# The Bank of the United States v. Dandridge/Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Marshall
This is a writ of error to the Circuit Court for the District of Virginia. The original action was debt on a bond, purporting to be signed by Dandridge, as principal, and Carter B. Page, Wilson Allen, James Brown, Jr., Thomas Taylor, Harry Heth, and Andrew Stevenson, as his sureties, and was brought jointly against all the parties. The condition of the bond, after reciting that Dandridge had been appointed cashier of the office of discount and deposit of the Bank of the United States of Richmond, Virginia, was, that if he should well, and truly, and faithfully discharge the duties and trust reposed in him as cashier of the said office, then the obligation to be void, otherwise to remain in full force and virtue. The declaration set forth the condition, and assigned various breaches. Dandridge made no defence; and the suit was abated as to Heth by his death. The other defendants severed in their pleas. It is not thought necessary to state the pleadings at large; it is sufficient to state, that Stevenson and Allen pleaded, among other pleas, non est factum generally, and also special pleas of non est factum, on which issues were joined; and that all the defendants in various forms pleaded, that the instrument was not the deed of Stevenson; and further pleaded, that the bond had never been approved, according to the provisions of the 30th article of the rules and regulations of the bank. Issues were also taken on these pleas; and the cause came on for trial upon all the issues of fact.
At the trial, evidence was offered for the purpose of establishing the due execution of the bond by the defendants, and particularly by Stevenson and Allen, and its approval by the plaintiffs. The evidence was objected to on behalf of the defendants, as not sufficient to be left to the jury, to infer a delivery of the bond, and the acceptance and approval thereof by the directors of the bank, according to the provisions of their charter; and the objection was sustained, the Court being of opinion, that although the scroll affixed by Allen to his name, is in Virginia equivalent to a seal of wax, and although proof of the handwriting of Stevenson, and the bond being in possession of the plaintiffs, and put in suit by them, and the introduction of Dandridge into the office of cashier, and his continuing to act in that office, would, in general, be prima facie evidence, to be submitted to the jury, as proof that the bond was fully executed and accepted; yet it was not evidence of that fact, or of the obligation of the bond in this case; because, under the act of Congress, incorporating the Bank of the United States, the bond ought to be satisfactory to the board of directors, before the cashier can legally enter on the duties of his office, and consequently before his sureties can be responsible for his non-performance of those duties; and that the evidence in this case did not prove such acceptance and approbation of the bond, as is required by law for its completion. This opinion constitutes the subject matter of the first bill of exceptions.
Farther evidence was then offered by the plaintiffs for the same purpose, the particulars of which are not now necessary to be enumerated; to which the defendants took various objections, and contended, among other things, that the whole of the evidence, if legal, was not sufficient to go to the jury, upon which to infer the delivery of the paper as the act and deed of the defendants, and its acceptance and approbation by the directors of the bank, pursuant to their charter; which objection was sustained; and the Court excluded the whole, and every part of the said evidence from the jury, being of opinion that the board of directors keep a record of their proceedings, which record, or a copy of it, showing the assent of the directors to this bond, was necessary to show that such assent was given; and if such assent had not been entered on the record of the proceedings of the said directors, the bond was ineffectual, and no claim in favour of the plaintiffs could be founded thereon against the defendants in these issues. This opinion of the Court constitutes the subject matter of the second bill of exceptions.
It has become the duty of this Court, upon the present writ of error, to decide whether these opinions of the Circuit Court, or either of them, can be maintained in point of law.
It is material to state, that the rejection of the evidence did not proceed upon the ground that it was of a secondary nature, leaving behind, in the possession of the plaintiffs, evidence of a higher and more satisfactory nature. On the contrary, the whole structure of the case shows, that there was in the understanding of both the parties, no record ever made of the approval of acceptance of the bond in question; and the principal controversy was, whether it could be established by any evidence short of such record proof.
The propositions maintained by the Circuit Court were in substance these. First, that the cashier could not legally enter upon the duties of his office, or make his sureties responsible for his non-performance of those duties, before his official bond was accepted as satisfactory by the board of directors, according to the terms of the charter. Secondly, that such acceptance could be established only by proof drawn from the records of the board of directors; and if no record had been kept of such assent and acceptance, the bond was ineffectual, and no secondary evidence could be admitted to establish the fact.
The last proposition will be first considered. The correctness of it in a great measure depends upon the soundness of the distinction taken between the acts of private persons and the acts of corporations. It is admitted in the opinion of the Circuit Court, that the evidence offered would, in common cases between private persons, have been prima facie evidence, to be submitted to the jury, as proof that the bond was fully executed and accepted. But it is supposed that a different rule prevails in cases of corporations; that their acts must be established by positive record proofs; and that no presumptions can be made in their favour, of corporate assent or adoption, from other circumstances, though in respect to individuals the same circumstances would be decisive. The doctrine, then, is maintained from the nature of corporations, as distinguished from natural persons; and from the supposed incapacity of the former to do any act not evidenced by writing; and if done, to prove it, except by writing.
