or debts due to the state, in the sum of dollars, with interest for the same, at the rate of two per cent, per annum, from the date.” By the act, certificates in this form, of various amounts, were issued and were receivable in discharge of all taxes or debts due to the state;' and in payment of salaries of state officers.
Four of the seven judges considered that these certificates were designed to 'circulate as money; that they were issued on the credit of the state; and consequently were repugnant to the constitution.
These certificates were loaned on good security,, at different loan offices of the state; and were signed by the auditor and treasurer of state. They were receivable in payment of salt, at the public salt works, “ and the proceeds of the salt springs, the interest accruing to-the state; and all estates purchased by officers under the. provisions of the act, and all the debts then due, or which should become due to the state, were pledged and constituted a fund for the redemption of the .certificates;” and the faith of the state was also pledged for the same purpose.
It is only necessary to compare these certificates with the notes issued by the Bank of the Commonwealth, to see that no two things which have any property in common, could be more unlike. They both circulated as money, and were receivable on public account; but in every other particular they were essentially different.
If to constitute a bill of credit, either the form or substance of the Missouri certificate is requisite; it is clear that the notes of the Bank of the Commonwealth, cannot be called bills of credit. To include both papers under one designation, would confound the most important distinctions; not only as to their form and substance, but also as to. their origin and effect.
There is no principle decided by the Court in the case of Craig v. The State of Missouri, which at all conflicts with the views here presented. Indeed the views of the Court are sustained and-strengthened, by contrasting the present case with- that one.
The state of Kentucky is the exclusive stockholder in the Bank of *324the Commonwealth:-but does this fact change the character of the corporation? Does it make the bank identical with the state? And are the operations of the bank the operations of the state? Is the bank, the mere instrument of the sovereignty, to effectuate its designs; and is the state responsible for its acts?
The answer to these inquiries will be given in the language of this Court, used in former adjudications.
In the case of the Bank of the United States v. The Planters’ Bank, 9 Wheat. 904, the Chief Justice, in giving the opinion of the Court, says. “ it is, we think, a sound principle, that when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its .sovereign character, and takes that of a private citizen. Instead of commuirieating to the company its privileges ajid its prerogatives, it descends to a level with those with whom it associates itself; and takes the character which belongs to its associates and to the business which is to bé transacted. Thus, many states of the Union who have an interest in banks, are not suable even in their own courts; yet they never exempt the. corporation from being sued. The state of Georgia, by giving to the bank the. capacity to sue and be sued, voluntarily strips itself of its sovereign character, so far as respects the transactions of the bank'; and waives all the privileges of that character. As a member of a corporation, a government never exercises its sovereignty’. It acts merely as a corporator, and exercises no other power in the management of the affairs of the corporation, than arc expressly given by the incorporating act.”
“ The government becoming a corporator lays down its sovereignty, so far as respects the transactions of the corporation; and exercises no power .or privilege which is not derived from timecharter.”
“The state does not, by becoming a corporator, identify itself with the corporation.”
In the case of the Bank of the Commonwealth of Kentucky v. Wister and others, 3 Peters, 318, the question was raised whethef a suit could be maintained against the bank, on the ground that it was substantially a suit against the state.
The agents of the defendants deposited a large sum in the bank; and when the deposite was demanded, the bank offered to pay the amount in its own notes, which were át a discount. The notes were refused, and a suit was commenced on the certificate of deposite.
A judgment being'entered against the bank; in the circuit, court of *325Kentucky; a writ of error was brought to this Court. In the court below, the defendant pleaded to the jurisdiction, on the ground that the state of Kentucky alone was the proprietor of the stock of the bank; for which reason, it was insisted that the suit was virtually against a sovereign state.
Mr. Justice Johnson, in giving the opinion of the Court, after copying the language used in the case above quoted, says, “ If a state did exercise any other power in or over a bank, or impart to it its sovereign attributes, it would be hardly possible to distinguish the issue of the paper of such banks from a direct issue of bills of credit; which violation of the constitution, no doubt the state here' intended to avoid.”
Can language be more explicit and more appropriate than mis, to the points under consideration?
