Case ID: ky_32/html/0114-01.html
Source: Caselaw Access Project
Author: {"author": "Chief Justice Robertson J(tdge Nicholas,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Tilford et al. vs. The Bank of Kentucky.
    Debt — /or a • devastavit.
    
    Notes discounted by the Bank of Kentucky, are placed upon-the same footing with foreign bills of exchange, as to "the remedy,and its effects, against the drawers and endorsers — and them only : so that actions of debt may be brought '■against the draw ers and endorsers jointly, or any one of them separately. But the representatives of a deceased drawer ■or endorser can not be joined with the survivors.
    Nor does the 3d sec. of the act of ’98 — which gives to protested foreign bills the dignity of judgments, and requires executors and administrators to suffer judgment to pass upon such bills,before any bond, bill oroth er debt of equal or inferior dignity apply to notes discounted by the Bank of Ken. An executor or administrator may-pay other bonds -or notes,in preference to those discounted by the bank, without being guilty, of a devastapit. [JudgeNicholas oí a different opinion,See page 122.T,-
    
      [Mr. Chapeze for-the Plaintiffs: Mr.- Crittenden and Mr. Charles A. Wickliffe for Defendant.]
    From the Circuit Court for Bueeitt County.
    
      April 25.
   Chief Justice Robertson

delivered the Opinion of a majority of the Court

Judge Nicholas dissenting.

The President, Directors and Co. of the Bank of Kentucky having obtained a judgment against the administrators and heirs of John Read, deceased, on anote which he, as principal, and others, as his sureties, had given to the said bank, in September, 1823, and a fieri facias on the judgment, having been returned nulla bona — ' this suit was brought against the said administrators and their sureties, for a devastavit.

On the trial, the circuit court instructed the jury, in effect, that, in the administration of the assets of the deceased obligor, his note to the bank was, by law, entitled to the priority of a judgment, and that, therefore, if the administrators, knowing that it existed and was unpaid, had discharged notes which were due from the intestate to natural persons, they had, to that extent, been guilty of a devastavit.

That instruction presents the only important question upon this writ of error, prosecuted to reverse the judgment which was rendered against the administrators and their sureties.

The instruction cannot be maintained, unless there be some statutory enactment which imparted to notes made payable to the bank, a factitious dignity, and a precedence in the order of administration, beyond what they can be entitled to claim according to the doctrines of the common law.

The following extracts will exhibit all the statutory law that can operate directly on the present question.

First. “ It shall be lawful for any person or persons having right to demand any money upon a protested foreign bill of exchange, to comrnen.ee and prosecute an action of debt, for principal, interest, and charges of protest, against the drawers and endorsers jointly, or against either of them separately; and judgment shall and may be given for such principal, charges and interest, after the rate of ten per centum per annum, as aforesaid, to the time of said judgment, and legal interest upon the money recovered until the same shall be fully satisfied.” 2nd Section of an Act of 1798, 1 Dig. 192.

Second. “ All foreign bills of exchange which are or shall be protested, shall, after the death of the drawer or endorser, be accounted of equal dignity with a judgment, and the executors or administrators of every such drawer or endorser shall be compelled to suffer judgment to pass against them, for all debts due upon protested foreign bills of exchange, before any bond, bill or other debt of equal or inferior dignity, under the penalty of being liable to pay the same out of their own- proper goods.” 3rd Section of the same Jlei'of 1798.

