Case ID: tenn_17/html/0119-01.html
Source: Caselaw Access Project
Author: {"author": "GREEN J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State vs. Union Bank.
    By the act of the legislature incorporating' the Union. Bank of Tennessee, the State reserved to herself the right of subscribing for a certain amonnt of its stock; accordingly the governor, in obedience to the dir.qqtions of the charter» subscribed stock to the amount of five hundred thousand dollars, in the namejof the State. The seventh section of the charter enacls, ‘‘that the profits which may arise from the slock owned by the Stale in the Union Bank of the Slate of Tennessee, after the bonds of the State shall have been paid, and also the bonus agreed tobe paid by the bank to the State for the privileges conferred by the charter; and also the interest, which may from time to time accrue upon the depo-sites of public money by the treasuserof the State, shall be, and they are hereby appropriated to the use of common schools: Held, that said seventh section did not by necessary implication create a trust in favor of the bank, and authorize it to retain the bonus and dividends until the State bonds were paid ; that the State had not; parted with the power to control the fund, and that the words, “after the State bonds shall have been paid,” only indicated and fixed positively the time when the right of the schools to the fund shall take effect.
    It is a rule, that what a man does not expressly part with, he retains,* there fore, unless the above section contains an express relinquishment of the right of the State to control the fund, or, unless this relinquishment arises by necessary implication from the language used, the State still has the right to their control,
    ‘•Necessary implication” means not natural necessity, but so strong a probability of intention,that an intention contrary to that which is imputed cannot be supposed.
    Supposing the language of the seventh section to be susceptible of two meanings, onethatthe words “after the State bonds are paid,” mean only a designation of the time when the fnnd shall be appropriated, the State reserving her control of the fund until then; the other, that the State surrendered her right to control it; it cannot follow from “necessary implication ,” that the latter was intended, because as neither meaning can be ‘‘necessarily implied,” the funds are unaffected by the language used, and remain with the legal owner.
    If the fund mentioned in the seventh section had been expressly appropriated to the payment of the bonds, it would not therefore follow, that a trust was created: the State would still have the power to control and manage it.
    If the seventh section had created a trust, the bank as trustee, would have been bound to perform the trust by investing the fund so that it would be plainly beneficial to the que trust,
    
    
      Where a trust is not expressly declared, or where there is a doubt as to the proper disposition of the (rust fund, by application to a court of chancery, the trusts will be declared and proper directions as to its investment given.
    It matters not what may be the discretionary power given toa trustee, yet, if he omit doing what would be plainly beneficial to the ceslue que trust, he will be answerable,and the cestueque trust may apply to a court of chancery to compel him to do his dutv.
    Where a trust fund is placed in the hands of a trustee for accumulation, and he permits it lo remain unproductive, he is accountable for the profits it should have made, or to pay interest, with half yearly rests.
    The bank having refused to pay the bonus and dividends half yearly in this case, interest was directed to be paid on the balances due to the State.
    This bill was filed by the State of Tennessee against the Union Bank of the State, to recover the bonus agreed by the eleventh section of the charter to be paid by the bank, and also the dividends which have accrued upon the stock owned by the State in that institution.
    The bill alleges that, on the 18th day of October, 1832, the legislature of Tennessee, passed an act entitled <can act to charter the Union Bank of the State of Tennessee”; that the subscribers and stockholders, their successors and assigns were created by said act a body corporate in law and in fact by the name and style of the president, directors and company of the Union Bank of the State of Tennessee; that the sixth section of said act provided, that whenever there shall have been five thousand shares of the capital stock of said bank subscribed, and the commissioners appointed in Nashville shall certify that fact to the governor of the State for the time being, he was authorized and required to subscribe on the part of the State for five thousand shares of the capital stock of the bank; and he was further required to execute on behalf of the State, bonds to the amount of five hundred thousand dollars, which bonds were to be signed by him officially, and to be countersigned by the Secretary of State, and were to bear five per cent interest per annum; that said bonds were to be paid in four instalments, of one hundred and twenty-five thousand dollars each, the first instalment to be paid in fifteen years; the second, in twenty years; the third, in twenty-five years; and the fourth and last instalment, in thirty years from and after the date of said bonds, and the interest on said bonds was to be paid half yearly; that said bonds, by the terms of said charter, were to be handed over by the governor to the president and directors of said bank, in full payment and satisfaction for said stock so subscribed in behalf of the State as aforesaid.
    The bill further alledges that said bank, shortly after the passage of said act, went into operation, and the commissioners at Nashville having certified in writing to the governor, that five thousand shares of the capital stock was subscribed by individuals; the said governor thereupon executed the bonds aforesaid, in the manner prescribed by said charter, and delivered them to the president and directors of said Union Bank, who received them in full satisfaction and discharge for the stock subscribed by and in behalf of the State.
    The bill also charged, that the State reserved the right at any subsequent time to increase the State stock to any amount not exceeding one million of dollars; that the said Union Bank by the acceptance of the charter, and in consideration of the privileges granted by said charter, agreed, as stipulated in the eleventh section of said act, to pay the State annually one half of one per cent, on the amount of the capital stock paid by stockholders other than the State; and that by the terms of said charter, the said bank is to declare half yearly dividends of so much of the profits as shall appear advisable to the director’s; that the said bank, by the eighteenth section of said act, also agreed to pay to the State, interest upon public de-posites made by and in the name of the State in said bank; the rate of which interest was to be agreed upon by the treasurer of the State and said bank; that no part of the bonus agreed to be paid by said bank, or the dividends which have been half yearly declared by said bank, as due and payable to its stockholders, nor any interest upon the public deposites, although often demanded, had been paid to the State, and that said bank wholly refused to pay any portion of the same, pretending, as will he seen by its answer to a resolution of the legislature of 1833, that by the seventh section of said charter, the said bank was not compelable to pay either the bpnus or the dividends, or the interest upon the public deposites until after the bonds of the State shall have been paid, and the said bank claims the right and privilege of retaining and using the same until said period arrives; and said bank refused to render ,1 , . . . . . account of the same, or permit the same to be invested in stock by the treasurer, as directed by the act of 1833, c. 73.
    rpjjg ^jjj prayS that said bank may be decreed to render an account of what is due to the State for said bonus, (particularly stating as that fact is unknown, what part of the capital stock from time to time has been paid in) and also, what is due to the State for dividends upon the State stock, and for interest upon the public deposites placed in said hank; that the amount thereof, with interest thereon, (after deducting the interest due upon the bonds of the State) be decreed to be paid by said bank to the State, or to the treasurer of the State of Tennessee; or that if the court should be of opinion said fund is to accumulate for the benefit of the State, and cannot be withdrawn from said bank until said bonds shall he paid; that then said bank may be compelled by decree to permit the said dividends, bonus and interest now due, and as they may hereafter from time to time become due, to be invested in stock in said bank, as provided for by the sixth section of said charter and the said act of 1833, c. 73.
    The answer of the bank admitted all the material allegations of the bill, but insisted that upon a just construction of the seventh section of the charter, the State agreed not to withdraw the bonus or dividends from the bank, but that the same were to remain as a security for the payment of the State bonds, and the interest upon the same; that the fund was by said section pledged for that purpose, and whatever at the end of thirty years was due the State, after payment of the bonds, was appropriated by said section to the use of common schools.
    The answer particularly sets forth the amount of stock ii'om time to time paid in, and what dividends were from time to time declared.
    The seventh section of the charter is as follows: “the profits which may arise from the stock owned by the State in the Union Bank of Tennessee, after the bonds of the State shall have been paid, and also the bonus agreed to be paid by the bank to the State for the privileges conferred by this charter, and also the interest which may from time to time accrue upon the deposites of public money by the surer of the State, shall be, and they are hereby appropriated" to the use of common schools,” &c.
    The chancellor by his decree dismissed the bill, from which decree the attorney general, in behalf of the State, prosecuted an appeal to this court.
    
      W. E. Anderson, for complainants.
    This case involves the construction of the seventh section of the charter of the Union Bank, and the simple question is, whether by the language used in that section, the State by contract has given to the bank the privilege of retaining the bonus and dividends upon the State stock for thirty years.
    To understand the meaning of the legislature correctly, it will be necessary to advert to other parts of the charter.
    The 13th fundamental article provides that half yearly dividends shall be made.
    
    By the 11th section, the bank agrees to pay to the State annually, one half of one per cent on the amount paid in of the capital stock by stockholders other than the State, &c.
    In these provisions of the charter there is no ambiguity. The language is plain, and no one in contemplating these sections alone would ever feel a doubt as to the intention of the legislature. That the State should receive what it now asks, could not be more plainly or unequivocally expressed.
    The bank, however, seeks to overturn or countervail this plain expression of intention by an inference which it contends is contained in the seventh section of the charter. Viewing the charter and the acceptance thereof properly as a compact between the State and the other stockholders, it is said that when the State declared in said section, that the dividends and bonus shall be appropriated to the use of common schools after the bonds of the State shall have been paid, there was an implied agreement that said dividends and bonus should not be demanded according to said thirteenth article and eleventh section, but that they should remain in possession of the bank as a pledge to meet the payment of the bonds.
    In resisting this view of the bank, we think we are not left to the argument merely, that plain and positive expressions are more conclusive of intention than any inference, however strongly implied. We are aided by the rule which we consider well and long established, that we are to seek for a construction of the doubtful section, which will accord with the clear expression of intention in another part of the act, and that if such construction can be found, which will give the legislature the credit of some sensible object, it is the duty of the court to adopt it.
    There are many reasons which repel the construction given by the bank to said seventh section.
    It can be seen by a calculation, that if the dividends on State’s stock should remain in the possession of the bank, by a re-loan thereof, and the accumulating interest, until the time the last bond of the State falls due, at the same profit which the bank has heretofore declared, to wit: eight per cent, the product will be sufficient to pay the interest on the bonds as they become due, and the bonds as they become due also, and leave a surplus of six hundred and forty-eight thousand four hundred and eighty-two dollars. If the interest upon them is compounded at six per cent, the proceeds will pay the bonds with interest, and leave a surplus at the end of thirty years of three hundred and thirty-six thousand five hundred seventy-one dollars; whereas, if the dividends remain with the bank without producing profit to the State, they will lack fifty thousand dollars of paying the bonds, with their interest, at the end of thirty years. The difference then, in the results of the two constructions at the' expiration of the charter will be, on one of the above modes of calculation, to wit: at six per cent, three hundred and eighty-six thousand five hundred and seventy-one dollar’s; and, calculated at eight per cent, six hundred and ninety-eight thousand four hundred and eighty two dollars.
    We cannot suppose, without imparting a criminal disregard of the public interest to the legislature, that it passed this charter without contemplating the results of what it was doing.
    To adopt the bank’s construction, we must believe the legislature was willing to allow the bank to make six hundred and forty-eight thousand four hundred and eigty-two dollars opon the credit and funds of the State, while it risked the , , .... . ’ , . , enormous sum oí halt a million, (enormous, contrasted v . the State’s revenue) upon the contingency of the bank’s solvency at the end of thirty years. If the bank should be so managed as to be insolvent, the State’s stock of course would be worth nothing, and the bonds for five hundred thousand dollars would have to be paid by taxation. Whoever has had any acquaintance with the caution and lively sense of responsibility which has ever characterised the legislature of Tennessee when dealing with the public funds on credit, will hardly be made to believe that this was its intention or understanding in passing this charter. Indeed we cannot ascribe to it this intention, without imputing to them very great direliction of duty and infidelity to the public interest.
    This charter is a very favorable one to the stockholders independent of the enormous advantage claimed by their construction of this seventh section.
    1. They are allowed to take in advance eight per cent, and that on double the capital stock paid in, which is equal to sixteen per cent interest in advance.
    2. The notes of the bank are made receivable for public dues.
    3. The public moneys are to be deposited at such interest as they agree to pay; if they agree to pay nothing, nothing is to be paid; yet the public moneys must be deposited. Add the present privilege which the bank claims, of making more than half a million clear money upon the State’s capital stock, and we will truly have a highly privileged institution.
    By section sixteen they may make their notes payable any where in the Union.
    As an equivalent for such great advantages, what is the State to receive in return? Responsibility, the risk of half a million, and the pitiful bonus of one half of one per cent, five thousand dollars per annum, and the payment of that too, to be postponed to the end of thirty years, and its final loss also risked upon the solvency and honesty of the bank.
    The inequality of such a compact, at once shocks the mind upon its statement; it is of that description which is relied on ⅛ controversies between individuals, as the evidence of fraud . . ’ itseli.
    . . . , . , In giving a construction to tins seventh section, we arc not to forget that the legislature possessed a double capacity or character, 1st. As a contracting party. 2d. As the legislative power of the country. There is nothing incompatible in the two characters, nor is their any thing inconsistent in these several functions being exercised in the same act. It does not follow, therefore, that an act of the general assembly which contains articles of contract in it, must necessarily have every article or section in it viewed in the same light. .The general assembly might, by compact, provide for the raising revenue, and by the same statute provide for the disposition of that fund without that disposition forming a part .of the compact.
    If this can be clone, by what means will we decide, or by what criterion will we determine when it is done? When any provision is made, the direct object of which does not or cannot affect the other contracting party, or any interest or right it has, we must scarce consider this a mere legislative act, although found in connection with stipulations.
    The direct object of the seventh section is to provide for the appropriation of an anticipated fund to the use of common schools. The stockholders, as a corporation, could have no interest in this subject. It has long been said that corporations had no soul, I believe it lias as long been known that they have no children.
    This seventh section was a sovereign act of legislation ■which bound the legislature to no one. The legislature may repeal or alter it at pleasure, as they have repealed the act of 1S21, making appropriations to Ilitenhouse Academy, as they may repeal and modify all their common school acts.
    If there had been a prospective period fixed to the appropriation of the moneys from the tliwassee land, could the buyers or enterers have said it is implied, &c. that we shall retain the money in the meantime until the period arrives against the express provision that they should pay.
    There is nothing in the words of the seventh section that necessarily implies a pledge. .
    
