Case ID: tenn_27/html/0235-01.html
Source: Caselaw Access Project
Author: {"author": "Turley, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State vs. Merchants Insurance & Trust Co.
    1. A writ of error lies in all cases in chancery, and the fact that the complainant has obtained all the relief prayed for, is no ground for a dismissal of the writ of error, but for the affirmance of the decree. «
    ^ By common law, a forfeiture of a charter can be exacted only in a court of law, and the proceeding is by scire facias or information in the nature of a writ of qua warranto. A scire facias is the proper remedy, where there is a legal existing body capable of acting, which has been guilty of an abuse of the power entrusted to it; a quo warranto is the proper remedy, where there is a body corporate de facto, which takes upon itself to act as a body corporate, but for some defect it cannot legally exercise the power it affects to use.
    3. The 5th section of the act of 1846, ch. 55, ‘confers jurisdiction on the chancery courts to decree forfeitures of charters of incorporation for non-user or abuse of their powers, or when they have been disabled from acting by asurrendor of their franchises, or by other modes. The eighth section confers jurisdiction alone to restrain by injunction the exercise of power not granted.
    4. In general to work a forfeiture of a charter, there must be something wrong, arising from wilful abuse or improper neglect; something more than accidental negligence,, excess of power, or mistake in the mode of exercising an acknowledged power.
    The following bill was filed in the chancery court at Nashville : — .
    “The State of Tennessee, by her attorney general, West EL Humphreys, brings this bill of complaint against the Merchants Insurance and Trust Company of Nashville, a corporation established at Nashville, in Davidson county, and Caleb G\. Norvell, secretary of said company at Nashville, and thereupon the State of Tennessee complains and says, that on the ninth day of January, one thousand eight hundred and forty, the General Assembly of the State of Tennessee, passed an act, entitled “an act to extend the act of 1837-8, chap. 206, and to create a body politic and corporate, to be called the Merchants Insurance and Trust Company of Nashville,” and thereby, among other things, provided that “the provisions of the 21st section of the aforesaid act, equalizing the rights and privileges of the insurance companies of this state, be extended to a body politic and corporate hereby created by the name and stylo of the Merchants Insurance and Trust Company of Nashville, and thereby vested in said corporation the same rights and privileges as had been by the general assembly granted to other insurance companies in this state.” That by the foprth section of said act, the year 1840, it was provided, that no part or provision of said act should ever be construe^ so as to authorize said corporation to issue or put in circulation any note, bill, draft, order, check or change ticket intended to circulate as change or currency, or the tendency of which would be to circulate as change or currency, and by the said act of 1838, and by the charters of the other insurance companies it was provided, that nothing therein contained should be so construed as to give the said corporations the power of issuing bills of credit, or exercising banking privileges. It was also enacted by said statutes, that the capital stock, money, funds, or other property of said corporations, might be invested in any public stock, funded debt, created or to be created by or under any laws of the United States, or this or any other state, or in the stock of any chartered bank in this or any other state or states, or of the United States, or they might loan the same or any part thereof to individuals or ■ public corporations, on real or personal security, for such periods of time as the directors might deem prudent.
    The State of Tennessee further shows to your honor, that the said corporation was afterwards, soon after the passage of said act, organized by the subscription of capital stock, mentioned in said act, of one hundred thousand dollars, and the election of directors, and that the directors have apjrointed George Crockett president, and Caleb C. Norvell, secretary of said corporation; and the present directors, in March 1846, are George Crockett, James Woods, Robert I. Moore, William P. Lawrence, J. Anderson, James W. McCombs, Adrian V. S. Lindsley, Henry J. Yeatman, Óornelius Connor, William A. Eichbaum, Thomas Eaken, and James 'A. McAllister, and said ■ corporation is transacting business at Nashville, and elsewhere, and in full operation. The powers which were granted to said corporation, were to make insurance upon ships and other