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The Elmira Savings Bank, a state bank chartered in New York, had on deposit with the
Elmira National Bank, a bank with a national charter, a sum of $42,704.67. The national bank defaulted
and the state bank attempted to use state laws to withdraw the funds on deposit.
Charles Davis was appointed to a receivership of the national bank and refused to immediately honor
the demands under state laws because of overriding federal laws. The New York district court and appeals
court ruled in favor of the Elmira Savings Bank. Davis appealed to the U.S. Supreme Court on a writ of
error and the Supreme Court ruled in favor of Davis and reversed the state court decision.
The Court stated that, “National banks are instrumentalities of the federal government, created for
a public purpose, and as such necessarily subject to the paramount authority of the United States. It
follows that an attempt by a state to define their duties or control the conduct of their affairs is
absolutely void, wherever such attempted exercise of authority expressly conflicts with the laws of the
United States, and either frustrates the purpose of the national legislation or impairs the efficiency
of these agencies of the federal government to discharge the duties for the performance of which they
were created. These principles are axiomatic, and are sanctioned by the repeated adjudications of this
court.”
Full text: Davis v. Elmira Savings,
161 U.S. 275 (1896) |