      In 1823, c. 49; in 1825 and 1828, the legislature made similar appropriations of moneys, to be raised from the sale of ■ Hiwassee land and the twelve and a half cents land.
    This section was placed in the act to secure the charter friends. The common schools had absorbed the public feeling; they were the politician’s hobby. And they really intended to .appropriate the money.
    There was nothing in the rules of law to prevent this, nor was the grant an implication of a gift of the intermediate interest. See % Yer. 583, Cains and wife vs Marley.
    
    The nineteenth section furnishes an argument for the State’s construction; why retain the privilege of searching books and accounts ?
    It is urged the legislature were bound to make an approprition for the interest. The legislature contemplated what has aceru.ed, sufficient profits or dividends to pay the interest, and so did the stockholders. If this had not been expected with .confidence, .the charter would neither have been passed nor accepted.
    If the State is. entitled to the fund, she is necessarily entitled to interest from the hank, as it has been wrongfully with-holden by the bank.
    I?. J. Meigs, for defendant.
    This controversy, though in its consequences extremely important to the credit of the hank and the currency of its paper, yet lies within a very narrow compass, being confined to a mere inquiry into the meaning of a single section of the charter: namely, the seventh, which enacts, “that the profits which may arise from the stock owned by the State in the Union Bank of the State of Tennessee, after the bonds of the State shall have been paid; and also the bonus agreed to be paid by the bank to the State for the privileges conferred by the charter; and also the interest which may from time to time accrue upon the deposites of public money by the treasurers of the State, shall be, and they are hereby appropriated to the use of common schools.”
    It should he borne in mind by the parties in this controversy, that when it comes to a judicial investigation, an independent judiciary will be governed in their decision by just such reasonings as are familiarly resorted to in disputes between citizen and citizen. The profession will look upon it as an ordinary legal question, and in solving it, will resort to no other than accustomed method, The law has not provided any peculiar measures of justice adapted to the greatness of sovereign States and powerful corporations. Justice is blind, and her inquiry is not who, but what is in this or that scale of her balance.
    As-in the interpretation of deeds and wills, and all other instruments evidencing the contracts and dispositions of men in relation to property, so in the interpretation of statutes, courts are obliged to enquire what was thedntention of the framer of the instrument. In the construction of contracts, this rule is subject to a modification which I proceed to state. When the question is asked, “In what sense are promises to be interpreted?” there can be but one answer, namely: “when the terms of the promise admit of more senses than one, the promise is to be performed in that sense, in which the promi-sor apprehended at the time that the promisee received it.”
    It is not the sense that the promisor actually intended it, that always governs the interpretation of equivocal promises; because at that rate you might raise expectations which you never meant, nor would be obliged to perform. Much less is it the sense in which the promisee actually received the promise; for according to that rule, you might be drawn into engagements which you never designed to undertake. It must, therefore, be the sense, for there is no other remaining, in which the promisor believed that the promisee accepted his promise.” From this principle results a rule which governs the construction of contracts, which are only natural promises, viz: that
    “Whatever is expected by one side, and known to be so expected by the other side, is deemed to be a part or condition of the contract.”
    The bank charter is a contract between the State and the corporation; and its several provisions are so many terms or conditions of that contract. In this construction, therefore it is not merely the intention of the legislature that is to prevail, as m the construction ol ordinary statutes, but that sense is be put upon the words in which the legislature apprehended they were received by the bank. Those things being premised, we are prepared to consider the matter of controversy between the State and the bank.
    By the sixth section of the charter, the State engages upon a^ertain condition, which has been performed by the bank, to purchase five thousand shares of the stock of the bank, and to execute and deliver to the bank in consideration thereof, her bonds, payable to the bank or its assigns at Philadelphia or New York, or elsewhere, as the bank might direct, in four instalments at the end of fifteen, twenty, iwenty-five and thirty years, bearing interest at five per cent, payable half yearly. And the bank engages to receive their bonds in full payment for the stock sold to the State. The condition on which the State was to execute and deliver the bonds was, that the bank should have previously sold five thousand shares , of the stock. It is impossible to mistake the intention of the parties in these provisions.
    The bank was not to go into operation without an actual capital of one million, one half of which she was to provide by the sale of her stock to others, after which, the State was to purchase the other half. To enable the State to make the investment, the bank was to receive her negotiable bonds as money, in full payment for the stock. They were made payable to the assigns of the bank; that is, they were made negotiable, that the bank might sell them, and thus procure the other half million of actual banking capital. Whatever legally results from this transaction was, in contemplation of law, anticipated by,both parties. When a security like these bonds is assigned, the parties stand in the identical relations of the parties to a bill of exchange. The assignor is as a drawer of a bill, and the maker as an acceptor. Such were the relations, the rights and responsibilities of the State and the hank, as soon as the bank had assigned the bonds. If there be an adequate consideration or value for the acceptance, the drawer may sue the acceptor upon the bill when' it falls due, without presenting it to him for payment. He is responsible to the holder, if the hill, when due, is dishonored by the acceptor, because he impliedly guaranties its payment. In this instance the State received from the bank in consideration for the acceptance, the stock of the bank equivalent in value to the bonds. Hence, when the bonds became due either as to principal or interest, if they are dishonored by the State, the bank is liable to the holders, and a right of action accrues to tire bank against the State to recover whatever sums she pays for the State, or is liable to pay. If she has funds of the State in her own hands, she may retain so much of them as is sufficient to cover her liabilities on behalf of the State. Were the State to sue the bank for the profits of her stock, the bank might set off against the demand any sums paid by her in behalf of the State to the. holders of the bonds.
    Such are the legal rights and liabilities of the State and the bank, resulting out of the execution and assignment of the bonds. No appropriation of the State’s stock or its profits, express or implied, was necessary to invest the bank with the rights and powers just mentioned. The bank has an unquestionable legal right, by force of the transaction itself, to retain the profits of the State’s stock to meet the interest of the bonds as it falls due. But this right can be exercised by the drawer of a bill or assignor of a note, only when the paper is due and is dishonored by the maker or acceptor. And in this case, it does not accrue by force of the transaction itself, ■in regard to the principal of the bonds, till they become due and are left unpaid by the State. The claim of the Bank to retain, rests on the language of the seventh section. It is not contended that this language expressly appropriates the profits of the stock, the bonus and the interest of the public depo-sites to the satisfaction of the bonds, and sets them apart to accumulate for that purpose. But it is insisted that this appropriation arises by necessary implication from the language employed. Such, the bank insists, was the sense in which the legislature of 1832 understood the bank received the section in question. The words of the section are equivocal. They are susceptible of two constructions. They may mean that till the’ State’s bonds are paid, the State reserves to herself the control of the profits of her stock, and the bonus and the interest of the public deposites. They may mean that the State surrenders her right to control those funds, til out of them, the bonds are satisfied, principal and interest. The only inquiry, according to the principles above laid down, is, in what sense did the bank understand them? In what sense did the legislature apprehend that the bank accepted them?
    The words of a contract are always to be taken most strongly against the party using them. It is his duty to explain himself, and if he speaks ambiguously and equivocally, that sense is to be affixed to his words, which is most comprehensive. But without invoking the authority of ihis rule which .is nevertheless founded upon good sense, the phraseology employed in this section happens to have received the precise interpretation contended for by the bank, in a numerous class of cases, of which that of Shatteross vs. Finclen, 3 Vez. 738, is an appropriate example. There the testator used this language, “After my debts are paid, I devise,” &c. and proceeded to dispose of his real estate. These were the only words in the will, from which it could be pretended that his real estate was to be made liable to the payment of his debts; and it is scarcely necessary to state, that real estate is never liable to the payment of debts till the personalty is exhausted, unless the will of the testator expresses an intention to make it liable. In deciding the case, the chancellor employed the following language, “The words, ‘after payment of my debts,’ mean, that he will not give any thing till his debts are paid; that every thing he has shall be subject to his debts.” 3 Yez. 739. In a case in New York, depending upon the meaning of the same words in a devise, Chancellor Kent, 2 John. Ch. Rep. 623, says, “The real estate is not of course charged with the payment of debts. It is never charged unless the testator intended it should be, and that intention must be either expressly declarad, or fairly and satisfactorily inferred from the language of the will. Thus, where the testator devises the real estate, after the payment of debts and legacies, the real estate has been held to be charged. It is not sufficient that debts and legacies are directed to be paid. That alone does not create the charge, hut they must be directed to be first or previously -paid, or the devise declared to be made after they are paid.” In short, a gift of a man’s realty after the payment of his debts, is an appropriation of his estate to the ¡rayment of his debts, and the devisee takes it charged with the debts; and yet there is no express appropriation of his estate to that purpose, but only, an appropriation by necessary implication. So in this case, the gift of the profits of the stock, the bonus and the interest of the public deposites, “after the State’s bonds shall have been paid,” is an appropriation of those funds to the liquidation of the bonds, first of the interest and then of the principal. If an owner of stock in the bank, were to make his will, and say, “after payment of my debts, I give the profits of my stock to A,” could a doubt be entertained but that those profits, in the meantime, were appropriated to the payment of his debts ? If we should be told, in the case supposed, that the testator merely meant to fix a period when A should take those profits, and that in the mean time he meant his distributees to take them, this would be to give greater efficacy to the testator’s -silence, than to his actual expressions, and would make him die intestate as to the profits of the stock, in the interval between his death and the payment .of his debts. But this would be contrary to the very end proposed by the testator, which was not to die intestate. Hence it is a rule, than which none is better established, that all doubtful words’ or expressions in any writing are to be taken in such a sepse as will make them produce some effect; that is they are to be so construed as to give them some meaning. Any other construction of them, instead of pointing out the intention of the writing, supposes him to have used the words without any intention at all. So here, .to interpret the words of the charter, as the State insists, is to give them no other effect, than to fix a time when the c.ommon schools are to enjoy the funds in question. But that is to deprive the words, gratuitously, of one half of their natural meaning, for they not only limit a period of time, after which a certain disposition is made of those funds, but they express, by necessary implication, that a certain other disposition is made of them before that arrives.
    