sea vessels, and upon steam boats, flat boats and other boats; upon freight, seaman’s wages, goods, wares, merchandize, and gold and silver bullion or money, against all maritime risks, or risks of the river, and upon houses, stores and other buildings, goods, wares and merchandize, furniture and other articles against fire, and upon bottomry and respondentia; to fix a premium thereon; to make insurance on lives; to accept and execute all such trusts, of every description, as may be committed to them by any person or persons, whatsoever, or may be transferred to them; to receive and hold lands under grants, with general or special covenants, so far as,the same might. be necessary to protect the rights of said company, and the same to sell, convey and dispose of, and generally to do and perform all other things necessary to promote these objects:
    The State of Tennessee further shows, that in the application to the general assembly, the persons who asked for the passage of said act of 1840, did not request of the general assembly, that they might be invested with the powers of banking or borrowing money; and that by the acts aforesaid, the general assembly intended only to grant the privileges mentioned in the acts, and to restrain and prohibit the corporation from engaging in any other operations, and particularly from those usually performed by incorporated banks, and the general law, as specified in the act of 1827, ch. 85, prohibits any corporation, unless chartered for that purpose- from erecting, establishing, instituting or putting in operation any banking institution, association or concern, or any office of discount or deposit, or issuing any bank bills, company bills, bills of exchange and promissory notes, or other instruments of any description whatever, with the intent, view or purpose of erecting, establishing or putting into operation any banking institution, association or concern, or any office or concern of discount or deposit.
    The State of Tennessee, by her attorney general, avers, that the said Merchants Insurance and Trust "Company have for* the space of three years, now last past, and upwards, and still do use, without any warrant, grant of charter, the following - liberties, privileges and franchises, to wit, that of being or becoming proprietor’s of a fund for the purpose of issuing checks, drafts, bills of exchange and promissory notes, receiving deposits, making discounts, and transacting other business which incorporated banks may lawfully transact by virtue of their respective acts of incorporation, and also that of actually issuing promissory notes, checks, drafts, bills of exchange, receiving deposits, making discounts, and carrying on banking operations and other monied transactions, which are usually performed by incorporated banks, and which .they alone have a right to do. The said Merchants Insurance and Trust Company have received from persons, whose names are unknown to the complainant and which it is desired may be Set out in their answer, large sums of money upon deposit, and have paid interest thereon, thereby increasing their means of doing business much beyond the amount of their capital stock, of one hundred thousand dollars, and said corporation buys and sells inland and foreign bills of exchange, and makes a business thereof, claiming to have the right to do so by the provisions of the acts of incorporation aforesaid," whereas, the attorney general avers, that all such transactions are unauthorized by the-said acts, and are in direct violation of the laws of the land.
    In consideration whereof your complainant by the attorney general prays that the said Merchants Insurance and Trust Company of Nashville, and Caleb C. Norvell, of Davidson county may be made defendants to this bill and true answer make, the former under their corporate seal, and the latter upon his corporal oath to all the matters hereinbefore stated, as if the same were here again repeated, and they and each of them more particularly interrogated, and that they state by what warrant they claim to have used and enjoyed the liberties, franchises and privileges aforesaid; and the State of Tennessee by its attorney general prays that the said Merchants Insurance and Trust Company of Nashville, and their officers and agents, may be enjoined from performing or exercising any franchise, or transacting any business not allowed by its charter, and that your honor would decree a forfeiture and dissolution of the charter granted to said corporation, and such other and further relief as is consistent with law and equity. May it please your honor to order writs of subpoena to issue directed &c. commanding &c. The bill is filed by order of a resolution of the general assembly of the State of Tennessee.
    WEST H. HUMPHREYS,
    
