# Minor v. The Mechanics Bank of Alexandria/Opinion of the Court

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Johnson
AN Act of Congress was passed on the 16th of May 1812, entitled 'An Act to incorporate a bank in the town of Alexandria, by the name and style of the Mechanics Bank of Alexandria;' which institution soon afterwards went into operation; subscriptions for filling up the capital stock of the corporation and bank, having been opened in the town of Alexandria, on the first Monday in June 1812, under the direction of fifteen commissioners, appointed for that purpose. On the 3d of September 1817, Philip H. Minor was elected Cashier of the bank; and, on the same day, by a resolution of the Board of Directors, it was ordered, 'that the present officers of the bank, do the whole duties of the bank.'
In the office of Cashier Philip H. Minor was the successor of William Patton junr., who diedin August 1817; and, before his appointment as Cashier, Philip H. Minor, (who had several years preceding served as an officer of the bank, for some time as discount clerk, and afterwards as book-keeper;) had, in March 1817, been appointed teller for one year, ending in March 1818, from the time of his appointment; and had given approved bond and security, conditioned that he would well and truly execute the duties of the office of teller. After the appointment of Philip H. Minor, in September 1817, to be Cashier of the bank; and the order of the Board, on the same day, relative to the whole duties of the bank being performed by the then officers of the bank; no renewal of the appointment of teller was made, and he usually performed the duties of Cashier and teller.
On the 19th day of Marclr 1818, Philip H. Minor, and the plaintiffs in error, executed a joint and several bond, in the sum of twenty thousand dollars, which contained the following condition:--
'Whereas the above bound Philip H. Minor, hath been duly elected to the office of Cashier of the Mechanics Bank of Alexandria, the conditions of the above obligation are such, that, if the above bound Philip H. Minor, shall well and truly execute the duties of Cashier of the Mechanics Bank of Alexandria, then, this obligation to be void, but otherwise, shall remain in full force and virtue in law.
'PHILIP H. MINOR, (L. S.)
'GEORGE MINOR. (L. S.)
'D. MINOR, (L. S.)
'WILLIAM MINOR, (L. S.)
'SMITH MINOR.' (L. S.)
In the Circuit Court of the district of Columbia, for the county of Alexandria, the defendants in error instituted an action of debt upon this bond, against all the obligors; and the declaration filed in the same, was for the penalty, without taking notice of the condition.
Oyer of the bond and condition having been prayed, &c., the defendants being the sureties of Philip H. Minor, to wit: George Minor, Daniel Minor, William Minor, and Smith Minor, pleaded joint pleas, separate from Philip H. Minor, the Cashier of the bank. The substance of these pleas was as follows:--
1. The Mechanics Bank was not competent to sue, because the commissioners, who, by the Act of Incorporation, were authorized to open and take subscriptions to the capital stock of the company, and who took the subscriptions, had colluded with the subscribers to the stock, and that 180,000 dollars of the stock, had been fraudently subscribed; and that an election for directors of the bank was fraudulently and illegally held, by which the persons named as commissioners, were elected the directors of the bank; the votes of the fraudulent holders of the stock, amounting to 180,000 dollars, having been taken at the said election;-that afterwards, the sums paid by the fraudulent or collusive holders of the 180,000 dollars stock, were, by the President and Directors, paid back to them; and thereby the capital was diminished to 320,000 dollars; and, by the said proceedings, the capital stock of the bank was reduced below 500,000 dollars, as was collusively held out to the public; without this, that the plaintiffs, the obligees in the bond, or any other person whatsoever, at the time and times of making the said bond, and of commencing the suit thereon, or at any time whatsoever used, claimed, or exercised, or yet use, claim, or exercise, the name and stile, privileges and capacities, of the said supposed corporation, or ever claimed to compose the same, otherwise, or by any other ways or means, or in any other manner or form whatsoever, than in virtue of the said subscription, conducted and concluded as aforesaid; and so the said defendants say, the said supposed writing, obligatory in manner and form aforesaid made, is utterly inoperative and void in law; and this, they are ready to verify, &c.
The second plea states, that the defendants ought not to be charged, &c. &c., because the plaintiffs demand the said debt, and bring this action, as pretending and claiming to be a corporation aggregate, in and by virtue of the Act of Congress, mentioned in the first plea, by the name of the Mechanics Bank of Alexandria, to be composed of the subscribers to the said Mechanics Bank of Alexandria, which subscribers were not in being at the time of the passing of the said Act, but were to be composed of such persons only, as thereafter might subscribe thereto, according to the provisions of the Act; whereas the subscriptions were not taken according to the said provisions, so as to entitle the persons pretending to be subscribers to the said Bank, and their successors and assigns, to compose the said corporation, wherefore there was not any person authorized, or lawfully competent to take the bond, which is the subject of this suit; nor was there any such person, at the commencement of this suit, capable of instituting and prosecuting the same, but that the said persons did, unjustly and illegally arrogate to themselves to compose the said corporation, without the capital stock having been filled by subscription, or the supposed corporation having been composed of actual subscribers to the Bank, pursuant to the directions of the said Act of Congress, or other lawful warrant whatsoever, contrary to the purview and effect of the said Act of Congress; and so the defendants say, that the said writing obligatory, was at the time of making the same, and is, utterly void in law, &c.
The third plea alleged that the Cashier had well and truly performed the condition of the bond, according to the tenor and effect, and the true intent and meaning of it.
The fourth plea alleged that the Cashier had performed the condition of the bond, 'to the best of his ability, skill and judgment,' without any fraud, deceit, or wilful default, or breach of duties, whatever.
The fifth plea alleged that the Cashier had performed his duties, in obedience to, and in pursuance of, the rules, orders, usages and customs of trade and business, ordained, established, and practised in the Bank, by authority of the President and Directors thereof.
The sixth plea asserts, that although the duties of the Cashier had not been performed by him, yet the non-performance was by the wrong, connivance and permission of the President and Directors of the institution.
The seventh plea states, that the Bank had not been damnified by the acts of the Cashier.
The eighth plea was, that although the Bank was damnified by the acts of the Cashier, yet it was by the wrong and connivance of the President and Directors, &c.
The ninth plea states that the business and affairs of the Company, and the conduct and duties of the Cashier, were performed under the regulation and management of the President and Directors, who had been chosen according to the provisions of the Act of Incorporation; and if, at any time, the corporation has sustained damage, since the making of the writing obligatory, by reason of any matter contained therein, it has been by the wrong, connivance or permission of the said President and Directors.
To the first and second pleas, the plaintiffs below put in general demurrers, and on each of the seven remaining pleas, issue was taken by general replications; all precisely in the same terms, as follows:
'And the said Mechanics Bank of Alexandria, by Thomas Swann, their attorney, say they ought not to be precluded, &c. because they say that the said cause of action, in the declaration mentioned, did accrue as in the said declaration and breaches are set forth; without that, that the matters set forth in the said plea, are true; and this they pray may be inquired of by the country, and the defendants likewise.'
But at the next term, the plaintiffs withdrew these general replications as to the 3d and 4th pleas; and to these two pleas put in special replications, leaving the issues on the remaining five to stand on the general replications and issues as above. The replications thus put in to the 3d and 4th pleas, and rejoinders of the defendants, taking issue upon the same, (being precisely in the same terms, mutatis mutandis, to each,) were as follows:
'And the said Mechanics Bank of Alexandria, by Thomas Swann, their attorney, say, that they ought not to be precluded from having and maintaining their action aforesaid against the said defendants, George Minor, Daniel Minor, William Minor, and Smith Minor, by any thing alleged by the said defendants in their third plea, pleaded as aforesaid: Because they say that the Board of Directors of the said Mechanics Bank of Alexandria, in pursuance of the authority granted to them by the Act of Congress, incorporating the said Bank, did duly make and declare sundry by-laws for the government of the said Bank, its officers and affairs, and, among other laws so made and declared as aforesaid, they did enact and declare, in substance, as follows, to wit:
Section 2d, article 5th. It shall be the duty of the Cashier to countersign, at the Bank, all the bills or notes to be signed by the President, by order of the Directors; carefully to observe the conduct of the persons employed under him; duly to examine into the settlement of the cash account at the Bank; count the money deposited in the vaults every evening; compare the amount thereof with the balance of the cash account of that day, and, in case of disagreement, report the same to the next meeting of the Directors; to see that all deeds appertaining are duly recorded; and to do and perform all other duties that may, from time to time, be required of him by the President or Board of Directors relative to the affairs of the institution.
Article 6th. It shall be the duty of every other officer, clerk, and servant of the Bank, to do and perform all other duties, that may, from time to time, be required of them respectively, by the President and Cashier; and in no case to divulge the transactions of the Bank.
Article 8th. That no officer of the Bank, the President excepted, shall leave the Bank after it closes, until the Cashier's account shall be found to agree, or if it does not agree, until a strict examination be made to discover the error.
Section 3d, Article 3d. That no discount shall be made without the consent of a majority of the Directors present; nor shall any reason be required by the Directors to each other, nor assigned to the public, for refusing discounts.
