Case ID: scl_46/html/0609-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State of South Carolina vs. The Bank of South Carolina. The Same vs. Other Banks.
    
      Penalty — Ads of the Legislature — Suspension.
    By the Act of 1840, banks suspending specie payments are declared liable to pay to the State a certain amount per month during the suspension. Held, that the amount to be paid was a penalty, and not a debt.
    An Act takes effect from the time it is ratified, and not from the commencement of the session.
    Where an Act imposing a penalty is suspended, it cannot be enforced during the period of suspension, for penalties previously incurred.
    BEFORE WITHERS, J„ AT CHARLESTON, JANUARY TERM, 1860.
    The report of his Honor, the presiding Judge, is as follows:
    " These were actions of debt, under and by virtue of the second section of an Act of Assembly, passed in 1840, which is in these words: “Every bank which shall suspend the payment of current coin for its notes, or which shall declare a determination to suspend, or refuse payment of its notes according to their legal obligation, in current coin, shall become liable to pay to the State of South Carolina, at the expiration of every month after such suspension, or declaration, a sum of money, at the rate of five per centum per annum upon the whole amount of its notes which shall have been issued in circulation at the commencement of the said month, and shall continue to pay at the same rate at the end of every month, until the said bank shall revoke its declaration, and shall lawfully redeem its notes when demanded, according to their legal obligation; the said sum of money to be recovered by action of debt, in any Court of competent jurisdiction.”
    "The banks above named .suspended specie payments, October 12th, 1857: and the debt sued for against each was a sum resulting upon a calculation, at the rate of five per cent, per annum, on the circulation of each, on the 12th October, 1857, the 12th November, ■ 1857, and for eight days of December, (from the 12th to the 20th of that month in 1857,) at which last day an Act of Assembly was ratified, providing (inter alia,) that the 2d section of the Act of 1810, above cited, “be, and the same is hereby suspended, until the first day of January, 1859, on the express condition, that no execution, issued upon judgments already obtained, or hereafter to be obtained, by any of the non-specie paying banks, shall be enforced until such bank shall resume specie payments : provided, that each debtor against whom the banks obtained judgment and issued execution thereon, shall pay to the banks to whom they may be so indebted, interest upon the whole amount of the judgment recovered, at the expiration of every sixty days from the passage of this Act, at the rate of seven per cent, per annum; and any debtor neglecting or refusing so to do, shall be ‘deprived of the benefits of this Act: provided, that if the property of the debtor be sold under an execution, or executions, of other creditors, the execution of the bank shall be entitled to the same lien and payment as now provided by law.”
    “ Demand of the debts sued for was made on the banks, January 80th, 1858; and actions brought, April, 1858. The Legislature met on the fourth Monday in November, 1857.
    “ The defence rested on these positions:
    
      
      “ 1. That the, Act of Assembly of 1857, though ratified 20th December, 1857, had relation back to the first day of the session, and, therefore, cut off all that was claimed for eight days of December, being the time between the 12th of that month and the 20th — the 12th being the end of a month of suspension. It was contended, also, that the sum to be recovered was to be reckoned by the month, not by any fraction of a month of suspension.
    
      “ I differed as to this position, and overruled it.
    "2. That the Act of 1840 imposed a Penally; and(being suspended as to the penalty, and as to all proceedings under it until 1859, (January 1st,) — and the demand, as well as the actions in these cases, being made and instituted during the term of suspension, these actions were not maintainable.
    "I disagreed with this position also, and overruled it. I held that the repeal of a law enacting a criminal effence, with a punishment provided on conviction, if repealed, estopped prosecutions under it, whether pending at the time of repeal, or instituted after the repeal, for offences committed before that period, against the provisions of the Act so repealed. I thought, also, there was good authority for placing'the case of & penalty, such technically, on the footing of a punishment for crime. But no case cited placed the suspension for a term of either a penal or a criminal Statute, on the same footing with the repeal of either. But, however that point may be decided, I held that the Act of 1840, second section, did not impose a penalty; that it was a financial scheme; that, if the banks suspended, allowed as they were a franchise which enabled, them to supply a currency for the people, and on suspension furnishing a currency which was below the standard of specie, at variable rates of depreciation, the Legislature designed, and wisely designed, to take from them five per cent, per annum of the larger .per cent.' they received from the people, place it in the Treasury in ease of the taxes to be levied of the people, and who would otherwise have to pay the legal rate of interest for the use of money, upon what was not money or its just representative ; and by such scheme, something like a pecuniary equalization was arrived at, whereby, in the end, the people would ultimately pay to the banks a rate of interest, if only two per cent., proportionate, nevertheless, to,the value of the currency they obtained, and the other five per cent, would go into the Treasury in ease of their burthen of taxation. I observed, also, that in other sections of the Act of 1840, forfeiture and penalty, eo nomine, were inflicted, that is, on bank officers . making default as to returns therein required, &c. If, then, what was now demanded was strictly a debt, though the second section of said Act was suspended for two years or so, yet a debt could be sued for at common law, and no permission to sue for it by statute was needed.
    "Touching the demand for the fraction of a month: I thought, and so held, that the rate of calculation was fixed by the Act of 1840, being according to the standard of five per centum per annum; that a month of suspension was spoken of, but only as fixing the period at which the liability could be enforced, not that the default must necessarily last a whole month before the liability could attach. Otherwise the mischief would not be remedied, for that was inflicted by the suspension, whether it endured eight days or thirty days. Besides, a declaration of a determination to suspend was equally prohibited as an actual suspension, (and obviously it would produce the same kind, if not the same degree of mischief;) and if the fraction of a month was excluded, a bank could declare such a determination, or actually suspend, on the first day of a calendar month, and revoke the declaration, or resume specie payments, the day before the month terminated,, and so from time to time, and, according to this ground of defence, such hank was safe from any operation of the Act of Assembly.
    “I held that the State was entitled to verdicts, in the several cases, and they were rendered accordingly. An appeal is taken on grounds annexed.
    “ I believe there was a case against the People’s Bank; but that bank is not named among those appealing. It can be added to the others, if so desired, and such be the understanding. ”
    The defendants appealed, and now moved this Court for a nonsuit, and failing therein, then for a new trial, on the grounds, to wit.:
    1. Because the second section of the Act of 1840, was suspended by the Act of 1857; and while suspended, no suit or action could be brought to recover the penalty or forfeiture specified in it.
    2. Because, after the suspension of the said second section of the Act of 1840, it could not be enforced for the penalties or forfeitures previously incurred under it.
    3. Because the Act of the General Assembly of the year 1857, relates back to the first day of the Session, and taking effect from that day, releases the penalty subsequently incurred.
    4. Because there- can be no recovery under the said second section of the Act of 1840, for'any period of time less than a month.
    