      Attorney General for the State.
    
    FRANCIS B. FOGG,
    
      Counsel appointed hy the Governor.’''
    
    A decree pro confesso was taken for want of an answer, and interrogatories being submitted to the corporation, Crockett, the president, answered as follows:
    1. “To the first interrogatory, he answers that as a trust company, the Merchants Insurance and Trust Company, of which this respondent is president, have taken charge of the funds of different persons at their request and for their accommodation, allowing such rate of interest thereon, as the company could earn after deducting or. estimating a reasonable compensation for trouble and responsibility in investing such funds. And this said company did, previous to the filing of the bill and from time to time.
    2. To, the second interrogatory, he answers, that the said company for the purpose of making profit upon the funds so deposited with it, and to execute the trust so committed to it by the depositors has from time to time invested said deposites in foreign and inland bills of exchange. But this respondent cannot state the amount of said investments, without great labor which he will nevertheless incur if the court should be of opinion that the amount is material to the principle. And this has been done, because the.company deemed itself authorized so to do by its charter and expressly by the act of the 17th January, 1838.
    3. To the third interrogatory, he answers, that the company has by way of loan, advanced money to its customers upon the security of bills of exchange drawn by the person so accommodated, deducting for such advance, at the time thereof, the interest to the period of the maturity of the bill. This has been done often on the security of bills of exchange and but seldom on promissory notes. On bills of thirty and sixty days the company makes no charge for exchange; but on those of longer date, it has chai’ged exchanges generally below the usual rate; never above.
    4. To the fourth interrogatory, he answers, that the said company has occasionally bought checks on the places named in the interrogatory and elsewhere, for the purpose of transferring its funds, but has never sold any such check. Said company has transacted the business of selling to its depositors, drafts and checks, to enable such depositors to transfer their funds on deposit with the company, and they have charged for such drafts and checks drawn on the points named or others a premium usually less than the market price of them, when there were any in market. And these last mentioned drafts and checks have always been drawn on the company’s own agent.
    5. To the fifth interrogatory he answers, that said company has not been engaged in the business of shipping or sending specie to New Orleans or elsewhere and there purchasing bills of exchange on New York, Philadelphia, London, or elsewhere. In transferring its funds from one point to another for the purpose of investing and reinvesting them as authorized by the charter, the company has occasionally employed coin, when a fair compensation for such transfers has been declined by the banks. •
    
      b 6. To the sixth interrogatory, he answers, that Messrs. Jacob McGavock, John. M. Hill, and various other persons have placed funds with the company for accommodation; the same being returned by the company according to agreement on their orders or checks.
    7. To the seventh interrogatory, he answers, that the company has lent money to Johnson & Smith, Robert Gibson, and others on drafts drawn on their commission merchants, to be returnedin thirty or forty days to the company’s agent in New Orleans, generally without interest and never beyond six per cent, per annum, in consideration- of the advantage of re-investing such funds when returned in New Orleans. . The company has taken from said persons no transfer of bills of lading for cotton, to secure payment of bills of exchange at New Orleans.
    To the eighth interrogatory, he answers, that he begs to be excused from the labor and expense.of preparing such a statement as. seems to be required in the question. He trusts it will be deemed sufficient to say, that the company in the four months before the filing of the bill, purchased many bills of exchange, advanced the money therefor, deducting the interest at the time of the purchase, and did this at the usual rates exchange or something less. And this the company thinks it is authorized to do by its charter and the act of assembly already particularly cited.
    And now having fully answered said interrogatories, this respondent in the name and on the behalf of the said company, begs to protest against the rights or power of the court to. compel said company to answer said interrogatories according to any known rule or practice of the courts of equity in Tennessee or any law of the land.”
    The presiding chancellor, Cahal, gave the following decree:
    “This cause came on to be finally heard, this 12th day of May, 1847, upon bills taken pro confesso, and answers to interrogatories in pursuance of counsel on both sides. And this court is of opinion, and doth declare, that the charter granted the Merchants Insurance and Trust Company, by the general assembly of this state, confers no power or authority o said corporation, to exercise banking privileges, or any authority for discounting bills of exchange and .promissory notes, or receiving money on deposit, or for issuing checks, drafts, bills of exchange and promissory notes, which business is usually transacted by banks under authority of law, and that all the immunities, franchises and privileges of banking, stated in the bill, as claimed by the corporation, and exercised by it, are without warrant of law'. And this court is also of opinion, that exercising such privileges, not granted, is a cause of forfeiture of the charter, which this court would decree, if the state, and its attorney general, and counsel, for the state had not waived any decree for dissolution or forfeiture of the charter for insurance or other privileges' and franchises granted, except those specified in bill of complainant. It is, therefore, awarded, adjudged and decreed, that the Merchants Insurance and Trust Company, their secretary, officers and servants, be perpetually enjoined from exercising banking privileges, discounting bills of exchange and promissory notes, receiving money on deposit and issuing checks, drafts, bills of exchange and promissory notes for money, except upon business connected with insurance' and the other liberties and franchises granted them in their charter. And it is further ordered, adjudged and decreed, that these defendants pay costs of this suit, and execution issue as at law.”
    From this decree the corporation appealed. In the supreme court the appeal was dismissed by the' defendant, and thereupon the state, by the attorney general, filed a transcript and asked a writ of eri’or and decree of forfeiture.
    
