Case Name: Samuel B. King versus The President, Directors, and Company, of the Dedham Bank
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1819-03
Citations: 14 Tyng 447
Docket Number: 
Parties: * Samuel B. King versus The President, Directors, and Company, of the Dedham Bank.
Judges: 
Reporter: Massachusetts Reports
Volume: 15
Pages: 397–403

Head Matter:
* Samuel B. King versus The President, Directors, and Company, of the Dedham Bank.
No act of the legislature can alter the nature and legal effect of an existing contract, to the prejudice of either party ; nor give to such a contract a judicial construction which shall be binding on the parties or the courts of law.
This action was brought to recover the contents of sundry bills or notes, made and issued by the defendants, of which the follow ing is a specimen, viz.: —
“ No. 2062. Dedham Bank, 18
To the Cashier of the Middletown Bank at Middletown. Pay to C. Strong, or bearer, on demand, ten dollars, on account of the President, Directors, and Company, of the Dedham Bank. Dedham, Mass., August 20, 1816.
Jab(,z Chickering, Cashier. Willard Gay, Pres’t.”
The declaration contained, besides the common money counts, two counts on each bill or note.
The first count alleges that the defendants, at, &c., on, &c., by their note commonly called a bank bill, of that date, numbered-, signed, &c., promised one C. Strong to pay him, or bearer, on demand, ten dollars ; and avers that the plaintiff was the proper bearer of said bill, which, before that time, came to him for a valuable con sideration; and sets forth a demand on, and refusal to pay by, the cashier, notice to the defendants, and a promise by them to pay the contents of the note, according to the tenor and effect thereof, and their neglect and refusal to pay, &c.
The second count is like the first, except that it describes the bill as addressed to the cashier of the Middletown Bank at Middletown, at said Dedham. It alleges a presentment to the cashier of the Dedham Bank, a refusal by him, and notice to the defendants; and concludes, “by reason whereof, and by force of the statute entitled An Act to enforce the Payment of Bank Notes ; and of the statute entitled An Act to incorporate the President, Directors, and Company, of the Dedham Bank; and of the statute entitled An Act concerning Banks,—the said president, directors, and company, became liable to pay the sum of said note, with * additional damages, at the rate of twenty-four per cent., per annum, until paid; and, being so liable, promised, &c., yet, though requested,” &c.
At the trial upon the general issue, before Jackson, J., at the sittings here after the last March term, the plaintiff offered in evidence a bill of which the above is a copy, and the signatures of the president and cashier were admitted. The bills on which the other counts were founded were all of a similar description, but for various sums, five, three, and on’e dollar each. It was admitted that the plaintiff presented these bills for payment at the Dedham Bank on the 29th of August, 1817; and that payment was refused, as alleged in the several counts. The plaintiff relied on this evidence, and on the statute of 1816, c. 91, entitled “ An Act concerning Banks.” All the bills bore date on the 20th of August, 1816, and the plaintiff did not offer to prove that any of them had been issued, by the defendants, after the passing of the above-mentioned statute.
The defendants objected that the bills, thus offered in evidence did not comport with either of the special counts ; but they agreed that any special count, to conform to the plaintiff’s case, might be filed ; and they contended that they were not liable to pay the amount of the said bills, until they had been presented for payment to the person on whom they were drawn, and such payment refused ; and that the evidence was not sufficient to maintain either of the other counts in the declaration.
The judge, being of this opinion, directed a verdict for the defendants, which was returned accordingly. The plaintiff moved for a new trial, on account of the said opinion and direction.
[By the said Act concerning Banks, $ 1, all banks incorporated in this commonwealth are prohibited the issuing of any bill, note check, or draft, payable at any other place than at such bank; unless the same shall also be made payable at the bank issuing the same.
* By § 2: Every incorporated bank which has issued, or shall issue, any such bill, note, check, or draft, shall be liable to pay the same in specie, to the holder thereof, on demand at such bank, without a previous demand at the bank or place where the same is, on the face of such bill, Xr,c., made payable And if such bank shall neglect or refuse so to pay such bill, &c., such bank shall be liable to pay to the holder thereof the same penalties as are provided in and by an act entitled “ An Act to enforce the Payment of Bank Notes.” Provided that the said pro visions shall not extend to checks or drafts for a sum exceeding 100 dollars.
By § 3 : The second section, so far as respects notes, bills, checks, or drafts, already issued, shall have effect, from and after the 1st of June, 1817.