      This view of the subject will appear still more satisfactory, if we now turn our attention to another rule of which rests upon the very highest, nay, upon all authority; . , , . .. , to Wit, that such an interpretation is to be made or doubtlul expressions in a law or contract as that the end which the lawgiver or party had in view, or the effect which he intended to produce by making the law or contract, may be attained. When we ask the question, what end was proposed by the creation of the Union Bank? the answer is, to provide a paper currency for the State, calculated to promote and facilitate all the operations of its citizens, whether agricultural, manufacturing or commercial.
    Now to make money to execute its functions, it must of necessity be possessed of inherent and positive value. For this reason, principally, gold and silver have in all ages been employed as the material of money. Bills of exchange, promissory notes, checks'and letters of credit have no inherent value, yet they have been made to perform the functions of money, i. e. of gold and silver, by being “invested with actual present value, by the prospect of their future value.” They are promises to pay money at some future time and fixed place. It is the certainty that this promise will be performed, that gives them their present value, since they have no inherent value. Now the bonds of the State were accepted by the bank as money, for they were received in payment of stock, which would have commanded money, had it been thrown into open market. The bank negotiated them for money. What gave them this currency, what invested them with this actual present value ? What, but the prospect of their future value? On what did this prospect of their future value depend? Was it that the legislature would, at some future day, create a certainty of their redemption, by imposing taxes on the people, or pledging the revenue of the State for their redemption? Universal experience has proved the utter fallacy of such expectations. Bills of credit, issued under the most solemn and imposing circumstances, have, without exception, been allowed to fall into the most deplorable depreciation. Such, at the time of our revolution, was the universality of this occurrence, that the people, when they formed the constitution of the general government, took from the Gtatos the power of issuing bills of credit. It was not, then, the expectation that the legislature would provide a fund, that a fund might at some future day exist to redeem those bonds, which gave them their actual present monetal value. It was the fact that they had provided such a fund, that such fact had an actual being, in the profits of the State’s stock, the bonus, and the interest of the public deposites, and that they had deposited that fund at a determinate place, the bank, where they could be had on demand, at the times and place specified. Nothing but these circumstances, in any case, invests promissory notos or other negotiable securities with an actual present value. Now it was the very purpose of the legislature, in executing those bonds, to communicate to them an actual present value, that they might stand in the place of, and represent money, without which the object oí their execution, the providing of the bank with a metalic capital, must necessarily fail. But if the construction now contended for by the State prevail, then is swept from the holders of the bonds, and from the bank, which has guarantied their payment, that very certainty of their redemption, which was the sole inducement with the bank to give for them what was an equivalent of money, and with the holders to give for them money itself.
    Such being the end proposed, and such the only possible means by which the end could be attained, are we to charge the legislature with the absurdity of proposing the attainment of an important object, and of omitting the only efficacious means of obtaining it? We will feel more sensibly the force of these remarks, if we now recur to the rule before laid down, that “whatever is expected by one .side, and known to be so expected by the other side, is to be deemed a pmrt or condition of the contract.” "When men part from their money or property, when banks sell stock, or buy bills, when capitalists advance money on the security of public bonds or stocks, have they ever been known to do it without a present certainty of ohtainig a future equivalent, or an actual present equivalent? "What capitalist ever gave government a loan, in any part of the civilized world, without an actual present pledge of funds for their redemption ? Does Rothschild advance 1 . ney to the executive of the United Kingdom, and depend for its repayment upon the precarious action of Parliament, and the ups and downs, ins and outs of whigs and tories? Never: there is always a present certainty of future repayment, created hy an actual pledge of an existing fund, or of current taxes. It is no reflection upon the dignity of Tennessee, or her faithfulness to' engagements, to insist that neither the hank, nor the purchasers of the bonds, would have parted from their stock or money, on better terms, for her. benefit, than the greatest capitalists in the world will advance money to the most powerful state on earth. Sea loans and insurance, are the only transactions known to commerce, in which men risk the loss of their capital entirely; and in these cases it is done, because it is found, by a calculation of chances, that the exorbitant interest paid is equivalent to the risk. Have we not then a right to conclude, that when the bank received the State’s bonds in payment for her stock, and when the purchasers of them advanced their money on their securities, they believed that there was a present certainty of their future redemption, that there was a fund set apart and pledged for their satisfaction?
    The course of business, the authority of courts of the highest respectability, the nature of commercial dealings, and above all, the reason and end of the law, all concur to support the interpretation contended for by the bank.
    These .remarks apply with equivalent force to the notes of the bank itself. The object of creating the institution was, hy its means, to provide the State with a convenient currency, capable of supplying the place of gold and silver. But it could never be capable of this, unless its notes were, by some means invested with an actual present value; in other words, unless they were certain to be redeemed in gold and silver when presented. This certainty can no otherwise exist than by the actual deposite of the gold and silver in the vaults of the institution. The gold and silver cannot be procured but by the sale of stock. The hank sells its stock to the State, not immediately, but mediately, for gold and silver. That was her object, and it was known to be her object by the State. She proposes to procure the metals by selling the bond?. The p-0ld and silver procured by the sale of the bonds, invests the 6 c,,,., , , . , , oi the bank with actual present value; mother words, with the attribute, which makes them a convenient currency, capable of supplying the place of gold and silver, which was the object proposed by its creation. But if the bank must pay out, every half .year to the holders of the bonds, twelve thousand five hundred dollars of the very gold and silver which she procured from them by selling the bonds, what is gained by the transaction? Absolutely nothing; for the very substratum on which the credit and monetal utility of the notes of the bank depends, will wholly vanish away in twenty years; and the bank will find itself just where it would-have been, if the State had purchased no stock, except that its notes will be out without the means of redemption, and must of course depreciate, and cease to answer the end of their creation. This consequence is an absurdity, because it is contradictory to the end of the charter, but it is a legitimate consequence from the assumption of the legislature. For if they can dispose of the profits of the stock, the bonus, and the interest of the public deposites before the bonds are paid, they have merely given the bank a nominal capital; which, about the middle of its corporate existence, when it will probably be most necessary, will have no existence in the vaults of the bank. If this be the constitution of the bank, it is falacious to regard its paper as the representative of gold and silver, and the institution is destined to a premature decay. For whenever the public learn, that the sale of the State bonds was a merely formal and unsubstantial transaction, and that those bonds operate as a constant drain of the funds of the corporation, at the rate of twenty-five thousand dollars per annum, merely for interest, all confidence in its stability will not only be shaken, but annihilated.
    For these reasons, among others, the bank contends, that the seventh section of the charter operates, in effect, as a de-posite of the profits of the stock owned by the State, and the bonus, and .the interest of the public moneys in the coffers of the bank for the special purpose of indemnifying the. bank for her liability as assignee of the bonds', and to be applied by the bank to the payment of the interest of the bonds, as it accrues, and to the satisfacción of the bonds when they fall due.
    