      Attorney general, for the state.
    
      A. O. P. Nicholson, for defendants.
    1. The motion to dismiss the writ of error is made upon the ground, that the state'had a decree below for all that was asked, and that so much of the prayer of the bill as was waived below by the state cannot again be opened for examination here. It is in effect a motion to affirm the decree below.
    The writ of error opens the case for re-examination in the same way, and to the same extent, as an appeal. Car. & Nich. 232. An appeal suspends and nullifies the decree made below, but it does not affect or destroy such parts of the recital of the decree showing admission, or consent, or waiver by the parties. A waiver of a part of complainant’s claim recited by the chancellor is tantamount to a decree by consent on so much as is waived, and stands in the same plight as a judgmen^by confession at law, from which no appeal lies. Car. & Nich. 419. Although therefore the‘right of appeal or writ of error exists, it exists only for the re-examination of so much of the decree as was not made by consent.
    2. The record shows that the state waived any decree of forfeiture of charter. The attorney general had the right to make such waiver and thereby bind the state. The bill was filed under the 8th section of the act of 1845, ch. 55, and under that section, the attorney general has unrestricted direction as the representative of the state, and could well give consent or make waivers which would be obligatory. . ■
    
      3. But whether the waiver is án estoppel or not, this court has not the power to declare a forfeiture. Before the act of 1845 a court of chancery had no power to deal with the question of forfeiture. 2Kent. 313-4; 3 John.R. 134;5 J. 0. 380; 17 Ves. 491; 2 J. C. 376; 5 T. R. 85.
    This court derives all of its power as to the question of forfeiture from the act of 1845. The bill is filed under the. 8th section, which only authorizes the court to restrain a corporation in the exercise of ungrante'd powers, and to make such orders as are consistent with the usages of a chancery court. No power is conferred by this section to declare a forfeiture of the charter.
    4. If it be insisted that the court can proceed under the 5th section, which authorizes a dissolution of the charter for non-laser or abuse of franchises, we answer, that the allegations in the bill do not make out a case of non-user or abuse of franchises; they make out only a case of the exercise of ungranted powers'. There is a distinction between the offence of abuse of chartered privileges and the exercise of ungranted powers which is fully recognized in the act of 1845. The same distinction is recognized in Angel & Ames on Corporations, 662. An abuse of privileges to justify a forfeiture must be wilful— and a wilful abuse of chartered privileges implies a fraudulent use of franchises to cover transactions known to be unauthorized. An abuse of franchises under an honest mistake as to the construction of powers is not a wilful abuse, and therefore does not necessarily work a forfeiture. There can be no reason to charge the company with a wilful abuse of privileges — they have exercised ungranted powers under an honest mistake as to the true construction of this charter, and for this the court can enjoin and restrain them, but no moré.
    