Which said by-laws, so made, enacted, and declared, as aforesaid, were, at the time of the sealing and delivery of the writing obligatory, in the declaration mentioned, in full force and effect. And the said plaintiffs say, that the said Philip H. Minor, in the said writing obligatory mentioned, was duly appointed Cashier of the said Mechanics Bank of Alexandria; and, in virtue of his said appointment, did accept the office of said Cashier; and, on the day of the date of the said writing obligatory in the declaration mentioned, did thereupon enter upon the duties of the said Cashier; and the said plaintiffs further say, that the said Philip H. Minor did not well and truly execute the duties of the said Mechanics Bank, as Cashier of the said Bank, according to the true intent and meaning of the condition of the said writing obligatory, but violated his duty as Cashier aforesaid, and broke the condition of the said writing obligatory, in the following instances: that is to say,
1. That, during the period that the said Philip H. Minor acted as Cashier of the said Mechanics Bank, under the writing obligatory, as aforesaid, he, the said Philip, as Cashier aforesaid, received into his custody, and keeping the moneys of the said Bank, amounting to very large sums: that is to say, amounting altogether to five hundred thousand dollars and upward; which said moneys, so received as aforesaid, the said Philip, although often required, hath failed to account for, or to pay over to the said Bank, or to make a correct report of the same, from time to time, to the Board of Directors of the said Bank.
2d. And further, that he, the said Philip, during the period aforesaid, and in his capacity of Cashier aforesaid, wrongfully, and contrary to the duty of his office of Cashier aforesaid, did waste, and suffer to be wasted, of the moneys of the said Bank, in his care and custody, as Cashier aforesaid, the sum of thirty thousand dollars and puwards, whereby the same became entirely lost to the said Bank.
3d. And the said plaintiffs further say, that the said Philip, during the period aforesaid, and in his capacity of Cashier aforesaid, wrongfully, and contrary to the duty of his office of Cashier aforesaid, and without the authority of the said Bank, did apply and appropriate, of the proper money of the said Bank in his care and custody, as Cashier aforesaid, to his own proper use, the sum of five thousand seven hundred and twenty-eight dollars, and to the use of Thomas J. Minor and himself,
the said Philip H. Minor, the further sum of
$3,179.
so that the said sums were entirely lost to the said Bank.
4th. And the plaintiffs further say, that the said P. H. Minor, during the period aforesaid, and in his capacity of Cashier aforesaid, wrongfully and contrary to the duty of his office of Cashier aforesaid, and without the authority of the said Bank, did pay away, and did suffer and permit to be paid away, of the proper moneys and funds of the said Bank in his care and keeping, as Cashier aforesaid, to Jabez B. Rooker, divers sums of money, amounting altogether to the sum of 4,967 dollars 30 cents; and to one Francis Adams, divers others sums, amounting altogether to the sum of 1,884 dollars 18 cents; and to William F. Thornton divers other sums of money, amounting altogether to the sum of of 7,407 dollars 25 cents; and to Benjamin G. Thornton divers other sums of money, amounting altogether to the sum of 4,810 dollars 74 cents; and to Lewis Hipkins the sum of 2,375 dollars; and to Robert Young divers other sums of money, amounting altogether to the sum of 9,294 dollars 44 cents; so that the said several sums of money were entirely lost to the said Bank.
5th. And the said plaintiffs further say, that the said Philip H. Minor, during the period aforesaid, and in his capacity of Cashier aforesaid, and without the authority of the said Bank, did endorse upon a certain check, drawn by Lewis Hipkins upon the said Mechanics Bank, in favour of 'note in city or bearer' for 3000 dollars, that the same was 'good;' when in fact and in truth, the said Lewis Hipkins had no money or funds in the said Mechanics Bank, at the time of the said endorsement, to pay the said check, nor has he, at any time since, had in the said Bank any money or funds to pay the said check, so endorsed as aforesaid, and the said Bank have actually paid and taken upon themselves the payment of the same.
7th. And the said plaintiffs further say, that Benjamin G. Thornton, on the 18th day of December, 1818, drew a certain bill or draft upon a certain Bank in the state of Ohio, called the Bank of New Lancaster; which bill or draft was in substance as follows:
'ALEXANDRIA, December 18, 1818. Cashier Bank of New-Lancaster, Ohio. Pay to the order of W. F. Thornton, ten days after sight, four thousand seven hundred and fifty dollars, and charge the same as per advice, to yours, &c.
B. G. THORNTON.'
And the said plaintiffs say, that the said Philip H. Minor, while he acted as Cashier aforesaid, under the writing obligatory aforesaid, wrongfully, and contrary to the duty of his office of Cashier aforesaid, and without the authority of the said Bank, did advance and pay, upon the credit of the said draft or bill, to William F. Thornton and Lewis Hipkins, the amount of the said draft: that is to say, the sum of 4750 dollars; by means of which said advancement, so made as aforesaid, the said sum has been entirely lost to the said Bank.
8th. And the said plaintiffs further say, that said Philip H. Minor, while he acted as Cashier aforesaid, under the writing obligatory aforesaid, wrongfully, and contrary to his duty as Cashier, and with a view to deceive and mislead the Board of Directors of the said Bank, did make sundry false and erroneous entries in the books of the said Bank, in his care and custody as Cashier aforesaid; and among others, the following, to wit: a charge against the Bank of Alexandria, of the date of the 31st of August, 1818, for the sum of 1791 dollars; and another against the Bank of Potomac, of the date of the 31st of August, 1818, for the sum of 2581 dollars 25 cents; and another against the Bank of Washington, of the date of the 2d of March, 1818, for 1000 dollars; when in fact and in truth, at the periods aforesaid, there was nothing due from the said last mentioned Banks to the said Mechanics Bank; by means of which said false entries and charges, the said Mechanics Bank have lost the said several sums of money. All which said several matters and thing the said plaintiffs are ready to verify. Wherefore, &c.
To these pleas, the plaintiffs in error put in the following replication:
'And the said defendants, George Minor, Daniel Minor, William Minor, and Smith Minor say, that the said Mechanics Bank of Alexandria ought not to have, or maintain, their aforesaid action against the said defendants, by reason of any thing by the said Mechanics Bank of Alexandria, in their said replication to the said third plea of the defendants, above in replying alleged; because they say that the said Philip H. Minor, in the said plea and replication named, did not violate his duty as Cashier aforesaid, and break the said condition of the said writing obligatory, in the instances by the said Mechanics Bank of Alexandria, in their said replication above pleaded and alleged, nor in any of them, with or by means of any fraud, or deceit, or wilful default whatsoever. And this they pray may be inquired of by the country-and the said Mechanics Bank of Alexandria in like manner.'
At the same term, the demurrer to the first and second pleas, and the issues on the remaining seven, between the plaintiffs and the four sureties, were respectively argued and tried; the first and second pleas were adjudged insufficient, on general demurrer; the issues were found for the plaintiffs, and damages, in gross, upon all the issues and breaches, assessed against the four sureties, at 8607 dollars 30 cents; and, upon the motion of the plaintiffs, a rule was then laid on the principal obligor and co-defendant, Philip H. Minor, to plead to issue on the morrow. In compliance with which rule, he did, within the time prescribed, plead five several matters in bar; the same, mutatis mutandis as the third, fourth, fifth, seventh and ninth, of the aforesaid pleas, put in by the co-defendants, his sureties. A day was given at the next ensuing term, to the plaintiffs, to reply: at which term, the plaintiffs took a judgment on the judgment against the four defendants, with whom the several issues had been tried as aforesaid; and then entered a nolle prosequi as against the co-defendant, Philip H. Minor, who thereupon recovered judgment for costs against the plaintiffs.
On the trial of the cause in the Circuit Court, a bill of exceptions was taken to the opinion of this Court, upon certain instructions which the Court was requested to give to the jury. The Court instructed the jury, according to the expressed desire of the plaintiffs below, except as hereafter stated, but refused to charge the jury, as requested by the counsel of the defendants.
The instructions given by the Court, on the motion of the plaintiffs' counsel, and on the evidence given in the cause, were
1st. If the jury, from the evidence aforesaid, should be of opinion, that the said Philip H. Minor, upon his leaving the Mechanics Bank of Alexandria, that is to say, on the 9th day of March 1819, failed to pay over, or to account to the said bank, for any portion of the moneys of the said bank, received by him as Cashier of the said bank, while he acted as Cashier of the said bank, under the writing obligatory, in the declaration mentioned, then, the jury may, and ought, to infer, that the said moneys, so unaccounted for, were wilfully wasted by the said Philip H. Minor, or applied to his own use; and that, under such circumstances, the defendants are liable to the bank, for the moneys which he so failed to pay over, or account for, to the said bank.
2d. And the said plaintiffs requested the Court further to instruct the jury, that if, from the evidence aforesaid, they should be of opinion, that the said Philip H. Minor, while he acted as Cashier aforesaid, under the writing obligatory aforesaid, did wilfully pay or apply, or did, knowingly and wilfully, suffer or permit to be paid away or applied to the use of Thomas I. Minor and himself jointly, or to himself individually, any portion of the funds or moneys of the said bank, without the authority of the Board of Directors of the said bank, so that the said sums, or any part thereof, were lost to the said bank; that the said defendants are liable for the said moneys or funds so paid away, or applied and lost.
