Case Name: Craighead vs. the Bank of the State of Tennessee
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1835-03
Citations: 7 Yer. 399
Docket Number: 
Parties: Craighead vs. the Bank of the State of Tennessee.
Judges: Green, J. concurred.
Reporter: Tennessee Reports
Volume: 15
Pages: 399–409

Head Matter:
Craighead vs. the Bank of the State of Tennessee.
The fact that some of the items of an account ave within the time limited to form the bar by the act. of hmitatiions, will not take from out of its operation those items which are of more than throe years standing.
This was an action of assumpsit, brought by the Bank of the State of Tennessee against John B. Craighead, on the 27th of June, 1831. The declaration contains two counts; one for money lent and advanced, and the other for money laid out and expended. The defendant pleaded non assumpsit, non assumpsit within three years, and that the causes of action in the declaration mentioned, nor either of them, accrued within three years. To these pleas there was a replication and issue.
The .counsel of the Bank stated to the court, before going into the trial, that the suit was founded entirely upon a supposed overchecking by Craighead; and the counsel of defendant thereupon moved the court to reject the evidence offered for that purpose, upon the ground of irrelevancy; as neither count in the declaration was adapted to such a state of proof, one being for money lent, which the Bank could only lend in the precise manner prescribed by the charter, and the other being for money laid out and expended, for which there was no authority in the charter. The court overruled the objection, and admitted the evidence; to which, there was an exception.
The Bank then introduced James P. Clark as a witness, who stated, that a short time before the commencement of this suit he took the defendant’s bank book out of the bank, and called upon the- defendant for the purpose of effecting a settlement. That the defendant protested that he owed the bank nothing, and that he believed he had fully paid and satisfied every cent that he ever did owe it; but at the same time said, if he could be convinced that he was indebted to the bank, he was willing to pay it. That the said Craighead- also stated, he could not specify the particular item-in said bank book in which he was wrongfully charged, and persisted in denying his indebtedness; and he and witness exárñined the book, item by item, but as to the different items, the defendant admitted they' were correct, but that still he could not see how he owed the bank any thing.
The Bank then introduced Nicholas Hobson, the cashier,' as a witness, who said, that he was not an officer of said bank at the date of any of the transactions between said bank and Craighead, as set forth in.said bankbook, to which the testimony of witness Clark referred, and the accompanying notes, checks, and powers of attorney; and that he knew nothing of them of his own knowledge, except that the defendant came to the bank with his said bank book, and claimed and received a credit for Richmond’s note, and promised to call again and examine the book,- item by item, with- witness, but never did. Said witness then produced said book, notes, powers- of attorney and bank cheeks, (copies of all of which are set forth in the record',) and said, that the said bankbook had been principally made out by him, and after his- coming into bank as cashier, from the notes and 'checks and other entries and memoranda, which he found in the bank, upon his assuming the duties of cashier. That the* said notes and checks all had the bank mark upon' them, which signified that they had- been paid, but that he had put it upon them. That upon his coming into the bank, he found its affairs in very great confusion; and, that there were many instances in which, from the accounts as kept by the bank, individuals appeared to be indebted, when, upon subsequent settlements, those individuals either owed nothing, or the bank was in arrears with them. That many of the- accounts of the dealers with said bank had not been balanced when he came into the bank; and that the books, such as the one produced of Craighead, of most customers, had been left in the bank, and instead of be ing balanced monthly, as is customary in other banks, must have been in the bank for months and years without being balanced; and that such was the condition in which he found defendant’s book. Craighead objected to the reception of said book as evidence; but the court admitted it, as it contained credits claimed by the defendant, upon the ground that it was the defendant’s own book, and was evidence against him as well as for him, to which opinion of the court the defendant excepted. The above was the whole of the evidence.
The court charged the jury, that the account set forth in said book of the defendant was an account current; and that if any item thereof was of a date within three years prior to the commencement of this suit, it would save the bar of the statute as to the whole; and that the different checks, deposites, and negotiations of discount, were not to be considered as so many isolated transactions, but were to be taken in connexion with each other. To this charge, the defendant also excepted.
The defendant below moved the court for a new trial, which motion was overruled, and to which decision of the court there was also an exception.