Third. A portion of the thirteenth section of the act incorporating the Bank of Kentucky. 1 Dig. 144.- — - “ And all notes or bills at any time discounted by the said corporation, shall be, and they are hereby, placed upon the same footing as foreign bills of exchange, so that the like remedy may be had for the recovery thereof, against the drawer Or drawers, endorser or endorsers, and with the like effect, (except so far as relates to-damages,) any law, custom or usage to the contrary notwithstanding.” ■

As bills of exchange are mercantile paper, regulatedby a peculiar code of the common law, denominated thelex mercatoria, there may have been an adequate and consistent reason for giving to “protested” foreign bills-of exchange (as the third section of the act of 1798, supra, did give,) the effect of judgments, as to the administration of the assets of a deceased drawer or endorser. And, as it was proper to impart negotiability to. notes discounted by the Bank of Kentucky, there was some just and consistent reason for placing them on the footing of foreign bills of exchange as to the remedy and the effect of that remedy — so that the same remedy might,,be pursued on a discounted note, as that which was allowed, by law, in a parallel case, on a foreign bill; an(j consequently, in that respect, and to that extent, the thirteenth section of the bank charter applied to protested notes the second section of the act of 1198, respecting the remedy and the effect of the remedy on protested foreign bills of exchange. But, in other respects, it would be difficult to imagine any sufficient motive for placing notes of the bank on higher or better ground than that on which domestic bills of exchange had been placed. And, perceiving no motive of policy or justice for imputing to notes due to the bank, the dignity of judgments, in any case, or for any purpose, we are not inclined to extend, beyond its plain import, the provision quoted from the thirteenth section of the charter ; more especially as that import is fortified by some extraneous considerations. The literal and grammatical interpretation of that provision, taking it altogether, and giving a consistent operation to every part of it, is, that, as to the “ remedy” against “ drawers and endorsers” and as to the “ effect” of that remedy against them, (damages excepted,) and as to that remedy and its effect only, notes discounted by the bank were placed on the footing of protested foreign bills of exchange.

The language of the provision is not, that notes, when discounted by the bank, should be placed on the footing of protested foreign bills of exchange ; nor is it, simply and alone, even that such notes shall be placed on the footing of foreign bills of exchange; but it is, that they shall be placed on the footing of 1 (foreign bills of exchange,” with a specified restriction, and for a special purpose. Had the legislature intended to place those notes on the footing of protested foreign bills, in all respects, the word foreign would have been inserted, and nothing should have been added to what would then have been the legislative declaration — “ shall be placed on the footing of protested, foreign bills of exchange.” Had such been the intention of the legislature, such a provision would, without obscurity or doubt, have expressed it, and then every word would have had án essential and consistent operation. But such is not the langtiage of the legislature : it is essentially of a different character and import. Not only is the important word “protestó” left out, (and doubtless with design,)' but a special qualification is added — “so thaf’ &c. This addition cannot be deemed mere supererogation. Judicially, it should be deemed, necessary for expressing the true legislative intention ; and it is our duty to give it some effect. Why, then, was it inserted ? and what should be its effect ? Supposing that it was added for some practical purpose, and was understood by the legislature, (ps we should suppose,) but one answer can be given to these questions, and that is, that it was intended to qualify the antecedent part of the enactment, and to shew, that it was not the intention of the legislature to place the notes of the bank on the footing, in ail respects, of foreign bills of exciiange ; and also, to shew to what extent they were to stand on the same ground. Had nothing more been said, than that such notes should “ be placed on the footing of foreign bills of exchange,” the third section of the act of 1798 (supra,) would not have applied, because that section gives the dignity of a judgment (in the administration of assets,) not to foreign bills of exchange merely as such, but only to “protestó” foreign bills. Nor would the second section of that act, as to the remedy on protested foreign bills of exchange, have been applicable to the notes of the bank, had the legislature provided only that they should stand on the footing of merely “foreign bills of exchange?” But the chief object of the enactment was to prescribe for notes discounted by the bank, the same remedy which was applicable to foreign bills of exchange; and therefore, lest it might be inferred that the notes of the bank were placed, in all respects, on the footing of“■protested” foreign bills of exchange, the legislature declared, that they should be “ placed on the footing of foreign bills of exchange ;” and lest the remedy contemplated would not have been deemed applicable had nothing explanatory, or more explicit, been said, the legislature added, “ so that the like remedy may be had for the recovery thereof, against the drawer or drawers, endorser or endorsers, and with the like effect &c.” This latter provis'wn should be construed as comprehending protested foreign bills, because it would be difficult to imagine a state of case analogous t.o the liabilities of parties to the notes of the bank, in which a suit could be maintained on a foreign bill, unless it had been protested. But this provision as to remedy against drawers and endorsers, should not be.construed as placing notes of the bank on the footing of protested bills of exchange, for any other purpose than the remedy, and that, too, against drawers and endorsers only ; and nothing preceding that provision had placed notes of the bank on the footing of protested foreign bills. The words “ and icilh the like effect” evidently refer to the antecedent provision — “ so that the like remedy for the recovery thereof, may be had against the drawer or drawers, endorser or endorsers”, and mean precisely what they would import had they and “ the like remedy" been placed in juxtaposition, so as to read, “ so that the like remedy and with the like effect may be had against endorser and endorsers &c.” And thus it may be made manifest, that the words “ and with the like effect” refer to the remedy, and not to the note.