      John J. While, for the defendants.
    The first question is, whether a writ of error can now be prosecuted by the state in this case ? The decree is wholly in favor of the complainant, and the state by her counsel, in the chancery court, expressly waived any decree for the dissolution or forfeiture of the charter. Suppose that an appeal will lie, or that a writ of error can be prosecuted upon this decree by the state, can this court as a revising court say there is any error in the decree of the chancellor for not doing what the state admits it has no right to do, or says it does not desire to have done? Most assuredly not. If it was at law, and a jdilgment by confession, that would be a release of errors; and indeed no appeal could by the act of assembly be taken upon it. This waiver in the decree by the party asking for it, is certainly as much a release of errors as a confession in a court of law. It is a principle universally acknowledged and that has passed into an axiom, that a party may renounce a benefit which the law gives him, and this whether in law or equity. “Quisque potest renunciare juripro se 'introducto.” We take it the state is now estopped by her own act of record from asking a decree'for the forfeiture of the charter.
    This bill was filed on the 26th of lifarch, 1846, and purports to be filed under a resolution of the general assembly of the 30th of January, 1844. But it is evident this resolution had lost its force in consequence of the general provision of the act of the 8th of January., 1846. By this act, before a judicial enquiry can be instituted against any corporation for forfeiture of its charter, there must be a concurrence of the governor and attorney general. Tins bill, therefore, cannot now be entertained for a forfeiture of the charter, for it no where appears to have had the sanction of the governor, and if it can be maintained at all, it is only under the 8th section of the act, which gives the attorney general the power to file a bill to restrain a corporation from exercising powers not granted by the charter.
    
      Besides, it is evident from the whole scope and language of the bill, that it does not demand a forfeiture of the charter “for the non-user or abuse of the franchises” of the corporation, the case provided for by the 5th section; but it is for the “exercise of franchises not granted,” the case provided for by the 8th section of the act. The bill alleges, that the company in violation of their charter have exercised banking privileges .; received monies on deposit; vested them in foreign and inland bills*of exchange and promissory notes, and given their checks in favor of depositors upon different commercial points, stfbh as New York, Philadelpíiia, and New Orleans, all of which furnish no ground by the latter section for the forfeiture of ’ the charter, but merely for the interposition of the court to restrain the company by injunction from the exercise of such powers.
    But let us enquire into the powers granted to the company by their charter, and see whether the bill can be sustained under the 8th section of the act of 1846. By the 3d and 5th sections of the act of 1838, the corporation is authorized to hold, and to sell, and convey all such real estate as shall be necessary for the transaction of its business, or the security of its debts, or to protect the rights of the company. They have the power- to make insurance upon property and lives. They have the right “to accept and execute all-such trusts, of every description, as may be committed to them by any person or persons whatsoever, or may be transferred to them.” Is not this broad enough to authorize the company to receive money on deposit, which is nothing but a trust, upon such terms as may be agreed upon with the depositors, and to use that fund in any way which would not be a violation of their charter? Wo contend it is.
    The power given in the latter part of the 5th section is-broad and comprehensive. It authorizes the company “generally to do and perform all other things necessary to promote these objects,” one of which is the acceptance and execution of trusts.
    Well, if the company have unlimited authority to hold land and to sell it, if it is deemed necessary for their interests, is it a higher or more dangerous exercise of power in them to invest the funds which they receive on deposit, in foreign and inland bills of exchange, or in checks upon Ñew York, Philadelphia, or New Orleans, or in selling checks to depositors upon these points, drawn upon their own agents, if the company deemed it necessary in order to promote the object of the execution of the trust? And does not the above clause give them the power to do this, if they deem it necessary?
    Let ijs now look at the 6th section of the act. It gives the company the power to invest any part of its capital stock, money, fund or other property, in any public stock created under the laws of the United States, or this or any other state, or in the st^ck of any chartered bank in this state, of any other state or states, or of the United States, but it does not exclude a different investment. On the contrary, it authorizes the corn-pan}'' “to sell or transfer the same at pleasure, and again to reinvest the same whenever and so often as the exigencies of the company, or a due regard for the safety of its funds shall require.” And the manner of this investment is only limited by the exigencies of the company, or a regard to the safety of its funds. What is there that would prevent them from making investments in bills of exchange and promissory notes, if the interests of the company and the state of their deposits required it; or from issuing checks and drafts payable at important commercial points to depositors for the amount? Nothing at all, we apprehend.
    But again: “they may loan the same, or any part thereof, to individuals or public corporations, on real or personal security.” This term “personal security” is a comprehensive term, and will include a loan secured by bills of exchange or promissory notes, as well as any other personal security. All the powers then, the exercise of which is complained of, are granted to the company by their charter.
    But then it is said, that by the 16th section of the charter, as well as the general law of,the land, by the act of 1827, the company is prohibited from “exercising banking privileges,” and that dealing in bills of exchange, and discounting bills oí exchange and promissory notes, and receiving monies • on deposit, are banking privileges. This term “banking privilege” is very vague and which few understand as meaning any thing but issuing bills and notes to pass as currency. But suppose under previous sections, some powers have been granted to the company which they exercise in common with banksj will this general clausé render the former grants nugatory ? Certainly not. This clause will then be construed only to mean a prohibition from such privileges used by banks, which have not been expressly given to the company, or are not fairly incident to some power which is given.
    It is evident from the 4th section of the act of 1840, which merely forbids the issuance of notes, &c.,. to circulate as currency, and the 16th section of that of 1838, that all the legislature meant to prohibit was the issuance of notes by the company which should pass as currency, which it is not pretended this company have ever done. It may well be contended, therefore, that there has been no violation of the charter in this case.
    But suppose there has, and that this bill was filed under the 5th section of the act of 1846, is it a case to decree a forfeiture of tlie charter ? Has it not been an honest mistake in the company in regard to the construction of their powers ? Is there any thing to show a wilful abuse on the part of the company, without which the court would not decree a forfeiture of the charter? See Angel & Ames on Corporations, (2d edition,) 662.
    With regard to the case in 15 John. 358, of The People vs. Utica Insurance Company, which is relied upon, the decision was made by a divided court, judge Spencer, afterwards chief justice, delivering an able opinion against it. Besides, that case is wholly different from.the present. The charter to.the Utica Insurance Company gave them no power to accept and execute, trusts, and to do whatever was necessary to promote that object, nor any such unlimited authority in regard to the re-investment of their funds, nor is. there any such term used as that of loaning upon personal security, and yet they performed the ordinary functions of a bank in issuing bank notes or bills.
    