3d. And the said plaintiffs prayed the Court further to instruct the jury, the if, from the evidence aforesaid, they should be of opinion, that the said Philip H. Minor, while he acted as Cashier aforesaid, under the writing obligatory aforesaid, wilfully paid away or appropriated, or knowingly suffered or permitted to be paid away, or appropriated to the use of Jabez B. Rooker, Wm. F. Thornton, Benjamin G. Thornton, Lewis Hipkins, and Francis Adams, or to either of them, the moneys and funds of the said bank, without the authority of the Board of Directors of the said bank, so that the said moneys or funds, or any part thereof, were entirely lost to the said bank; then, the said defendants are liable for the said moneys so paid away, or appropriated, and lost.
Upon the first and second issues, being the issues under the third and fourth pleas-and upon the third, being the issue joined on the fifth plea, the Court gave the instructions as prayed for, by the counsel for the bank. Upon the third issue, being the issue joined in the fifth plea, the Court gave the first instruction, with the addition of the following words:-'unless such failure to pay over, or account, for the money so received, by the said Philip H. Minor, was in obedience to, and in pursuance of, the directions, rules, orders, usages, and customs of trade and business, ordained, established, and practised, in the said bank, by the authority of the said President and Directors.'
Upon the fourth issue, being the issue joined under the sixth plea, the Court gave the instructions prayed for, adding, in each instruction, after the words 'directors of the said bank,' the words, 'and without the wrong, connivance, or permission, of the said President and Directors.'
Upon the fifth issue, being the issue joined in the seventh plea, the Court gave the first instruction, adding the words, 'if the jury should be also satisfied, by the evidence, that moneys, which the said Philip H. Minor so failed to pay over, or account for, were thereby lost to the bank;' and, upon this issue also, the Court gave the second and third instructions.
Upon the sixth and seventh issues, the Court gave the second and third instructions, adding the words, to make them applicable, to the fourth issue; and upon the sixth issue, the Court also gave the second and third instructions, adding, in each instruction, after the words 'Directors of the said bank,' the words, 'and without the wrong, connivance, or permission, of the said President and Directors.'
The counsel for the defendants, then moved the Court to instruct the jury,--
1. That if it were the established usage and practice of the said bank, that the Cashier might, in his discretion, permit customers to overdraw, and to have checks and notes charged up, without present funds in bank; and for the Cashier to receive and pass, as cash, checks and drafts, upon other banks; and if the said balances, so appearing against the several persons above charged on the books of said bank, arose out of the exercise of such discretion, by the said Cashier, and in the course of the ordinary transactions of said bank, and pursuant to established usage and course of business there adopted, and personally known to the said President and Directors, and practised and continued, with their knowledge, for a series of years, from the commencement of the bank, to the termination of the said Philip H. Minor's cashiership; though the existence of such balances, or the particular circumstances attending them, were not formally communicated to the Board of Directors. the jury may infer the approbation, assent, and acquiescence, of the said President and Directors, as to such usage and course of business.
2. That if the said balances, appearing against the several persons above charged on the books of said bank, arose in the course of the ordinary transactions of said bank, pursuant to the established usage and course of business there adopted, and known to the President and Directors, and expressly or tacitly acquiesced in, and approved by them; or if the said President, and a majority of the directors, were personally acquainted with such usage and course of business, purposely connived at the same, and declined investigation, then, the jury may infer, that the same were approved and permitted by the said President and Directors, though no formal communications of the same were made, by the said Cashier, to the Board of Directors, at their official meeting: and, upon finding such to be the fact, the jury, as to such balances, should find for the defendants, under the issues joined on the replications to the sixth, eighth, and ninth pleas.
Which instructions the Court altogether overruled, and refused to give to the jury.
3. If the jury find, from the evidence, that the several officers of the said bank, annually appointed by the said President and Directors, as aforesaid, each gave separate bond and security, for the faithful performance of the duties of his office;-that the said William Patton, so being Cashier, as aforesaid, died on or about the 28th of August, next ensuing his last appointment, on the 9th of March 1817; and that on the third day of September following, the said Philip H. Minor, having all along acted as teller, under his said appointment, as such, for one year, from March 1817, was duly appointed Cashier, in place of said Patton, and gave bond and security in the usual form, for the faithful performance of his duties as such Cashier; being at the same time under bond and security for the faithful performance of his duties as teller, for the year, ending in March 1818, as above stated; that he continued to be such Cashier, under his said appointment, till the 9th of March 1818, when he was again appointed Cashier for one year; and on the 19th of the same month, gave the bond now in suit;-that on the said third of September 1817, the said President and Directors, duly passed the said orders, of that date, appointing the said Philip H. Minor Cashier, as aforesaid, and directing the then officers of the bank, to do the whole duties of the bank; and did not then, or any time after the said ninth day of March 1817, make any new appointment of teller;-that the said Philip H. Minor, from the time of his first appointment as Cashier, usually performed the duties of teller; which duties, as well as those of Cashier, were occasionally, and frequently, during the continuance of said Minor in the office of Cashier, performed by the other officers of the said bank, whilst the said Minor was absent, and otherwise occupied with the business and affairs of said bank;-that the separate office of teller was established at the first institution of said bank, by the written laws and ordinances of the President and Directors, as above given in evidence;-that after the said President and Directors ceased to appoint a distinct person as teller, as aforesaid, all the distinct functions and duties of teller, and the forms of keeping the accounts and transacting the business by the Cashier, or some other officer of said bank, in the name and capacity of teller, were pursued, the same as when the office of teller was filled by a distinct person; the practice being still continued, of placing the money of the bank, intended to answer the current demands of each day, in the hands of the officer as teller, of keeping separate accounts of such moneys, and of all deposits, and of all payments upon checks or otherwise, in the name and capacity of teller; such accounts being distinct and separate, and in distinct and separate books from those kept in the name and capacity of Cashier; and that the said Board of Directors, and the proper committees of the same, in their quarterly and other examinations and reports of the state and condition of said bank, and of the accounts of its officers, still kept up the distinction between the teller's and the Cashier's accounts, and the teller's and Cashier's money; then, that the defendants are not chargeable in this action for the conduct of said Philip H. Minor, in the execution of the duties distinctly appertaining to the office of teller, whilst he was Cashier, as aforesaid.
Which instruction the Court refused to give, the plaintiffs having offered in evidence to the jury, the following by-law of the said President and Directors, to wit:--
Article fifth, in section second of the by-laws, above given in evidence; and having also offered in evidence, to prove, that, after the appointment of the said Philip H. Minor to the office of Cashier, on the 9th of March 1818, he did, in fact, generally perform the duties of teller, with the knowledge of the President of the said bank; from which it was competent for the jury to infer, that he, the said Philip H. Minor, as Cashier, as aforesaid, was required by the President of the said bank, or by the Board of Directors of the said bank to perform the duties appertaining to the office of teller.
Mr. Taylor, and Mr. Jones, for the plaintiffs in error.--
1. The Plaintiffs below sue in their corporate capacity, under the Act of Congress, of May 16, 1812, and no such corporation ever existed; it was to exist only, on the happening of a future event. The law does not incorporate a company already formed, but provides for the erection of the corporation, upon certain conditions, and on certain forms being complied with.
The demurrer admits the facts stated in the first and second pleas, and the corrupt evasions of the Act prevented the corporation ever coming into existence. The obligors in the bond were not thereupon estopped, as the bond was given to supposed or fictitious persons, and not to an existing corporation; and there was no one in esse to take the bond. An estoppal cannot be alleged against an Act of Parliament. 1 Chitty's Pleadings, 435. Comyn's Dig. Abatement, 16. 3 Instructor Clericalis, 89. Story's Pleadings, 24.
Dealing with a pretended corporation, does not preclude a party from denying its existence; it must have existed de jure. It is no objection to the matter in the first and second pleas, that they are not pleaded in bar; a plea that goes to show that there never was such a person as the plaintiff, is a plea in bar. 1 Bos. & Pull. 44. 1 Chitty, 425.
The general rule that sealed instruments cannot be opened, has exceptions, and in cases of illegal and fraudulent considerations, and considerations ex turpe causa; a fraud which is injurious to the public, cannot be precluded by any shield of law. 2 Wilson's Reports, 347. 2 Term Reports, 171.
It is not necessary to resort to a quo warranto, to determine the existence of the corporation. The defendant in an action on a promissory note, may call upon a corporation, if plaintiff, to show its charter, and the same principle will apply in this case. A quo warranto, or mandamus would be proper, if the corporation had ever existed, but that was not the fact in this case; and it is not an answer to the course of proceedings, here, that it would multiply actions, for such would not be the fact.
2. As to the effect of the nolle prosequi. The action is upon a joint and several bond, and the obligors are sued jointly. The sureties appeared, and took a separate defence, and a verdict was obtained against them. The principal pleaded, after being ruled; and at the subsequent time a nolle prosequi was entered against him, and a judgment was taken against the sureties.
The proceeding was erroneous. Upon a joint and several bond, all the parties must be sued together, or each must be sued separately-and it is error to sue less than all, unless the suit be against one only. 3 Term Reports, 782. 1 Hen. & Mumford, 62. 3 Mumford, 187. 2 Maul & Selwyn, 23. 2 Randolph, 446. 478. 174. 313. 2 Day, 387. 5 Mumford, 556. 1 Williams Saunders, 291. vol. 4. 207, n. 2-91. note 4. 1 Henry Black. 108. 1 Bos. & Pull. 670. 1 Chitty, 32, 33. 546.