This literal and grammatical deduction, so obvious and inevitable, is fortified by another consideration.— The parenthetical words “(except as to damages,)” tend to shew that, by the expressions “and with the like effect,” the legislature meant the effect of a suit on a protested foreign bill of exchange. “ The like remedy" is action of debt against all the endorsers and drawers, jointly, or against any one of them separately. And the effect of that remedy, as prescribed by the second section of the act of 1798, is, that the note shall not be impeachable by an endorser or drawer, otherwise than a protested foreign bill might be impeached, and that principal, interest and charges of protest, may be recovered from all or any one of the drawers and endorsers.

Thus every word of the provision .quoted from the thirteenth section of the charter of the bank, may have a full and consistent operation by restricting their application to the second section of the act of 1798 ; and neither the letter of the provision, nor the utility and harmony of its parts, will authorize a construction that will embrace the third section of that act, giving to protested bills of exchange the dignity of judgments. There is no analogy between the thirteenth section of the charter, and the act of 1812, elevating certain unsealed writings to the dignity of sealed instruments.— The latter places the unsealed on the footing of sealed contracts in all respects — to be entitled to the same consideration and effect, and to be the foundations of the same form of action. This creates a perfect parallelism in every essential particular ; and the enactment contains nothing incongruous or restrictive. There is -not a word in the thirteenth section of the' charter, that imports an intention to extrend, beyond the remedy by suit against drawers and endorsers, the similitude between notes discounted by the bank, and protested foreign bills of exchange. This should be deemed sufficient. But there are some negative considerations which fortify the conclusion thus deduced from the words of the thirteenth section. The remedy of which it speaks, is a remedy against endorsers and drawers only, and undoubtedly refers to that prescribed by the second section of the act of 1798. That remedy, and with the same effect, does not apply to a personal representative of a drawer or endorser : first, because the thirteenth' section of the charter restricts it to drawers and endorsers; second, because a joint suit against such personal representative, and a surviving drawer or endorser, .could not be maintained; third, because the remedy by suit, and the effect of such remedy, as provided for by the second section of the act .of 1798, and by the thirteenth section of the charter, evén if they applied to a personal representative of a drawer or endorser, can have no connection with the third section of the act of 1798, which gives to protested foreign bills of exchange the dignity of judgments, as against executors and administrators, without regard to any suit, and, of course, before suit, The second section of the act of 1798 has no effect on the relative dignity of protested foreign bills, jn ¿he administration of assets ; it applies only to the remedy and the effect of the remedy by suit, on such bill, against the drawer and endorser. The thirteenth section of the charter of the bank, like the second section of the act of 1798, applies only to the remedy, and the effect of the remedy, on the note against drawer and endorser, and does not affect, or attempt to affect, the dignity of the note without suit and as against administrators and executors in the administration of assets. There is nothing in the thirteenth section of the charter, any more than there is in the second section of the act of 1798, which alludes to the dignity of a protested note or bill in the order of administration; and it would be difficult to give it such a construction as to produce such an effect ;‘ indeed, it could not be done consistently with the right rules of philology, or with the presumption that the legislature understood the import of its own language, and deemed the words which have been adopted, necessary and proper, to express the true intention of the enactment.

