Case ID: mass_11/html/0093-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Samuel Spear and Another versus Daniel Ladd.
    A note payable to the president, directors, and company, of an incorporated bank, or their order, was endorsed by the president, pursuant to a vote of the directors, and the assignment was held sufficient to pass the note to the assignee.
    Assumpsit on a promissory note for 2000 dollars, dated April 23, 1808, made by the defendant, jointly and severally with two others, to the president, directors, and company, of the Coos Bank, or their order, by them endorsed * to one J. H. [ * 95 1 Crane, or his order, and by him to the present plaintiffs.
    
      The cause was tried on the general issue, before Parker, J., at the last November term in this county, and a verdict returned for the plaintiffs, subject to the opinion of the Court upon the judge’s report of the trial.
    The note was endorsed thus: “ The president, directors, and company, of the Coos Bank, order the contents of the within note paid to John Jrl. Crane, or order. J. Montgomery, president, G. Woodward, cashier.” And was afterwards endorsed by said Crane to the plaintiffs. The defendant objected to the authority of Montgomery to endorse the note, and denied the title of the plaintiffs through such endorsement; and the question reserved for the consideration of the Court was, whether the present plaintiffs had a right to maintain the action on the note.
    There came up in the case copies of the act of the New Hampshire legislature, incorporating the Coos Bank, and of a vote of the directors (four being present) of the bank, authorizing the said Montgomery, as president of the bank, to transfer, sell, and assign, to Crane the note declared on.
    By the said act of incorporation it was provided, among other things, that the corporation might establish and put in execution such by-laws as should appear necessary and convenient for the government of the said corporation and the prudent management of their affairs. Four directors were to constitute a board for the transaction of business, of whom the president was always to be one, except, &c.
    By an article of the by-laws of the corporation, which also camo up in the case, it was provided that the directors should have “ power to make any contracts in behalf of the stockholders, relative to the proper and legal object of the corporation, which, when made, should be binding on the stockholders.”
    It was agreed that the note declared on was made to the bank for money, which was loaned thereon to the promisors; and that it was endorsed to Crane in satisfaction of the same [ * 96 ] * amount of the bills or notes of the bank then in the hand of said Crane.
    
    If the Court should be of opinion that the plaintiffs had not shown a legal title to the note, so that this action could be maintained by them, the verdict was to be set aside, and they were to become non-suit ; otherwise judgment was to be rendered upon the verdict, with additional interest.
    
      Selfridge, for the defendant,
    contended that the note had never
    been legally passed from the corporation, to whom it was originally made payable. The endorsement was not such an act as their charter authorized; and of course the vote of the directors could not give the authority to the president. If, however, such an endorsement was within their chartered powers, it must necessarily be accompanied with the seal of the corporation.
    But it would be mischievous, and against public policy, to countenance such a transaction. As between the promisors and the corporation, the notes or bills of the latter would be good in payment ; whereas, by transferring them in this manner, such an effect was fraudulently evaded. 
    
    
      Otis and Bigelow for the plaintiffs.
    
      
       3 Dallas, 499. — 1 Black. Comm. 475.-3 Salk. 103. —2 Cranch, 127.
    
   Per Curiam.

The question reserved is, whether Montgomery, the president of the bank to which the note was given, had authority, by virtue of his office, or by the vote of the directors for that purpose, to transfer the same by his endorsement. And we have no doubt upon the question.

The act of incorporation gives the general management of the property and concerns of the bank to the directors; and they have, by their vote, authorized the president to endorse this note. This power in the directors may be essential to the interests of the bank; and is certainly not more hazardous than the power, which they have from necessity, to hand over any note lodged for discount, with the blank endorsement of the promisee upon it.

Mischief may be done. But it is incident to corporations of this sort; and the proprietors of stock must guard against it in the choice of the directors.

* To require an assignment under seal, or a vote of the [ * 97 ] company, every time it might be necessary to transfer securities in the bank, would be to burden this class of institutions with very inconvenient and unnecessary regulations,

Judgment on the verdict. 
      
      
         Rex vs. Briggs, 3 P. W. 419. — Bailey, Bills, 5th ed. 38. — Northampton Bank vs. Pepoon, post, 288. — Bank of Columbia vs. Patterson, Admr. 7 Cr. 305. — Fleckner vs The United States Bank, 8 Wheat. 357.— Randall vs. Van Vechten, 19 Johns. 65.— Baptist Church vs. Mulford, 3 Halst. 182. — Osborn vs. United States Bank, 9 Wheat. 738. — M'Mecken vs. Mayor, &c., of Baltimore, 2 Har. Johns. 41. — Perkins vs. Washington Ins. Co. 4 Cowen, 645. — Prop. Cam. Bridge vs. Gordon, 1 Pick. 297. — School Dis. Rumford vs. Wood, 13 Mass. Rep. 193.