      James Campbell, for defendant.
    After adverting to the different provisions of the charter of the Union Bank, and the other acts and proceedings of the legislature, in relation to the matters in controversy, observed, that the difficulty between the legislature on the one hand, and the Union Bank on the other, arises principally upon the construction to be given to the seventh section of the bank charter. But in fixing this construction we must necessarily look to the other parts of the act. The principal question to be considered is this, are the profits which may arise from the stock owned by the State in the Union Bank, the bonus agreed to be paid by the bank for the privileges conferred by. the charter, and the interest upon the deposites of the public money, appropriated by the seventh section of the charter of the Union Bank, of the State of Tennessee? If these funds are already appropriated by the charter, and rights have been acquired under such appropriation, it will not be pretended, that the legislature could afterwards make a second appropriation of the same fund to another and a different object.
    It will be noticed, that by the sixth section of the charter, the State was to execute bonds of one thousand dollars each, amounting in all to five hundred thousand dollars; and these bonds were to be drawn payable to the Union Bank, or its assigns, and were to be redeemable in four instalments; and in the mean lime, the interest upon the bonds was to be paid by the State, half yearly. When these bonds were given payable to the Union Bank, and delivered over to the bank, and a promise was contained therein, to pay the debt at a certain time, and to pay the interest every six months; and when the Union Bank received the bonds, and gave the State five hundred thousand dollars of her stock for them, I suppose it will be admitted by all, that the Union Bank acquired an absolute vested right to the bonds, a right to have the interest paid every six months, and 'the principal to he paid as stipulated, and as incident to all this, a right to the means of payment, if any, provided hy the legislature. What was it that constituted the great value of these bonds? Undoubtedly it was that the holder would have a right to them, and that the interest and principal would be punctually paid. The bonds for five hundred thousand dollars were to he given, not in one or two sums, but in sums of one thousand dollars each. They were to be made payable in New York or Philadelphia, to the Union Bank, or its assigns. What was the object of all this? Is it not plain it was intended to give them a saleable and negotiable quality? The legislature intended they should be sent forth, with the best recommendation they could give them. They were created expressly for traffic in the markets of the eastern cities. Now can it be supposed for one moment, that such a thing ever entered into the head of any legislative body, as to give notes, pledging the faith of the State only for their redemption, payable from fifteen to thirty years after date, the interest to be paid six, twelve and eighteen months, &c. and yet make no provision whatever for the payment of either principal or interest. The State expects her bonds to sell in the eastern markets, at par, or at a premium, and yet she knows that the very first time the interest falls due upon the bonds, she is to be protested for want of funds to meet the interest. To suppose all this would be imputing an oversight, or a degree of absurdity to the legislature, too gross to be tolerated for a moment. We must suppose, that when the legislature promised to pay, they meant to pay; and if they meant to pay, there is no other way that the legislature of a State can carry this intention into effect, except by making an appropriation by law, setfng apart a certain fund to be applied to the payment of the demand. The charter was adopted the 18th of October, 1832. The stock was to be subscribed by the 1st of December following. The directors were to be elected upon thirty days notice after that time. The State bonds were to be given, and the bank to be in full operation by the 1st of January, 1833, and did go into operation as expected. The Union Bank, if she retained the bonds, would expect the payment of the first half yearly interest, on the 1st of July, 1833. If she offered the ! J r 1 , , , , „ bonds lor sale, as she was expected to do, the very first inquiry that would be made by a purchaser, would be what provision is made for the payment of interest, and the security of the principal. The legislature had all these matters before them in prospect. Now the question is again asked, did the legislature intend to make no appropriation for the payment of the bonds and the accruing interest upon them? Undoubtedly they intended to do so, and if they have not done it, it must have been an oversight, such as never before happened in any matter of a similar kind.
    But let us look at the charter itself, and see if the appropriation is not made in language, clear, explicit and which cannot be misunderstood.
    The seventh section before quoted, declares that the profits which may arise from the stock owned by the State, in the Union Bank of the State of Tennessee, after the bonds of the State shall have been paid, and also the bonus, &c. shall be and they are hereby appropriated to the use of the common schools in this State. Now here the intention of' the legislature is directed to the appropriation of the fund. What do they do with it? They first direct that the bonds of the State shall be paid out of the fund, and then the balance, after paying the State bonds, shall be appropriated to the use of common schools. How were the State bonds to be paid? From the face of them, the interest was to be paid every six months, and the principal in fifteen, twenty, twenty-five and thirty years. The interest was a part of the obligation itself. The bonds were to be paid out of the funds provided in the seventh section of the act incorporating ihe bank. The State bound herself to pay the bonds and provided these funds for their payment. These bonds, then, by the express enactment of the seventh section of the charter, were to be a lien on the profits of the stock, anü the other funds mentioned in the section, and were to remain a-lien upon the profits of the stock and other funds, until the bonds were paid. This was the pledge given. The promise made by the State, at the time the bonds were directed to be issued, and when the Union Bank took the bonds, she took them with that fund pledged for their payment, both principal and interest. The State expected, that when the bonds were offered for sale, as from the plain and obvious provisions of the charter she intended they should be, she intended that it should be told, upon her plighted faith as a State, that the profits of the stock and other funds before mentioned, were pledged for their redemption. The funds there mentioned, in the seventh section of the charter, were the very things that gave value to the bonds; at all events, there can he no doubt, they were the very things that were to give them their saleable and negotiable quality, and to cause them to circulate in the eastern markets.. The paper itself was comparatively speaking of but little value, without an appropriation to meet it. The State might as well issue paper money at once, and expect it to circulate on a par with gold and silver, as to issue such bonds as these, and expect them to circulate in the eastern markets, without any means provided for their redemption. In truth, such bonds as these, without a fund for their redemption, would be nothing more nor less than the old paper money system acted over again. From the plain language of the charter, then, it is incontrovertibly established, that the State in a certain event, was to subscribe for five thousand shares of the capital stock of the bank; that the governor was to make and execute, on behalf of the State, five hundred thousand dollars, in bonds of one thousand dollars each, bearing five per cent, interest, payable in New York or Philadelphia, &c., to the Union Bank, or its assigns, redeemable in certain instalments, and the interest payable half yearly; that the State appropriated a fund and placed it in the hands of the Union Bank for the payment of these bonds; and upon this appropriation being made, the Union Bank accepted of the bonds from the State, in payment of its stock.
    The creation of the fund to pay the bonds before they were given, and their appropriation in the charter itself,' to pay them, made it a part of the contract, on the part of the State, to pay those bonds out of these funds, and the State can no more touch the fund, than she can violate her promise. This was the bargain — the contract between the State and the Union- Bank; and if so, the State had no , , power aite.rwards to alter this contract, and to say, true, she pledged the funds mentioned in the seventh section of the charter, for the redemption of the bonds given to the bank, but she pledged more than was requisite for the purpose, and she will take away a portion of those funds, which she had pledged for the redemption of her paper. As well might a mortgagor say to his mortgagee, I have given my bond and pledged my estate for its payment, but the estate is worth more than the bond, and I require that a portion of it be given up, that I may appropriate it to some other purpose. The act of 1S33 does propose to do this. It directs the treasurer to receive the bonus and the dividend of the stock, as declared, and after paying the accruing interest upon the bonds of the State, to subscribe other stock with such surplus. Now if the legislature can authorize the treasurer to , do this, can they not with equal propriety direct the treasurer to súbscribe for stock in the Planter’s Bank, or retain the money ⅛ his hands, subject to the order of the legislature, and thereby wholly divert the fund from the objects contemplated, the payment of the bonds, for which they are pledged? Undoubtedly they can. And if they can take part of the fund pledged for the redemption of the bonds, they can, with equal propriety, take all. The funds mentioned in the seventh section, by the contract between the State and the bank, were to remain in the vaults of the bank, and under the control of the bank, the creditor, and not of the State for the payment of the State bonds. They were appropriated by the legislature, in the first place, to that effect. , If so you cannot avoid the constitutional objection, by the directions that may be given to the treasurer after he gets the money. If the fund is taken away, the contract is violated, although you may afterwards agree to put it back again. It will be noticed, that it is not merely the accruing interest the fund is pledged to pay, but the whole fund is pledged for the payment of the whole of the bonds, which of course includes principal and interest.
    It is contended by the counsel for the State, that the seventh section of the bank charter is no part of the charter itself, and that it is to be construed as though that section was a ■separate and distinct act altogether; and that admitting the section alluded to did contain the appropriation contended for, the legislature had aright to repeal the act and withdraw the appropriation, in the same manner as the legislature can make an appropriation to the support of the government, and by a subsequent act repeal sucli an appropriation. Admitting the premises contended for by the complainant’s counsel, his conclusion does not follow. The seventh section may be no part of the bank charter, and yet it would not be consistent for the legislature to repeal it. If the State issued her bonds, and by the seventh section appropriated certain funds to their payment, and the bank took these bonds upon the faith of the appropriation thus made, or the pledge thus given, then the appropriation or pledge becomes a part of the contract between the State and the bank, and the legislature can no more withdraw the appropriation, or take away the pledge, than they can repeal the contract itself. The State says to the bank, “I will give my bonds in payment of my stock, and pledge the profits of the stock for the payment of the bonds.” The bank says, “I will accept of the bonds in payment of the stock upon these conditions,” and she does accept them. Is it not plain, that the appropriation of the profits of the State stock, is a part of the contract between the State and the Union Bank? But the truth is, the seventh section of the act incorporating the Union Bank, is as much a part of the charter as any other part of the act. It was one of the conditions upon which the charter was granted, that the State was to be a partner in the bank to be established. She established the bank, and became a partner by executing her bonds and pledging her interest in the partnership, her stock in trade, to pay the bonds. How, then, can it be pretended, that the seventh section is no part of the charter, when it is incorporated with the charter itself, and constituted one of the conditions upon which the contract was formed. It is clear that an appropriation made by law where there is no contract may be repealed; and it is equally clear, that an appropriation made by contract, or in fulfilment of a contract, and which appropriation constitutes a part pf the contract itself, cannot be repealed. See the case of the ^ State of Louisiana vs. the Bank of Louisiana;, reported tbe National Banner, 6th November, 1833.
    It is also contended, that if the Union Bank, under the seventh section of the charter, can retain the profits of the stock, till the bonds of the State shall have been paid, yet the bank ought to account for interest. To this we answer; that interest can only be recovered, first, where a party contracts to pay interest; and second, where a party violates his contract or obligation, and interest is given by way of damages for the breach or non-fulfilment of such contract or obligation. The bank here did not contract to pay interest, nor has she violated her contract with the State; she is therefore not bound to pay the interest. 2 Comyn on Contracts, 178.
    There is another consideration that requires notice. Although the bank has heretofore declared dividends semi-annually, yet it might happen that losses might be sustained by the institution that would render such a course improper. This has frequently happened with other banks, and this very institution has already sustained a considerable loss in the negotiation and transfer of these very bonds. The Bank, by her negotiation and assignment of the bonds, and with the funds in her hands, pledged for their redemption, will be bound to pay the principal and the interest of the bonds as they become due; and if there is a surplus profit now, over and above what will pay the interest, that is no argument to prove that there will in all time to come, during the subsistence of the charter continue to be a surplus profit, still accumulating over and above what will pay the interest. Besides, the bonds themselves are to be paid out of the fund set apart for that object, as they fall due. These things the State looked to at the time she granted the charter, and she considered that the large bonus she was to receive, and other advantages secured to her, and for which the bank was responsible, was a sufficient equivalent for the advantage that would accrue to the bank by having the use of the profits of the stock during the subsistance of the charter. But whether the bargain was a good or bad one, on the part of the State, is not now the question. The only matter of inquiry is, what was the bargain? and I submit whether I have not given a fair interpretation of it. It may, however, be remarked, when we look at results, that the State of Tennessee, merely by granting a bank charter, by executing her bonds as above stated, paying for her subscription of stock with them, without being at one cent of expense to be paid*by her citizens, with no trouble, and but a small share of responsibility, will, in all probability, by the expiration- of the charter realize something like a million of dollars, to he appropriated by her to the education of her children.
    I have given what appears to be the plain and obvious meaning of the charter itself, construing it by the language which the legislature have chosen to employ in granting it. By recurring to the journals of the house of representatives, of the 20th ol October, 1832, it will be seen, that the legislature themselves, who granted the charter, understood its provisions as I have interpreted them. It is there stated, that a motion was made by Mr. Brown, to reconsider the seventh section of the bill, which was sustained by the house. A motion was then made to amend the seventh section, so as to give the State the control of the surplus profits of the stock belonging to the State, &c., after the accruing interest upon the bonds should be paid. This amendment was made, but upon a reconsideration was again stricken out. So that the legislature, before any stock had been subscribed, or rights acquired under the provisions of the • charter, before her citizens had come forward to accept the contract that had been offered them by the State, and when she had the charter completely within her own power, refused to alter it, thereby holding out a double inducement to those who might wish to become stockholders, to come forward and subscribe the stock, and the State will be a partner with them, upon the terms expressed in the charter, as it now is, and as I have construed it to be.
    Upon the whole it is believed to be established, that by the contract between the State and Union Bank, the State pledged the funds mentioned in the seventh section of the charter, to the payment of the State bonds due the bank;' that the hank and not the State has the control of those funds, and that the act of 1833, or any other act that might be - passed, taking this fund away from the bank, and directing it to be paid into the hands of the treasurer, or converting it into other stock, or other property, is or would be an act impairing the obligation of the contract, and a violation of the charter of the Union Bank, and on that account is, or would b.e, unconstitutional, and therefore void,
    