The whole of the account, as set forth in said bank book, except a few items, bears date more than three years before the commencement of the suit; and these items are items of debt against the bank. The notes and checks all bear date more than three years before the commencement of the suit. The item for which a credit was claimed, consisting of Richmond’s note, bears date the 13th of October, 1825, which was the time when the note fell due, and was paid; and which had, when the book was made out by Hobson, been omitted by the bank to be credited.
T. Washington, for plaintiff in error.
1. Evidence of overchecking will not support either count in the declaration, even if such overchecking has been proved. To recover for an overchecking, there should be a count for money had and received; in which case, no contract would have been alleged to have been made by the bank, but an implied contract by Craighead,, to pay money to the bank, which belonged to it, and which he had received to its use. But, in a count for money lent, or in a count for money laid out and expended, the bank is alleged to make the loan, and to advance the money to some third person, for the use of Craighead.
Now a bank being a corporation, is the mere crea* ture of the act to which it owes its existence, and is precisely what the incorporating act has made it. It derives all its powers from that act, and is capable of exerting its faculties only in the manner in which that act authorizes. 2 Cranch, 127: 12 Wheaton, 68, 69: 7 Wendel, 254. By the charter, (act of 1820, ch. 7, sec. 4, 21,) this bank is not authorized to loan money, except upon personal or real security, in the manner pointed out by the said 21st section. And there is no authority whatever for the bank to lay out and expend money for the use of a third person.
2. The circuit court erred in charging the jury, that the notes discounted by the hank for Craighead, were constituent parts of the account between them, and to be taken in connection with the rest of the transactions. 6 Peters Rep. 163-4.
5. Any exception to the statute of limitations, must be specially replied to a plea of the statute. Here the exception as to merchants’ accounts is not replied; but the replication is general, and the issue formed by it is, whether the defendant did assume within three years, or whether the cause of action accrued within three years. And, notwithstanding this state of the pleadings, under the' charge of the court, the benefit of the exception was allowed to the plaintiff. According to the pleadings, as they stand, every item of the account exhibited by the bank would be barred, which bears date more than three years before the commencement of.the suit, unless the balance had been regularly struck and acknowledged, and carried forward to the account originating within three years, so as to constitute an item of the new account. The proof shows that this was not done in this case. Angel on Limitations, 202, 203, 204, 205. The effect of Judge Stuart’s charge was, that if an account has not been settled, but runs on from year to year, no matter how long, that makes it an account current, which will prevent the bar; thus, not only creating an exception not contained in the statute, but nullifies it completely in all actions of assumpsit founded upon account.
4. The only part of these transactions between Craig-head and the Bank, that is matter of account, consists of the depositing on his part, and of the paying out of his deposites by the bank. No part of this account is between merchant and merchant, or concerns the trade of merchandize. 6 Peters, 163, 164. The foundation of this action is a supposed overchecking, which is not a matter of account, but is the subject of a special action on the case when it exists.
5. Mr. Clark’s testimony does not take the case out of the statute of limitations. 1 Peters, 351: Gass vs. Russell, Martin and Terger’s Rep.: 8 Cranch Rep. 71.
6. The bank is a non-entity, there being no corpora-tors to whom the charter was granted. 12 Wheaton, 71.
7. The circuit Judge’s charge, that the bank book was evidence, was wholly wrong. It was not, as assumed by him, Craighead’s book, nor did Craighead affirm it, by claiming a credit for Richmond’s note, which said book did not allow.
J. P. Clark, for defendant in error.
1st. The evidence was properly received upon the counts in the declaration to show the indebtedness of Craighead. 1 Sand. Rep. 264: 2 Starkie, 92-3: 1 Sel. N. P. 65-66: 16 John. 283, note a: 14 John. 192 and 382: 1 Chitty 304.
2d. The private bank book of defendant was evidence, he having examined it and admitted it to be correct, and claiming credit lnmself'from it, upon the same principle that an open account, admitted to be correct, is received.
