In Bank v. Supervisors, the United States Supreme Court considered the question of whether a state could tax a national bank. The case arose when the Bank of the United States, a national bank, was assessed a tax by the supervisors of the county in which it was located. The Bank argued that the tax was unconstitutional because it was a tax on a federal instrumentality. The Supreme Court agreed, holding that the tax was unconstitutional because it was a direct tax on a federal instrumentality. The Court reasoned that the Constitution did not give the states the power to tax federal instrumentalities, and that the tax was therefore invalid. The Court also held that the tax was invalid because it was a direct tax, which the Constitution did not allow the states to impose. The Court concluded that the tax was unconstitutional and that the Bank was not liable for it. This decision established the principle that states cannot tax federal instrumentalities.

In Bank v. Supervisors, the Supreme Court was asked to decide whether a state-chartered bank could be taxed by local governments in addition to being subject to taxation from the federal government. The majority opinion held that such double taxation was permissible under the Constitution and did not violate any of its provisions. However, Justice Field dissented from this decision on two grounds: firstly, he argued that it would be unfair for banks to have their property taxed twice; secondly, he asserted that such double taxation violated Article I Section 10 of the Constitution which prohibits states from passing laws impairing contracts between citizens and corporations. He concluded his dissent by stating that if Congress had intended for banks to pay both federal and state taxes then they should have explicitly stated so in legislation rather than leaving it up to interpretation by courts or other bodies.