Little light can be thrown on this subject by considerations drawn from corporations existing by the common law, or dependent upon prescription. To corporations, however erected, there are said to be certain incidents attached, without any express words or authority for this purpose; such as the power to plead and be impleaded, to purchase and alien, to make a common seal, and to pass by-laws. In ancient times it was held, that corporations aggregate could do nothing but by deed under their common seal,
But whatever may be the implied powers of aggregate corporations by the common law, and the modes by which those powers are to be carried into operation, corporations created by statute must depend, both for their powers, and the mode of exercising them, upon the true construction of the statute itself. The doctrine of this Court, in Head v. The Providence Insurance Company, (2 Cranch. 127.) on this subject, is believed to be entirely correct. It was there said by the Chief Justice, in delivering the opinion of the Court, that 'without ascribing to this body, which in its corporate capacity is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it; to derive all its powers from that act, and to be capable of exerting its faculties only in the manner which that act authorizes.' In that case, the act of incorporation prescribed the mode in which contracts should be made, in order to bind the corporation, which was not complied with; and the Court held, that there was no binding contract, for the corporation could only act in the manner prescribed by law; and when their agents do not clothe their proceedings with those solemnities which are required by the incorporating act to bind the company, they cannot be deemed as more than proposals or preparatory negotiations. We do not perceive anything in this doctrine which fairly admits of controversy. But this case has been pressed upon us, at the present argument, as justifying to its full extent the reasoning of the defendants on the present occasion. The question there was not, whether every corporate act must be evidenced by writing; but whether certain acts, which by law were to bind only when done and verified in a particular manner, ought to bind, although those forms were not adopted.
We do not admit, as a general proposition, that the acts of a corporation, although in all other respects rightly transacted, are invalid, merely from the omission to have them reduced to writing, unless the statute creating it makes such writing indispensable as evidence, or to give them an obligatory force. If the statute imposes such a restriction, it must be obeyed; if it does not, then it remains for those who assert the doctrine to establish it by the principles of the common law, and by decisive authorities. None such have, in our judgment, been produced.
By the general rules of evidence, presumptions are continually made in cases of private persons of acts even of the most solemn nature, when those acts are the natural result or necessary accompaniment of other circumstances. In aid of this salutary principle, the law itself, for the purpose of strengthening the infirmity of evidence, and upholding transactions intimately connected with the public peace, and the security of private property, indulges its own presumptions. It presumes that every man, in his private and official character, does his duty, until the contrary is proved; it will presume that all things are rightly done, unless the circumstances of the case overturn this presumption,
The same presumptions are, we think, applicable to corporations. Persons acting publicly as officers of the corporation, are to be presumed rightfully in office; acts done by the corporation, which presuppose the existence of other acts to make them legally operative, are presumptive proofs of the latter. Grants and proceedings beneficial to the corporation are presumed to be accepted; and slight acts on their part, which can be reasonably accounted for only upon the supposition of such acceptance, are admitted as presumptions of the fact. If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers will be deemed rightful, and the delegated authority will be presumed. If a person acts notoriously as cashier of a bank, and is recognised by the directors, or by the corporation, as an existing officer, a regular appointment will be presumed; and his acts, as cashier, will bind the corporation, although no written proof is or can be adduced of his appointment. In short, we think, that the acts of artificial persons afford the same presumptions as the acts of natural persons. Each affords presumptions, from acts done, of what must have preceded them, as matters of right, or matters of duty.
It may not be without use to advert to a few cases where corporate acts have been the subject of presumptions. In the first place, we may advert to the known fact, that a charter may be presumed to have been given to persons who have long acted as a corporation, and assumed the exercise of the powers of a corporate body, whether of an ordinary or extraordinary nature. This is the case in respect to all corporations existing by presumption. Yet the very case supposes that no written proof can be adduced of a charter, or of a vote of the corporators to accept the charter. Yet, both a charter and acceptance are vital to the existence of the corporation. They are, however, presumed, not merely from the lapse of time, but from the continued exercise of corporate powers, which presuppose their existence. So, in relation to the question of acceptance of a particular charter by an existing corporation, or by corporators already in the exercise of corporate functions, the acts of the corporate officers are admissible evidence from which the fact of acceptance may be inferred. It is not indispensable to show a written instrument or vote of acceptance on the corporation books. It may be inferred from other facts which demonstrate that it must have been accepted. Upon this point it is not necessary to do more than to refer to the general course of reasoning in The King v. Amery, (1 Term Rep. 595. S.C.. 2 Term Rep. 515.) as applied to the circumstances of that case. In Wood v. Tate, (5 Bos. & Pull. 246.) which was replevin upon a distress made by the bailiff of the borough of Morpeth, for rent, it appeared in evidence that the tenant went into possession under a lease void for not being executed under the corporate seal, even if made by proper officers; yet the Court held, that though the lease was void, the tenant was to be deemed tenant from year to year under the corporation, and his payment of rent from time to time to the officers of the corporation, (though not proved to be by virtue of any written authority) was sufficient proof of tenancy under the corporation, on which the corporation