If a judgment could not be obtained against four obligors, on a bond given by five, in a suit so institued, it cannot be obtained by the entry of a nolle prosequi against one. 1 Saunders, 207. 1 Chitty on Plead., 32. 38. 546. 5 Espinasse's Nisi Prius Cases, 47. Jeffray vs. Frebain-Chandler vs. Parks et al. 3 Esp. 76. The cases which impugn the doctrine contended for, are Noke vs. Ingraham, 1 Wilson, 89. 5 Johnson's Reports, 160.
If the parties to a joint and several bond are joined in an action, they never can be separated; and if one is discharged, all are discharged, except in cases of infancy and bankruptcy. 1 Henry Black., 108. 1 Bos. & Pull. 630. The rationale of the rule is, that the party having made it a joint contract by his suit, cannot afterwards make it a several contract. 3 Taunton, 307. 4 Taunton, 468.
The most important inquiry in this case, is upon the instructions given by the Court.
Mr. Swann, and Mr. Wirt, Attorney General, for the defendants.
The instructions first given, sustain the action, and sweep away the defence, taking it entirely from the jury. The words 'well and truly' in the condition of the bond, mean only integrity, not capacity. 10 John. 271-and the instruction given considers the words as requiring skill. The Cashier acted according to the instructions of the President and Irectors, and to the usage of the Bank. The instruction given precludes mistake, and denies that it constitutes a defence.
The demurrers to the first and second pleas, were not on the ground of an admission of the facts, but the pleas were considered invalid. It was not obligatory on the Bank, that the capital should be 500,000 dollars, as the expression that it 'may' consist of 500,000 dollars, authorizes it to be less, if it shall be deemed proper; and even admitting the collusion charged, as to the creation of a false capital, to the amount of 180,000 dollars, the remaining capital of 320,000 dollars was sufficient, under the charter. The pleas are also insufficient, as, although collusion is set up, there is no certainty in the charge or allegation of the persons concerned in it, or the place of the same. The whole purpose of the law is, to limit the amount of trading by the Bank; and it is not a fair construction of the Act of Incorporation, to interpret the terms 'may consist' into 'must consist.' The company went into existence in 1812, and the Cashier was appointed in 1817, after many successive years of business by the Bank, which could not be affected by the proceedings of 1812.
2. The plaintiffs in error are estopped by having executed this bond to the Bank, from denying the existence of the corporation. Wills' Reports, 11, 12. 14 Johnson, 238.
Where the matter which constitutes the ground of an alleged estoppal is new, it is necessary to state it by plea, but not so when it is contained in the declaration. 1 Chitty's Pleadings, 575.
The proper mode of contesting the existence of the corporation, would have been by an information, in the nature of a quo warranto; and it does not rest with every one dealing with a corporation, to inquire, when called upon to comply with his contract, whether it exists? It was not necessary to set out breaches, until the defendants, the obligors in the bond, had alleged performance, and then the pleas are insufficient; no breaches need be set out. 1 Chitty, 598. 1 Saunders, 103. Archbold, 262. 2 Chitty, 481. But if there are any omissions or defects in the pleadings, they are cured by the verdict, according to the laws of Virginia.
The instructions given by the Court upon the replication, and on the evidence, were such as the Court were bound to give, and were in strict conformity to the facts; and, if the Court refused to give the instructions asked for by the plaintiffs in error, they did so upon the authority of the by-laws of the bank, and the orders of the Board of Directors relative to the duties of the officers of the bank. Because the custom and practice might have been to overdraw the bank, and for its officers to abuse their trust, was this custom to excuse the conduct of the Cashier?
As to the effect of the nolle prosequi, all the cases referred to by the plaintiffs in error, are cases of joint contract, and where the trial was joint. But in this, the four sureties severed from the principal, and, on their own choice, went to trial alone, upon pleas put in separate from the principal.
The verdict has been given against the plaintiffs in error, on a trial of their own selection; and they suffered judgment to be entered against them, without any objection, before the principal in the bond had appeared and pleaded.
The entry of a nolle prosequi, does not admit that the plaintiff had no cause of action, it is not a retraxit or a release, and does not preclude the commencement of another suit. 1 Williams Saunders, 207. Archbold's Practice, 87. 1 Saunders, 291. 2 Maul & Selwyn, 444. 1 Wilson's Reports, 89. 5 John. 160.
Although the law is well stated to be, that a suit on a joint and several bond must be brought against all, or against one, and that you cannot sue four, when there are five joint obligors, yet the objection must be taken by plea in abatement; and if there is no such plea, and judgment, the consent of the defendants will be inferred. The following cases were also cited in the argument,-Walsh vs. Bishop, Cro. Char. 239. Ibid. 243. Carthew, 98.
Mr. Justice STORY delivered the opinion of the Court.--
This is a writ of error to the Circuit Court of the district of Columbia, sitting at Alexandria. The plaintiffs in error were original defendants in the cause, and the suit is now before this Court, upon the judgment of the Court below, upon certain pleas of the defendants, to which there was a demurrer; and also, upon the instructions given and refused by the Court, upon the trial of certain issues of fact, joined by the parties.
The action is dubt upon an official bond, given by Philip H. Minor, Cashier of the bank, and by four other persons, as his sureties, with condition, that Minor 'shall well and truly execute the duties of Cashier' of the bank; and was originally brought against all the parties to the bond. The declaration proceeds for the penalty of the bond, without any notice of the condition, and avers, by way of breach, the non-payment of the penalty. The sureties, after oyer of the bond and condition, (which thereby became part of the declaration,) severed themselves from the principal, and pleaded nine several pleas. To the two first of these pleas, demurrers were put in; and the Court below, upon consideration, gave judgment upon the demurrers in favour of the bank; and the correctness of this decision, constitutes the first subject of inquiry.
Exceptions have been taken, both to the matter and the form of these pleas; and if the matter of them, or either of them, might constitute a good bar to the action, it may then be necessary to consider, whether that matter is pleaded with due propriety and certainty, according to the established rules of pleading, so as to escape objection upon general demurrer. Both of them are, in effect, though not in form, special pleas of nul teil corporation. The first plea, in substance, avers, that, by the charter granted by the Act of Congress, of the 16th of May 1812, ch. 87, the capital stock of the bank was by the charter fixed and limited, to consist of 500,000 dollars, bona fide;-that the whole capital stock was not bona fide filled up, and subscribed for; but, on the contrary, by a collusion between the commissioners, under whose direction the subscriptions were taken, and the subscribers, a large portion of the capital stock, to wit, 18,000 shares, amounting to 180,000 dollars, were filled up, by false and colourable subscriptions; the ostensible subscribers, after payment of the first instalments, were fraudulently permitted to withdraw the same; and future payments by them, were dipensed with, while they were still rated and held out, as stockholders, for the purpose of colourablyfilling up the subscription of the whole capital stock, and electing a Board of Directors; and that, in this manner, and by these means, and by no other, the bank was put into operation.
This plea is meant to rest upon two grounds, to sustain its legal propriety. First, that the subscription of the whole capital stock of 500,000 dollars, was a condition precedent to the putting of the bank into operation as a corporation. Secondly, that the collusion between the commissioners and the subscribers, for the 18,000 shares, being fraudulent, made their subscriptions a mere nullity.
Various answers have been given at the bar, to the legal sufficiency of the matters thus pleaded. In the first place, it is said, that the defendants are estopped, by the bond, to deny the legal existence of the corporation. In the next place, that the charter does not make the subscription of the whole capital stock, a condition precedent to the establishment of the bank. In the next place, that the question, whether the bank was regularly, and bona fide, put into operation, is matter not inquirable into, in a suit of this nature, but only upon a quo warranto, instituted by the government; and, in the last place, that the whole stock being, in fact, subscribed, the fraudulent intention and acts of the parties, did not make the subscription of the 18,000 shares a nullity. Let us, then, consider what is the true construction of the charter itself, upon the points raised at the argument, supposing it to have been, (which in terms it is not,) incorporated into the plea, and therefore judicially before us. The first section of the Act of the 16th of May 1812, chap. 87, provides, 'that the subscribers to the Mechanics Bank of Alexandria, their successors and assigns, shall be, and hereby are created, and made a body politic, by the name and style of the Mechanics Bank of Alexandria; and by such name and style, shall be, and are hereby made able and capable in law, to have, purchase, &c., lands, &c. &c., and the same to sell, &c, to sue and be sued, & c. &c.; subject to the rules, regulations, restrictions, limitations, and provisions, hereinafter prescribed and declared.'
In this section, there is no limitation as to the number of the subscribers necessary to constitute the corporation. The subscribers, whether many or few, are declared to be incorporated; and, unless there be some restriction or limitation elsewhere in the Act, is is most manifest, that the Court cannot intend that any particular amount of subscriptions is indispensable.