      T. Washington, on the same side.
    The bank in this case contends, that by the true construction of the charter, the bonus and dividends upon the State stock, are a pledge, to remain in the hands of the bank, for the ultimate redemption of the bonds of the State. The dividends upon all the stock composing the capital of the bank, have been regularly declared, as prescribed by the charter; and the State has been duly informed of the amount paid in from time to time upon the stock taken by individuals, and of the sum which, in the shape of bonus, the State is. credited with, subject to the charge above mentioned.
    1. The main question submitted to the court for decision, is founded on the seventh section of the charter. The literal meaning of that section, as expressed, is, that after the bonds of the State shall have been paid, the profits of the stock held by the State, the bonus, and the interest accruing upon the deposites of public money, are all appropriated to the use of common schools.
    The literal meaning of the section under consideration, has been adverted to, because, as some contend, there is a difference between the liability of the bank, 'to be called upon for the bonus, as regards the profits of the stock belonging to the State. The former, according to the opinion of many, the bank has no pretence of right for retaining; whereas they admit that there may be some doubt as to the latter. I maintain, however, that they both stand upon precisely the same footing, as does also the interest produced by the deposites of public money.
    2. But whatever may be thought of the meaning of this section of the charter, as it relates to the bonus, it is certainly explicit, with respect to the profits of the stock. They, “after the bonds of the State shall have been paid,” are appropriated to the use of common schools. Now, what is the legal effect of this provision, “that after the bonds of the State shall have been paid,” the profits of the stock “shall he, and are hereby appropriated to the use of common shools. I maintain, that these words, by positive enactment, create an express charge upon the profits of the stock, for the redemption of the bonds of the State; and after they shall have been disencumbered of that charge, then there is a trust declared for the benefit of common schools. Discarding for the present the question as to who is to have the custody and management of this trust fund, until the bends become due, or some portion of the interest, it will be my first object to show, that such a charge exists in behalf of the bank, and the nature of it.
    It has been held in numerous adjudged cases, that a devise to A, after all my just debts are paid, or after payment of debts and legacies, or words of similar import, create a charge upon the real estate 'for payment of debts. Fenwick vs. Chapman, 9 Peter’s Rep. 469: Kidney vs. Perismaker, 1 Vezey, Jr. 267: Newman vs. Johnston, 1 Vernon, 45. And in Shalleross vs. Finclcn, 3 Vez. 739: the master of the rolls uses this emphatic language, “after payment of debts, means that until debts are paid he gives nothing, that every thing he has shall be subject to his debts.” See also to the same effect, Trott vs. Venon, 2 Vernon, 709: Earl of Godolphinvs. Pinnock, 2 Vezey, Sen. 270: Cases Term. Tal. 110: 3 P. Wms. 95: 1 Vezey, Sen. 499: 2 John. Ch. Rep. 614.
    The above authorities demonstrate what would be the construction of the above words in a will; and it is not'perceived how a different principle can result from the use of the same words in a statute or contract; the intention governs in both cases. And in cases of contracts, which the seventh section undoubtedly is, the expressions used are to be taken most strongly against the grantor. *
    If the view above taken is correct, it is clear that a charge is created in behalf of the bank, prior in point of right to the trust created m favor of common schools, because 3 charge is coetaneous with, and is inseperable from, the fund , , upon winch it is based.
    3. But there are other considerations, extrinsic of what appears upon the face of the charter, that equally conduce to sustain the construct'on contended for by the bank; to some of which I will briefly advert.
    The construction insisted on by the State, and the course pursued by her, inevitably lead to the conclusion, that in granting the charter, she was, in effect, imposing a tax upon the people, to be levied hereafter, to the amount of half a million of dollars, and bank profits upon that sum for the period of thirty years; together with the bonus and its products, and the interest that might be yielded by the public deposites. And this tax too, was imposed in such a way, that those upon whom the burden of it was cast, never could avoid it by a repeal of the law; for it is in the form of a grant of a specific source of revenue, which not only creates a lien upon it, but it is an absolute appropriation of it.
    Let us suppose the money paid over to the treasurer, as the resolution of the legislature requires; profits of the stock, bonus, and interest upon the public deposites. "What then? It has been shown already, that the seventh section of the charter constitutes of these funds, two trusts; the first, for the redemption of the bonds of the State; the second, for the establishment of a system of common schools. Now the State being in possession of this money, she will eithér apply it to the purposes of these trusts, or she will use it as her own, regardless of the trusts. If she does the former, she of course concedes that the construction insisted on by the bank is correct; and then the controversy is reduced to the simple question, as to whether the Slate is the proper trustee or not. But if she does the latter, and the presumption is that she will, for the ground assumed by her is, that the money is hers; then, the redemption of her bonds hereafter, must depend upon her own good faith and sense of feeling; and an equivalent fund for the use of common schools, this being exhausted, is to be supplied. How? By a tax upon the people. But did any one believe, at the time of the emanation of this charter, that so enormous a tax was thereby imposed? No, certeinly, never. But yet such will be the inevitable result, for it must be recollected, that the institution of common schools will be entitled to the whole of these revenues and their proceeds, after paying the bonds of the State; which, in the course of thirty years, by judicious management, will amount to a very great sum.
    The same view of the subject, is applicable to the claim which the bank has for the redemption of the bonds of the State, if the State takes away these funds, and uses them as ordinary revenues.
    The provision of the seventh section is, “that after the bonds of the State shall have been paid,” which has been shown to be tantamount to saying, that after what shall become due on that account, has been deducted from these specific funds; then they, to wit, the funds themselves remaining, “shall be, and are (in presentí) hereby appropriated to the .use of common schools.” Does not this convey a vested interest in remainder? I am at a loss to conceive of language, that would be better adapted to the purpose. And yet, although there has been a positive and unequivocal grant of these funds, by which the whole of them have passed from the State, and been transferred to the bank, and to common schools; still we find the State contending most vehemently for them, to the prejudice of her own grantees, and in violation of her own solemn engagements, which conduct would not be countenanced, by a court of equity, in the case of an individual.
    4. If there exists no charge against these funds, the State might transfer them to a purchaser; and if they were so transferred, the purchaser would take them fioo from any charge.
    By sale and transfer, what would be the situation of the bank, in regard to the payment of bonds, and of common sc! ools, as respects their interest in the matter? And, what would have become, by this operation, of the seventh section of die charter? It would he entirely struck out of existence, and would remain a dead letter in the charter.
    If the seventh section can be dispensed with, we must, therefore, come to the conclusion, that there is no other obligation to pay the bonds, than what the bonds i ic i 11 it • impart; and as the fotate cannot be sued, that obligation never can be enforced. And that, as to common schools, they possess no lien upon the funds mentioned in the said seventh section; and that, il they should ever get the benefit of them, it will be an entire gratuity to be hereafter conceded.
    The only ground on which the State can righfully claim to be heard in this suit, is that of calling for an account, and of having a trustee appointed, to supply the defect of the non-appointment of one by the author of the trust, in order to have the trust carried into execution. If the position assumed bjr the Stale, in its intercourse with the bank on this subject prior to the commencement of this suit, is tenable, its remedy would be at law, for the direct recovery of these funds, and in that case, resort should be had to a different Jorum.
    
    
      5. It is argued that the 11th section taken in connection with the 7th, prove the construction of the State to be correct.
    The charter is an entire thing; and, in construing it, the meaning of any particular part, must be taken in connection with all the parts! The 7th section anticipates the application of the bonus, (forasyet, it had not been spoken of,) and direct;., that after die payment of the bonds of the State, it shall go, together with the other funds mentioned, to the use of common schools. So that, before the bonus had an existence, its destination was determined. Furthermore; a charter is a grant, a contract of the very highest nature. And, it is a well known rule in the construction of grants or deeds, that if there be in them a repugnancy between an antecedent and a succeeding part, the former must prevail. The reason of' the rule is, that the grantor did not intend to defeat his own act, once solemnly performed; and therefore, if any part must be rejected, it must be that which has that tendency.
    But, there is no repugnancy between the 7th and 11th sections of the charter. The former merely dedicates a fund, which it was in contemplation to provide, to particular objects; and the latter merely says it shall be paid to the State at specified periods, as a method of fixing the amount, and value before tlie expiration of the charter: but, in perfect consisten-cenc7 with its previous appropriation.
    6. If the foregoing views are correct, the bank is not only not bound to pay these funds over to the treasurer of the State, but it would not be justified, consistently with the best legal advice in doing so, and might be made responsible if it did, to those to whom they equitably belong, as having diverted them from the purposes of the trust.
    I must be allowed to say, however, with all proper deference, that the State has not been, from first to last, consistent with herself, in the interpretation given by her to this disputed section of the charter. She now claims to hav.e the control pf the surplus profits of the stock which stands in her name, beyond what will be sufficient to discharge the accruing interest upon the bonds, and the entire bonus, and the interest yielded by the public deposites. A reference to the journal of the house of representatives, of 20th of October, 1832, will show that on that day a motion was made by Mr. Brown, then a member, to reconsider the seventh section of the charter, the bill by which it was offered being then in progress. The motion prevailed; and an amgndment was then proposed in accordance with the present assumptsion of the State, and adopted. The amendment was then reconsidered and stricken out, leaving the section precisely as it stood originally. So that the very legislature that granted the charter, must have been aware of the operation of the seventh section, as contended for by the bank, and possessing that knowledge, she acquiesced in the terms of the section as it was first introduced. What the legislature did upon that occasion amounted to more than mere acquiescence; it was a practical construction put by themselves upon their own act, and an express repudiation of the interpretation now insisted upon by their successors. ■
    I have adverted to the above fact for the purpose of showing in what sense both parties understood the seventh section when the charter was accepted. When contracts are doubtful upon their face, they are to be construed in that sense in which the obligor knew that the obligee understood them, and entered into them. United States vs. Heath, 3 Cranch, 4x3.
    
      
      7. Another fact may be adverted to, which has an equally ' ^ . ■ C strong tendency to prove that the legislature, at the time ? .'I _ 0 7 granting tils charter, entertained the same sense of the mean- ¿ r t , • f ing ol the seventh section that tile bank does.
    The charter was granted in October, 1832, at an extraordinary session of the legislature. The bank went into operation on the 1st of March, 1833; and the bonds of the State bore date on the 1st of January, 1833. By the terms of the charter, the interest upon them was to he paid semi-annually.
    The next regular session of the legislature after that time, was to commence by law, on the third Monday in September, 1833; and no other session did or was expected to intervene. Consequently, one instalment of interest become due upon the bonds before the meeting of the legislature in 13o3, and that could not but have been foreseen by the legislature of 1832. Yet no provision was made by the legislature of 1832, other than what is contained in the section of the charter for the payment of the portion of interest alluded to.
    Now, why this omission, unless it had been considered that sufficient provision for that object was contained in the said seventh section? It is impossible to account for it on any other principle, without ascribing to the State either a predetermination not to comply with its engagements, or a most culpable negligence with regard to the preservation of its credit.
    8. It cannot affect in the smallest degree, the construction contended for by me of the seventh section of the charter, that the funds mentioned in it are likely to accumulate by the end of thirty years, or at the end of each separate year of the corporate existence of the bank, to an amount greater than the sum that will be due at the termination of those periods respectively, upon the bonds of the State.
    If a trust has been constituted of property worth ten thousand dollars, as a security for the payment of a debt of five thousand, would the debtor have a right merely on account of the superabundance of the security, to go and -take away half of it and apply it to another use? or the whole of it, as the State proposes to do in this case? Such a proposition is monstrous, and can find no semblance of support, either in law or reason.
    