This Court further say, “ the defendants pleaded to the jurisdiction-on the ground that the state of Kentucky was sole proprietor of the stock of the bank, for which reason it wras insisted that the suit was virtually against a sovereign state. But the Court is of opinion that -the question is no longer open here. The case of the United States Bank v. The Planters’ Bank of Georgia, was a much stronger case for the defendants than the present; for there the state of Georgia was not only a proprietor, but a corporator. Here the state is not a corporator; since, by the terms of the act, the president and directors alone constitute the body corporate, the metaphysical person liable to suit.”
If the bank acted as the agent pf the state under an unconstitutional charter, although the persons.engaged might be held liable, individually; could they have been held responsible as a corporation?
It is true the only question raised by the plea was, whether the bank could be sued, as its stock was owned by the state? But it would be difficult to decide this question without, to some extent, considerihg the constitutionality of the charter. And, indeed, it appears that this point-did not escape the attention of the Court; for they say, “if a state imparted any of its sovereign attributes to a bank in which it was a stockholder, it would hardjy be possible to distinguish the paper of such a bank from bills of credit;” and this, the Court say, “ the state in that case intended to avoid.”
These extracts cover almost every material point, raised in this investigatior
They show that a state, when it becomes a stockholder in a bank, *326imparts none of its attributes of sovereignty to the institution; and that this is equally the case, whether it own a whole or a part of the stock of the bank.
It is admitted by the counsel for the plaintiffs, that a state may become a stockholder in a bank; but they contend that it cannot become the exclusive owner of the stock. They give ho rule by which the interest of a state in such an institution shall’ be graduated; nor at what point the exact limit shall be fixed. May a state own one-fourth, orie-half, or three-fourths of the stock? If the proper, limit be exceeded, does the charter become unconstitutional; and is its constitutionality restored, if the state recede within the limit? The Court are as much at a loss to fix the supposed constitutional boundary of this right, as the counsel can possibly be.
If the state must stop short of owning the entire stock, the precise point may surely be ascertained. It cannot be supposed, that so important a constitutional principle as contended for exists without' limitation.
If a state may own a part of the stock of a bank, we know of no principle which prevents it from owning -the whole. As a stockholder, in the language of this Court, above cited, it can exercise no more power in the affairs of the. corporation, than is expressly given by the .incorporating act. It has no more power than any other stockholder to the same extent.-'
This Court did not consider, that the character of the incorporation was at all affected by the exclusive ownership' of the stock by the state. ' And they say, that the case of the Plantérs’ Bank presented Stronger ground of defence, than the suit against the Bank of the Commonwealth. That in the former, the state of Georgia was not only a proprietor, but a corporator; and, that in tlje latter, the president and directors constituted the corporate body. And yet in the case of the Planters’ Bank, the Court decided the state could only be considered as an ordinary corporator; both as it regarded its powers and responsibilities.
If these positions be correct, is there not an end to this controversy? If the Bank of the Commonwealth is not the state, nor the agent.of the state;.-if it possess no more power than is given to it in the act of incorporation; and precisely the same as if the stock were owned by private individuals, how can'it be contended, that the notes of the bank can be called bills of credit, in contradistinction from the notes of other banks?
*327If, in becoming an exclusive stockholder in this bank, the state imparts to it none of its attributes of sovereignty; if it-holds the stock as any other stockholder would hold it; how can it be said to emit bills of credit? Is it not essential to constitute a bill of credit, within the constitution, that.it should be emitted by' a..-state? Under its charter the bank has no power to emit bills which have the impress of the sovereignty, or which contain a pledge of its faith. It is á simple corporation, acting within the sphere of its corporate powers; and can nó more transcend them than any other banking institution. The state, as a stockholder, bears the same relation to the bank as any other stockholder. ~
The funds of -the bank and its property, of .every description, are held responsible for the payment of its debts; and may be reached by legal or equitable process. In this respect, it can claim no exemption under the prerogatives of the state.
And, if in the course of its operations, its notes have depreciated like the notes of other banks, under the pressure of circumstances; still it must stand or fall by its charter. In this its powers are defined; and its rights, and the rights of those who give credit to it, are guaranteed. And even an abuse of its powers, through which its credit has been impaired and the community injured, cannot be considered in this case.
We are of the opinion, that the act incorporating the Bank of the Commonwealth, was a constitutional exercise of power by the state of Kentucky: and, consequently, that the notes issued by the bank are not bills of credit, within the meaning of the federal constitution. The judgment of the court of appeals is, therefore, affifnied, with interest .and costs.