      Edwin II. Ewing, for the defendants.
    
      F. B. Fogg, for the state.
    Defendants have made a motion to dismiss the writ of error.. A writ of error is as much a writ of right as any other process, and it lies from decrees in chancery, as well as'from judgments at law. University et cd's. vs. Cambreleng, 6 Yerg. 79. A writ of error cannot be dismissed without a hearing on the merits. Act of 1809, ch. 103. Caruthers & Nicholson, 96. In our system of jurisprudence, when a cause is removed to this court by writ of error, “it is to be reviewed and examined in the supreme court, as if brought up by appeal from the decision of the chancellor.” Act of 1835, ch. 20, sec. 16. Caruthers & Nicholson, p. 232. An appeal in this state wholly suspends the decree below, and is a rehearing and review of the whole cause ab origine, and can only be granted from a final decree.
    2. Upon the merits of the case, the questions depend upon the construction of the act of 1846,. ch. 57, entitled “an act concerning corporations,” and the authorities at common law. The state require a forfeiture for their abuse by the corporation of the franchises conferred by their charter. Notwithstanding the prohibition against exercising banking privileges, such privileges have been exercised, and in addition to their violation the corporation has violated the provisions of the act of 1827, specified in the bill. Angel & Ames on Corporations, p. 660 to 669. 23d Wendall, 222, People vs. Bristol; same volume 254, People vs. Hillsdale. This corporation has acted contrary to and wilfully disobeyed the requisitions of the charter.
    An insurance company, without express power, cannot discount bills of exchange and promissory notes, and do other banking business. Angel & Ames, 193 to 201. People vs. Utica Ins. Co., 15th Johnson, 358. N. Y. Firemen Ins. Co. vs. Ely, 2 Cowan, 664, 678. 5 Connecticut Rep. 574, 568. 13 Connecticut, 249. Phila. Loan Company vs. Firemen et al., and other cases cited by Angel & Ames, in notes, pages 196-7. See also 6 Cowan, People vs. Bank of Niagara, page 196. 8 Cowan.
   Turley, J.

delivered the opinion of the court.

