Nashville union and dispatch. [volume] (Nashville, Tenn.) 1866-1868, 1867-02-13
DECISIONS OF THE SUPREME
COURT.
Nashville. December Term. 1866.
Reported for the Union and Dispatch. by Lsinds-
ley Reid

Jun" ~ -AtHtf To- NJ L. hIt0fctaaB. a ut.
Banks ASDBANEGN6 ASSOCIATIONS Act of
1861, Ch: q. section 20. provides, That in all
cases OF oiinsolyency sfV1y bank or banking
citation, the bill hOld - h ereOf shall be entitled
to preference in paynelitste all ,plReareks1i ors
Of such bank or assoeintion and ~ fraf4er or
assignment Of any note, bill Of eSchange, or
other evidence Of debt 10y the bank, shall pre-
vent the debtor from paying the same in the
hands OF the assignee IN the currency Of the
bank" ...
The facts Of this eae are agreed, and
they are substantially as follows: On the
9th Of August 1868, John Marshall made
his promissory note for $3.50 90, payable
four months after date 10 NJ L. Andrews,
or order, at the Office of the Planters Bank
Of Tennessee, at Franklin. The note was
endorsed by NJ. L. Andrews and Wm. Cum
mings, and afterwards discounted by the
bank. 1t was not paid at maturity and
after presentation, regularly protested for
non-payment, and the endorsers duly no.
tilted thereof.
The note was held by the bank until the
l4th Of March, 1865, when, under policy
adopted by the bank Of giving, in iall cases
its debtors the preference Of paying their
liabilities, in the issues of the bank, and on
their falling 10 DO 50, TO third persons,
who would pay the principal and interest
ia the notes Of the bank, 10 pass such Sc
curity 10 the party thus paying il. This
note was assigned 10 the plaintiffs, who
paid its nominal value to the bank ia its
own issues. Under the state, of facts the
plaintiff brought his action against the de-
PENDANTS 10 recover the amount OF the note.
The declaration formally sets forth the
facts above recited. The defendants demur;
bat no action was taken on thedemurrer in
the court below, and now under an agree
ment Of the parties, is necessary 10 be taken
on il here Pending the action, the defend
ants brought into the court seven hundred
and four dollars and forly.fve GEMS in the
Planters BanknOtes, procured bythem since
the assignment Of the note, and moved the
court for a rule on the plaintiff 70 compel
linn To receive the same in full satisfac-
tion and discharge Of the note; whereupon
IL was agreed by the parties, il the court
shonld be Of opinion, that the defendants
had the legal right to pay the note in the
hands of the plaintiff, as assignee Of the
Bank, IN its own issues, then the rule should
be made absolute; but II, on the contrary,
IN the opinion of the court, no such right
existed, then the rule should be discharged
aRd Judgment entered against the defend
ants for the principal and interest Of the
note. The court under this agreed sub
mission 10 his opinion, decided that the
rule be made absolute, and directed the
Clerk 10 deliver 10 the plaintiffs the notes
of the Planters Bank paid into court by
the defendants in fiil satisfaction and dis
charge Of the note sued on IN this case. To
reverse this decision Of the Circuit Judge.
an appeal in error is prosecuted 20 this
court. did his Honor, the Circuit Judge,
err in thus deciding the case? This is the
only question raised in the record.
Thepowers of corporations aredelegated,
and must therefore be construed strictly;
bni as a rule in modern times, they may
exercise such incidental powers as are ne.
cessary and proper TO carry into effect ex-
press grants of power, which are not for
hidden and contrary 10 the public laws and
constitution of the State The right of the
bank 10 assign the note in controversy, we
apprehend, cannot be questioned. To hold
otherwise would greatly embarrass the
operations Of almost every corporation in
the State, whose charter in terms fail to
confer this power
The manner in which this note was
parted with 10y the bank certainly is not
customary in the conduct of banking ope-
rations Banks seldom pass by assign
ment their individual securities IN exchange
for their own issues unless they are driven
TO it by necessity; and we may reasonably
infer from the policy of the bank, adopted
90 diminish its circulation as rapidly az
possible, that :his assignment was made
under the presence of necessity. And so
far from its being illegal, we are not pre-
pared to say, in times of great eXigency
or pressing necessity 10 redeem their issues,
or TO raise funds to meet sudden demands,
IL is not their duty 10 assign or hypothecate
their securities for that purpose They are
bound in some way 20 redeem their notes,
and 10 pay their debts In cases of emer-
gency, AZ for instance TO procure more spe-
Gle when an unexpected draft has been
made upon them, or heavy deposits have
been Withdrawn, or large debts due 90
banking hodses have Unexpectedly been
demanded, il is their duty, as well as their
right, without special authority in their
charter, TO sell, If need be, hypothecate or
assign their notes, bills or other securi-
ties, 10 meet the emergency and sustain
the credit of the bank. The right of a
banking corporation, under such circum-
stances 10 sell any of their assets, not re-
stricted hy their charter, OF by previous
law, is az unlimited as an individual
Planters' Bank a, Sharp et o., Howard
3lS. Dana as the Bank Of the L. s., 5
Watts and Sergt. 223. Bnt before the act
of 1850, ch. o, under the enlargement OF
the law Of sett Oft and cross action, as pro
yided in the Code, Sec. 29lS, there can be
no doubt that the assignee of a note, bill of
exchange or other evidence of debt, bona
aHs transferred, could recover against the
maker and endorsers thereof, unlOss they
could, at or before the assignment or en-
dorsement plead a tender, sett OF, or pay
ment. The makers and endorsers could
not after suit brought, 10y bona Fir holder
or assignee, or even after they had notice of
the assignment, bay up the notes or bills of
banl, that made the assignment and make
them availing under the plea of set of or
tender The plea of tender, upon well
settled principles, must be before suit
brought, and II the plea Is predicated of
matter arising uhsequently, it is competent
present thunder thePlea of pU2dd5cn con-
tHuGnce Theplea Of sett OF must be made
ola mutual claimo or demand, held by the de
PENDANT at the time Of the assignment, or at
all events, and in all cases, at the COM
mencement of the action. Law Library,
Vol Gl-275; . Paige 5S6 and authorities
there cited. Keith ~ Smith: Swan % /;
Bylea cor Bills Pa.
Ia this ease the note when transferred
was over due and IL WAS the moral as well
as the legal duty Of the defendants 10 have
paid il at the time aud place fixed ia the
face Of the note But they failed 10 dis
charge this duty, and the bank, after grea;
indulgence and forbearauce transferred it
10 the planting who gave there for its nom
inal value in the bills of the hank. Upto
this time, aud ip fact not until after suit
was brought, did the defendants make any
offer Go pay IT.. either in the bills of the
hank OF in any other manner; and from
The agreed stale oi facts, at the date of the
assignment under the general law, they had
uo legal or equitable set of against il.
but the act Of 1860, Oh. ~, see 80 in
telposcs and effects a radical change in the
general law of set oh and payment. as ap-
piled TO hanks and banking associalioas.
lts language Is rs follows THAT in all
eases of insolvency of any bank or banking
association. the bill holders thereof shall
be- entitled 10 preference ia payment 20 all
other creditors Of Iich bank or association
aud no transfer or assignment of any note,
hill Of exchange, or other evidence of debt
I. he hank shall prpyPnt the debtor from