      ft is within the range of posibility, and even of probability, we look to the late ol every other institution oí the land which we have heretofore had, that the bank may sustain such ]oggeg ag wjj] jn p^e enc]: cause stock to depreciate, and the winding-up to prove a sacrifice instead of a gain. Should that, unfortunately, turn out to be the case, and should the bank now give up those contested funds, the stockholders other than the State, will have to bear the pressure of the loss exclusively in the first instance; for their capital will have been actually paid in, while that of the State will remain to be contributed in such manner as the legislature may think proper to provide hereafter.
    The foregoing argument brings us to the conclusion, without the necessity of stating it formally, as to where the custody of these funds ought to be, until the scrip of the State is paid for. If the bank has a lien upon the fund, she of course has a right to retain it until she has been fully indemnified.
    The stock which was purchased by the scrip, would of course be in the bank and under the management and control of the board of directors. The proceeds of the stock and the bonus, would also be in the hands of the bank until paid out to the State or its agent. But before any proceeds are yielded, or any bonus due, that is, at the-very instant of creating the stock, these proceeds, and this bonus, thus necessarily obliged to come through the hands of the bank if ever they should exist at all, are devoted to a particular object, namely: the payment of scrip,.which it was in contemplation that the State should issue as a means of acquiring a certain portion of the stock. And that object, in its own nature, was incapable of being accomplished under fifteen, twenty, twenty-five and thirty years, the respective periods when the different instalment of the scrip become payble.
    Under these circumstances, how is it possible that any doubt can arise as to where the custody of these proceeds and the bonus was intended to be, until the arrival of those several periods of time? What was it that was pledged for the redemption of the scrip? Not the stock, but the profits of it and the bonus. What kind of a pledge was it? It was vi-vum vadium, or living pledge, as contradistinguished from 
      mortuum vadium, or dead pledge, and -signifies that the ject of it is productive. And in the case of a living pledge, , . . . f , , , . . , ° 1 , the title ol the property pledged remains in the pawnor, and the possession in the pawnee; and the thing pledged is the product of the property, and the pawnee has a right to the possession of the property, as incident to the collection and enjoyment of the proceeds until the debt is paid. 3 Bl. Com. 157, et seq.: 4 Kent, 132 and seq.
    
    
      9. ‘ The right of the bank to the custody of these funds having been shown, the next point is as to the nature of its final accountability.
    First, then, as to the profits of the stock, Chancellor Kent, in Nichol vs. Munford,, 4 Johnson’s Rep. 522, .lays down the following principles: that “the interest of each partner in the partnership property, is his share in the surplus, subject to partnership accounts.” And he says furthermore, “that that interest alone is liable to the separate creditors of each partner, claiming either by assignment or execution.” And that “an assignee of a separate creditor of one partner, is entitled only to the share of such partner after a settlement of the accounts, and after all the just claims of the other partner are satisfied.” See, also, to the same effect, West vs. Ship, 1 Vez. 238: Fox vs. Harburg, Cowper 44-5: Field vs. Clark, 4 Vez. 396: and Dutton vs. Morrison, 17 Vez. 193.
    The State is a partner in this banking concern; that is, she is a joint owner of stock with the other stockholders, and her stock is of course subject to all the casualties of trade, to which that of the other stockholders may be exposed for thirty years, the terrb to which the existence of the corporation is limited. Her profits upon her stock will be the same as theirs, according to the amount of stock owned by each, and consequently, her losses must be the same; and the proportion of profit and loss can only be ascertained when the charter shall have expired.
    The bank then, from the very nature of the case, is necessarily compelled to retain these profits until the end of the charter, in order upon a final settlement of the concern, to see what they arc, and whether they will be sufficient to pay for the stock, and without any appeal to the State so far as , , _ J rl may prove deficient.
    Considering this as a partnership, still it may be contended ^at ^ aj^fofog or charter expressly provide, that semi-annual dividends shall be declared. The individual stockholders are entitled to semi-annual dividends upon the profits of their stock; and so would the State be, if she had not in the formation of the charter pledged the profits of her stock throughout the whole existence of the bank, for the payment of her stock.
    It will result from the preceding views, that the bank will not be chargeable with any interest at all upon the accumulating profit of the stock of the state, nor upon the bonus until the expiration of the charter. Interest never accrues, but as an incident to a debt due, or where a trustee, having a trust fund in his hands, uses it in his own business, or suffers it to lie idle and unproductive. In the case before us, there would be no debt due from the bank to the state, until the termination of the charter; nor then, unless the stock had been paid for, and there should be a surplus of profits left.
    In the foregeing view the profits on the stock and the bonus have been Supposed to be governed by the same principles; but in one respect the pledge made of the bonus differs essentially from that which was made of the profits of the stock. The stock itself was not pledged, but only the profits, which might be more or less, or nothing at all, according to the success or adversity of the bank. But in the case of the bonus the principal debt itself was pledged, which consists of a certain and determinate sum due at a given time. The debt itself being pledged, it could not be paid annually without destroying the pledge, and therefore, the state has no right to demand it until the object for which the pledge was made has been accomplished.
    From the views here presented, the following propositions are deducible:
    1. That the profits of the stock owned by the state, and the bonus, are both pledged for the payment of the debt due bn account of the purchase of said stock; and that, until said debt is fully paid, they cannot be released from the operation of the pledge.
    
      2. That when the bonus is released from the operation of the pledge, then there will be six per cent, interest due upon each instalment of it, previously payable.
    3. That no interest whatever ought to be allowed upon the profits of the stock belonging to the state and held in pledge by the bank; because, whether the profits already accrued, at any period of the charter, might amount to any security for the debt, or whether they might not have to be applied against future losses, could only be determined at the expiration of the charter.
    4. That if the state should think proper, at any time before the debt becomes payable which she has incurred for the purchase of the stock, to pay up the whole of it, then the bonus and the profits of the stock will both be released from the operation of the pledge, and thenceforward the state will be entitled to the profits of her stock, both past and future, in the same manner as any other stockholders.
    5. That the state has no right to complain of tós&stíiffiy if at any time short of the expiration of t: amount due in the shape of bonus, and the profits'" alread^_ac-. cruing upon the stock, should be sufficient to pay' tlié whoíe debt owing to the bank, the state has the powej the debt in full to discharge the pledge, and in' will be entitled to every thing that is now withha
    6. That the advantage which the bank may possibly gSm, by the use of the profits upon the stock of the State, accumulated to an amount beyond the debt due to the bank before the State thinks proper to pay that debt, is counterbalanced by the privation to which the bank is subjected in not having an actual capital paid in upon the stock of the state, out of which to make those profits.
    I beg leave to say one word in conclusion, concerning myself.
    I am one of the directors of this bank, appointed by the State. I came into the board, however, after the controversy had arisen, and after it had assumed a shape when it was manifest that there could be’no future action by the directors -on the subject. My professional services were not engaged by the bank, nor, so far as I know, thought of, until after the adjournment of the legislature, they having first taken the case into their own hands, by the adoption of a resolution directing their own officer, the attorney general, to commence this suit. As the state and the bank had assumed their respective positions, and were fairly at issue, and nothing remained to be done which could possibly influence my conduct as a director, I did not think proper to decline being employed.
    Furthermore: I do not consider that I am placed at the board to advocate whatever legislation may take place on the subject of the stock owned by the State, or whatever views may be entertained by a majority of the legislature in regard to it for the next thirty years, if I should continue in office so long. The charter is my guide, and my only guide, as to all matters of construction, of right, or of power. The best judgment which I can form consistently with the charter, is my guide as to all matters of expediency. In carrying oil the operations of the bank, there is not, and cannot possibly be, any conflict between the interest of the State as a stockholder, and that of the other stockholders. As to this controversy, the decision of it does not belong to the board, for that would exclude the participation of the legislature, but to the judicial tribunals of the country. The questions involved in it, are altogether extrinsic of the ordinary duties of a director.
    I have said this much, because I know that this dispute has produced much excitement in the public mind, and in the hope of avoiding all censure and uncharitableness in these times of mortal strife between politicians and banks.
    
      G. $. Yergtr, attorney general, in reply.
    The language of the seventh section of the charter, or act incorporating the bank, cannot, by any fair construction, be deemed a contract, or trust, between the State and the bank.
    The word “after,” as used in that section, is an adverb of tune; it merely indicates the period when the proceeds or profits of the State stock shall be appropriated to the use common schools, until which time the State has the undoubted and entire control of the fund.
    By the common law in general, no estate can arise except by express limitation; no intention to create an estate can be presumed, it must be by express limitation. Preston on Estates, 190: Equity Cases, Ab. 195. But in equity it is admitted, trusts may be raised by any mode or form, which clearly demonstrates, that such was the intention of the parties. Sanders on Uses and Trusts, 316.
    Does this section nesessarily create the trust as contended for by the bank? It is believed not.
    Trusts are either express or implied. This it is admitted is not an express trust; it must, therefore, if it be a trust at all, be an implied one.
    Implied trusts are of three kinds, or they may be divided into three distinct classes. 1st. Resulting trusts. 2nd. Constructive trusts. 3rd. Trusts arising from necessary implication upon the face of a conveyance or contract.
    A resulting trust can be better understood by stating an example, than by a particular definition; thus, when money is advanced by A, but the conveyance is to B, or when a conveyance is made to A, subject to such declaration of the trusts thereof as shall afterwards be declared b'y the creator of the trust, or where there is a conveyance, without a legal consideration. In these cases and others of a similar character, the trusts are resulting.
    Constructive trusts are those which the law raises by construction, upon facts, dehors the instrument. As where a party purchases a trust estate, with notice of the trust, or where by fraud, or evidence knowledge, a party is in equity turned into a trustee.
    It is manifest this is not a resulting or constructive trust. Is it a trust by necessary implication of law?
    Do the words of the seventh section of the charter necessarily operate as a transfer of the fund to the bank, subject to the payment of the State^bonds? ⅝ Can no other meaning be attached to the language used ? If no other meaning can be attached to the word used, then a trust arises by implication. But if the section can have a plain and sensible meaning, and still leave the fund within the control of the State, then it is submitted, ho trust is raised for the bank.
    A trust of th:s kind ought never to be implied, unless it is absolutely necessary to give effect to the whole sentence or instrument. Willis on Trustees, 24: 3 Swanston’s Ch. R. 592: 1 Vezey & Beames, 466: 1 Roper on Legacies, 81: Equity Cases,, Ab. 196: 1 Mer. Ch, Rep. 414: Finch’s Rep. 436.
    Where A devises to B, after the death of his wife, this does not give to the wife an estate for life, by implication, because the estate can, in the mean time, vest in the heir. Equity Cases, Ab. 196: 2 Roper on Legacies, 311: 1 Me-vale Rep. 414. But had the devise been to the heir at law, after the death of the wife, this would have vested the estate in her during life, because it was manifest the heir was not to have it until her death, and if she did not take it in the mean time no other person could. Ib.
    Here the fund is appropriated, after the payment of the bonds, does this necessarily convey the fund to the bank? if the words can have effect,' and the fund remain with the legal owner, it does not. • The words, I contend, can have full operation, and the State still have control of the fund, therefore, no such implication can arise. In order to raise this “implication,” the State must have debarred herself from using or controlling the fund, or enjoying its benefits; then, although there is no direct assignment of it to the bank in trust, it would have been necessarily implied, because the State having debarred herself of all control, the bank must necessarily have it, or it would have been under the control of no person.
    But when the State has not in terms debarred herself of the control of the fund, and where she has not, by express limitation vested it in the bank, and where the language used may be susceptible of two meanings, by one of which she retains her legal right, and by the other she divests herself of all control; it surely does not follow from “necessary and unavoidable implication” that the latter was intended. In such ease, there is not such a strong probability of intention, in favor of the latter, that the former cannot possibly he sup- . ' . r J i posed, and as neither meaning can be “necessarily implied,” the fund remains unaffected by it, under the control and management of the légal owner. See the definition of “necessary implication,” by Lord Eldon, in the case of
    1 Vezey & Beams, 466: See also, 1 Peter Wms. 518, 519.
    I refer the court particularly to the case of. Cook vs. Foun~ tain, 3 Swanston, 591, where the doctrine of trusts by implication is ably examined by Lord North.
    In speaking of implied and presumptive trusts, he says, “There is one good, general and infallible rule, it is such a rule as never deceives, and to which there is no exception, and that is this: the law never implies, the court never presumes a trust, but in case of absolute necessity. The reason of this rule is sacred, for if chancery do once take liberty to construe or presume a trust unnecessarily, a way is opened to the lord chancellor to construe or presume any man in England out of his estate.”
    Suppose A, having fifty slaves, conveys twenty of them to B, after payment of a debt he owes to C. Can C say, here is a trust raised to secure my debt? Can he file a bill in equity and have them sold to satisfy it? Surely not. And why? Because there is no express conveyance for that purpose, nor is it necessary to imply one, for full effect can be given to the conveyance to B, without such a consequence resulting.
    In order to sustain the construction centended for by the bank, the court will have to add to the section, the necessary word», by mere supposition or conjecture; this is not allowed in the case of wills, Glascock vs. Drummond, 1 Sim. and Stuart 517. Even if the court could infer or conjecture what the intent was, if the words used are insufficient to effectuate that intent, the necessary words cannot be supplied, 3 Brown Ch. Cases 395, (note) Frederick vs. Hall, 1 Vesey jr. 396: Upton vs. Ferren, 5 Vesey 801: Scott vs. Chamberlain, 3 Vesey 302, 49. The trust must not only be conjectured or implied, but its terms also; whether it is to bear interest, or how invested, &c.
    