      Simonton, McOracly, for appellants,
    cited United States vs. Passmoore, 4 Dal. 372; State vs. Gole, 2 McO. 1; Allen vs. Farrow, 2 Bail. 584; 6 Bro. P. 0. 553; 4 T. B. 660; 5 Yes. 237; Esp. P. St. 22; Dorchester vs. Webb, Cro. Car. 372; Wanford vs. Wanford, 1 Salk. 279.
    
      Jlayne, Attorney-General, contra.
   The opinion of the Court was delivered by

O’Neall, C. J.

We are of opinion that the plaintiff is not entitled to recover.

The second section of the Act of 1840, 11 Stat. 100, 101, provides, that “ every bank which shall suspend the payment of current coin for its notes, or which shall declare a determination to suspend, or refuse payment of its notes, according to their legal obligation, in current coin, shall become liable to pay to the State of South Carolina, at the expiration of every month after such suspension or declaration, a sum of money at the rate of five per centum per annum upon the whole amount of its notes which shall have been issued in circulation at the commencement of the said month, and shall continue- to pay at the same rate, at the end of every month until the said bank shall revoke its declaration, and shall lawfully redeem its notes, according to their legal obligation: the said sum to be recovered by action of debt in any court of competent jurisdiction.” Under this clause, it is necessary first to decide what is the character of the provision, “shall be liable to pay” five per cent, per month during the months of suspension? I have no doubt, it is a penalty. It is a sum to be paid, in the event of failing to perform a legal duty. That is beyond all doubt a penalty. 1 It enforces a duty, and punishes the non-performance. This is plainly a penalty. The case of the State vs. Cole, 2 McC. 55, declared a matter of the same analogous character, a penalty. So in Burger, Tax Collector, ads. The State, 1 McMull. 410, I held that a sum imposed on a broker for the purchase or sale of bullion, specie, bank-notes, &c., “for any bank or company out of the State,” so large as to amount to prohibition, although called a tax, was yet in fact a penalty. The sum here is imposed in prohibition, and is a plain penalty.

The defendants respectively incurred the penalty, by suspending, 12th October, 1857; they paid the penalties for two months. The penalties now claimed are for eight days, from the 12th to the 20th December. On the 20th of December, 1857, the Legislature passed an Act, 12 Stat. 680, which in its first section provided, that “the operation of the second section of the Act of 1840,” above cited and set forth, “be, and the same is hereby suspended, until the first day of January, 1859, on the express condition, that no execution, issued upon judgments already obtained, or hereafter tó be obtained, by any of the non-specie paying banks, shall be enforced, until such bank shall resume specie payments, provided, that each debtor, against whom the banks obtained judgment and issued execution thereon, shall pay to the banks to whom they may be so indebted, interest upon the whole amount of the judgment recovered, at the expiration of every sixty days from the passage of this Act, at the rate of seven per cent, per annum, and any debtor neglecting or refusing so to do, shall be deprived of the benefits of this Act: provided, that if the property of the debtor be sold under. an execution or executions of other creditors, the execution of the Bank shall be entitled to the same lien and payment as now provided' by law.”

It is objected, on the part of one of the Banks, that the Act passed 20th December, has relation back to the first day of the session, and that therefore for the eight days now sued for, there was no penalty incurred, as the law was suspended during that time. I think a little attention to the plain reading of the sixteenth section of the first Article of the Constitution, would have saved tig the necessity of an opinion about this matter. The sixteenth section provides: “No bill or ordinance shall have the force of law, until it shall have been read three times, on three several days, in each house, has had the great seal affixed to it, and has been signed in the Senate house by the President of the Senate and Speaker of the House of Representatives.” This final ceremony, which is called “ratification,” took place on the 20th December; then it became a law, and not before.

The next question in this case is, what was the effect of suspension on the eight days for which the Ranks were unlawfully suspended? On the 30th January, 1858, demand was made upon the defendants for the penalties of eight days’ suspension, and actions were brought April, 1858.

I think suspension has the effect of a repeal during the period suspended. Until the 1st January, 1859, no claim could be made upon the Banks. For, during that time, the law could not be enforced. It was the'same as if it did not exist. The effect of a.repeal on a penalty incurred, before the repealing Act, is to discharge the penalty. This point has been so often adjudged, that it is only necessary to refer to Allen, qui tam, vs. Farrow, 2 Bail. 584, where the law was collected and remarked upon with the concurrence of the whole Court, by my much esteemed and regretted brother Martin.

The motion to set aside the verdicts and for a nonsuit in each of the cases, is granted.

Wabdlaw, J., concurred.

Johnstone, J., declined to give an opinion, as he was a stockholder in two of the Banks, i. e. The Farmers’ and Exchange Bank, and the People’s Bank.

Motion granted.