Case Name: The President, Directors, and Company, of the Springfield Bank versus Samuel F. Merrick and Others
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1817-09
Citations: 13 Tyng 322
Docket Number: 
Parties: *The President, Directors, and Company, of the Springfield Bank versus Samuel F. Merrick and Others.
Judges: 
Reporter: Massachusetts Reports
Volume: 14
Pages: 276–280

Head Matter:
*The President, Directors, and Company, of the Springfield Bank versus Samuel F. Merrick and Others.
The hills or notes of banks not incorporated by this commonwealth were prohibited by law to be received, or in any way negotiated, by the banking corporations within the commonwealth under a heavy penalty. It was holden, that a promissory note, payable in such hills to a banking corporation, made while the statute was in force, was void; and that no action could be maintained upon it by the promisees, after the statute was repealed.
Assumpsit on a promissory note, given by the defendants to the plaintiff, dated December 14, 1815, for the sum of 300 dollars, pay. able in sixty days.
At the trial of the action, which was had upon the general issue, before Jackson, J., at the last April term at Springfield, in the county of Hampden, the note appeared to have been written in the usual form of a cash note, and it was subscribed by two attesting witnesses. It was presented at the bank, to be discounted, by the said Merrick, who was the principal debtor, the other two defendants having signed the same as sureties for him. The words “ in facilities ” were afterwards written on the left side of the note, under the names of the subscribing witnesses. The word “ facilities ” was understood at that time to mean certain notes of some of the banks in the state of Connecticut, which were made payable in two years after the close of the late war.
The time and manner of writing those words.upon the note were as follows: The plaintiffs, in discounting notes, sometimes paid the amount in the facilities above described, or in bills of some of the banks in the state of New York; and in such cases agreed to receive payment of the note, when due, in the like kind of bills. The officers of the bank, when discounting a note in that manner, usually wrote the words “ in facilities ” on the face of the note. The note in question was agreed to be discounted for such facilities, or for bills of some of the New York banks, which were at that time of about equal value; and the person who received the note * from the said Merrick, and paid him therefor at the bank, wrote the said words on the note in his presence. This person was not the cashier of the bank, but was often employed by the cashier to assist him, and sometimes did the duties of that office, in the absence of the cashier; in which cases he often received instructions from the directors, as to the discharge of his duty. He had general instructions from the directors to write the words above mentioned on notes when they were to be paid in facilities, but did not remember that he had any particular instructions respecting this note. He was never formally appointed cashier of the bank, nor had he given any security to the plaintiffs for the faithful discharge of the duties of that office.
The defendants contended that the note was illegal and void, as being contrary to the provisions of the statute of 1809, c. 38, <§> 2; and if not- void, they contended that, by force of the memorandum written on it as above mentioned, it was payable in such bills of the Connecticut banks which were of less value than specie at the time when it became due.
There had been sundry payments made and endorsed on the note ; and the balance due at the time of the trial, with interest, if it was payable in such “ facilities,” amounted to 145 dollars 9 cents; the amount due, if it was payable in specie, was 157 dollars 70 cents
A verdict was taken for the latter sum, subject _ to the opinion of the Court, whether the plaintiffs were entitled to recover in this action; and if so, for what sum; and the verdict was to be set aside in whole or in part, and altered or affirmed, according to the Opinion of the Court upon the foregoing facts.
Mills and Morris, for the defendants,
argued that the words “ in facilities,” thus placed upon the note, must have their effect in construing the contract, and must be understood to intend that the note was to be payable in facilities; so that, if any thing should be recoverable in this action, it must be the smaller sum only.
