Case ID: miss_14/html/0179-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Mr. Justice Clayton", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William F. Smith et al. vs. The Mississippi and Alabama Railroad Company, use of James Bradley.
    In an action of assumpsit by a bank upon a promissory note payable to itself, it is not competent for the court, at the instance of the defendant, to inquire into the organization of the bank, or as to fraud in the taking of its stock.
    Where, in an action by a hank to recover the amount of a note payable to itself, the defendant proved that he had delivered to his counsel to use in evidence, the receipt of the bank for a certain amount of cotton, and that the receipt had been lost, and offered to prove the contents of the receipt: Held, that a sufficient foundation for the secondary evidence had been laid, and it should be admitted.
    Where a party has executed his note, and afterward delivers cotton to the payee in part payment thereof, and takes the payee’s receipt therefor; upon the loss of such receipt, the maker, when sued upon the note, may prove the delivery of the cotton in payment of his debt, by any other proof in his power, without producing or accounting for the receipt.
    In error from the Hinds circuit court; Hon. John H. Rollins, judge.
    The Mississippi and Alabama Railroad Company, suing for the use of James Bradley, on the 23d of April, 1839, sued in assumpsit William F. Smith, Nathan Bryant and Hugh Campbell, on a note made by the defendants for $10,926 28, dated the 29th of March, 1838, and payable to the plaintiffs, ninety days after date, at their banking house in Brandon.
    The defendants pleaded non assumpsit and payment with a notice of set-off of the value of 530 bales of cotton.
    The case was submitted to a jury, who found for the plaintiffs the full amount of the note and interest.
    From the bill of exceptions it appeared that on the trial, the defendants offered evidence with a view of showing that the transfer to the usee of the note sued on was fraudulent; which the court below rejected; they then offered the same evidence with a view of coupling it with other proof, to show that the whole course of the bank had been fraudulent, and that it was so in its inception ; the evidence was again rejected.
    The defendants then offered to prove, that at the ostensible commencement of the bank, and before the origin of the note sued on, but thirty thousand dollars in specie of the one hundred thousand required by the charter, had been paid in, in specie, the residue being paid in fraudulent certificates of deposits in and the paper of other banks, and that soon after its organization the specie paid in was no longer on hand; this proof was also rejected.
    The defendants then offered to prove that the note sued on was discounted by the plaintiffs in their own paper; that it was known, at the time of the discount, to them that but $30,000 in specie had been paid in, and that they had issued between seven and eight millions of notes, so that the notes issued by them were in point of fact worthless, which facts, known to the plaintiffs, were unknown to the defendants.
    The defendants then having proved by J. J. Davenport, Esq. one of their counsel, that a certificate, purporting to be signed by William II. Shelton, which stated that Smith, one of the defendants, had a credit on the books of the bank for about six hundred bales of cotton, had been placed in his hands by Smith, to use as evidence of payment on the trial of the case, and had been in his possession since the commencement of the suit; that he had never seen Shelton write, but had seen his name to letters and bank notes, and from that believed the receipt was written and signed by Shelton, the president of the bank, and called for about six hundred bales of cotton. H. S. Foote, Esq., also of counsel for defendant, proved that he had seen the receipt in Davenport’s hands, and recognized the writing of Shelton ; Smith also made oath that he had placed the receipt in Davenport’s hands. Davenport further proved that he had lost it, and after recent search had been unable to find it; whereupon the defendant asked that proof of the contents of the receipt might be made to the jury, but the court below refused to allow it, and exceptions were taken.
    Other proof was offered to the jury of the reception of eighty eight bales of cotton by the bank, which it is not deemed necessary further to notice, as the opinion of the court was irrespective of it.
    The defendants moved for a new trial and filed in support of it an affidavit of Smith, one of the defendants, of the delivery of the cotton to the bank, with letters from the trustee of the bank, stating that it appeared by the books of the bank, that he had delivered 530 bales of cotton in 1837. Other statements and evidence were also offered on the hearing of the motion for a new trial, but are not noticed here. The court below refused to grant a new trial; a bill of exceptions, embodying all the evidence, was taken, and the defendants prosecute this writ of error.
    