In respect to grants and deeds beneficial to a corporation, there seems to be no particular reason why their assent to, and acceptance of the same, may not be inferred from their acts, as well as in the case of individuals. Suppose a deed poll granting lands to a corporation, can it be necessary to show that there was an acceptance by the corporation by an assent under seal, if it be a corporation at the common law; or by a written vote, if the corporation may signify its assent in that manner? Why may not its occupation and improvement, and the demise of the land by its agents, be justly admitted, by implication, to establish the fact in favour and for the benefit of the corporation? Why should the omission to record the assent, if actually given, deprive the corporation of the property which it gained in virtue of such actual assent? The validity of such a grant depends upon the acceptance, not upon the mode, by which it is proved. It is no implied condition that the corporation shall perpetuate the evidence of its assent in a particular way. At least, if it be so, we think it is incumbent on those who maintain the affirmative, to point out the authorities which sustain it. None such have been cited at the bar. On the contrary, there are highly respectable decisions, made upon great consideration, which assert a different doctrine. The case of the Proprietors of the Canal Bridge v. Gordon, (1 Pickering's Rep. 297.) is directly in point. There the object was to impose an onerous duty, and to discharge or limit the right of toll of the plaintiffs; and the Court held, that the corporation could bind itself, and did in fact, in that case, bind itself to a surrender of its valuable rights, by implications from corporate acts, without vote or deed. The learned Chief Justice of Massachusetts, on that occasion, in delivering the opinion of the Court, said, 'it is true that the acts, doings, and declarations of individual memebers of the corporation, unsanctioned by the body, are not binding upon it; but it is equally true that inferences may be drawn from corporate acts, tending to prove a contract or promise, as well as in the case of an individual; and that a vote is not always necessary to establish such contract or promise. This has been settled in several cases in this country and in England.' And afterwards, addressing himself to the facts of that case, he added, 'The question, then, is narrowed to this: Have the proprietors of the canal bridge assented to this proposition, and acted under it? We find no vote to this effect; but we do find that the cross bridge was suffered to unite with theirs, pursuant to this proposition, and that for four years all were suffered to pass without toll, who came from Charlestown to Cambridge, or vice versa. Now, corporations can be bound by implication as well as individuals, as has been before stated; and no acts could be stronger to show an assent to a proposition, an agreement, or bargain, than those which have been mentioned.' Nor was this doctrine new at that time in that Court. It may be clearly inferred from the prior cases of the President, &c. of the Salem Bank v. The President, &c. of the Gloucester Bank, (17 Mass. Rep. 1.) and Foster v. The President, &c. of the Essex Bank, (17 Mass. Rep. 479.) And it has been more recently confirmed in The Episcopal Charitable Society v. The Episcopal Church in Dedham, (1 Pick. Rep. 372.) It may therefore be considered as conclusively settled in Massachusetts. The case of The Bank of Columbia v. Patterson's Adm. in this Court, (7 Cranch, 299.) did not call for any expression of opinion upon the particular point now under consideration; but the Court there held, that from the evidence in that case, the jury might legally infer an express or an implied promise of the corporation. The Court there said, 'the contracts were for the exclusive use and benefit of the corporation, and made by their agents for purposes authorized by the charter. The corporation proceed, on the faith of those contracts, to pay money, from time to time, to the intestate. Although, then, an action might have lain against the committee personally, (for the contract was a personal contract by them, under their private seals,) upon their express contract, yet, as the whole benefit resulted to the corporation, it seems to the Court, that from this evidence the jury might legally infer that the corporation had adopted the contracts of the committee, and had voted to pay the whole sum which should become due under the contracts, and that the intestate had accepted their engagement.' Here, then, secondary evidence and presumptive proof was admitted in a suit against the corporation to fix its responsibility. A vote of the corporation was presumed from other acts, though there was no proof of such a vote being on record. If the corporation had shown that no such vote had been on record, would the presumption have been completely repelled? Would the omission of the corporation to record its own doings, have prejudiced the rights of the party relying upon the good faith of an actual vote of the corporation? If such omission would not be fatal to the plaintiff in suits against the corporation, (as in our opinion it would not be,) it establishes the fact, that acts of the corporation, not recorded, may be established by parol proofs, and, of course, by presumptive proofs. In reason and justice, there does not seem any solid ground why a corporation may not, in case of the omission of its officers to preserve a written record, give such proofs to support its rights, as would be admissible in suits against it to support adverse rights. The true question in such case would seem to be, not which party was plaintiff or defendant, but whether the evidence was the best the nature of the case admitted of, and left nothing behind in the possession or control of the party, higher than secondary evidence. The case of Dunn v. St. Andrew's Church, (14 Johns. Rep. 118.) proceeded upon like reasoning. There the plaintiff had performed services as clerk of the church, for the corporation, for which he had received some payments. The records of the corporation contained entries of the payment of moneys, at several times, to the plaintiff, for his services; but no resolution was entered on the minutes or records of the corporation, appointing the plaintiff clerk of the church. The Court held such vote unnecessary to be shown, and that there was sufficient evidence of an implied promise of the corporation to make the compensation. In the King v. Inhabitants of Chipping Norton, (5 East's Rep. 240.) there was a demise by a verbal agreement of the corporation, at a court leet, of certain tolls belonging to the corporation. The Court held, that the corporation could demise only under seal, and that the agreement amounted to a mere license to collect the tolls, though it might be a ground to apply to a Court of equity to enforce it as an equitable interest. The ground there was not that the proceeding being verbal was a nullity, but that it did not operate as a demise of the tenement at law. It was conceded that the verbal agreement bound the corporation as a license.