But were it admitted that the true import of the thirteenth section is doubtful, even then we should not be inclined to adopt, by any doubtful process, a construction that would give to notes discounted by the Bank of Kentucky, the dignity and effect of judgments, in the administration of assets. Before we would attribute to them such character and privilege, we should be thoroughly convinced that the legislative will, plainly expressed, has so directed.

The third section of the act of 1798 is explicit and unambiguous; and the charter of the Bank of the Commonwealth is equally so ; it declares that, “ all such notes (meaning notes discounted by the Bank of the Commonwealth,) shail be debts of superior dignity, and shall be paid first by executors and administrators.” — - But nothing resembling this provision, or the second section of the act of 1798, can be found in the charter of the Bank of Kentucky. The only reasonable deduction from this circumstance is, that the legislature did not, in the one case, intend to do what, in the others, it thought proper to do, in a distinct, direct and explicit enactment. Moreover, as the sovereign has a prerogative right to priority, there was an obvious and consistent motive for declaring, that notes discounted by the Bank of the Commonwealth should be paid first by administrators and executors. But no such motive applied to the Bank of Kentucky. The interest of the state in the stock of the latter was comparatively inconsiderable, and that interest it held as other individual stockholders.

Dissent of Judge Nicholas

But whatever room there might have been for a diversity of construction, had no judicial interpretation been ever given by this court, to the thirteenth section of the charter of the Bank of Kentucky, all perplexing doubt should, in our judgment, be deemed to have been settled by the opinion of our predecessors, in the unreported case of The Bank of Kentucky vs. Sturgus’ Administrators, decided in 1828. In that case, the court decided express!}', that notes discounted by the Bank of ’ Kentucky, are not, by law, entitled to the priority of judgments, or any other priority, over other notes of equal natural dignity. One direct decision on such a question, should be satisfactory and conclusive. A personal representative would have just cause to complain, if this court should convict him of a devastavit for administering assets and paying debts according to the law as it had been expounded and settled by the same court. We would not, therefore, feel authorized to overrule the decision in the Bank as. Sturgus’ Administrators, even if the point decided were more doubtful than it is, or than it could be deemed to be, as an original and unsettled matter of construction.

Wherefore, it is the opinion of a majority of this court (Judge Nicholas dissenting,) that the judgment of the circuit court is erroneous, and should be reversed.

Judgment reversed, and cause remanded for a new trial.

J(tdge Nicholas,

dissenting from the decision of the other members of the court, delivered the following Opinion.

The principal question presented is, whether a note negotiable and payable at the Bank of Kentucky, and discounted by the bank, stands, as to priority over other debts in the settlement of a decedent’s estate, upon the same grade with judgments.

This depends upon the proper construction of the following words of the thirteenth section of the charter of the 1 Dig 144 :-

« And all notes or bills discounted by said corporation, shall be, and they are hereby, placed upon the same footing as foreign bills of exchange, so that the Jibe remedy may be had for the recovery thereof against the drawer or drawers, endorser or endorsers, and with the like effect, (except so far as relates to damages,) any law, custom or usage to the contrary notwithstanding.”

The first section of the act of 1798, 1 Dig. 192, declares,, that foreign bills of exchange shall, after protest, bear interest at the rate of ten per centum per annum„

The second section gives the action of debt on a foreign bill of exchange, for principal, interest and charges of protest, against the drawers and endorsers jointly, or against either of them separately ; “ and judgment shall be given for such principal, charges' and interest, after the rate of ten per centum per annum, as aforesaid, to the time of such judgment, and legal interest upon the money recovered, until the same shall be satisfiedi”

The third section says, that a protested foreign bill of exchange, after the death of a drawer or endorser, shall be of equal dignity with a judgment, and directs executors and administrators to permit judgments against them thereon, “ before any bond, bill, or other debt of equal or inferior dignity, Under the penalty of being liable to pay the same out of their own proper goods.”