      Foote and Hutchinson, for plaintiffs in error.
    1. Did the court below err in excluding the evidence offered to show that the transfer of the note in suit, from the nominal to the real plaintiff was fraudulent.
    In support of the affirmative it is contended that the defendant, under the general issue might avail himself of any facts tending to prove that the plaintiff had not the. cause of action alleged; and in a suit upon an indorsed promissory note, the question of title directly arises. Possession is prima facie evidence of title; 3 Kent Com. 789-80; but only prima facie. “Suspicion must be cast on the title of the holder, by showing that the instrument had got into circulation by force or fraud, before the onus is cast on the holder, of showing the consideration he gave for it.” 3 Kent, 79.
    In King v. Milson, 2 Camp. 5, Lord Ellenborough says: “ There is a distinction between negotiable instruments and common chattels ; with respect to the former, possession is prima facie evidence of property. I must presume that the defendant, when possessed of this note, was a bona fide holder for a valuable consideration. It lies upon you to impeach his title. You might have thrown so much suspicion upon his conduct in the transaction as to have rendered it necessary for him to prove from whom heYeceived the note, and what consideration he gave for it, but I think you have not done,so.”
    In Reynolds v. Cheule, 2 Camp. 596, Lord Ellenborough said, “ You must first cast some suspicion on his title by showing that the bill was obtained from the defendant, or some previous holder, by force or fraud.” In Rees v. The Marquis of, Hertford, 2 Camp. 574, the plaintiff, from circumstances developed at the trial, was forced to prove what consideration he gave for the bill sued on.
    The usee, Bradley, must be treated as the holder; as the actual plaintiff. Act of 1822; How. & Hutch. 584, §30; 1 Kent Com. 346;- 2 Sumner, 251; 1 Kent, 323; 2 How. 642; Anderson v. Patrick, 7 How. 354.
    Did the act of 1836, (H. & H. 595, §29, 30, 31, 32,) rendering the contracts of partners joint and several, and providing that no written signature should be denied, or identity or description of persons suing, be required to be proved except such signature, identity or description be called in question by plea under oath, alter this rule of law 1 It does not in terms embrace the point here made, nor in spirit; as the question of title in the usee does not include or affect identity or description of the plaintiffs, nominal or real.
    2. It was error to reject the proof offered to establish : 1. that the Mississippi and Alabama Railroad Company never had legal existence. 2. That if it had, it had not performed the acts necessary, by its charter, to be performed in order to be possessed of the power to make the contract sued on; so that the note was fraudulent and void. Wolf v. Goddard, 9 Watts, 554.
    “There was a time in England,” says the court, “when in matters of construction every intendment was made in .favor of corporations; and the courts studied to extend, rather than restrain the meaning of terms granting corporate rights and privileges; and this upon the principle that their design is to provide some good that is useful to the public, and that through their instrumentality, the people regained from the crown some portion of those rights of which it had possessed itself. If the franchise ceased it reverted to the crown, which was thus strengthened against the people. But this doctrine either never has, or never ought to have, prevailed here, at least since the 4th of July, 1776, because here the people are the legitimate source and depositary of power, and whatever is given to an association of individuals is so much abstracted from the rights of the citizens at large. And from the multiplication of corporations, the rule, of late years, has been changed in England, and is the same as that which exists in this country, viz.: that in the construction of grants of corporate rights a strict rule must prevail, and that all legitimate presumptions must operate in favor of the public rather than in favor of corporations.”
    In the case of the Pennsylvania, Delaware, and Maryland Steam Navigation Company v. Dandridge, Gill & Johns. Rep. 319, the court say, “In deciding whether a corporation can make a particular contract, we are to consider, in the first place, whether its charter, or some statute pending upon it, forbids or permits it to make such a contract; and if the charter and valid statutory faw are silent on the subject, in the second place whether a power to make such a contract may not be implied on the part of a corporation, as directly or indirectly necessary to enable it to fulfil the purpose of its existence, or whether the contract is entirely foreign to that purpose.”
    See also Kemper v. Turnpike Co. 11 Ohio R. 393; 1 W. L. J. 228; The Salem Mill-dam, 9 Pick. 195; Reed v. Benton and Manchester Railroad Co. 4 How. 257; 1 Kent’s Com. 464; 7 Wend. R. 558.
    3. The secondary testimony offered in relation to Shelton’s certificate, ought certainly to have been admitted. Its former existence was fully shown by evidence introduced. Its delivery by Smith to his attorney to be used as testimony was also attested, and that it had been lost or mislaid was shown, as well as searches in vain for it. Its character was also satisfactorily proved, inasmuch as the signature of William H. Shelton, the president of the bank, was fully established; and though it was not proved to have been signed by him in his official capacity, that presumption naturally arose in the absence of all evidence to the contrary.
   Mr. Justice Clayton

delivered the opinion of the court.

The questions as to the proper organization of the bank, and as to fraud in the taking of its stock, have already been determined by this court. They cannot be investigated in this mode of proceeding.

Of the other points raised in the argument, it will only be necessary to notice a single one.

The defendant proved by his counsel that he had delivered to them a receipt to be used as evidence in the suits, for some 600 bales of cotton, signed by Shelton, the president of the bank— proved the loss of the receipt — and then offered to prove its contents. The court refused to permit this to be done.

Not only was the party entitled to prove its contents, under the circumstances, but he was at liberty to prove the delivery of the cotton, in payment of his debt, by any other testimony in his power. The receipt was not the only proof which was admissible, and so clearly is this the law, that we are at a loss to perceive on what principle it was ruled differently by the court below.

For this error the judgment will be reversed, and a new trial granted.