The Merchants Insurance and Trust Company of Nashville, was incorporated on the 9th day of January, 1840, with an express prohibition against using and exercising banking privileges. On the 26th of March, 1846, the state, by her attorney general, filed a bill i,n the chancery court of Davidson county against the corporation, charging it with, using and exercising the privileges of banking, by receiving money on deposit, discounting notes and bills, dealing in exchange, &c., in violation of its charter; and praying that it be restrained from the further exercise of said powers, and that a dissolution and forfeiture of its charter be decreed. This bill is answered by the president of the company upon interrogatories, from which it appears, that powers belonging properly to banking institutions, and the use of whichnvere forbidden to the company, had been exercised by it, but because it was believed that it had the authority so to do.

On the Í2th day of May, 1847, the cause was brought to a hearing before chancellor Cahal, at Nashville, who adjudged, that banking powers had been exercised by the corporation, in violation of the provisions of its charter, and that it should be perpetually enjoined from any further exercise thereof — and that this was a good cause of forfeiture of its charter — which would be decreed, but for the fact, that the right to demand it was waived by the state, through her attorney general and counsellor.

Prom this decree the corporation appealed to this court, which appeal has been dismissed by it through its attorney. Whereupon the attorney general for the state files the record for a writ of error, under the provisions of the act of 1835, ch. 20, sec. 16, and asks that the decree of the chancellor be reversed, and a decree of forfeiture be entered here against the corporation.

It is objected on the part of the corporation, that the application on the part of the state for a writ of error, upon the record, should be disregarded,' and the case dismissed from the docket; because the state obtained by the decree in the chancery court all that was asked against the corporation, and, therefore, has no cause of complaint against the decree, and ought not to be permitted to prosecute a writ of error thereon. To this we cannot yield our assent; because the writ of error' is given by statute in all chancery cases, provided it be prosecuted within twelve months after the rendition of the decree in the chancery court. To hold that it does not he, because every thing has been obtained by it that was asked, would be begging the question; because this cannot be known till the record has been examined and adjudicated upon. If the fact be so, then there is no error in the decree, and an affirmance would be the consequence. But, furthermore, the state did not get all it asked in the bill, for a decree of forfeiture was asked, which was not given. It is true, the chancellor says, because the right to demand it was waived on the part of the state by her attorney general and counsellor. But then the state has a right to be heard in this court, as to the power of her attorney general and counsellor 'to waive such right on her part. And this makes it necessary for us to enquire and de-tei’mine, whether there be any error on the part of the chancellor in not decreeing a forfeiture of the charter of the corporation, under the prayer of the bill. By the common law, thé forfeiture of a charter can be enforced in a court of law only; and the proceeding to repeal it, is by a scire facias, or on information in the nature of a writ of quo warranto. A scire facias is the .proper remedy, where there is a legal existing body capable of acting, but which had been guilty of an abuse of the power entrusted to it. A quo warranto, where there is a body corporate de facto,- which takes upon itself to act as a body corporate, but from some defect in its constitution, it cannot legally exercise the power it affects to use. 8 Wheat. 483-4. 3 Term Rep. 244-5. But a court of chancery, unless especially empowered by statute, cannot decree a forfeiture, though it may hold trustees of a corporation accountable for an abuse of trust. Attorney General vs. Utica Insurance Co. 2 John. Rep. 376-7, 388. Attorney General vs. Earl of Clarendon, 17 Vesey, 491.