If the charter of the bank had stopped after saying the notes discounted by it, should be placed upon the same footing as foreign bills of exchange,” it would have been free from ambiguity, and there would have been' no room left for any construction which would take from a discounted note, the dignity of a foreign bill, in the administration of a decedent’s estate. But it is contended, that the succeeding words, “ so that the like remedy may be had for the recovery thereof, against the drawers or endorsers, and with the like effect, (except so far.as relates to damages,)” do restrain the import of the preceding words, to the giving the remedy by action of debt allowed by the act of 1798, on foreign bills. This construction, which merely gives the remedy by action of debt, is obviously far short of the legislative intention, as it has always been understood and acted upon by the courts in numberless cases, recognising that the charter had imparted to a discounted note, the actual qualities of a hill of exchange, and, as an incident thereto, requiring protest and notice of nonpayment, to fix the liability of an endorser, instead of the legal diligence, by suit, required in the case of ordinary promissory notes. This recognised quality or property of a discounted note could never have arisen from the giving of merely the same remedy by action of debt, allowed in favor of a foreign bill. The remedy so given neither imparted or took from a foreign bill.that or any other quality. Notice of protest is still necessary' to a recovery on a foreign bill, notwithstanding that remedy is pursued ; and as it is equally required in a recovery on a discounted note, the latter must have received from the charter some of the properties of a hill of exchange, over and above what the remedy merely could have imparted. As, then, the section must be so construed as to give a discounted note some of the qualities of a foreign bill, independent of the mere remedy, and as that effect is only given by the broad, comprehensive language placing them upon the same footing, it would seem necessarily to follow, that they must be tr.eated as standing upon the same footing for every purpose, except so far as those who contend for a different . construction, can restrain the assimilating process of the charter, by fair interpretation of some other restrictive • words or expressions. The words, “ and with the like effect (except so far as' relates to damages,)” cannot be tortured into any such purpose. On the contrary, to give any operation to the words “ with the like effect,” they must be made to refer to the placing a note on the footing of a bill of exchange, and not to the remedy spoken of. To use the words, “ except so far as relates to damages,” for any such purposes, would violate the fundamental rules of all construction, which treat the exception of one thing as the implied inclusion of all other things not excepted, on the same principle .that the enumeration of particulars is the exclusion of generais, and the mention of one thing is the exclusion of another.

Considering the large share which the state held in the stock of the bank — that is one half as originally contemplated by the charter — and the earnest desire which may well be presumed on the part of the legislature, to ensure the success of the first experiment of such an institution in our state, very adequate motives may well be inferred for the giving such dignity and priority to a discounted note ; and at the same time, a satisfactory reason is found for assimilating a discounted note to a foreign, rather than an inland, bill of exchange. On the other hand, the opposite construction, which restricts it of this effect, infers the absence of that heedful caution and monopolizing selfishness, which characterizes all legislation where the state involves its interests with those of individuals, and which our legislature can at no time be charged with having laid aside, but of which it subsequently shewed itself especially mindful, on the kindred subject of the Commonwealth’s Bank.

The use of the superfluous language as to the remedy, is fairly ascribableto that superabundant caution, which frequently manifests itself in our legislative enactments, and is equally displayed, and in almost the identical same manner, in the act of 1812, placing unsealed, on the same footing with sealed writings.