The second section provides, 'that the capital stock of said corporation, may consist of 500,000 dollars, divided into shares of ten dollars each, and shall be paid in the following manner; that is to say: one dollar on each share, at the time of subscribing, one dollar on each share at sixty days, and one dollar on each share, ninety days after the time of subscribing; the remainder to be called for, as the President and Directors may deem proper; provided they do not call for any payment in less than thirty days, nor for more than one dollar on each share, at any one time.' The argument of the defendants is, that 'may,' in this section, means 'must,' and reliance is placed upon a well known rule in the construction of public statutes, where, the word 'may,' is often construed as imperative. Without question, such a construction is proper, in all cases where the legislature mean to impose a positive and absolute duty, and not merely to give a discretionary power. But no general rule can be laid down upon this subject, further than that that exposition ought to be adopted in this, as in other cases, which carries into effect the true intent and object of the legislature in the enactment. The ordinary meaning of the language, must be presumed to be intended, unless it would manifestly defeat the object of the provisions. Now, we cannot say, that there is any leading object in this charter, which will be defeated by construing the word 'may' in its common sense, as imparting a power to extend the capital stock to 500,000 dollars, and not an obligation, that it shall be that sum and none other. It is by no means clear, from this section, that the legislature contemplated that there should be a capital of 500,000 dollars, on which the bank was to commence, or carry on its operations. On the contrary, three instalments only are required to be absolutely paid in, and the residue of the capital stock is to be paid in, only when the President and Directors may deem it proper. So that the capital stock, except at the discretion of the Board, may never extend beyond the amount of 150,000 dollars, for any practical purposes, either as security to the public, or as the basis of discounts. Now, the plea itself does not attempt to deny that all but 18,000 shares of the stock were, bona fide, subscribed for; so that, for aught that appears, the capital stock, on which the bank carried on its operation, may have far exceeded that sum. It has been urged, that public policy requires such an imperative construction of the clause, for the public security. But it is a sufficient answer to that suggestion, that no such public policy is avowed, or can be inferred, from the general terms of the Act. When the legislature intends to restrict the capital stock of a bank, or to require any portion of stock or stockholders to be indispensable for its legal existence and operations, it is not uncommon to incorporate such a restriction into the charter. The omission to do so, in quite as significant that the legislature did not deem such a restriction subservient to any manifest public policy.
The legislature might well presume, after prescribing the maximum to which the capital stock should extend, that the actual capital to be employed might safely be left to the discretion of the stockholders, or its agents. The 13th section of the charter contains provisions for the security of the public against over issues by the bank, and if any such restriction had been intended, as the argument supposes, it would naturally have found a place. It declares, that no stockholder shall be answerable for any losses, deficiencies or failure of the capital stock, for any larger sum than the amount of the stock belonging to him; excepting, that if the total amount of the debt of the bank shall exceed twice the amount of its capital stock, over and above deposits, then the directors shall, in their private capacities, be liable for the excess; and if the directors shall not have property to pay the amount of the excess, then every stockholder shall be liable for their deficiencies, in proportion to their shares in the bank. Whether, therefore, the capital stock be great or small, if there be debts due from the bank, exceeding twice the amount of the capital stock; which may fairly be construed to mean the capital stock actually paid in; the stockholders become ultimately liable for the excess; and this liability furnishes, if not an ample, at leass a reasonable security against the public evils, which the argument supposes might result from not requiring the whole capital to be subscribed for. At all events, we cannot perceive any clear legislative intention to make the subscription of the whole capital stock, a condition if not an ample, at least of the bank, and unless it is so made by the charter, the matter of the plea falls, and cannot sustain the defence.
It, however, this interpretation of the charter could not be supported, and the subscription of the whole capital stock were a condition precedent, the result, so far as the first plea goes, would not be varied. The fraud and collusion asserted in that plea, if admitted in its fullest manner, does not lead to the conclusion which it seeks to establish. If the subscription were fraudulently made, with a view to evade the provisions of the charter, the law will hold the parties bound by their subscriptions, and compellable to comply with all the terms and responsibilities imposed upon them, in the same manner, as if they were bona fide subscribers. It will not make the subscription itself a nullity, but it will deprive the subscribers of the power of availing themselves of the same. The third section of the Act manifestly contemplates cases of fraudulent subscription, and provides, 'that all the subscriptions and shares obtained in consequence thereof, shall be deemed and held to be for the sole and exclusive use and benefit of the persons subscribing, or in whose behalf the subscriptions respectively shall be declared to be made, at the time of making the same; and all bargains, contracts, promises, agreements, and engagements, in any wise contravening this provision, shall be void; and the person, &c. subscribing, &c. shall have, enjoy, and receive the share or shares respectively, &c., and all the interest and emoluments thence arising, as freely, fully, and absolutely, as if they had severally and respectively paid the consideration therefor; any such bargain, &c. to the contrary notwithstanding.'
This section seems to us conclusive upon the point. It avoids all bargains contravening the provisions in respect to subscriptions, and gives to the subscriptions the same effect as if they were bona fide made for the real use and benefit of the subscribers; and independently of this provision, it would be extremely difficult to maintain, upon general principles of law, that a private fraud, between the original subscribers and commissioners, could be permitted to be set up, to the injury of subsequent purchasers of the stock, who became bona fide holders, without any participation or notice of the fraud.
For these reasons, we are of opinion that the matter of the first plea, even if it had been well pleaded, would constitute no bar to the action.
The second plea is disposed of by the construction of the charter already intimated, and is further open to fatal objections, from its deficiency of proper averments, and want of legal certainty. It makes no averment of the amount of the capital stock, or of the necessity of the whole being subscribed for, before the bank is to be put in operation.
It asserts no fraudulent combination or subscription; but in the most general terms, without any certainty as to facts or circumstances, alleges, that the capital stock was not filled up by any subscription, opened and conducted in pursuance of the Act, so as to entitle the subscribers to bring the action; and that the subscribers did unjustly and unlawfully arrogate of themselves the corporate name, style, and privileges, without the capital stock having been filled up by subscription, or the corporation having been constituted and composed of actual subscribers, pursuant to the directions of the Act. In point of substance, as well as form, it is bad, upon the established rules of pleading.
This view of the case renders it wholly unnecessary to consider the point made as to the estoppal, and the necessity of a quo warranto; on which, therefore, we give no opinion.
The third and fourth pleas are intended to be pleas of general performance; the third is so, in fact, and pursues the condition of the bond. The fourth is argumentative, and assumes a particular legal interpretation of the condition, that is to say, that the condition covers only wilful defaults, and breaches of duty, and is no security for competent skill and reasonable diligence in the discharge of duty, but only for honesty. To these pleas special replications were filed, assigning special breaches of duty, upon which the parties were at issue, and upon this, and all the other issues in the cause, the jury returned a verdict for the plaintiffs. No exception has been taken to the sufficiency of these replications.
The fifth plea states a general performance of duty, in obedience to and in pursuance of the 'directions, rules, orders, usages and customs of trade and business, ordained, established and practised in the said bank, by the authority of the said President and Directors.' It is, therefore, argumentative, and supposes that compliance with the rules, orders, usages, & c., established and practised by the President and Directors, whatever they may be, whether within the scope of their power or not, would be a good and true discharge of duty. To this plea, a general replication was put in, 'that the said cause of action, in the declaration mentioned, did accrue, as in the said declaration and breaches are set forth, without this, that the matters set forth in the said plea, are true,' and this the plaintiffs pray may be inquired of by the country; and the defendants joined in the issue; upon which a verdict was found in favour of the plaintiffs. An exception has been taken at the argument to this replication, upon the ground that it ought to have assigned a special breach, and that the omission is not cured by the verdict. There is no question that the replication is not drawn with technical accuracy and correctness; and if the plea be a good plea of general performance, it is clear, both upon principle and authority, that a special breach ought to have been assigned in the replication; and the objection, if insisted upon by way of demurrer, for that cause, would have been insuperable. The reason is, that the law requires every issue to be founded upon some certain point, that the parties may come prepared with their evidence, and not be taken by surprise, and the jury may not be misled by the introduction of various matters. A covenant or condition for general performance, is broken by any single omission of duty, and no inconvenience can arise from stating the particular breach with suitable certainty. But it does not follow, that if not so stated, the objection may be taken in any stage of the suit. The rule as to certainty in pleadings, is framed for the benefit of the parties, and may be waived by them, and in many cases, both at common law, and by the statute of jeo fales, defects in this particular are cured by a verdict. It is true, that in a declaration upon a covenant for general performance of duty, if no breach be assigned, or a breach which is bad, as not being in point of law within the scope of the covenant, the defect is fatal, even after verdict. Com. Dig. Plead., p. 14. But that is not the present case. Here the declaration does assign a good breach, by the non-payment of the penal sum stated in the bond. The defendants disclose the condition of the bond upon oyer, and set up a general performance of it; and the replication, though inartificially drawn, puts in issue the whole matter of the defence, and denies the performance of it. The verdict has found that the condition was not performed, and consequently, upon the whole record, the non-payment of the penal sum is admitted, and the excuse for it is negatived. The replication, then, does assert a breach, though in too general a form. It ought to have assigned a special breach; but the general breach includes it, and the verdict having found the general breach, there is, upon principles, no reason shown against the plaintiff's right of recovery.
It is exactly like the case of a declaration upon a general covenant of the like nature, where a particular breach ought to be assigned; and yet if a general breach be assigned, the defect is cured, by a verdict for the plaintiff. Com. Dig. Plead., 48. The objection, then, to the replication to the fifth plea, cannot now be sustained.
It is not necessary to notice the remaining pleas, upon which issues were joined, because a verdict has been found in all of them in favour of the plaintiffs, however liable to objection some of them may be, and particularly the seventh plea of non damnificatus, as an answer to the declaration. They set up special defences, and the plaintiffs were not bound to do more than traverse them.
