Case Name: The President, Directors, and Company of the Portland Bank versus Woodbury Storer
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1811-05
Citations: 6 Tyng 433
Docket Number: 
Parties: The President, Directors, and Company of the Portland Bank versus Woodbury Storer.
Judges: 
Reporter: Massachusetts Reports
Volume: 7
Pages: 361–363

Head Matter:
The President, Directors, and Company of the Portland Bank versus Woodbury Storer.
It is not usurious in a banking company to take their notes payable in Boston money, and, upon renewal of such notes, to take a premium equal to the difference between that and other money.
Nor is such a transaction within a prohibition in their charter to use their moneys, &c., in trade or commerce.
Assumpsit by the plaintiffs, as endorsees of an order bearing date September 25, 1809, drawn by the defendant, for the sum of 859 dollars 74 cents, on G. Bradbury, Esq., as president of the Maine Fire and Marine Insurance Company, in favor of Joseph S'wifi, cashier of said bank, and by him endorsed to the plaintiffs.
The cause was tried on the issue of non assumpsit, before Thatcher, J., at an adjournment of the last May term in this county ; when the plaintiffs proved that the order was drawn by the defendant, was duly presented to the drawee for acceptance and payment, that both were refused, and that notice thereof was duly given to the defendant.
The defendant proved by the cashier of said bank, that the orde was given for the amount of certain sums claimed by the plaintiffs as interest on certain promissory notes, which had been previously given by the defendant to the plaintiffs, for moneys loaned by them to him, and discounted at said bank; six of which notes were made and renewed several times, and discount paid under the following circumstances, viz. The notes were made payable in sixty days from date, in Boston money; and afterwards two or three * of them, on renewal, were made payable in sixty [ * 434 ] days, and a memorandum was made on the back of each, purporting that they were to be paid in Boston money; that, when the respective times appointed for payment of said notes arrived, the defendant offered, and the plaintiffs received of him one per cent, for the difference in value between Boston money and other, or foreign bills. Said notes were so renewed at said bank a number of times, the defendant not paying specie or Boston money, according to the terms of the promises or the memorandums.
The plaintiffs proved that the defendant was one of the directors of the bank at the time of these transactions ; that the difference in value between Boston money and foreign bills was two per cent at the times when the defendant paid but one per cent, on the renewal of his notes as aforesaid; that the situation of the bank, at the times above referred to, was such as to induce the directors to take their notes, in many instances, payable in Boston money, to enable the bank to redeem their bills when presented for payment ; there being frequent runs upon the same from the Boston banks.
It was further in proof, that the loans aforesaid were made in manner aforesaid, at the request of the defendant; that the bank purchased of the defendant and others Boston money at one and two per cent, advance; and that the generality of banks did the same.
The counsel for the defendant contended, at the trial, that upon the foregoing facts the said order was void, either as being usurious, or as being taken under such circumstances, and in such a manner, as was not warranted by the act incorporating and establishing said bank.
But the judge, who sat in the trial, instructed the jury, that upon the above facts the plaintiffs were entitled to recover, and a verdict was accordingly returned in their favor.
The defendant’s counsel filed exceptions to the direction of the judge, and the action stood over for the consideration of the exceptions.
[ * 435 ] * And now, at this term, Mellen and King, of counsel for the defendant, argued in support of the two points made at the trial.
1. That the consideration for the order was usurious, and for this they cited the cases of Fisher vs. Beasley, and Commonwealth vs. Frost.
2. .That the corporation had no authority by their charter to speculate, in the manner proved at the trial, upon the different species of money current in the market. They are expressly prohibited by the second fundamental article, contained in the act incorporating them, from vesting, using, or improving, any of their moneys, goods, chattels, or effects in trade or commerce. It is true, they are authorized to loan and negotiate their moneys and effects by discounting on banking principles. What those principles are, neither the common law nor any statute have defined, But it seems to be very foreign from them to speculate on the various currencies of' the country; and especially under this pretence to exact a premium in addition to the interest they are allowed to demand. If this practice is sanctioned by law, it is impossible to fix a bound to their exactions.
Longfellow and Southgate for the plaintiffs.
Doug. 235.
5 Mass. Rep 53.
Stat. 1799, c. 4.

Opinion:
By the Court,
(except Sewall, J., who did not hear the argu ment.) There seems no ground for the defence on the ground of usury. The defendant might have discharged himself by paying the money due by his promises, which were to pay in cash. As the transaction did not in itself import usury, if the defendant thought it merely colorable, he should have put it to the jury to decide. There is as little ground in the second point. The construction of the statute contended for is too narrow. We all remember the runs upon the banks in this section of the state. It was competent to the directors, and but the use of due discretion, to make their loans on such terms as should enable them to meet such demands.
Judgment on the verdict.