But the present question does not depend upon the point, whether the acts of a corporation may be proved otherwise than by some written document. The reasoning upon it, however, was very ably gone into at the bar, and as it furnishes very strong illustrations upon the point now in judgment, it could not be passed over with propriety.
In the present case, the acts of the corporation itself, done at a corporate meeting, are not in controversy. In corporations existing at the common law and by charter, there are great diversities both of powers and organization. In some corporations the whole powers rest in a select body, or in select bodies, with powers to perpetuate their own corporate existence, by filling up vacancies in their own body; and such body or bodies constitute the corporation itself, and the meetings and acts done thereat are the meetings and acts of the corporation itself. In short, they constitute the corporation, so far as it has life or organization exclusively. Such are many of the boroughs and other municipal corporations in England, familiarly shown by the name of quasi corporations. There are corporations of another sort, where the aggregate body of corporators meet and assemble to discharge corporate functions, and have authority also to perform certain acts and duties, by means of different agents, sometimes designated in the statutes creating them, and sometimes left to their own choice. Of this nature are the townships in New-England, where the inhabitants are corporators, and assemble to exercise corporate powers, and have authority to appoint various officers to perform public duties, under the guidance and direction of the corporation. Such are the selectmen for the ordinary municipal concerns; overseers of the poor, school committees, assessors of taxes, and various other functionaries. In these cases, the various officers form different boards for the performance of different duties, subordinate to the corporation; their acts lawfully done, bind the corporation; but they do not constitute the corporation, nor are their meetings the meetings of the corporation. In the latter cases, the records of the officers are properly records of their own proceedings, and not of the proceedings of the corporation itself.
It will be at once seen, upon an inspection of the charter creating the Bank of the United States, that it is not a corporation of the former description. The charter, in the first section, declares, that a bank of the United States of America shall be established, with a capital of 35,000,000 of dollars, of which 7,000,000 shall be subscribed by the United States, and the residue by individuals and corporations. It proceeds to enact, in the 7th section, that the subscribers to the said Bank of the United States, their successors and assigns, shall be and hereby are created a corporation and body politic, by the name and style of 'the President, Directors and Company of the Bank of the United States,' and by that name shall be capable in law to have purchase, receive, &c. lands, &c. goods, chattels and effects, &c. to an amount not exceeding 55,000,000 of dollars, including their capital stock; and the same to sell, grant, &c.; to sue, and be sued, &c.; to make, have, and use a common seal, and to alter the same at pleasure; to ordain, and establish, and put in execution, such by-laws and ordinances as they shall deem necessary and convenient for the government of the said corporation; and generally to do and execute all and singular the acts, matters, and things, which to them it shall or may appertain to do, subject to the other provisions of the act. It proceeds to enact, that for the management of the affairs of the corporation, there shall annually be chosen twenty-five directors by the stockholders; and the board of directors shall appoint a president of the corporation. The directors have further authority given to them to appoint such officers, clerks, and servants, as they shall deem necessary for executing the business of the corporation, and to exercise such other powers and authorities for the well governing and ordering of the officers of the corporation, as shall be prescribed by the laws, legulations, and ordinances of the same. The directors have further authority given them to establish offices of discount and deposit, wheresoever they shall think fit, within the United States, or the territories thereof, and to commit the management of the said offices, and of the business thereof respectively, to such persons, and under such regulations, as they shall deem proper, not being contrary to law or the constitution of the bank; and annually to choose the directors of such offices. Among the rules, which the act prescribes as fundamental articles of the constitution of the corporation, are the following: 'that not less than seven directors shall constitute a board for the transaction of business of whom the president shall always be one, except in case of sickness or necessary absence;' that sixty stockholders, who are proprietors of 1000 shares in the stock, 'shall have power at any time to call a general meeting of the stockholders, for purposes relative to the institution;' 'that each cashier or treasurer, before he enters upon the duties of his office, shall be required to give bond, with two or more surefies, to the satisfaction of the directors, in a sum not less than 50,000 dollars, with condition for his good behaviour, and the faithful performance of his duties to the corporation;' that the total amount of the debts of the corporation shall not exceed a limited sum; and if it does, the directors shall, in their natural and private capacities, be liable to any creditor therefor, with the exception that any director, who shall have been absent when the excess was contracted or created, and who shall have dissented from the resolution or act authorizing it, and shall give notice of the fact in a particular manner, shall be exonerated; that the secretary of the treasury shall be furnished, from time to time, as often as he may require, &c. with statements of the amount of the capital stock, of debts due, of moneys deposited, of notes in circulation, and of specie on hand; and shall have a right to inspect such general accounts of the bank, as shall relate to the said statement. The act further provides, that a committee of either house of Congress, appointed for that purpose, shall have a right to inspect the books, and to examine into the proceedings of the corporation, and to report whether the provisions of the charter have been violated or not.