* But they insisted that the note was illegal and void by the statute before referred to ; by the second section of which it is enacted, that, after the 1st day of January, 1810, “ The bank bills, or notes of any banking company not incorporated by this commonwealth, other than the bank bills of the United, States Bank and its branches, shall not be received as a deposit, or in any other way be negotiated, loaned, or passed in payment, by any of the banking corporations within this commonwealth, under the penalty of one thousand dollars for each offence, to be recovered by action of debt in any court proper to try the same, to the use of the person who shall sue therefor.” And although this provision of the statute has been since repealed, and thus the plaintiffs may escape the penalty, since there is no saving clause in the repealing act, the contract was void in its origin, and the repeal of the law will not give it validity.
Bliss, for the plaintiffs.
The statute relied on to avoid this contract was repealed before the present action was commenced; and while it continued in force, its whole effect was to inflict a penalty on those corporations who should do a certain act, which the legislature considered as inconsistent with the financial policy of the country. It was not intended to aid fraudulent debtors, by deciar ing their contracts void.
However the transaction disclosed in this case might, have subjected the plaintiffs to the penalty inflicted by the statute, while tha.t was in force, it does not lie in the mouth of the defendants to avoid their contract for this cause, for which, as between them and the plaintiffs, the transaction was in every respect fair.
4 Mass. Rep. 245, Jones vs. Fales.
Stat. 1816, c. 43.
6 D. & E. 723, Camden vs. Anderson. — 1 B.& P. 277, S. C. - 11 East, 180. - Johnson & Al. vs. Hudson, Ibid. 299.
9 Mass. Rep. 423, Little vs. Obrien.

Opinion:
Parker, C. J.
The writing which was in this case submitted to the jury, as evidence of the promise declared upon, must, with the accompanying testimony, be taken to be an engagement to pay facilities, to the amount of three hundred dollars nominal value, for that was the consideration of the note; and it was the understanding of the parties that the contract should have that effect. That evidence tending to give this * character to the promise was legally admitted, is proved by the case of Jones vs. Fales, cited in the argument; in which case the words foreign bills, at the foot of a note otherwise negotiable, were considered capable of being made, by evidence of the intent of the parties, an essential part of the contract, so as to defeat its negotiability.
There can be no question but this memorandum, under the circumstances proved, must be considered as the act of the directors of the bank, and so binding on the stockholders. The verdict, then, ought to stand for the lesser sum, which is understood to be the value of the note, as payable in facilities, unless it shall be wholly set aside, on the ground that the contract is void, as against law.
By the statute of 1809, c. 38, it was made unlawful for any bank to loan, negotiate, receive in payment, or otherwise to deal in, the bank bills of other states; and a heavy penalty was inflicted upon any who should transgress this law. The note sued in this action was made and received during the existence of this law, and in direct violation of its provisions. Can it, then, be recovered ? If it can, the judiciary power may, to a very great extent, defeat the manifest intent of the legislature. For although the penalty may be sued for and recovered, yet circulation may be given to bills received upon such illegal contracts, and the penalty may never be exacted.
The subsequent repeal of the act can have no effect upon a contract made while it was in force. As well might a contract, made for the purpose of trade with an enemy during a war, be purged of its illegality by "the return of peace.
The case of Camden vs. Anderson does not prove the point it was cited to support. It would seem rather, from the provisions of the statute commented upon in that case, that, when a penal statute was repealed, it might still be pleaded against any contract made in contravention of it, unless in the repealing act provision was made to the contrary.
* The case of Little vs. Obrien is wholly different from the case at bar. The defence against the note in that case was, substantially, that the corporation had no authority to receive notes for stock. Such notes were not declared to be illegal, nor was there any penalty for taking them imposed by the act.
The verdict is set aside, and the plaintiffs must be called,
Plaintiffs nonsuit.
[Russell vs. Degrand, 15 Mass. Rep. 39. — Wheeler vs. Russell, 17 Mass. Rep. 258. — Dwight vs. Brewster, 1 Pick, 55.— Coombs vs. Emery, 2 Shep. 404. — Seidenbender vs. Charles, 4 S. & R. 159.— Sharp vs. Teese, 4 Hals. 352. — Ed.]