Case ID: barb-ch_2/html/0301-01.html
Source: Caselaw Access Project
Author: {"author": "The Chancellor.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Taylor vs. Bruen and others.
    The sixth section of the title of the revised statutes relative to unauthorize banking, applies to foreign as well as to domestic corporations. And foreign corporations are still prohibited from keeping any office in this state for the purpose of receiving deposits, or for discounting notes or bills,-
    Whére-sUch .a corporation authorises .one:of its officers, or aii agent; to -attend from tipie'.to time at-certain, known places in this .state, for the purpose .of- receiving deposits, or for the purpose of discounting notes or bills, with the funds of, the corporation, and for its benefit, such known places of attendance aré to' be considered as offices of discount and deposit, of the corporation, illegally kept for the purposes prohibited by the statute. And the officer or agent of a foreign corporation who thus carries on the business of discounting notes and bills in this state, with the funds of such corporation, and for its benefit, renders himself personally liable to the penalties prescribed by the 7th section of the act relative to unauthorized banking.
    He cannot, therefore, be compelled to make a discovery of such violation of the statute, to aid the defence in a suit at law, brought in his own name, upon a note thus discounted by him as the officer or agent of a foreign corporation.
    A defendant is not bound to answer or disclose any facts showing that he has been guilty of any act for which he is liable to an indictment, or which can subject him to a penalty, or forfeiture.
    This was an appeal by Herman Bruen, one of the defendants in this cause, from an order of the vice chancellor of the first circuit, denying an application to dissolve an injunction The facts, as stated in the complainant’s bill, were substantially as follows: Bruen, the appellant, was the president and agent of the Commercial Bank of New Jersey. And as such president and agent, he was in the habit of attending at certain known places in the city of New-York, with the funds of that foreign banking corporation, to discount notes for its use and benefit. In May, 1845, the complainant made his note for $500, at six months, and payable to the order of W. W. Chester & Co.; which note was endorsed by them as accommodation endorsers, for his use and benefit, and was discounted for him in the city of New-York by Bruen, with the funds of the Commercial Bank, and for its use and benefit, in the ordinary course of his agency for the bank in discounting notes at such known places of attendance for that purpose. The defendant Bruen having brought a suit upon the note in his own name, the complainant filed his bill in this cause to obtain a discovery from Bmen, of the alleged violation of the restraining law, to aid the complainant and his accommodation endorsers in their defences in the suit at law upon the note; and for an injunction to restrain the proceedings in the suit at law until such discovery could be had. An ex parte injunction having been granted, Bruen moved to dissolve the same, upon the matter of the bill only; which application was denied.
    
      
      W. Watson, for the appellant.
    
      A. Taber, for the respondent.
   The Chancellor.

If the charges in the complainant’s bill are true, the discounting of this note by Bruen, as the president and agent of the Commercial Bank of New Jersey, was not a single or isolated transaction; but it was in violation of the provisions of the laws of this state against unauthorized banking. And the complainant and his endorsers have a good legal defence to the suit, upon such note; which suit has been brought for the benefit of the bank. The sixth section of the title of the revised statutes relative to unauthorized banking, (1 R. S. 712,) applied to foreign corporations, as well as to those which were incorporated by the laws of this state. And foreign corporations are still prohibited, by that section, from keeping any office in this state for the purpose of receiving deposits, or for discounting notes or bills. And where such a corporation authorizes one of its officers, or an agent, to attend from time to time at certain known places, in this state, for the purpose of receiving deposits, or for the purpose of discounting notes or bills with the funds of the corporation, and for its benefit, such known places of attendance must be considered as the offices of discount and deposit of the corporation, illegally kept for the purposes prohibited by the statute.

The bill in this case distinctly charges that the suit at law is brought in the name of Bruen for the sole benefit of the bank, and for the purpose of defrauding the defendants in that suit of the benefit of his testimony on the trial. Bruen is therefore bound to make the discovery sought for by this bill, if he could have been compelled to give evidence of the facts charged, upon the trial of the suit at law, in case such suit had been brought m the name of the bank as the real party in interest. And he could, in that case, have been compelled to give such evidence, unless the facts charged in the bill show that he has been guilty of an offence which is indictable, or which will subject him to a penalty or forfeiture. (Matter of Kipp, 1 Paige's Rep 601. City Bank of Baltimore v. Bateman, 7 Harr. & John. Rep. 104.)

It remains to be considered, thérefore, whether the bill-in this case shows that the appellant Bruen has been guilty of any thing"for -which -beds liable- to' an indictment/ or which ctitild subject'-or expose him to a penalty or -forfeiture; - For if it does, he is not bound- to.answer and»disclose-the facts. (2 R. S. 405, § 71.) And upon a careful examination of the several provisions of the title"of -the revised statutes relative to-"unauthorized banking, . I have arrived at the conclusion that if the appellant, as the agent- and.’.president of' this-foreign corporation, has carried bn- the business of discounting' notes and bills in tlie'-city of- New-York,. as-charged by 'the- complainant,-' and -under-the circumstances mentioned in the bill in this cause, he has rendered himself personally liable-tó’the penalty-prescribed by - the seventh' section of that title:. (1 R. S. 712.)

By referring to the fourth section,-it will’ be seen" thaty for--an offence of a similar character, the -directors and other officers and agents -of‘the* corporation-are, in' terms, made. personally liable-for the--penalty;-for a violation- of the "provisions of- the statute which-'-are prohibitory upon- the; corporation:-- And in reference to the offences prohibited in: the sixth section; of which the offence charged id the complainant’s bill is one,"the seventh section-declares that-every -person,, and every'corporation, and every member of a corporation; who shall contravene ¡either of the provisions of the sixth section, or-shall directly or; indirectly assent -to- such-violation;-shall-forfeit $1000.' The-terms-“"every -member of a corporation,”-are'-certainly "broad -enough to reach the--defendant Bmen, who is charged' , to have'acted as the president-of the Corporation, as well; as its agent, in the violations of the statute mentioned in the complainants -bill: The statute also-subjects every'person to -the-penalty who assents-to the'violation of-its-provisions:’• And Bruen must certainly .be considered as-having assented-to the violation'of thestatute/by the corporation of which he was president, when-he actually acted as its agent for the- purpose of contravening - the ¡provisions -of the law. He cannot, therefore, be'- compelled -td make the discovery, sought by this bill, in aid of the defence at law. And for that reason, the injunction restraining him from proceeding in the suit at law until he should have an wered this bill, and made the discovery called for therein, should not have been granted.

The order appealed from is erroneous and must be reversed. And the injunction must be dissolved with costs.