3d. The charge of the court upon the statute of limitation, that when there is a running account and any of the items are within three years, they take the whole account out of its operation, is supported by the following authorities. 16 Term Rep. 189: 2 Mod. 217: 6 John. 267: 1 Hay. 21: 2 Hay. 242-394: 4 Greenel. 237: 5 Johh. Ch. Rep. 522: 20 John. Rep. 576: 2 Star. Evi. 898.

Opinion:
Peck, J.
Two points are presented in this case worthy of serious consideration; and though the amount in controversy is small, it is no reason for escaping from principle. Being myself not satisfied with the opinion delivered on the point touching the items in the account, which, it is assumed, saves the bar, (some of them being within three years next before blunging the action,) I will first confine myself to the consideration of this question.
The rule is thus given, "that where there have been mutual, current and unsettled dealings and accounts between the parties, and any of the items are within six years, they are,of themselves evidence (therebeing such open accounts,) that the defendant did promise to pay; and the reason seems to he, because the mutual accounts between the parties, for any item of which credit has been given within six years, are of themselves evidence of there being such an open account, and of a promise to pay the balance; therefore, that sort of evidence is as proper on the issue of non assumpsit within six years, as any other evidence of the acknowledgment of the debt by the defendant, or of his promise to pay it;" and that a replication of a promise to pay within six years lets in the evidence. To sustain this, it is assumed that the latter items show that the dealings have not been closed, and that no action has accrued, and that as the action had not occurred by putting an end to the dealings, the action in the above form of pleading lies for the whole account, the last item carrying the balance with it.
The argument in my opinion proves too much; for if the action does not accrue when the party chooses to put an end to it by bringing his suit on the delivery of any item, it follows, that in cases where the mutual c'onsent of both is wanting to close the account, the defendant could on that ground plead in abatement of the action; for as the concurrence of both is necessary to make the contract, if it be incomplete, because the account is not closed, it must follow that defendant may by plea abate the action, on the ground that the cause of it has not arisen.
The error, as I humbly conceive, arose out of a practice upon the action of account; the action on the case in assumpsit having been substituted in the place of the former action, an arbitrary rule had to be adopted, which treats the account under the latter form of action as closed, when in fact it was not so; and the rule adopted, of making all the items of an account one entire thing, as if acknowledged or signed, was a mere fiction of the judges to reach what they no doubt esteemed the justice of the case. But the effect of it is a repeal of the statute of limitations; no equitable consideration, or supposed justice of the case, will justify a departure from the plain letter of the statute.
We have always held, in this country, that the statute of limitation is as honest a defence as any other, and may be relied upon with as much confidence. In considering other of our statutes, and especially that for the prevention of frauds, we prefer a strict adherance even to the letter, to that of latitudinarian interpretation. Newnan vs. Hays and Carroll, 3 Yerger's Rep. 18.
Even in England, where the judges at first had been less inclined to favor the plea, in latter times have let it in with full effect. They no doubt saw the evil of making rules to obviate the force of the plea; rules, which under the guise of doing justice, as was supposed, defeated a statute made for repose; and every days, experience must have proved that stale demands were likely to be set up and sustained; unless the statute presumed the evidence of satisfaction had been lost; and that the injustice on this hand had been greater than the supposed loss occasioned by letting in the plea according to its letter. Hence the departure of the judges from the rule early established, and hence the passage of the act of 9 George IV. ch. 14, which provides, that to take a case out of the statute, there shall be a signed promise in writhing; this conclusion is fairly inferrable from the words of that statute. Taking our statutes all together, and the inference is irresistable, that it never was intended that limitations, as a plea, should be evaded by the mere circumstance of a single item being entered within the period'of three years.
The book-debt law, as we commonly call it, illustrates this position. There the party, by his own oath, is let in to prove his book; but the statute forbids the proof of any item of longer standing than two years. Here he is made a witness competent to establish the account; but then the evidence shall not be heard to reach items of more-than two years standing. What is expressed as a positive rule in this statute, cutting off the stale items, should also have been the rule under the statute of three years. They are acts upon the same subject; and though they have different matters to operate upon, still as the rules given are for the admission of evidence, they should be construed alike; at least, the positive expression in thl book-debt act ought to caution us in lessoning by con Struct ion the force of the act of three years. Admit the rule the bank contends for, that because it has given a credit, the action is not barred to any portion of the account. It must be seen by the most superficial observer, how easy it would be to remove the operation of 'the bar, either by making a fictitious credit on the account; or to induce a dealing for some item, however trifling, as a mere pretext to save the bar, the making an entry of which would have the effect intended.