Such is a summary of the most important provisions of the act constituting the charter of the bank, and material to the present cause. It is most manifest that the corporation is altogether a distinct body from the directors, possessing all the general powers and attributes of an aggregate corporation, and entitled to direct and superintend the management of its own property, and the government of the institution, and to enact by-laws for this purpose. So far as the act delegates authority to the directors, the latter possess it, and may exercise it, not as constituting the corporation itself, but as its express statute agents to act in the ordinary business of the institution. The directors are created a board, and not a corporate body. If the authority delegated to them can only be exercised by them when assembled as a board, with a proper quorum, and not by the separate assent of a majority of the whole body, (on which it is unnecessary here to express any opinion,) still it is clear, that their meetings and acts are but the meetings and acts of a board of agents acting ex officio, and not the meetings and acts of the corporation itself. The whole structure of the charter, and the whole proceedings under it, as well as the by-laws and regulations which have come under our review, demonstrate that this has been the uniform construction of the corporation itself, and of the directors. Indeed, this is believed to be so universally acted upon in all the cases respecting banks, which have been judicially decided, that it is not thought necessary to do more than express our opinion that such is the true interpretation of this charter.
It is not necessary to consider whether the sixth of the fundamental articles of the constitution of the bank, which directs that such cashier or treasurer shall be required to give bond, &c. to the satisfaction of the directors, might have applied, by its own force, to the cashiers of offices established as offices of discount and deposit. In the first place, that point is not put in the pleadings; in the next place, the directors are, by the charter, authorized to establish such offices, subject to such regulations as they shall deem proper; and, in virtue of that authority, they have prescribed regulations on this very subject in the 30th article of the rules and regulations adopted by them for the government of such offices, which are set forth at large in the transcript of the record. The fourth of these articles declares, that the directors of the Bank of the United States shall appoint the cashiers of the offices of discount and deposit; the fifth declares the duties of the cashier, and, among other things, his duty 'to attend all meetings of the board' of directors of the office, and 'to keep a fair and regular record of its proceedings.' The sixteenth directs that all notes and bills discounted shall be entered in a book to be called the credit book, in such manner as to discover to the board at one view, on each discount day, the amount which any person is discounter, or is indebted to the office, either as payer or endorser. The thirteenth directs, that 'the cashier of each office shall give bond to the President, Directors and Company of the Bank of the United States, with two or more approved securities, with a condition for his good behaviour and faithful performance of his duties to the corporation.' By whom the approval is to be made, whether by the directors of the parent bank, or by the directors of the office, is not stated. If the directors of the parent bank might, by the charter, have committed it to the local directors, being found in a system of by-laws for their regulation, it would seem a natural inference that it was their intention to commit it to the latter. When, as in the fourth rule, they reserve the appointment of the cashier to themselves, the language directly reserves it to 'the directors of the Bank of the United States.' If such authority could not, by the charter, be delegated, then it must be deemed to belong to the directors of the parent bank. It is in the latter point of view that it has been argued at the bar, and in that view it will be considered by this Court.
Assuming, then, that the directors of the parent bank were, as a board, to approve of the bond, so far as it respects the securities, in what manner is that approval to be evidenced? Without question, the directors keep a record of their proceedings as a board; and it appears by the rules and regulations of the parent bank read at the bar, that the cashier is bound 'to attend all meetings of the board, and to keep a fair and regular record of its proceedings.' If he does not keep such a record, are all such proceedings void, or is the bank at liberty to establish them by secondary evidence? In the present case, (we repeat it,) the whole argument has proceeded upon the ground as conceded, that no such record exists of the approval of the present bond.
The charter of the bank does not, in terms, require that such an approval shall be by writing, or entered of record. It does not, in terms, require that the proceedings of the directors shall generally be recorded, much less that all of them shall be recorded. It seems to have left these matters to the general discretion of the corporation, and of the directors; and though it obviously contemplates that there will be books kept by the corporation which will disclose the general state of its affairs, it is not a just inference that it meant that every official act of the directors should be recorded, of whatever nature it might be. And if it had, it would deserve consideration, whether such provisions ought to be deemed conditions precedent, without which the act was void, or only directory to the officers in the performance of their duty, the omission of which might subject themselves to responsibility, and the corporation itself to the imputation of a violation of its charter. There are many cases where an act is prescribed by law to be done, and record made thereof, and, nevertheless, if left unrecorded, the act is valid. By the English marriage act, registers of marriages are required to be kept in public books in every parish, and signed by the parties and the minister, and attested by two witnesses. Yet, it has been decided, that such an entry is not necessary to the validity of the marriage, and that an erroneous entry will not vitiate it. So, where a magistrate omits to record an oath of office taken before him, parol evidence of the fact is admissible, though it is an omission of duty. That some of the provisions of the charter and by-laws may well be deemed directory to the officers, and not conditions without which their acts would be utterly void, will scarcely be disputed. What are to be deemed such provisions must depend upon the sound construction of the nature and object of each regulation, and of public convenience, and apparent legislative intention. If a regulation be merely directory, then any deviation from it, though it may subject the officers to responsibility both to the government and the stockholders, cannot be taken advantage of by third persons. In the case of The Bank of the Northern Liberties v. Cresson, (12 Serg. & Rawle, 306.) the directors were required by their own by-laws, to take a bond of the book-keeper with sureties, and they took a bond from sureties without joining the principal. The Court held the bond valid, notwithstanding the by-law, and took notice of the distinction between such provisions of a statute as are essential to the validity of an act, and such as are merely directory. Mr. Justice Duncan said, that it was a matter between the directors and the stockholders, and that the obligors, who had voluntarily entered into the stipulation, could not withdraw themselves from their obligation.