      The very fact, that the legislature in one part of the cliar-stipulate for interest upon the deposites, and say nothing a^out interest on this fund, shows conclusively they did not believe, the bank was to control this fund. Why stipulate for interest upon comparatively so small an amount,.and yet say nothing about the interest on a fund, which at the end of the torm the bank claims to retain it, would amount to perhaps a million of dollars.
    The construction we contend for is sustained by the provi-" sions of the thirteenth fundamental article and the eleventh section of the charter.
    The consequences of the construction contended for by ths bank, have been so ably presented by Judge Anderson, that it is unnecessary to again repeat them.
    (The .counsel here introduced the original bill incorporating the bank, with its various amendments, on which the very power or interest claimed by the bank was inserted, but was afterwards struck out, from which he contended it was manifest no such intention existed in the mind of the legislature.)
    But again, if the fund mentioned in the seventh section, had been expressly appropriated to the payment of the State bonds, it does not necessarily follow that a trust was created. Cannot the State appropriate a particular fund to the payment of a particular debt, and yet retain the control of the fund?
    It surely cannot be supposed, that when the government declares that a particular fund shall pay a particular debt, that this gives its creditor the power to control and také possession of the fund; the idea is chimerical.
    Again. Suppose a trust were created, it would be a trust for accumulation. Has not the State in such case the right to file a bill and have the fund invested in such manner as will make it productive?
    A trustee is bound to manage aud employ the trust property for the benefit of the cestui que trust with the same care that a prudent man would be supposed to manage his own affairs, and, although he may have discretionary powers, if he omit to invest it, or to do ivhativould be clearly beneficial for the trustee, a court of chancery will compel him. Willis on trustees .124, 125, 126, 127: Hovendam on frauds 486: 2 Ball and Beatty’s Rep. 434! 6 Madd. ch. Rep. 13. When the fund J r , is intended to accumulate, the trustee is bound to invest it, * . ' apply to a court of equity to have it done. Willis on trustees 124, 125, 126: Chancery practice 108.
    And if the trustee omits to do so, he renders himself responsible. Willis on trustees 173.
    The legislature by the act of 1833, ch. have directed how this fund shall be invested, and it is the duty of this court to compel the bank to invest it according to the directions of the legislature.
    The next inquiry is as to whether the bank is liable to pay interest. Whether it is a trust or not, I insist the bank is clearly liable.
    Where a trust is placed in the hands of a trustee, and he permits it to remain unproductive. He is accountable for the profits, it should have made, or at least interest compounded half yearly. Willis on trustees 178, 181: 12 Yesey 127.
    If there has been an improper detention of trust property, the trustee is liable for interest, or, if money be retained by a trustee contrary to his duty, he is liable. Ib. and note G.
    If no trust is created, the bank must pay interest. Because the answers of General Gibbs, the president, in 1833, to the resolution of the legislature, shows a refusal on the part of the bank to pay the fund to the treasurer or to permit it to be invested. It has wrongfully retained it ever since. In such case the interest ought to be compounded. See Quarrel vs. Bezkford, 1 Madd. ch. Rep. 269: Trimbleton vs. iJame, 1 Ball and Beatty Rep. 37: Archdeacon vs. Bowers, 6 Cond. Exch. Rep.; 1 Johnston’s ch. Rep. 510, 527, 620.
   GREEN J.

delivered the opinion of the court.

This is a bill filed by the attorney general, in the name of the State, to recover of the Union Bank, the bonus agreed, by the eleventh section of the charter, to be paid, and also, the dividends which have accrued on the stock, owned by the State, in the bank.

The bank resists the payment of these moneys, alleging, that by the seventh section of the charter, these funds were appropriated for the extinguishment of the bonds of the State after which, they are to go to the use of common schools, and that they avo to remain in the bank, in trust for the accomplishment of these objects. That until the State’s bonds shall be -paid, the funds cannot rightfully bo withdrawn from the custody of the bank. The sixth section of the charter directs, that whenever there shall have been five thousand shares of the capital stock of said bank subscribed, and the commissioners appointed in Nashville, shall certify that fact in writing to tho governor, be shall be authorized, and required to subscribe on behalf of the State, for five thousand shares of tho capital stock of said bank; and shall forthwith make and execute on behalf of the State, five hundred thousand dollars in bonds of one thousand dollars each, signed by him officially, and countersigned by the secretary of state, and under the seal of the Stale, hearing five per cent interest; which bonds were to be made payable at New York or Philadelphia, or at such place as the president and directors might direct, to the president, directors and company of the Union Bank, of the State of Tennessee, or assigns, at the periods and in tho proportions following: that is to say, one hundred and twenty-five thousand dollars at tho end of fifteen years; one hundred and twenty-five thousand dollars at the end of twenty years; one hundred and twenty-five thousand dollars at the end of twenty-five years; and one hundred and twenty-five thousand dollars at tho end of thirty years, and the interest upon said bonds to be paid half yearly; which bonds the governor shall hand over, and deliver to tire president, directors, and company of the Union Bank, of the State of Tennessee, in full payments of said stock. The governor was to hayo the power to appoint five directors for the management of said hank, annually, on tho first Monday of January, in each and everj year.

On the 1st day of January, 1833, after the individual subscriptions of stock had been made, as provided for in the charter, the bonds of the State were executed, as directed, and delivered to the Union Bank, and received by it in payment for five thousand shares of stock.

By the eleventh section of the charter, it is enacted, “That in consideration of the privileges granted by , r ° ° ^ tire tank agrees to pay to the State annually, one ilia, on die a: ;tai stocic charte half of one per ceamm, on die amount of ¿lie paid in by stockholders other than the State.”

By the fundamental article in the charter, it is provided, that “half-yearly dividends shall be made of so much of the profits as shall appear to the directors advisable.”

This bonus, and these profits, the State insists it has a right to receive and dispose of at pleasure. The right thus claimed unquestionably exists, unless it has been relinquished by some other provisions of the charter,

The hank contends, that the seventh section contains such relinquishment. It is in these words; “Be it enacted, that the profits which may arise from the stocic, owned by the State, in the Union Bank, of the Stale’of Tennessee, after the bonds of the State shall have been paid, and also the bonus agreed to be paid by the bank to the State, for the privileges conferred by the charter, and also the interest, whicn may, from time to time accrue- upon the deposites of public money, by the treasurers of the State, shall be, and they are hereby appropriated to the use of common schools in this State,” &c.

It is insisted by the bank, that the words in the above section, “After the bonds of the State shall have been paid,” constitute a surrender of the right of the State to control the funds mentioned in the seventh section, until, out of them the principal and interest of the bonds are satisfied. Does this construction arise, by necessaiy implication, from tfre use of these words? In answering this question, we are to take the words employed by the legislature, in their obvious sense. We cannot be governed by the rule contended for by one of die counsel for the bank, “that the words are to be taken in the sense in which the promissor apprehended, at the time, that the promissee understood them.” The bank was not in existence at the time the legislature used the words. The charter was an offer, on the part of the State, of a contract, with the terms and stipulations in it, to those who might choose to become subscribers for stock. There could, therefore, be no knowledge, on the part of the legislature, as to the sense in which any of the terms of the contract would be understood by subscribers for stock; and it necessarily follows, that there can be no obligation, on the part of the State, arising from the above principle, to yield its construction of the charter, because the bank has put a different one on this section.

As it is a rule of law, and of common sense, that what a man does not expressly part with, he retains; (Preston, 191, 192,) it follows, that unless the words used in the seventh section of the charter, contain an express relinquishment of the right of the State, to control the funds in controversy, or unless this relinquishment arises, by necessary implication from the language employed, the State still has the right to their control.

There is an express dedication of these funds for the use of common schools, after the bonds of the State shall have been paid, but it is not contended, that there is any express appropriation of them for the payment of the bonds, much less, is there an express relinquishment of their control; but it is urged, that by necessary implication, a trust is raised for the payment of the bonds out of their funds, and that the bank, is constituted a trustee to carry this design into effect.

In order to a clear understanding of this question, let us inquire what is meant by necessary implication? In the case of Wilkinson vs. Adams, (1 Vez. and Beams, 466,) the Lord Chancellor says, “necessary implication means, not natural necessity, but so strong a probability of intention, that an intention, contrary to that which is imputed to the testator, cannot be supposed.” Taking this natural, and just definition, let us apply it to the case in hand.

The seventh section of. the charter says, “that the profits which may arise from the stock, owned by the State, in the Union Bank, of the State of Tennessee, after the bonds of the State shall have been paid, and also the bonus agreed to be paid by the bank, for the privileges conferred by the charter, and also the interest which may, from time to time, accrue upon the deposites of public money, by the treasurers of the State, shall be, and they are hereby appropriated to the use of common schools in this State.”

