Case Name: The President, Directors and Company of the Grand Gulf Railroad and Banking Company vs. The State of Mississippi
Court: High Court of Errors and Appeals of Mississippi
Jurisdiction: Mississippi
Decision Date: 1848-01
Citations: 10 S. & M. 428
Docket Number: 
Parties: The President, Directors and Company of the Grand Gulf Railroad and Banking Company vs. The State of Mississippi.
Judges: 
Reporter: Mississippi Reports
Volume: 18
Pages: 428–434

Head Matter:
The President, Directors and Company of the Grand Gulf Railroad and Banking Company vs. The State of Mississippi.
Where the act of incorporation of a bank, reserved to the legislature a right to repeal the charter to a limited extent, leaving power to the bank to wind up ils affairs, it was held, that the right to proceed against the bank by quo ivarranto, was not, if the legislature did not enforce its right under the charter, in any way impaired.
Under the construction of the act of 1840, prohibiting assignments by banks of their evidences of- debt, placed upon it by the high court of errors and appeals of this state, a general assignment to trustees for the benefit of creditors, made by a bank, of its property and effects, since the law of 1840 referred to, would be void; yet, as the supreme court of the United States has reversed the decisions of the former court; and has given a construction to that act different from that given by the court of this state, the court of this state feels bound to conform to the decision, rendered on direct appeal, of the supreme court of the United States, and will hold such assignments valid.
Therefore, where a bank, since the act referred to of 1840, had made a general assignment of its property and choses in action to assignees for the benefit of its creditors, and, subsequently, proceedings, under the quo warranto act of 1843, were had against the hank, and a judgment of forfeiture rendered, and trustees appointed under the law, it was held, that the latter could take only what did not pass by the deed of assignment.
On appeal from the circuit court of Claiborne county; Hon. Stanhope Posey, judge.
Elbridge G. Walker, Esq., the district attorney for the third judicial district, filed an information under the law of 1843, against the President, Directors and Company of the Grand Gulf Railroad and Banking Company. The writ was issued without any affidavit. Tire bank plead its charter. It is not deemed necessary to set out more of the plea than relates to the remedy retained by the legislature, in case of a violation of the corporate franchises. It is part of the amendatory act of 1840, and is as follows, viz.:
“Nor shall it be lawful for said company at any time after the first day of January, 1841, to refuse or fail to pay on demand, in specie, any of its notes presented for payment now or then in circulation ; and if said company shall at any time, now or hereafter, issue post notes, or notes payable at a future time as currency, &c., &c.,.or shall at any time after the first day of January, 1841, re-issue or fail to pay on demand, in specie, any of its notes presented for pay ment, it shall be lawful for the legislature of the state of Mississippi, without the previous finding of the above facts, or any of them, by the verdict of a jury, or adjudged of by a court of competent jurisdiction, to amend or wholly repeal the charter of said company, and the several acts amendatory thereto, so far as the same confer banking powers; provided, however, that the corporate capacity of said company, and all the rights, privileges and powers to construct and continue a railroad, as designated in their charter, or in this or other acts amendatory .thereto, shall enure and remain to said company and their successors and assigns forever; and provided also, that in case of the repeal of the banking privileges of said company, said company shall, notwithstanding, be enabled to sue for and recover and collect the assets and dues of said company, with a view to the settlement and closing their business as a bank.”
Various replications were filed. The substance of them and of the rejoinders is as follows :
The first replication was, that the defendant, after entering upon the business of banking on the 1st February, 1842, became insolvent and unable to redeem its notes and evidences of debt in specie; and that it became insolvent by the fraud, neglect or mismanagement of its officers, and still continued so.
To this the defendant rejoined, it did not become insolvent and unable to redeem its notes, bills, &c., by the fraud of said defendant, or its officers.
The second and third replications aver, that the defendant, in February, 1842, became unable to redeem, and still continue tmable to redeem its notes, bills, &c., in specie; and that it became unable to do so by the fraud, mismanagement or neglect of the defendant or its officers; and being unable to redeem in specie, it afterwards, to wit, on the 10th February, 1842, assigned and transferred to trustees for the benefit of its creditors, so much of its real and personal estate, and choses in action, as to disable it from continuing its banking operations, &c.
To these the defendant rejoined, it did not become insolvent ■and unable to redeem its notes, &c., in specie, by the fraud of defendant or of its officers; and that in and by the assignment mentioned in the replication, it was stipulated that the surplus, after payment of the debts mentioned therein, should be returned to defendant; and that ever since the making of said assignment. the defendant had continued to use the corporate franchises, in this, that it continued to sue in its corporate name — to defend suits — to pay taxes to the State in its corporate character — to elect its directory annually, &c. &c.
The fourth replication, states that the defendant, on the 10th February, 1842, transferred and assigned so much of its property and choses in action to trustees to pay its debts, as incapacitated it to continue its banking operations.
To this the defendant rejoined, the surplus in the assignment mentioned was by the terms of the deed to be repaid to the bank ; and that after the assignment, the bank continued to use its banking privileges and corporate rights, by suing and defending suits, paying taxes, and annually electing its directory, &c.
To the rejoinders to the first four replications, the State demurred.
The fifth, sixth, and eighth replications, aver, that by two acts of the legislature, amendatory of the charter referred to in the pleas, the bank was compelled to pay specie; and avers, that these acts were accepted by the bank; and that after the 1st January, 1842, certain of its notes were presented for payment, and specie demanded, which was refused, &c.
To these replications the defendant demurred.
The seventh replication was, that the act of 1840 required all banks to pay specie after the first of January,T842; and the defendant had failed to do so after that period.
To this the defenáant demurred.
