Ex Parte Public National Bank of New York

Background

A nationally chartered bank based in New York sued a city tax collector and a receiver to stop collection of a tax on the bank’s shares. The bank said a state law fixing the tax rate discriminated against it and violated federal law and the Constitution. A three-judge statutory court was originally formed, evidence was taken, and a master reported, but the court dissolved itself and ordered the case to proceed before a single district judge.

Reasoning

The core question was whether the case required a three-judge court under the statute that protects state laws from being enjoined except after a three-judge hearing. The Court explained that two things must both be true for that rule to apply: the suit must attack a state statute as unconstitutional, and it must seek to restrain the action of a state officer in enforcing that statute. This suit failed the second requirement because the defendants were municipal officers acting solely for the city, not officers of the state enforcing state law. The Court relied on the plain wording of the statute and earlier decisions to give force to every clause in the law.

Real world impact

The decision narrows when litigants can insist on a three-judge federal panel. Challenges to state statutes brought only against city officials who collect city taxes do not trigger the three-judge requirement. As a result, single district judges may decide many local-officer suits that involve constitutional objections to state laws.