The instructions of the Court, given and refused at the trial, constitutes the next subject of inquiry. It is conceded, that if the instructions given on the prayer of the plaintiffs were correct, as to the issues on the third and fourth pleas, the qualifications annexed to them by the Court in their applications to the other issues, were perfectly proper.
The first instruction is, in substance, that if Minor, upon his leaving the bank, failed to pay over or to account to the bank for any portion of the moneys of the bank, received by him as Cashier; then the jury may, and ought to infer that the moneys so unaccounted for, were wilfully wasted by Minor, or applied to his own use; and under such circumstances, the defendants are liable for the same. We can perceive no error in this instruction; the presumption of a wilful waste or misapplication of the funds of the bank by the Cashier, was a natural conclusion, from his failure to pay over or account for the same. It was not put to the jury as a presumption capable of being rebutted by evidence showing a loss by negligence or accident. If such a loss actually occurred, it was incumbent on the Cashier to prove it, and his total omission to offer any such proof, which, from the nature of the case, must be more within his own power, than that of the Bank, ought to lead the jury to the presumption of the nonexistence of any such negligence, or accidental loss.
It has been argued, that this instruction is the more material and injurious to the defendants, because it proceeds in the latter part, upon a misconstruction of the true import of the condition of the bond. The condition, that Minor shall 'well and truly execute the duties of Cashier' of the bank, is said to be merely a stipulation for honesty, in the discharge of the duties, and not for skill, capacity, or diligence. We are of a different opinion. 'Well and truly to execute the duties of the office,' includes not only honesty, but reasonable skill and diligence. If the duties are performed negligently and unskilfully-if they are violated, from want of capacity or want of care, they can never be said to be 'well and truly executed.' The operations of a bank, require diligence, with fitness and capacity, as well as honesty, in its Cashier; and the security for the faithful discharge of his duties, would be utterly illusory, if we were to narrow down its import, to a guarantee against personal fraud only.
The remarks already made, dispose of the second and third instructions prayed for by the plaintiffs. These instructions, in substance, declare that the sureties are liable upon the bond, for any wilful or permissive misapplication of the moneys of the bank, which the Cashier knowingly made, or suffered, without authority, whereby the same moneys have been lost to the bank. There seems no ground, upon which to rest any reasonable objection to such a direction to the jury.
We may now proceed to the consideration of the three instructions prayed for, in behalf of the defendants. The first is, in substance, that if it were the established usage and practice of the bank, that the Cashier might, in his discretion, permit customers to overdraw, and to have checks and notes charged up, without present funds in the bank; and for the Cashier to receive and pass, as cash, checks, and drafts upon other banks; and if the balances appearing against such persons charged in the books of the bank, arose out of the exercise of such discretion by the Cashier, in the course of the ordinary transactions of the bank, and pursuant to the established usage and course of business there adopted, and generally known to the President and Directors, practised and continued with their knowledge, for a series of years from the commencement of the bank, to the termination of Minor's cashiership, though the existence of such balances, or the particular circumstances attending them, were not formally communicated to the Board of Directors; the jury may infer the approbation, assent, and acquiescence, of the President and Directors, as to such usage and course of business.
The refusal of this instruction, is matter of no small embarrassment and difficulty to this Court, from the terms in which it is couched, and the issues on the sixth, eighth, and ninth pleas, to which, alone, it can be properly applied. Those issues put to the jury the question, whether the acts of the Cashier, whatever might be their character or kind, were, or were not, done by the wrong, connivance and permission of the President and Directors of the Bank. The point of the instruction is, that the established usage and practice of the bank for a long period, known to the President and Directors, does afford a presumption of the approbation, assent, and acquiescence of the President and Directors, as to such usage and practice; though the balances resulting therefrom, were not formally communicated to the Directors. From the shape of the prayer, it is undoubtedly meant that such usage and practice was known to the President and Directors, as a board, and in their official character, and received their approbation as such. In a general view, with reference to the principles of the law of evidence, we are not prepared to admit, that such a presumption could not ordinarily arise. The ordinary usage and practice of a bank, in the absence of counter proof, must be supposed to result from the regulations prescribed by the Board of Directors; to whom, the charter and by-laws, submit the general management of the bank, and the control and direction of its officers. It would be not only inconvenient, but perilous, for the customers, or any other persons dealing with the bank, to transact their business with the officers upon any other presumption. The officers of the bank are held out to the public as having authority to act, according to the general usage, practice, and course of their business; and their acts within the scope of such usage, practice, and course of business, would, in general, bind the bank in favour of third persons possessing no other knowledge. In the case of the Bank of the United States vs. Dandridge, (12 Wheat. 64,) the subject was under the consideration of this Court; and circumstances far less cogent than the present to found a presumption of the official acts of the board, were yet deemed sufficient to justify their being laid before the jury, to raise such a presumption. If, therefore, the usage and practice alluded to, in the instruction, were within the legitimate authority of the board, and such as its written vote might justify, there would be no question, in this Court, that it ought to have been given.
The pertinency of such a presumption, to these issues, cannot admit of dispute. But the real difficulty remains to be stated. Assuming that the Court, upon these issues, ought to have given the instruction prayed for, the question is whether upon the whole record, that is such an error as now justifies this Court in a reversal of the judgment. If the instruction had been given, and thereupon, a verdict upon these issues had been found for the defendants, could any judgment have been given upon these issues, in favour of the defendants; or ought the judgment, non obstante veredicto, to have been for the plaintiffs? If it ought, then the error becomes wholly immaterial; since, in no event, could the instruction, in point of law, have benefited the defendants. Upon deliberate consideration, we are of opinion, that the pleas, on which these issues are founded, are substantially bad. They set up a defence for the Cashier, that his omission 'well and truly to perform' the duties of Cashier, was, by the wrong, connivance and permission of the Board of Directors. The question then comes to this, whether any act or vote of the Board of Directors, in violation of their own duties, and in fraud of the rights and interest of the stockholders of the bank, could amount to a justification of the Cashier, who was a particeps criminis.
We are of opinion, that it could not. However broad and general the powers of the direction may be, for the government and management of the concerns of the bank, by the general language of the charter and by-laws, those powers are not unlimited, but must receive a rational exposition. It cannot be pretended, that the board could, by a vote, authorize the Cashier to plunder the funds of the bank, or to cheat the stockholders of their interest therein. No vote could authorize the directors to divide among themselves, the capital stock, or justify the officers of the bank in an avowed embezzlement of its funds. The cases put are strong, but they demonstrate the principle only in a more forcible manner Every act of fraud-every known departure from duty, by the board, in connivance with the Cashier, for the plain purpose of sacrificing the interest of the stockholders, though less reprehensible in morals, or less pernicious in its effects, than the cases supposed, would still be an excess of power, from its illegality-and, as such, void, as an authority to protect the Cashier, in his wrongful compliance. Now, the very form of these pleas, sets up the wrong and connivance of the board as a justification; and such wrong and connivance cannot, for a moment, be admitted as an excuse for the misapplication of the funds of the bank, by the Cashier.
The instruction prayed for, proceeds upon the same principles, as the pleas. It supposes, that the usage and practice of the Cashier, under the sanction of the board, would justify a known misapplication of the funds of the bank. What is that usage and practice, as put in the case? It is a usage to allow customers to overdraw-and to have their checks and notes charged up, without present funds in the bank; stripped of all technical disguise-the usage and practice, thus attempted to be sanctioned, is a usage and practice to misapply the funds of the bank; and to connive at the withdrawal of the same, without any security, in favour of certain privileged persons. Such a usage and practice, is surely a manifest departure from the duty, both of the Directors and the Cashier, as cannot receive any countenance in a court of justice. It could not be supported by any vote of the directors, however formal; and, therefore, whenever done by the Cashier, is at his own peril, and upon the responsibility of himself and his sureties. It is any thing but 'well and truly executing his duties, as Cashier.' This view of the matter, disposes of this embarrassing point, and also of the second instruction prayed for, by the defendants; which substantially turns upon the like considerations.
The third instruction prayed for, in effect, was, that the Court would instruct the jury, that the defendants are not chargeable in this action for the conduct of Minor in the duties distinctly appertaining to the office of teller, whilst he was Cashier in the bank, although those duties were duly assigned to him; because it constituted a distinct office, and the accounts and proceedings of the teller, were at all times kept distinct, and in separate books, from those of the Cashier. In our judgment, this instruction was properly refused. By the fifth article of the second section of the by-laws of the bank, the duties of the Cashier are generally pointed out; and among other things, it is provided, that he shall 'do and perform all other duties, that may from time be required of him by the President or Board of Directors, relative to the affairs of the institution.' On the appointment of Minor as Cashier, who had previously acted as teller, the directors passed a vote, 'that the present officers of the bank, do the whole duties of the bank.' From the other circumstances of the case, the inference is irresistible, that the duties of teller were, under this vote, assigned to the Cashier. If so, then the performance of these duties constituted thenceforth a part of the duties of the Cashier, as such; and as much so, as if they had been originally affixed to the office of Cashier. There is nothing in the nature of the duties of teller, incompatible with those of Cashier; on the contrary, as is well known, Cashiers often perform the functions of both. The circumstance, that the office of teller, and distinct accounts, and books, were still kept up, does not vary the legal result. It was a matter of mere convenience and regularity, for the government of the bank, in its own business; and probably had no higher, or other origin, than to preserve the same forms and series of accounts, which the bank had adopted at its first institution. The office of teller had a nominal, but not a real, existence; and, from the time of the union of the duties in the Cashier, as such, there was a legal extinguishment of the separate official character. If the Cahier had originally had the duties of book-keeper and accountant assigned to him, and, in consequence thereof, had kept distinct account books in the bank, no one would have imagined, because he kept separate account books, as Cashier, for his own convenience, or, according to the ordinary usage of banks; that he would not, under his bond, have been responsible for mal-conduct, in keeping the general account books of the bank, to its loss or injury. The bond of the Cashier must be construed to cover all defaults in duty, which are annexed to the office from time to time, by those who are authorized to control the affairs of the bank; and sureties are presumed to enter into the contract, with reference to the rights and authorities of the President and Directors, under the charter and by-laws.