But, waiving for the present this inquiry, we ask, upon what ground it can be maintained that the approval of the bond by the directors must be in writing? It is not required by the terms of the charter, or the by-laws. In each of them the language points to the fact of approval, and not to the evidence by which it is to be established, if controverted. It is no where said the approval shall be in writing, or of record. The argument at the bar upon the necessity of its being in writing, must, therefore, depend for its support upon the ground that it is a just inference of law from the nature and objects of the statute, from the analogy of the board of directors to a corporate body, from principles of public convenience and necessity, or from the language of authorities which ought not to be departed from.
Upon the best consideration we can give the subject, we do not think that the argument can be maintained under any of these aspects.
If the directors had been a board constituted by an unincorporated company, or by a single person, for the like purposes, and with the like powers, it would scarcely occur to any person that the acts of the board must, of necessity, be reduced to writing, before they would bind their principal. The agents of private persons are not usually in the habit of keeping regular minutes of all their joint proceedings, and hitherto there has been no adjudication, which requires such a verification of their joint acts. Yet, innumerable cases must have arisen, in which such a principle might have been applied with success, if it had ever been supposed to possess a legal existence. The acts of private and public trustees, of joint agents for commercial purposes, of commissioners for private objects, and of public boards, must have presented many occasions for passing upon such a doctrine. The silence of the books under such circumstances, would form no inconsiderable answer to the argument, connected, as it must be, with the knowledge of the loose and inartificial manner in which much of the business of agencies is generally conducted. There may be, and undoubtedly there is, some convenience in the preservation of minutes of proceedings by agents; but their subsequent acts are often just as irresistible proof of the existence of prior dependent acts and votes, as if minutes were produced. If a board of directors were created to erect a bridge, or make a canal or turnpike, and they proceeded to do the service, and under their superintendence there were persons employed who executed the work, and the board proceeded to pay them therefor out of funds in their hands, these facts of public notoriety would be as irresistible evidence of the due execution of their authority, and of due contracts made, and proceedings had by the board, as if the proceedings were recorded in the most formal and regular manner. Can there be a doubt that, in the cases put, many contracts are so varied and rescinded, many acts done and assented to by the board, which never are reduced to formal votes, and declarations, and written proofs? We think we may safely say, that the sense of the profession, and the course of private business, have never, hitherto, in respect to private agencies and boards, recognised the existence of any rule which required their acts and proceedings to be justified by written votes.
What foundation is there for a different rule in relation to agencies for corporations? The acts of a single duly authorized agent of a corporation, within the scope of his authority, bind the corporation, although he keeps no minutes of such acts. They may be, and they are, daily proved aliunde. In what respects do the acts of a board of agents differ from those of a single agent, in their operation as evidence? A board may accept a contract, or approve a security by vote, or by a tacit and implied assent. The vote or assent may be more difficult of proof by parol evidence, than if it were reduced to writing. But, surely, this is not a sufficient reason for declaring, that the vote or assent is inoperative. If a board of directors agree to build a banking house, and it is accordingly built, and paid for by their cashier, with their assent, is the whole proceeding to be deemed void, because, in the progress of the undertaking, from accident, or negligence, the votes and the payments have not been verified by regular minutes? But, it is said, that in the present case, the cashier is required to keep a fair and regular record of the proceedings of the directors. But if this is admitted, it does not establish the purpose for which it is used. It is a by-law of the corporation, directory to its officers, enacted for its own security and benefit, and not for the purpose of restricting the acts of the directors. If the cashier should neglect to keep such records, or should omit any single vote, the by-law has not declared that the vote shall be void, and the proceedings nugatory. Suppose no such by-law had been passed, would not the votes of the board have bound the corporation? If they had discounted notes, taken mortgages, advanced money, and bought stock by faith of viva voce, unrecorded votes, and evidence of the existence of these acts and votes necessarily resulted from the other proceedings of the bank, could it be the intention of the legislature that they should be utterly void? or of the stockholders, that any by-law should operate a legal extinguishment of their title to the property? It seems to us difficult to imagine that such could be the legislative or corporate intention. If, in ordinary cases, such an intention could not be inferred in order to produce a very strict and inconvenient construction of the charter, there is still less reason to apply it to the cases of approval of official bonds. These are taken exclusively for the security and benefit of the bank itself, and not of mere strangers. The approval is matter of discretion in the directors, and that discretion once being exercised, it is of very little consequence to the bank whether a written minute of the vote be made or not. All that the bank is interested in is, that there shall be an approval; and it matters not whether the fact is established by a direct record, or by acts of the directors, which recognise its prior existence.