On the 8th of January, 1846, the legislature of this state passed an act, ch. 55, the 5th section of which provides, “that whenever it may be deemed proper by the legislature of this state, or the governor and attorney general, for the time being, the latter officer concurring therein, that judicial enquiry shall be instituted, to ascertain whether -any corporation, by nonuser or abuse of its franchises, has incurred a forfeiture of its charter, or has been disabled by a surrender of its franchises, or in any other mode: it shall be the duty of the attorney general, in 'behalf of the. state', to file a bill in equity in the chancery court or circuit court of the district or county wherever the general meetings of the members of the officers of such corporation have usually been holden, setting forth, briefly and without technical formality, the grounds on which such forfeiture or dissolution is alledged to have been incurred, or taken place. And, thereupon, it ¿hall be the duty of said court to take such order for enabling those interested in the charter, or continuance of the corporation, to have due notice of, and make defence against such bill, and make all such rules for procuring and taking evidence, an.d having a fair trial ol the controverted facts, as shall be deemed just and reasonable, and the suit shall be proceeded in as other suits in.equity.”

The 8th section provides, “that it shall be lawful for the attorney general to file a bill, in the nature of a bill in equity, in the court of chancery or circuit court, as herein before directed, to restrain by injunction any corporation from assuming or exercising any franchise not granted, to bring the directors, managers and officers of a corporation, or the trustees of a fund given for public or charitable purpose^ to an account for the management and disposition of the property confided to their care, and to remove such officers and trustees upon proof of misconduct; to secure for thd benefit oí all interested, the property or funds aforesaid; to set aside and restrain improper alienations, and generally to compel the faithful performance of duty.” This statute enlarges the jurisdiction of a court of chancery in relation to corporations, and iinpowers it to decree a forfeiture’of a charter upon a proper case made out, and if there be no cause of forfeiture, still to restrain a,corporation from assuming or exercising powers not granted. The 5th section is obviously inténded to apply to cases of forfeiture, which the legislature has defined to be for non-user or abuse of its franchises, or a surrender of them. The 8th section, to cases of an assumption and exercise of franchises not granted, which are not considered as amounting to a forfeiture. Now, though we are not willing to say, that proceedings for a forfeiture may not be had against a corporation'by scire facias, or quo warranto, for an assumption and exercise of powers not granted by the act of incorporation; yet it would seem, that such usurpation is not of itself necessarily a forfeiture at common law, for it is laid down in Angel & Ames on Corporations, page 662, that “in general, to work a forfeiture there must be something wrong, arising from wilful abuse or improper neglect; something more than'accidental negligence, excess of power, or mistake in the mode of exercising an acknowledged power; from which it would seem, that a mere negligent or mistaken excess of power, would not of itself work a forfeiture of a charter of incorporation. And, therefore, it may be, and no doubt is, that the legislature in giving the courts of chancery in this state jurisdiction of this subject, has confined the power of decreeing forfeitures, toi cases of non-user, or abuse of the granted franchises, and to cases of disability, created by a surrender of them, or other causes, and has been content to rely upon the injunction powers of the courts in cases of the assumption and exercise of franchises not granted. And in as much as the proceeding for forfeiture is highly penal, has not given the attorney general the power to file a bill for that purpose, unless it be deemed proper by the Legislature, or the governor of the state, but that by injunction being preventive, the power of proceeding by bill is given at the discretion of the attorney general. With this view of the power conferred upon the attorney general, there can be but little difficulty in determining under which section of the law this bill was filed. The bill does not charge, that it was deemed proper, either by the legislature of the state, or the governor for the time being, that a judicial enquiry should be instituted for a forfeiture against the corporation. It does not charge a non-user or abuse of the franchises of the corporation, nor that it has been disabled by a surrender of its franchises, or in any other mode. Then it cannot be a proceeding under the 5th section of the statute. But it does charge an assumption and exercise of franchises hot granted, and is, therefore, filed under the 8th section of the statute. Under this section, as we have seen, the chancellor had ho power to decree a forfeiture, but only prohibition by injunction; the very thing he did. Here we might-stop this investigation. But we deem it proper to say, that even if the bill had been filed under the 5th section, and the assumption and exercise, on the part of the corporation, of the franchises, not granted, had constituted a good cause of forfeiture, we should not be willing to decree a forfeiture here, the chancellor having neglected to do so; because, we think, this assumption and exercise were an honest mistake in the construction of the charter of incorporation ; and, because, the state, through its attorney general and counsellor, waived the right to demand a forfeiture.

The decree of the chancellor will, therefore, be in all things affirmed.