By Stat. 1809, c. 38, to enforce the payment of bank notes, it is provided that any incorporated bank, refusing or neglecting to pay on demand any bill or bills by them issued, shall be liable to pay to the holder after the rate of two per cent., per month, from the time of such neglect or refusal; to be recovered as additional damages in any action against such bank for the recovery of such bill or bills. And the same provision is, in effect, made in the act incorporating the defendants. Stat. 1813, c. 175.]
Savage, for the plaintiff,
relied on the statute of 1816, c. 91, as giving this action; and he argued that the notes or bills sued, although in form like inland bills of exchange, being intended by the defendants to pass as other current bank notes payable to bearer, and being always paid and received as such, the defendants were bound to redeem them as their other notes. It is impossible to believe that they were intended to be issued as bills of exchange. Thousands of them were issued of the denomination of one dollar, and drawn on a place a hundred miles distant, and all of the same date, and in favor of a fictitious payee. They were, in fact, paid out, by the defendants, on notes discounted, as current money, made payable to bearer, and engraved in close imitation of bank bills or notes in the * usual form. If the defendants, when paying them out on loans, did not inform the receiver that they were inland bills, it would never have oc curred to him to consider or treat them as such. Promises are to be performed in that sense in which the promisor apprehended, at the time, that the promisee received them.
If these are to be held and treated as inland bills of exchange, they must be subject to all the questions of due diligence, reasonable notice, &c., which the defendants never could have intended Neither, in case of payment by the drawee, could they have been a second time issued.
If it was the understanding of the defendants, and of the person to whom they passed these notes, that they were to be considered and treated as inland bills, they might charge any advance upon them, and thus evade the statute against usury.
By the statute of 1804, c. 120, § 1, any person possessed of ten counterfeit bank notes, with intent to utter them as true, is subjected to certain punishments. These bills would undoubtedly be held within this statute. They must, then, be bills of the Dedham. Bank.
If these are not bank notes, then the defendants may issue notes in this form, wherein a fractional part of a dollar shall be expressed, without incurring the penalty of the statute of 1809, c. 38 ; —and they will not be liable to pay the original amount of any such note, altered to a larger amount during its circulation, as is directed in the 11th section of the act incorporating the defendants. By the same act, also, the bank must be kept at Dedham; the reason of which plainly is, that holders of their notes may know w'here to apply for payment of them.
If these are not bank notes, the defendants are not obliged to include them in the semi-annual statement to be made to the governor and council, and this wholesome provision of the law will be frustrated, as far as concerns this bank. But it is understood that the defendants have always made return of these notes, as the notes of the bank in circulation.
* The statute of 1816, c. 91, on which this action is founded, has not interfered with the rights of the defendants. It is merely declaratory ; and, as the defendants are the only corporation to whom it can apply, it may w'ell be presumed that the third section was added, at their particular request, to give them time to call in these notes gradually.
Webster, for the defendants, contended, 1.
That the evidence did not maintain the declaration, independent of the statute of 1816, c. 91. The declaration is on direct and absolute promises. The papers offered in evidence are but proof of conditional promises implied by the law, after presentment of the bills, a refusal on the part of the drawee to pay them, and notice to the drawers.
If it was unlawful for the defendants to issue these papers, this could give no new rights to the plaintiff under the contracts; although, perhaps, the defendants may be liable to the process of the commonwealth, by a quo warranta. But it was in no view unlaw fui for the defendants to draw their funds from the places where they were deposited; even if all their notes ought to have been payable at their own bank, which were intended for circulation. It was for the public to discriminate between bank notes payable on demand, and these bills, so very distinct in their nature and properties.
2. Nor is the action better maintained by the evidence, in virtue of the statute relied on. So far as the provisions of this act are prospective, the defendants make no objection. But as it is intended to be retrospective in its operation, it is, to say the least of it, bold legislation. As proposed to act on a contract already made, it is void; and indeed, as it is prospective, it is not perceived that the legislature are more authorized to make such a provision applicable to stockholders in a bank than to any other class of citizens, as merchants, physicians, agriculturists, or mechanics.
In the case of Brown vs. The Penobscot Bank, it was yielded by the counsel and the Court, that, had the statute *on which that suit was brought, which was like this in its penalties, been retrospective in its effect, it could not have been enforced.
The act now under consideration would make a contract, which the parties had agreed should be performed at Middletown, to be performed at Dedham. It is an attempt to operate on a vested right, to adjudicate on an existing fact.
The constitution of the United States is the paramount law of the land ; and every attempt to counteract its provisions, made by what body soever, is utterly void. The act in question is rather an edict, or decree, than a law, which always has reference to the future.