It has been supposed by the defendant's counsel, that the case of Beatty v. The Marine Insurance Company, (2 Johns. Rep. 109.) is in point in his favour. Upon an examination of the facts of that case, we think it is otherwise. In that case, the incorporating act provided that no losses should be paid without the approbation of at least four of the directors, with the president and his assistants, or a majority of them. The attempt was to charge the company with a total loss, upon a verbal agreement made by the president and assistants, to accept an abandonment, and pay a total loss, at a meeting, when it did not appear that a single director was present. The board therefore was not so constituted as to bind the company. Mr. Justice Thompson, in delivering the opinion of the Court, said, 'no part of the case will warrant an inference that any of the directors were present at the time of the alleged acceptance. When the plaintiff's agent called to know the determination of the company in relation to the payment of the loss, he says, the secretary went into the room where the president and assistants were conven d, and the answer returned was, that the president and assistants had agreed to pay a total loss; but no mention is made of any of the directors being present, or assenting to it. When the testimony is positive as to the persons by whom the acceptance is made, there is no room left for presumption. If any of the directors were present, so as to make the act binding on the company, the plaintiff ought to have shown it affirmatively. We are of opinion, therefore, that the acceptance, not having been made by the agents constituted by the act of incorporation, cannot be binding on the company.' The case, therefore, so far as it goes, is against the defendants. It carries an almost irresistible inference, that the Court did not think a written vote of acceptance necessary, and that parol proof would have been sufficient. No other authority has been produced to sustain the argument; and it cannot be doubted, that if any did exist, the researches of the counsel would have brought it before the Court. We may therefore consider that it is a new doctrine, unsupported by prior cases, and to be established now for the first time. We think that the reasons of public convenience and individual safety and protection, would not be promoted by establishing it.
On the other hand, every case which has been adduced to show that corporate acts need not always be reduced to writing, but may be proved by presumptions, is, a fortiori, an authority against the argument. There are, however, some cases, which confirm in a very clear manner the doctrine for which we contend, and which have not been yet particularly adverted to. In the case of Apthorp, Treasurer of the Commonwealth, v. North, (14 Mass. Rep. 167.) a suit was brought on the official bond of a coroner. By the laws of Massachusetts, the bond was required to be approved by the Court of Common Pleas of the county. It was delivered into the Court of Common Pleas by the first Justice thereof, and remained on its files for sometime. No record was ever made of its approval by the Court of Common Pleas; and at the trial, contradictory evidence was offered, of a presumptive nature, as to its approval and rejection by that Court. It was held, that notwithstanding there was no record of any approval, the bond might well, upon the circumstances, be deemed to have been duly delivered and approved. Chief Justice Parker, in delivering the opinion of the Court, said, 'A formal act, or certificate of approbation by the Court, is not made necessary by the statute;' and after commenting on the terms of the statute, he added, 'it is not, then, required expressly that any record or certificate should be made, that the bond given was approved. But if such bond is found upon the files, without any evidence accompanying it that it has been rejected, and the principal has proceeded to execute the duties of his office, the presumption is violent, if not conclusive, that the bond was received by the Court as the security required by the statute.' In Foster v. The Essex Bank, (17 Mass. Rep. 479.) there was no clause in the charter respecting the receipt of special deposits, and no by-law had ever been made by the corporation or the directors on the subject. But the practice had long prevailed to receive such deposits, and was known to the directors, though no vote could be found recognising them. The Court held the bank liable for the safe keeping of such deposits, like a common bailee, without hire, upon the ground that there was a plain adoption of them, from the knowledge and acquiescence of the directors. The case of The Dedham Bank v. Chickering, (3 Pick. Rep. 335.) approaches still nearer the present case, and discussed the very point now in judgment. It was the case of an official bond, given by the cashier of the bank, with sureties. The charter required that the cashier, before he entered upon the duties of his office, should give bond, with two sureties, to the satisfaction of the directors. After the cashier was elected, the directors passed a vote, that A. B. and C. D. be accepted as sureties in a bond to be given by the cashier for the faithful discharge of the duties of his office. The bond in question was dated before this vote; but does not seem to have had but one surety. That circumstance, however, was not relied on at the argument; but the principal ground was, that there had been no approval of the bond by the board of directors. It was found on their files, and the cashier had been frequently re-elected. Chief Justice Parker, in delivering the judgment of the Court, said, 'We should have supposed that in the case as well of a corporation as of an individual, a paper intended for their benefit, and found on their files, would be considered as accepted by them;' and after alluding to the decision of the Circuit Court in this case, which required the record of a vote of the directors, he added, 'We think, however, that the case before us may be decided without touching that principle, for, admitting it to be correct, we are, nevertheless, of opinion, that the vote to accept the sureties, and the bond being in possession of the President, are a sufficient acceptance of the bond.' It is impossible, we think, to doubt, that the real opinion of the Court was, that the acceptance might be proved without any record of a vote, and that the very facts of the case brought the point of implied and presumptive acceptance from other acts of the directors completely in judgment.
So far, then, as authorities entitled to very great respect and deference go, we are of opinion, that they are against the reasoning assumed on behalf of the defendants.