The remaining inquiry is, as to the effect of the nolle prosequi, which the plaintiffs entered against Minor, after he had pleaded, and after judgment was given against the sureties, in favour of the plaintiffs, upon all the pleadings interposed by the sureties. The pleas of Minor were, mutatis mutandis, the same as the third, fourth, fifth, seventh, and ninth pleas, put in by the sureties; and the question arises, whether under such circumstances, (no objection to the judgment appearing to have been made by the sureties,) this proceeding is an error, for which that judgment ought to be reversed. It is material to state, that the bond on which the suit is brought, is a joint and several bond. Under such circumstances, the plaintiff might have commeneed suit against each of the obligors, severally, or a joint suit against them all. But in strictness of law, he has no right to commence a suit against any intermediate number. He must sue all or one. The objection, however, is not fatal to the merits, but is pleadable in abatement only; and if not so pleaded, it is waived by pleading to the merits. The reason is, that the obligation is still the deed of all the obligors who are sued, though not solely their deed; and therefore, there is no variance in point of law, between the deed declared on, and that proved. It is still the joint deed of the parties sued, although others have joined in it. This doctrine is laid down, and very clearly illustrated, in Mr. Serjeant Williams's note to the case of Cabell vs. Vaughan, (1 Saund. R. 291, Note 2,) where all the leading authorities are collected. If, therefore, the present suit had been brought against the four sureties only, and they had omitted to take the exception by a plea in abatement, the judgment in this case would have been unimpeachable. Is the legal predicament of the plaintiffs changed, by having sued all the parties, and subsequently, entered a nolle prosequi, against one of the obligors? If not in general, then, is there any legal difference, where the party in whose favour the nolle prosequi is entered, is not a surety, but a principal in the bond? not indeed, so named in the bond, but the suretyship resulting as a necessary inference from the nature and terms of the condition.
These questions must be decided by authority, if any such exist; if none can be found, then, they must be decided by analogy and principle. It may be proper, in this view, again to notice the fact, that this suit is on a joint and several bond; that the defendants severed in their pleas from the principal; that the trial of the issues, (which undoubtedly ought to have been, by the regular course of practice, deferred until the cause was at issue, as to all the parties, or the steps of the law taken to bring them into default;) does not appear upon the record to have been opposed, and that no motion was made in arrest of judgment, or for a postponement, until a trial of the issues upon the pleas of the principal might have been had. What would have been the proper proceedings under such circumstances, whether to try all the issues by the same jury, and have damages assessed at the same time against all the defendants; or whether there might have been several trials, and several assessments of damages; and whether, if such several assessments had been made, and differed in amount, any, and what judgment, ought to have been entered; are points upon which the Court does not think it necessary to give any opinion.
The nature and effect of a nolle prosequi, was not well defined, or understood, in early times; and the older authorities involve contradictory conclusions. In some cases it was considered in the nature of a retraxit, operating as a full release and discharge of the action, and, of course, as a bar to any future suit. In other cases it was held not to amount to a retraxit, but simply to an agreement not to proceed further in that suit, as to the particular person, or cause of action, to which it was applied. And this latter doctrine has been constantly adhered to, in modern times, and constitutes the received law. In cases of tort against several defendants, though they all join in the same plea, and are found jointly guilty, yet the plaintiff may, after verdict, enter a nolle prosequi, as to some of them, and take judgment against the rest. The reason is said to be, that the action is in its nature joint and several; and, as the plaintiff might originally have commenced his suit against one only, and proceeded to judgment and execution against him alone, so he might, after verdict against several, elect to take his damages against either of them. A fortiori, the same doctrine applies where the defendants sever in their pleas. Indeed, in tort, as we shall hereafter see, it does not seem to have been denied, that cases might exist, in which, if the defendants severed in their pleas, the plaintiff might, after judgment against one, have entered a nolle prosequi as to the others. The doubt was, whether he could do so before judgment, which was finally settled in favour of the right, and in such cases, where several damages were assessed against the different defendants, the difficulty was afterwards cured, by entering a nolle prosequi as to all but one defendant. And in the same manner, a misjoinder of improper parties is sometimes aided. The authorities on this subject, will be found summed up with great accuracy, in a note of Mr. Serjeant Williams, to the case of Salmons vs. Smith, (1 Saund. R. 207, note 2.) In the same note, the learned editor adds, 'if an action is brought upon any contract against several defendants, who join in their pleas, any contract is found against them, it is apprehended the plaintiff cannot enter a nolle prosequi against any of them; because the contract being joint, the plaintiff is compellable to bring his action against all the parties thereto; and he shall not, by entering a nolle prosequi, prevent the defendants against whom the recovery has been had, from calling upon the other defendants for a rateable contribution.'
So far as this reason goes, it is inapplicable to the present case; for, the defendants are entitled not only to a rateable, but a full, contribution over, for the entire sum, against the party in whose favour the nolle prosequi has been entered; and consequently, the nolle prosequi does not touch their rights. It is observable also, that the language is qualified by the words 'who join in their pleas;' which are printed in italics, and may therefore fairly be presumed to have been inserted by the learned editor, ex industria, with a view to point out an implied distinction between cases, where there is a severance, and where there is a joinder in the pleas. If there be any such distinction, it is favourable to the present case; for, the plaintiffs severed in their pleas from their principal. The learned editor proceeds to state, that, 'if in such actions the defendants sever in their pleas, as where one pleads some plea which goes to his personal discharge, such as bankruptcy, ne unques executor, and the like, not to the action of the writ, the plaintiff may enter a nolle prosequi, as to him, and proceed against the others; for, with respect to the bankruptcy, the statute of 10th Ann, chap. 5, makes the other defendant, who is not a bankrupt, liable for the whole debt; and therefore, in that particular instance the case is exactly the same, as where an action is joint and several. So the plea of ne unques executor, does not deny the cause of action; but only, that he is one of the representatives of the testator. When the defendants sever in their pleas, with this limitation as to the extent of the pleas in action upon contracts, it is immaterial, what is the form of the action; for, the plaintiff may enter a nolle prosequi against any of them, before verdict, and proceed against the rest.'
The learned editor is fully borne out, in the general position here stated, by the case of Noke et al. vs. Ingraham, (Wilson R. 89,) to which he refers. The only question is, whether there is any such qualification upon it, as that the plea should be one going exclusively in personal discharge, and not to the merits? That is the point of real difficulty. The case in 1 Wilson R. 89, was upon several promises made by the defendant, as partners. One of them pleaded a former judgment; and issue being taken upon the replication of nul teil record, judgment was given against him, and a writ of inquiry of damages awarded, and final judgment. The other defendant pleaded his bankruptcy, and upon this, issue was joined; and afterwards the plaintiff entered a nolle prosequi, as to him. Upon error brought, the principal objection was, that the nolle prosequi, upon a joint contract of two, was a discharge of both. Mr. Chief Justice Lee said, 'it is agreed, on all hands, that in trespass against several, the plaintiff may enter a nolle prosequi, as to one, and that will not discharge the other; and therefore, I cannot see, why it may not be done in this case; and I do not see, how so proper an advantage can be taken upon the statute of Ann, as to the bankrupt, as is now taken by the entry of this nolle prosequi.' Wright, Justice, was of the same opinion, and so was Dennison, Justice; and the latter added, that 'the plea of the bankrupt is not a plea to the action, but only a personal discharge; but that if one defendant was to plead a plea that was to go to the action of the writ, he thought it might then have a different consideration, but that this is not the case here. This case is exactly the same, as when an action is joint and several; for, the statute 10th Ann, ch. 15, has made the partner not a bankrupt, liable for the whole debt. This case is the very same, as to this matter of entering a nolle prosequi, as if it had been trespass against several defendants.'
It is apparent, from this summary of the reasoning of the Court, that the case turned upon the consideration, that the contract, by the operation of the statute of Ann, was several as well as joint; and all the Court concurred, that, under such circumstances, the nolle prosequi would be good, being governed, in the analogy, to trespass, where the cause of action was several as well as joint. What was stated by Dennison, Justice, was not the exclusive ground of his particular opinion, but only a suggestion, that the case might be, (not would be,) different upon a plea to the merits. Now, the general reasoning comes very close to the case at bar; for here the bond is several, as well as joint, and an action might have been maintained severally against the defendants; and what is not immaterial to be considered, all the parties were retained, who had joined in their pleas, and between whom there existed a right of mutual contribution. Even in the case of bankruptcy, the practice is, in England, to require all the joint contractors to be sued, as is proved by the case of Bevil vs. Wood, (2 Maul & Selw. 23,) which makes it really less strong than a joint and several contract.