Plainly, the interest of common schools was in the minds of the legislature, and was intended to be secured by the m-troduction of this section. We, therefore, see an express appropriation of these funds for that object. But a question arose, whether they could risk with the people, the creation of so large a debt as five hundred thousand dollars, and at the same time appropriate the whole of the profits of the bank, in a way that would exclude their future control of of them? A provision for common schools, would be an exceedingly beneficial measure; but the creation of a debt, by which the people would be exposed to future taxation, it was feared, would more than neutralize the benefits that might be acquired by the provisions for schools.' This consideration manifestly placed the members in a dilemma, as to the course they should take upon this subject. The proceedings upon Mr. Brown’s motion, to amend this section, by inserting before the word “bonds,” the words “accruing interest on the,” so as to make it read, “after the securing interest on the bonds of the Slate shall have been paid,” is evidence of this remark. That amendment was at first voted by the house. The effect of it would have been, to have vested in common schools a larger sum, by five hundred thousand dollars, than the section would have appropriated without it; and by this pledge, would have left the State to raise the sum required for the payment of the principal of the State bonds, by some other means. Upon a reconsideration of the subject, the members were not willing thus to put this fund beyond their reach, and the amendment was withdrawn. These proceedings are insisted upon, by all those who have argued for the bank, as evincing, on the part of the legislature, an understanding of this subject, in accordance with that for which they contend. We think, on the contrary, that if they are to be looked to at all, they prove that as it regarded an application of these funds, between the passage of the act, and the time at which they were to be vested in common schools; the legislature were not willing to take any decisive step. They, therefore, fix positively the time, when the right of the schools to the fund shall take effect, and leave the direction of it, during the intermediate time,, to future legislation. That it was not intended to leave the bonus and the profits or: the stock of the State, in the Bank, as a sinking fund, to meet the accruing interest, and to extinguish the bonds as they fell due, is strongly indicated by the fact, that the seventh section, as originally introduced, contained the provision. It was, however, stricken out, and a section adopted in lieu of it, appropriating these funds unconditionally and immediately, as they might fall due, to common schools. This amendment wus afterwards amended, by the insertion of the words, “after the bonds of the State shall have been paid.” It is thus plainly indicated, that while, on the one hand, there was a strong inclination to appropriate the whole fund, as it might accrue, to common schools; on the other hand, they were afraid to place it beyond the reach of legislative action, until the bonds were paid; and not being willing to create from this source, a sinking fund to pay them, they chose to leave the subject in such a condition, that a future legislature might act upon it without embarrassment.

This view of the subject has been taken, not because the court thinks this is a proper judicial method of arriving at the meaning of the act, hut as it has been pressed upon the court by the counsel for the hank, it was thought to be, not altogether impertinent, to give it a passing notice, and to show that these proceedings indicate the reverse of that, for which they contend.

As, therefore, we must be governed by the meaning of the words which the legislature have used, the inquiry recurs, Is the appropriation contended for, necessarily implied? It is admitted by one of the counsel for the hank, “that the words used are susceptible of two interpretations.” They may mean, “that till the States bonds are paid,” the State reserves to herself the control of the profits of her stock, and bonus, and the interest of the public deposites. They may mean, that the State surrenders her right to control those funds, until, out of them, the bonds are satisfied, principal and interest.”

This admission, due alike to the candor, and known acquaintance with the meaning of language, of the learned. counsel who made it, is in effect, a surrender of the 7 7 ^ tion. We have already seen, that Lord Eldon defines necessary implication, to be “so strong; a probability of in- • 1 . . , tention, that an intention contrary to that winch is imputed, cannot be supposed.” Now, if it be admitted, as it is here, that the words are susceptible of two meanings, and one of them is imputed, it follows, that the contrary one may be supposed. These words do not, therefore, raise the trust contended for, by necessary implication. To support the construction contended for, we are referred to cases in English books, where the testator used this language. “After my debts are paid, -I devise,” &c. and proceeded to dispose of his real estate. It was held, that the words used meant, “that lie would not give anything until his debts were paid, and that every tiling he had should be subject to his debts. 3 Vez. *?89:

In reference to cases of this description, it may be remarked, that as in England, real estate is not liable to the payment of simple contract debts, and as a moral obligation rests upon a man to make provision for the payment of his debts, when he has the means of doing so, the court will lay hold of almost any thing, in a will, indicating such an intention of the testator, in order to charge his real estate for the payment of debts. But it is laid down, (1-Equity, Ca. Ab. 196,) that “If a man devises to a stranger, after the death of his wife, this gives the wife no estate for life by implication; for it is but a demonstration when the estate of the stranger shall commence.” In the mean time, the estate would vest in the heir, and, therefore, it is not necessary to imply, that the testator intended that the wife should take it, as another meaning might be supposed. But if the devisor had said, that “after the death of his wife,” the heir should have the manor, the wife by necessary implication shall have the whole manor for life; foy the devisor’s intent is plain, that the heir is not to have the manor, while the wife lives.” 1 Eq. Ca. 156. From these two cases, the rule of construction will be obvious. Xu the first, there was a direction the estate might take, other than by vesting in the wife an estate for life; and as the words used, were susceptible of two meanings, nothing should be implied, and the estate should vest in the heir, the legal owner. So here, the words are susceptible of two meanings', and as neither can be necessarily implied, the funds aré unaffected by the language employed, and remain in the legal owner.

In the other case, the heir was excluded by the plain meaning of the will, from taking the estate while the wife lived; and there being no one else in whom it could vest, it was necessarily implied, that the wife should have it during her life.

Had the legislature, in this case, in plain and unequivocal terms relinquished any right to the control of these funds until the State bonds had been paid, then as the funds are in the hands of the bank, and as it holds the bonds, and no one else has a right to the money; the bank, by necessary implication, would have had a right to retain, and apply it as indicated by the legislature. But this is not the case. The State may still control the fund, and the words may well mean, and do mean, that it reserves'the right to do so until its bonds are paid. They are, therefore, only “a demonstration when” the right of the common schools shall commence.

But if this section of the charter had expressly declared, that this fund should be set apart for the payment of accruing interest, and the principal of the State’s bonds, and then to vest in common schools, the consequence contended for would not have followed. It would, to be sure, have been a pledge of the faith of the government, that this fnnd should not be diverted from the object contemplated by the act; but it would have created no legal right on the part of the bank, to retain and control the fund. ■ It is said, that whenever England creates stock, she hypothecates some particular branch of the revenue, at the same time as a sinking fund. Suppose she does, what is it but a pledge of the faith of the government, that this particular fund shall be so applied? Did it ever enter into • the head of the holder of her government stock, that he was created a trustee for the management and custody of that branch of the revenue? Surely not; and who would contend, that in that case, the government of England, if it chose to do so, might not control that fund, and pay the debt from other sources of revenue? all, who would for a moment suppose, that the government-might not control the collection, safe custody, and disbursement of such funds. If but one answer can be given to these questions,- let us apply the case supposed to the one in But abcve hand. The government of Tennessee is entitled to an annual revenue of one half of one per cent, upon the stock of individuals in the Union Baak, and to its share of the semiannual dividends upon its stock. From these sources it derives considerable revenue. Now suppose the legislature had directly declared, that this branch of the revenue of the State should be set apart for the extinguishment of its bonds. How would that differ in principle, or in,its legitimate consequences, from such a declaration to any other part of thé revenue? We can perceive no distinction. And yet we imagine, if this seventh section had declared, that the revenue arising from merchants license should be so set apart, it would never have been thought by any one, that the bank would have a right to interpose and receive that revenue, and retain for their own use a large amount of the public treasure, for a long series of years, upon the ground, that so much as might be due to it from tho State, was ultimately to be paid out of this fund, and that in the mean time, the State could not be trusted with its custody and management. Admitting that the faith of the State is engaged, that the bonds shall be paid out of this fund, that engagement does not pledge the fund in the hands of the State’s creditor, as a security for the payment. It is a promise on the part of the State that it will pay the debt from this source; but it is not a surrender of the right to collect it, and to disburse it, according to that - promise.

It is insisted by the counsel for the State, and we think with great reason, that the failure to stipulate in the charter* that the bank should pay interest on any sums arising from the dividends and bonus, goes far to show that it was not intended they should remain in the bank. It is hardly possible to conceive, that there should have been a stipulation for interest on government deposites, when it was known that from ordinary sources of revenue, these would be very ¡«.considerable, and at the same time, to have been entirely insensible to the immense profits the bank would make upon the funds of the State, without, as it is contended, paying one cent for their use. The bank felt the pressure of this circumstance, and in the answer of the president to a call of the legislature in 1833, attempted to avoid its force, by supposing that the legislature were willing the bank should have the use of these funds, and by the profits upon them, neutralize what he calls “the oppressive tax of ten thousand dollars per annum.” We cannot conceive that any such purpose existed. Why was the bonus required to be paid by the eleventh section, if a provision had already been enacted in the seventh, by which it was neutralized? It would have been a much more simple method, to have granted the privileges of the charter, without exacting any bonus at all. The supposition of the bank is unreasonable, and does not tend to explain the strange inconsistency into which its construction of the seventh section would involve the legislature. . The interest upon government deposites, arising from the ordinary revenue, would have been too inconsiderable to have deserved legislative provision. But if the bonus and dividends were paid, and were placed on deposits in the bank, there would then be a fund, the interest on which would form a considerable item. Upon the whole, we are well satisfied, that there is nothing in the seventh section of the charter, that authorizes the bank to withhold from the treasurer, the payment of the dividends which have been declared upon the stock owned by the State, and the bonus agreed to be paid annually, for the privileges of the charter.

But if the bank were right in its construction of the seventh section, and a trust had been created of this fund, for the redemption of the bonds of the State, and a legal right to control the fund had been vested in the bank, we do not perceive that the result of this case could have been more favorable to the bank than the one to which the court has arrived. The bank, in that case, would have been a trustee for carrying into -efFect the implied intentions of the legislature. Upon the best settled principles, it would hav.e been bound to perform the trust, by investing the fund, so that it should be beneficial to cestui que trust, and to act in relation to the fund] with the care of a provident owner. Willis on Trusts, 124, 125, 126, 127: Hovenden on Frauds, 486, and references.

In that case the State would have been the cestui que trust, because the bonds were to be paid out of the fund. If the trusts were not expressly declared, and if the trustee had any doubt as to the proper disposition of the fund, by application to a court of equity the t£usts would have been declared, and proper directions given. Willis, 124-5 and note 5.

However fully,’2 says a late writer, (Willis on Trusts, 125,) ua discretionary power of management may have been given, yet if a trustee omit doing what would be plainly beneficial, he will be answerable.” If he fails to do this, the cestui que trust may by bill in chancery obtain the aid of the court, to compel a performance of his duty. In that case too, the bank would have been liable to pay interest with half-yearly rests. As the fund would have been placed in bank for accumulation, if it were permitted to remain unproductive, the bank would have been responsible for the profits that should have been made. Willis, 181.

We are all satisfied, however, that the charter does not authorize the last aspect in which we have viewed the case. The bank was liable to pay the State the bonus annually, and the dividends half-yearly; and having refused to do so in the answer of their president, in 1833, the court is of opinion, that interest shall be paid on such balances as may have remained, after the payment of the accruing interest on the State bonds; and that the bank, upon the application, and under the direction of the treasurer of the State, shall invest the amount now due the State, in the stock of said bank, in payment for such additional shares, as the said treasurer may subscribe, for, by virtue of the act of 1833, c...73, § 2, and by virtue of the sixth section of the bank charter.

The clerk and master of this court will take and state an account, charging the bank the balance duo for dividends and bonus, after the payment of the interest on the State bonds, together with interest on such balances up to this time.

Decree reversed.