We have said during the present term, that we will not tolerate the principle, that a party shall, by his own imme diate act make the evidence to sustain his cause. Steel and Streeter vs. Matthews. For the same reason it was denied in that case, in the form'attempted'to be denied in this.
I feel as strongly inclined to respect opinions long established as any of the judges, but I will not become the slave of them. I must retain some freedom of opinion, and when I differ, claim the right of expressing that difference, with my reasons for it. On this point, I feel confident that the reasons already satisfactory to my mind, might, had I time to pursue it, be greatly amplified and more conclusively inferred. On the other point, which draws in question the constitutionality of the bank charter, I forbear to give an opinion.
Green, J. concurred.
Gatuon, Ch. J.
It is objected, that the Bank of the State of Tennessee is a mere non-entity, and incapable to sue; that there is no incorporation of persons. The act of incorporation, (1820, ch. 7 and 8,) provide for a president and ten directors, who are to have perpetual succession until the first day of July, 1843, with a fund of one million of dollars, to constitute a bank, to be known by its corporate name of the "Bank of the State of Tennessee;" and to be a body politic and corporate, and to be capable of sums; and being sued by this name. Because oí the certain death oí individuals, and the destruction of individual rights, it often becomes necessary, for the public good, to have particular rights kept on foot, by a legal succession of individuals, enjoying a kind of legal immortality; as the incorporation of trustees of colleges and academies for the advancement of learning; the incorporation of chambers of commerce in cities for the promotion of trade; the incorporation of mechanic's institutes for the promotion of the mechanic arts, &c. These corporations are grounded on public considerations, and have succession, and a name by which they act, independent of natural capacities. So of the Bank of the State of Tennessee. A public fund is vested in corporate hands for management, the same as the college funds, the academy funds, and common school lands. 1 Bl. Com. 467: 2 Bac. Ab. 2. The power to sue is well enough conferred, and we think the suit for so much money "loaned and advanced" to the defendant was well sustained by proof that he obtained the money on checks from the Bank. He, by mistake, overchecked, supposing he had money in Bank, and this was an advance and loan on the part of the Bank.
The next objection is, that James P. Clark, the surety to the prosecution bond, was discharged by the court, another bond taken, and rMr. Clark admitted as a witness for the plaintiff. Who is, and who is not competent, as a witness depends on judicial precedents and the practice of the courts. Nothing is belter settled in this State, than that the prosecution surety may be discharged from his suretyship, other surety be given, and the first surety be introduced as a witness. The bond is involved in the litigation, is part of the proceeding, and subject to judicial control; but were it otherwise, the witness is rendered competent by the act. The practice has been common in every court in the State, and is not now open to investigation.
3d. It is insisted, the bank book of Mr. Craighead . , . . . . . , could not be given in evidence against him. Ordinarily the bank book of an individual is competent evidence against him. He furnishes the book, has the entries made in it, and when it is made up, generally at the end of the month, he withdraws from the Bank his checks, and is furnished with the best means of correcting any errors that may exist. It is a stated account, which, if retained without objection, is taken to be true. In this case Mr. Craighead made his objections, and caused a credit of three hundred dollars to be entered. He admitted to Mr. Clark, who attempted to settle the account with him, that all the items on the book were correct; after which proof, not the slightest reason existed why it should not be given in evidence to the jury.
Note. The remainder of Judge Catron's opinion in this cause was withdrawn by him, as appears from the following note:
" Craighead vs. The Bank. — In this cause I had delivered my opinion in accordance with the British authorities; but my brother judges disagree with me, and.are clearly of opinion, that items in an account of more than three years' standing are barred by the statute oí limitations, and do not draw after items within three years; and not being sufficiently clear that my opinion to the contrary is a just construction of the statute, at the request of the other members of the court, I withdraw that part of the opinion treating of this point, and assent to the opinion delivered.
April 15, 1835. J. .Catron.'*
The opinion delivered by Catron, C. J. on this point, was withdrawn by him.