To all the authorities cited at the bar on this point, the counsel for the defendants has made on answer, which he deems applicable to all of them. It is this, that where no particular form for the expression of the corporate will is prescribed by law, there it may be inferred from corporate acts; but that where such a form is prescribed, it must be followed. This distinction, he supposes, will reconcile all the cases. The distinction, if admitted, will not aid the argument. It may be, and, indeed, is conceded, that no corporate actcan be valid, if done differently from the manner prescribed by law, as essential to its validity. If in the present case the statute had prescribed that nothing but a written vote on record should be deemed an approval of the bond, or that the cashier should not be deemed, for any purpose, in office, until such approval, the consequent contended for would have followed. His acts would have been utterly void, and any unrecorded vote of approval nugatory. But the very point in controversy is, whether such written record be necessary by the charter or by-laws, not as a matter of a convenience or discreet exercise of authority, but as a sine qua non to the validity of the act. The cases which have been commented on by the Court, do not deny the distinction, but proceed upon the ground, that unless positively required by law, a written vote is not to be deemed indispensable. The Court then is called upon, not to administer a doctrine of strict, and settled, and technical law, but to introduce a new rule into the law of evidence; and to exclude presumptive evidence, not only of the acts of corporations, but of their unincorporated agents. If such a rule be fit to be adopted, it must be upon the foundation of some clear and unequivocal analogy of law, and public policy and convenience. We are not prepared to admit that it has any such foundation. On the contrary, we are persuaded that the introduction of the rule itself would be attended with serious public mischiefs, and shake many titles and rights, which have been consummated in entire good faith, and the confidence that no such written record was necessary to their validity. We cannot therefore assent to the doctrine decided in the Circuit Court on this point.
In respect to a collateral argument urged at the bar, upon the point whether the terms of the charter and by-laws would be complied with, without an express vote that the bond was 'to the satisfaction of the directors,' or that the sureties of the bond were 'approved' by the directors, we are of opinion, that in either case there need not be express votes of approval and satisfaction. An acceptance of the bond by the directors would, necessarily, in intendment of law, include the approval of it, and be conclusive of it.
The remaining point is as to the opinion of the Court delivered in the first bill of exceptions. If that opinion meant to state what it seems to import, that the cashier was not legally cashier, so as to bind the bank in its rights and interests by his acts, if permitted to enter upon the duties of his office, before a satisfactory bond was given, we think it cannot be maintained. The cashier was duly appointed, and he was permitted to act in his office, under the express sanction of the directors, for several years. If he had never given any bond whatsoever during this period, yet his acts within the scope of his authority would have bound the bank. Notes signed by him would be lawful notes; moneys paid by him would be irrecoverable; records kept by him would be bank records. Indeed, it is conceded by the defendant's counsel, that the bank would, under such circumstances, be bound by his acts in favour of third persons, acting upon the faith of his public character. The same principle, in our opinion, applies in favour, as againt the bank. If he could legally perform the duties of the office for any purposes, he could for all. He was either an agent, capable of binding the bank in all his official acts, or those acts were void as to third persons as well as the bank. If he was held out as an authorized cashier, that character was equally applicable to all who dealt with the bank, in transactions beneficial as well as onerous to the bank. It seems to us, that the charter and the by-laws must be considered in this respect as directory to the board, and not as conditions precedent. The language is not more strong than that of the laws which came under the consideration of this Court, in the United States v. Kirkpatrick, (9 Wheat. Rep. 720.) and the United States v. Van Zandt, (11 Wheat. Rep. 184.)
Our view of this matter is in exact coincidence with that entertained by the Supreme Court of Pennsylvania, in the Bank of the Northern Liberties v. Cresson, (12 Serg. & Rawle, 306.) The directors might have been responsible for their neglect of duty; but it was a matter wholly between themselves and the stockholders, and between the latter and the government, as a violation of the charter and by-laws.
So far, indeed, as respects the sureties to the bond, they may not be responsible for any breaches of official duty by the cashier, before their obligation has been accepted. But this is a very different consideration from that which respects the legal effects of the acts of the cashier himself upon the interests and transactions of the bank itself.
This is the substance of what we deem it necessary to say upon the present occasion. We do not go into the consideration of the admissibility of every part of the documents and testimony offered in evidence. Perhaps some of them were in a shape not exactly fit to be admitted as formal evidence, without farther verification and proofs. But must of it was of a nature unexceptionable, as conducing to proof of the issues joined, if any thing short of record proof were admissible, as competent to establish the approval or acceptance of the bond. It is not understood that the Circuit Court entertained any doubt as to its general competency, except upon the ground already stated. We are of opinion, that the evidence was competent, in point of law, to go to the jury, notwithstanding there was no record of approval of the bond, it being in its nature competent; its sufficiency to establish the issues was matter of fact, the decision of which belonged to the jury; and upon which they ought to have been allowed to pass their verdict.
The judgment of the Circuit Court must be reversed, and a mandate awarded, with directions to the Circuit Court to award a venire facias de novo.
JUDGMENT. This cause came on, &c. On consideration whereof, it is ORDERED and ADJUDGED, that there was error in the Circuit Court in rejecting the evidence offered by the plaintiffs in the first bill of exceptions stated, and not suffering the same to go to the jury in support of the issues joined in the case; and also, that there was error in the said Court in rejecting the evidence offered by the plaintiffs in the second bill of exceptions, and not suffering the same to go to the jury in support of the same issues; this Court being of opinion, that the evidence was admissible in favour of the plaintiffs, notwithstanding there was no record of any approval of the bond stated in said bills of exceptions by the board of directors of the bank aforesaid, and that the plaintiffs were at liberty to prove the fact of such approval by the said board, by presumptive evidence, in the same way and manner as such fact might be proved in the case of private persons not acting as a corporation, or as the agents of a corporation. And it is further ORDERED and ADJUDGED, that for the error aforesaid, the judgment of the said Circuit Court be, and hereby is, REVERSED and ANNULLED, and that the same be remanded to the said Circuit Court, with directions to award a venire facias de novo.

## Notes

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