The case of Moravia, and another, vs. Hunter & Glass, (2 Maul & Selw. 444,) which has been relied on, at the bar, was assumpsit against four defendants, two of whom were not served; D., one of the other defendants, pleaded-1. Non assumpsit. 2. A special plea of bankruptcy. 3. A general plea of bankruptcy, as to whom the plaintiff entered a nolle prosequi. The other defendant pleaded non assumpsit, and a verdict was found against him. The form of the nolle prosequi was, that the plaintiffs, inasmuch as they 'cannot deny the several matters above pleaded, by the said D., freely here in Court confess, that they will not further prosecute their suit against him.' It was moved, in arrest of judgment, that the nolle prosequi, so entered, had confessed the non assumpsit, as well as the other pleas; and therefore, the other defendant was also discharged, and the distinction of Dennison, Jus., in Noke vs. Ingraham (1 Wils. R. 89,) was relied on. But the Court held, that the nolle prosequi was, in effect, only a confession; that as far as regards D., he had a defence in the matters pleaded by him. This case does not, in terms, overrule the distinction, but it does establish, that the Court upheld the nolle prosequi, notwithstanding the pleadings did set up a plea to the marits, and not merely a personal discharge. The contract does not appear to have been joint and several; and to have arrived at its conclusion, the Court must have considered, that the confession of the plaintiffs, that they could not deny the several matters above pleaded, ought not to be deemed an admission of the truth of the pleas, except so far as to waive further proceedings in the suit, against the party who sets them up as a defence. This conforms to the definition given in the book, of a nolle prosequi. 'It is,' as Serjeant Williams states, (1 Saund. R. 207, note 2,) 'a partial forbearance by the plaintiff to proceed any further, as to some of the defendants, or to part of the suit, but still he is at liberty to go on as to the rest.'
These are the only cases in England, which the researches of counsel have brought to our notice, bearing directly on the point before the Court; and upon looking into the elementary treatises and books of practice, we have not been able to find any more general doctrine. Indeed, the latter confine themselves exclusively to the enunciation of the principles above stated, with the qualifications annexed to them in these authorities, as, see 1 Chitty's Plead., 32, 33. 546. Com. Dig. Pleader, X 2. 3. 5. 2 Tidd's Practice, 630. 2 Arch. Practice, 219, 220. 2 Lilly's Practical Register, 280. In America, the cases have gone a step further. In Hartness vs. Thompson, (5 John. R. 160,) where an action was brought against three, upon a joint and several promissory note, and there was a joint plea of non assumpsit, and the infancy of the defendants, that was set up at the trial; it was held no ground for a nonsuit; but the plaintiff upon a verdict found in his favour against the other two defendants, might enter a nolle prosequi, as to the infant, and take judgment upon the verdict against the others. In Woodward vs. Marshall, (1 Pickering's Reports, 500,) in the Supreme Court of Massachusetts, upon a joint contract and suit against two persons, one of whom pleaded infancy, it was held that a nolle prosequi might be entered, as to the infant, and the suit prosecuted against the other defendant. These decisions were admitted to be against the cases of Chandler vs. Parker, (3 Esp. Rep. 76,) and Jaffray vs. Frebain, (5 Esp. Rep. 47,) but the Court thought the practice adopted by themselves was most convenient, and therefore gave it a judicial sanction. These cases were distinguishable from that in 1 Wilson's R. 89, in the fact, that the plea went, not only in personal discharge, but proceeded upon a matter which established an original defect in the joint contract; whereas the plea of bankruptcy was for matter arising afterwards. The distinction was not thought to be sound. Indeed, the Court seem to have considered the question rather as a matter of practice, to be decided upon convenience and policy, than as matter of principle.
Hitherto the question has been discussed, as if the nolle prosequi had been entered before, when in fact it was entered after judgment against the defendants. The next inquiry is, whether this creates any substantial difference in the case. In Lever vs. Salkeld, (2 Salk. 455,) in trespass against two defendants, and verdict for the plaintiff, one being an infant, the plaintiff took judgment against the other, and entered a non pros. after the judgment against the infants, and took out execution upon the judgment; upon error brought, it was objected that a non pros. could not be entered after judgment, for the judgment could not very from the demand of the writ. It was argued on the other side, that torts were several, and that a non pros might be entered after, as well as before judgment, and cases to this effect were cited. Lord Holt is reported to have said, that he supposed there were interlocutory judgments, wherein it might well be; but a final judgment differed, for that being once wrong, a subsequent entry would not set it right. The case was however adjourned, and nothing more appears of it. This case is not very accurately reported, and it may have been that the judgment was joint, and the nolle prosequi afterwards, which would remove the objection to its authority. The circumstance of its being adjorned, shows that the doctrine thrown out by Lord Holt, was not deliberately considered by him, and was deemed not clear. In truth, it is directly against the case of Parker vs. Lawrence, decided in the Exchequer chamber, and reported in Hobart's Rep. 70. That was trespass against three; one pleaded not guilty, and the other two a justification, to which the plaintiff replied, and there was a demurrer to the replication. Pending the demurrer, the issue was tried, and damages and judgment given against him. After judgment, the plaintiff entered a nolle prosequi against the other two, and a writ of error was afterwards brought by all three; and it was alleged for error, that the noll prosequi discharged all three. It was agreed by the Court, (in conformity with the doctrine then prevailing,) that if the noll prosequi had been before judgment, it would have discharged the whole action; and so it would, if the judgment had been against them all, and then the plaintiff had entered a nolle prosequi against the other two; for a nonsuit, or release, or other discharge of one, discharges the rest. But here the action was at an end, as to the one, by the judgment against him, and no judgment was had against the others, so that they were divided from him, and are not subject to the damages found against him. It was adjudged that he was not discharged, and there was no error. This case is of great authority, having been deliberately decided by a very high Court. It is cited as authority, by Chief Baron Comyns, in his digest, (Pleader, X. 5,) who also cites (Pleader, X. 3,) the case in Salkeld, as one in which there was a final judgment against all the defendants. The reason of the thing would seem entirely in favour of the judgment in Hobart, and it stands supported by a much earlier case, in the year Books, (14 Edw. 4; Brooks abridg. Trespass, pl. 331.) If the plaintiff may, in any case, recover a judgment against one on a joint action against two, who sever in their pleadings, it is wholly immaterial to the regularity and effect of that judgment, in what stage of the cause the suit has ceased to be prosecuted against the other. It is sufficient, that in the event the judgment is consistent with the general principles of the action. If a nolle prosequi may be entered after verdict, and before judgment, without discharging the other party, there is no good reason why it may not be done after judgment, when there has been no proceeding which binds the plaintiff to consummate a judgment against the party whom he wishes to dismiss. In each case the judgment upon the whole record is consistent with the writ.
The result of this examination into authorities, is, that there is no decision exactly in point, to the present case; that there is no distincion between entry of a nolle prosequi before, and the entry after judgment, applicable to the present facts. That the authorities, and particularly the American, proceed upon the ground that the question is matter of practice, to be decided upon considerations of policy and convenience, rather than matter of absolute principle; and that therefore this Court is left at full liberty to entertain such a decision as its own notions of general convenience, and legal analogies would lead it to adopt. We are of opinion, that where the defendants sever in their pleadings, a nolle prosequi ought to be allowed. It is a practice which violates no rules of pleading, and will generally subserve the public convenience. In the administration of justice, matter of form, not absolutely subjected to authority, may well yield to the substantial purposes of justice.
There is one curious result produced by this decision, which is not among the least of the objections to rendering a judgment for the defendant in error. It cannot be contested, and the whole argument is admitted, that if the discharge of the principal produce a bar in his favour, this judgment should be reversed for error. But the conclusion, that it is no bar, is now to be deduced from a string of decisions, in every one of which, Serjeant Williams himself admits, that no recovery could be had against the defendant who has been discharged by the nolle prosequi. It is true, he attributes this bar to the nature of the action; but this is at least acknowledging that the material question, in the trespass cases, never could arise in the present case. In the only case, however, even in trespass, in which the question in this case came distinctly before the Court, I mean the case of Green vs. Charnock, (1 Croke, 762;) in which there was an interlocutory judgment against S., and judgment pronounced against C., and a nolle prosequi as to S.; it was adjudged, that the nolle prosequi as to S. was a release to him, and therefore to C.; and the judgment against C., was reversed in error brought, and yet there they did not join in pleading. If, in the present case, the defendants had all pleaded, whether jointly or severally, and verdict had been for the one defendant, on any plea to the merits, it is clear, that, not withstanding a verdict had passed for the plaintiff against the remaining four, he could not have had judgment, (1 Saund. 217.) And the distinction between the actions of debt and trespass on this point, has been, until now, considered as known and established, (1 Plow. 66. 6. 8 Rep. 120. 133. 2 Lilly Ab. 210. 107.) Upon the whole, I am very clear, that this judgment ought to be reversed, and judgment below entered for defendants.
Judgment affirmed, with costs.

## Notes

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