As it was no part of the effect of the second section of the act'of 1798, either to make that a bill of exchange which otherwise would not have been, or to give damages upon any bill which otherwise, without that section, would not bear them, the exception, stated in the charter, as to the effect of discounting a note, that damages should not be allowed thereon, as was allowed upon a foreign bill, conclusively shews the legislative understanding of the true import of the language used ; and that, but for that exception, a discounted note would for every purpose be placed upon the same footing as a foreign bill. It is equally, manifest, from the fact of making such an exception, that the intention was, that a discounted note should, for every other purpose, stand, in all respects, upon the precise same footing as a foreign bill.

The idea of converting a promissory note into a bill of exchange, was no doubt taken from the statute of Anne, indeed, from some of the phraseology of the thirteenth section of the charter,' it is apparent, that the draftsman of the charter had that statute before him. The statute of Anne places assigned notes on the footing of inland, not of foreign bills. The distinction is an essential one in many respects. Prima facie, our legislature would also have preferred to place the notes discounted by the bank upon the footing of inland, rather than of foreign bills, in the absence of any controlling reason to the contrary. That reason, then, must be sought for. None has suggested itself, and it is believed that none, having even the semblance of plausibility, can be suggested, except that, according to the existing law, foreign bills had the dignity of judgments in the settlement- of a decedent’s estate ; whereas, inland bills had no such dignity and priority. When it is recollected, that, according to the scheme of the charter, it was contemplated that the state was to own' one half of the stock, an abundant reason is'also found, why the foreign bill should have been selected, on that very account.

A loose note of an opinion by our predecessors, endorsed on the back of the record, in the case of the Bank versus Sturgus’ Administrators, is relied upon, as establishing a different construction. It is difficult to ascertain from'the language there used, whether it was thought, that the case necessarily turned upon the point now under consideration. But be that as it may, I cannot receive that case as a controlling authority, in opposition to the construction which, to my mind, is so indisputably the only legitimate one. The only reason assigned in that casd, why the discounted note does not acquire the dignity of a judgment, is because the third section of the act of 1798 only gives that dignity to protested foreign bills of exchange, and the charter does 110t place the note on the footing of a protested foreign bill of exchange. I understand the word protest, as used in She act of 1798, to import nothing more than dishonored. Why should not the same remedy and the same damages be allo'we'd on foreign bills, where no protest was necessary to a recovery, as where it was ? There is no good reason for any such distinction ; and the legislature should not be presumed to have intended any such. But concede, that the true construction is otherwise, and that the distinction was intended. That will-not affect this question. If the charter placed discounted notes on the footing of foreign bills, except as to damages, — as-one of the incidents of a foreign bill was, that, when protested, it held the-dignity of a judgment, — so also it would seem necessarily to follow, that when the discounted note, having all the essential qualities of a foreign bill, was protested, that it, also, would then be raised to the same dignity. But this opinion, thus intimated in the Bank versus Sturgus, is in direct contravention of the uniform construction of the charter by both bar and bench, ever since its passage, and as has been recognised by our predecessors in numerous cases. The uniform habit, under the sanction of this court, has been to sue upon a discounted note, as a protested foreign bill, under the remedy given by the second section of the act of 1798, in debt, against all the parties, or either of them separately. Now, it is only upon protested foreign bills that this remedy is given by the act of 1798, and it can, with the same pro* priety, be contended that the charter does not apply to the second section, giving the remedy on a protested bill, as to the third section, which gives the accumulated dignity. There is no room or reason for distinction or difference between them. The charter does not give the remedy allowed on protested bills. The only way you obtain the remedy afforded by the act, is by shewing that the note is, by the charter, placed on the footing of a foreign bill ; and then, because that remedy is allowed as incident to a foreign bill, to allow it, also, as incident to the note thus converted into a foreign bill. The very same process of reasoning inevitably places it upon the same scale of dignity when protested. The case of the Bank versus Sturgus, standing, as it does, in such direct repugnance to a construction so long, and. so well established, and so repeatedly recognised by the same judges, could weigh little, even if it had been discussed seriatim; but circumstanced as it is, it should weigh nothing at all as an authority.