The case of Dash vs. Van Kleck was not so strong a case as the present. It was not interfering with existing contracts, but merely regulating the measure of damages in certain cases of tort; yet a majority of the court refused to give it a retrospective operation, and the judges who dissented agreed in the general principle.
Savage, in reply.
This statute neither interferes with vested rights, nor declares the remedy. It merely declares that it was unlawful, and beyond the powers granted by their charter, for the defendants to issue notes of this kind. They were authorized by that charter to issue no notes or bills but such as were payable in specie, and at their own place of business. The penalty of two per cent, was of earlier date than the defendants’ charter, and has been enforced by this Court, in the case of Brown vs. The Penobscot Bank.
This was a wholesome provision, and was made only for the regulation of those corporations who are wholly the creatures of the legislature. It was merely declaring the sense of the legislature, as to the rights and duties of these bodies of their own creating; and although they were satisfied that they had never conferred such a power, yet they allowed them six months to call in the paper outstanding, and to save themselves from the penalty of the law.
Patty's Mor. & PoL Phil. c. 5, § íí.
8 Mass. Rep. 445.
2 Vent. 227. — 1 Mod. 310.
7 Johns. 477.

Opinion:
* Curia.
It is very clear that the action cannot be maintained upon the principles of the common law The two counts on which the plaintiff relies set forth an absolute promise, by the defendants, to pay the contents of the bill to the bearer, as in case of a common promissory note; and the bill pro duced in evidence is a draft, or order, on a third person, containing only an implied conditional promise of the defendants to pay, in default of the drawee.
If the defendants had no authority, by their charter, to issue such bills, this might expose them to reprehension or punishment, but could not alter the legal construction of the written contract. But before the passing of the statute of 1816, c. 91, there seems to have been no legal objection to their drawing such a bill. If they had funds in the Middletown Bank, or in the hands of any other person, they might lawfully draw them out, as any other person might do; and even the statute referred to still leaves them this right, provided the sum drawn for, in any one bill, exceeds one hundred dollars,.
The mistake of the plaintiff, and perhaps of others who received bills of this description, seems to have arisen from the belief that, when a bank was incorporated, all their bills and notes, of whatever tenor, were to pass as money, and were redeemable by the bank at the pleasure of the holder. If this bill, instead of being engraved, had been written on common paper, in the usual manner, for the sum of a thousand dollars, the plaintiff would not probably have supposed that, upon receiving it of the defendants, he could immediately have demanded the money of them, without presenting it to the drawee for payment.
The best, if not the only, security of the public is, to consider every bank bill a note, when offered to them, as they would a like contract of any other person ; and not to receive it in payment, unless they are satisfied that it gives them a legal right to call for the specie at their pleasure, and that the bank will be able and wi.ling to pay it on demand. If the banks were not incorporated, and were dealing * like any other private company or association, this would be the course of business ; and it would probably, in general, give sufficient security to the public; as no notes would circulate where the ability and integrity of the members or partners of the banking company were not well known, and of established credit. Experience seems to have proved that the incorporation of banks gives but little, if any, additional security to the holders of their bills; and that no legislative acts which can be passed will supply the want of prudence, skill, or integrity, in those who administer the concerns of a bank.
Having ascertained the nature and legal effect of the contract, when made, we cannot give it a different construction in consequence of the statute which was afterwards passed. The contract remains the same, and the present action is founded on that contract. No act of the legislature would authorize this Court to render a judgment, in any particular case, which should be contrary to law ; and most, certainly the act in question was not so intended. If intended as declaratory merely, as suggested in the argument for the plaintiff, it was founded on a misapprehension of the preexisting laws; and if it should have the effect contended for, it would make a new law applicable to the case at bar, instead of ascertaining what the law was before its enactment.
If the defendants have been in the habit of drawing bills of this description, and have thereby exceeded their lawful powers, and violated their charter, they may be prosecuted in a regular manner, and subjected to the legal consequences of the abuse of their charter; so, if their proceedings have been contrary to the spirit and design of the institution, and injurious to the people, the legislature may restrain and prevent such proceedings for the future. But no act of the legislature can alter the nature and legal effect of an existing contract, to the prejudice of either party ; nor give to such a contract a judicial construction, which shall be binding on the parties, or on the courts of law.
Judgment on the verdict.
Foster & Al. vs. The Essex Bank, 16 Mass. Rep. 245. — Read vs. Fullum, 2 Pick. 158. — Kimberly vs. Ely, 6 Pick. 440. — Green vs. Biddle, 8 Wheat. 84. — 3 Story's Com. Const. Law, c. 34, § 1397.