Case Name: Merchants' Bank of St. Louis, Appellant, v. Charles Sassee et al., Respondents
Court: Supreme Court of Missouri
Jurisdiction: Missouri
Decision Date: 1863-01
Citations: 33 Mo. 350
Docket Number: 
Parties: Merchants’ Bank of St. Louis, Appellant, v. Charles Sassee et al., Respondents.
Judges: Judges Bay and Dryden concur.
Reporter: Missouri Reports
Volume: 33
Pages: 350–354

Head Matter:
Merchants’ Bank of St. Louis, Appellant, v. Charles Sassee et al., Respondents.
Banks — Exchange.—The banks chartered by the State may charge, in addition to the interest mentioned, a reasonable premium on exchange when the note or obligation is payable out of the county in which it is discounted. (Sess. Acts, 1857, p. 22, s. 38.)
Appeal from Chariton Circuit Court.
Price & Harris, for appellant.
I. The Circuit Court, in deciding that a premium on exchange could not be demanded and received upon the note sued on, assumed that the branch of the Merchants’ Bank of St. Loui's, at Brunswick, had its location, so far as the right to charge the one per cent, premium on the note was concerned, in St. Louis. In other words, it assumed, or had to assume in order to decide as it did, that the Merchants’ Bank of St. Louis was located not only in the city of St. Louis, but in every county where there is a branch of said bank — in the counties of Chariton, St. Clair and Ste. Genevieve; and that the branch bank at Brunswick is located in St. Louis, so far as this question is concerned.
It is contended that the words “ any bank,” as used in section 33 above referred to, is a general term, embracing and referring not only to a parent bank, but to the branch banks. That this construction is correct will be evident from an examination of various sections of the act referred to. (See § 7, 9, 11,18, 21, 23, 28.) Other sections of the same act seem to show clearly that the Legislature, where speaking of the “ location” of branch banks, regards them as having separate and distinct “ locations ” from their parent banks. (See bank act, 1856-7, art. 1, § 8,10,12, 31; art. 2, § 2 & 3 ; art. 3, § 6 & 8.)
Musser, for respondents.
I. Two questions present themselves in this case.
1. Did the bank, in exacting the one per cent, premium in addition to seven per cent, interest per annum, violate the law as contained in her charter ?
2. What is the effect of such violation on the contract ? Does it render the whole contract void, as to paper and endorsers, or will the court enforce a contract entered into with a corporation without the authority and in violation of law ?
In determining the first proposition, I rely on the first article of “ An act to regulate Banks and Banking Institutions and to create the office of Bank Commissioner,” and the 33d section of Sess. Acts, 1866-7.
To entitle a bank lawfully to charge this premium, the note, bill or obligation must be made payable outside of the county where the bank is located. In determining the locality of the bank which is plaintiff in this cause, I rely upon the first section of chapter 3 of the 4th article of the act above cited.
There is a constitutional provision which forbids the establishment of more than ten banks in this State. And the court, in taking judicial notice of the locality of the Merchants’ Bank of St. Louis,.and of her corporate existence, will also take judicial notice of the locality and existence of her nine sister parent institutions, and of their several branches.
The bank and all its branches constitute but one corporation ; the contracts of its branches are essentially the contracts of the parent bank. There can exist no consideration on which to base a charge for exchange in addition to interest, simply because a contract is entered into away from the locality of the corporation, when the place of performance is at her own counter.
A corporation possesses only those powers conferred on it by its charter. And plaintiff, having entered into a contract with defendant unauthorized by her charter and in violation of law, such contract is void, and she is not entitled to recover anything in this action. (Orr v. Lacey, 2 Doug. Mich. 230; Bank of Michigan v. Niles, 1 Doug. Mich. 171; Hulbert v. Bultain, 2 Doug. Mich. 191; Mr. Justice Sharkey’s dissenting opinion in Planters’ Bank v. Snodgrass, 4 How. Miss. R. 573; Grand Gulf Bank v. Archer, 8 Smed. & Mar. 151; Bank v. Owens, 2 Peters, 527 ; Armstrong v. Toller, 11 Wheaton, 258; Angelí & Ames, Corp. § 256.)
The bank in discounting the note here sued on, corniptly received a greater rate of interest than allowed by law; the note is therefore void. The court will not enforce a contract made with a corporation in violation of her charter. (Orr v. Lacy, 2 Doug. Mich. 26%; Bankv. Owens, 2 Pet. 527; Rust v. Wallace, 4 McLean ; Davis v. Bank of River Raisin, 4 McLean, 378 ; Bank v. Waggoner, 9 Pet. 399 ; People v. Utica Ins. Co. 15 John. N. Y. 9, 383; N. Y. Firemen’s Ins. Co. v. Ely, 5 Conn. 560; 13 Conn. 266; 2 Cow. 110; 9 Mass. Rep. 54.)
II. The court erred in giving judgment against defendant for the amount of the note less the premium illegally charged.

Opinion:
Bates, Judge,
delivered the opinion of the court.
The plaintiff sued the defendants on a note of the defendants which the plaintiff acquired by discounting the same at its branch at Brunswick, in Chariton county, Missouri. The note was by its terms payable at the Merchants' Bank of St. Louis, at the city of St. Louis. The plaintiff, in discounting the note, deducted from the amount of it and in that way received the interest permitted by law to be received, and also in adddition thereto a sum for premium on exchange. The defendants set up this fact as a defence to the suit.
This is a common and well known trick of the banks for increasing their profits, and seems to have been intended by the Legislature.
The 33d section of the first article of the " Act to regulate Banks," &c., (Sess. Acts, 1856-7, p. 22,) is as follows:
" No bank shall directly or indirectly receive or demand, by way of interest or discount, more than six per cent, per annum, on paper not having over one hundred and twenty days to run until due, and seven per cent, on all paper having one hundred and twenty days and not more than six months to run until due; the interest to be computed according to the ordinary rules of banking' institutions; and nothing in this act shall be construed so as to prevent any bank from demanding and receiving a reasonable premium on exchange in addition to interest upon all notes, bills or obligations payable beyond the limits of the county -where the bank is located."
The third chapter of the fourth article of the same act enacts that " a banking company is hereby established in the city of St. Louis, to be known by the name and style of The Merchants' Bank of St. Louis."
The court below, in this case, held that the premium received by the plaintiff could not be lawfully received, and gave judgment for the plaintiff for the amount of the note less the amount of the premium paid to it. The plaintiff appealed. The only question for consideration is whether the note was payable beyond the limits of the county where the bank is located.
The act evidently intends that the bank shall be located in some county, and that it is not located in some other counties, and it establishes it in the city of St. Louis, and provides that it shall establish a branch at Brunswick in the county of Chariton. Primarily the location of the bank is at the city of St. Louis, in the county of St. Louis, and in strictness the note was not payable beyond the limits of the county where the bank is located ; but it appears to us to be obvious that the intention of the Legislature was to enable a bank to charge a premium for exchange when the note should be payable in a different county from that in which it should be discounted. In this view the court below erred in deducting from the amount of the judgment the premium which had been received by the plaintiff.
The suit was originally brought in the name of the branch at Brunswick as a distinct corporation. A demurrer was sustained to that petition, but the plaintiff amended by substituting its own corporate name, and we are not therefore called upon to review the decision of the court below upon that demurrer.
Judgment reversed and cause remanded.
Judges Bay and Dryden concur.