At the April term, 1846, the circuit court sustained the demurrer of the State to the rejoinders of the defendant, and overruled the demurrers of the defendant to the replication of the State; and accordingly adjudged the charter of the bank forfeited, and ordered its franchises, rights and privileges, to be seized into the hands of the State, and also appointed David M. Massie, William M. Randolph, and Ephraim A. McLean, trustees of the bank under the act; approved their bond, and ordered the bank “ to deliver to the said trustees all the property, notes, bonds, and choses in action” of the bank.
The bank appealed.
George S. Yerger, for appellant, contended,
1. That the power of repeal given to the legislature formed part of the contract of the charter; and while the legislature might vary the mode of effecting the repeal, and subjecting the bank to a loss of its corporate privileges, it could not alter the contract as to the effect of the forfeiture, which was that the debts of the bank should be paid and its business settled up.
2. The replication, which relies on the assignment of the property of the bank to trustees as ground of forfeiture, is bad, because 1. If it be prohibited by the act of 1840, it is absolutely void, and so no assignment; and therefore not ground of forfeiture, even if an assignment were so; but 2. The making of an. assignment by an insolvent bank is not at common law cause of forfeiture. 23 Wend. 581; 6 Gill & John. 375 ; 24 Pick. 49. To do that which a corporation is allowed to do, can never be cause of forfeiture of charter. Ang. & Ames, on Corp. 659.
3. The cases in New York in 6 Co wen Rep. and in Slee v. Bloom, 19 John. 475, are based upon the New York statute, and do not conflict with the position that the bank at common law has the right to make an assignment of its effects. Mr. Yerger reviewed the New York cases; and cited Ang. & Ames, on Corp. 658; 24 Pick. 49; 15 lb. 361 — ■ 366; Slee v. Bloom, 19 John. Rép. 475 ; 7 John. Ch. Rep. 217; Ang. & Ames on Corp. 659; 6 Cowen, 216.
H. T. Ellett, for appellee.
I. The refusal to pay specie for its notes on demand after January 1, 1841, as required by the charter, has been already held to be good ground of forfeiture. Commercial Bank of Natchez v. The State, 6 S. & M. 617.
2. That the bank became and continued insolvent and unable to pay its debts, and made an assignment of so much of its effects as to prevent it from continuing its business is also good cause of forfeiture, and is alleged to have occurred after the passage of the act of February 15, 1840. Arthur v. Commercial and Railroad Bank of Vicksburg, 9 S. & M. 394; Grand Gulf Bank v. Archer, 8 S. & M. 151.
3. All corporate franchises are granted upon the implied condition that they shall be executed according to the grant, and if the grantees neglect to perform the terms, the grant may be repealed. 3 Cruise’s Dig. 307; Ang. & Ames, 510; 2 Kent’s Com. 312; 2 Kyd, 474; 23 Wend. 233, 580; 9 Cranch, 51; 1 Bl. Com. 485.
4. It is a condition annexed to every bank charter, that the corporation shall continue to make discounts, receive deposits, issue notes, and redeem them in specie on demand — these being the objects for which the franchises are granted. State v. State Bank, 1 Blackf. 275, 276.
5. If a corporation do, or suffer to be done, any act which renders it unable to answer the end and object for which it was created, it is a forfeiture of its charter; and continued insolvency, and refusal by a bank to redeem its notes, and the assignment of so much of its effects, as to make it incapable of continuing its operations, are such acts. 1 Spear’s L. Rep. 485; Slee v. Bloom, 19 Johns. 456; 6 Cowen, 215, 219; Ang. & Ames, 419; 23 Wend. 204, 205, 233, 583, 584, 585; 5 Ire-dell, 307; 1 Blackf. 275, 276; 6 S. & M. 623; Arthur v. The Assignees of the Vicksburg Bank, MS.
6. The State has not waived its right to prosecute an information to take away the charter, by the amendment reserving the right to repeal the charter for a breach of any of the provisions of that section. Acts of 1840, p. 49. The reservation of the right of repeal for the causes specified, does not impair or interfere with the right of the State to prosecute an information for the same cause, — the remedies being cumulative. 23 Wend. 243, 244 ; 6 S. & M. 621; Blunters Bank v. The Slate, 6 S. & M. 628; Archb. Cr. PI. 2; 2 Hale, 191; 1 Russell on Cr. 47, 48; 1 Saund. R. 135, n. 4; 2 Yerger, 472 ; 6 Bac. Ab. 373.

Opinion:
Mr. Justice Clayton
delivered the opinion of the court.
This case is, in most respects, like the quo warranto cases heretofore determined in this court.
The remedy reserved to the legislature in this act of incorpo» ration, to repeal the charter to a limited extent, leaving power to the bank to wind up its affairs, must be regarded as cumulative. If not enforced by the legislature, the right to proceed by quo warranto is unimpaired.
Previous to the institution of the proceedings in this case, the bank had made a general assignment of its property and effects. Under the construction of the act of 1840, prohibiting assignments by the banks, heretofore placed upon it by this court, such assignment was void. But the supreme court of the United States has reversed the decision of this court upon that point, on the ground that the act of 1840 was unconstitutional. In cases of that character, that court bears the relation of an appellate tribunal to this, and we feel bound to conform to its construction of the constitution of the United States, when made upon direct appeal from this court. Of consequence the right of the assignees under this deed of assignment set forth and admitted in the pleadings, is paramount to that of the trustees appointed by the court, upon the rendition of the judgment of forfeiture. They could take only what did not pass by the deed of assignment.
The judgment of the court below must be reversed, and must be so modified as to embrace only the property, estate and effects of the bank, not contained in the deed of assignment. The judgment so modified will be entered in this court.
Judgment reversed.