Court Opinion

ID: 6503794
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:16:14.010172+00
Date Added: 2024-06-11T15:54:40.868753
License: Public Domain

CHILTON, J.
The first question we propose to consider is, whether the Merchants & Planters’ Bank of Mobile could lawfully purchase the bill in suit, in the manner averred in the second and third pleas, to which a demurrer was sustained ? This question we regard as one of easy solution.
There is no legal proposition better settled, than that a corporation created by statute, can do no act, nor exercise any powers, except such as are conferred on it by its charter, or such as result by necessary implication, from some power expressly given, to enable it to discharge the functions and effectuate the object designed by its creation. Angel & Ames on Cor. 66; Beally v. Lessee of Knowler, 4 Peters, 152; Smith v. The Ala. Life Ins. & T. Co., 4 Ala. R. 561; The State v. Granville Alexandrian Society, 11 Ohio Rep. 1; Selma & Tenn. R. R. Co. v. Tipton, 5 Ala. Rep. 787. Upon the forfeiture of its charter, which works the dissolution, or civil death of the corporation, it is said that by the *676rules of the common law, its real estate remaining, would revert to the original grantor or his heirs, its personal property vests in the State, and the debts due to and from the corporation, are totally extinguished. A. & A. on Cor. 128, 667; 1 Iredell’s Eq. Rep. 358; Paschal v. Whitsett, 11 Ala. Rep. 472.
In Miami Exporting Co. v. Gano, 13 Ohio, 269, it was held, that after the forfeiture of the charter, and the appointment of receivers, the corporation, as such, could not prosecute a suit; the receivers alone are entitled to sue in the' name of the corporation, and they must show in the declaration the character in which they prosecute. So in Mississippi, it was held, in the Bank of Miss. v. Wrenn, 3 Sm. & M. R. 791, that after the expiration of the charter, the bank ceases to exist for any purpose, in the absence of any statutory provision to the contrary, and suits in its name must abate. These authorities may suffice to show, that aside from statutory provision, the bank in this case, after its charter was duly declared forfeited by the judgment of a court of competent jurisdiction, had no power to make a contract, ■much less to invoke the aid of the court for its enforcement, Let us then turn to ,the statute, and ascertain the extent of the powers with which it was invested at the time the bill in question was purchased.
By an act passed 13th February, 1843, entitled “ an act for the final settlement of the affairs of the Planters and Merchants’ Bank of Mobile,” after declaring its charter forfeited, by reason of its failure to pay on demand its debts and obligations, and providing for the exhibition of an information in 'the nature of a quo warranto, by the solicitor of the Mobile circuit, upon the requisition of the governor, and the appointment of commissioners to take charge of its effects, with power to sue, &c.; the 11th section proceeds as follows: “ It shall be lawful for the said commissioners to submit to arbitration contested claims, either those against, or held by the bank, and to convpound any doubtful or bad debt,” &c.
The judgment of the circuit court of Mobile, which was authorized by the act to take cognizance of the cause, was obtained upon the information filed, on the 27th February, 1843, declaring the charter forfeited. By the 8th section of *677an act passed in 1845, (see pamphlet acts, p. 46,) it is provided, “ that the trustees may use the corporate name of said bank, in the collection of debts due to the same ; and may use all the modes and powers given to said bank by its original charter, or any subsequent act of the legislature for the collection of its debts in the same manner as if the charter of the bank [had never been forfeited.” Upon the foregoing provisions, which are are all that have any bearing upon the question before us, we think it very clear, the bank had no power to acquire the bill sued on, in the manner averred in the second and third pleas. These pleas asssert how the bank became the holder of said bills — the second plea states, “ the said plaintiff, by discount thereof, became the purchaser,” &c. — the other avers, “ the said bank discounted and purchased the said bill of exchange in the said plaintiff’s notice described,” &c.
What are we to understand by the term discount, when applied to the transaction of the bank in acquiring the bill of exchange ? The term discount, as a substantive, signifies the interest allowed in advancing upon bills of exchange or negotiable securities: and “ to discount a bill is to buy it for a less sum than that, which upon its face is payable.” Now, although we would intend, in the absence of such averment, that the bank acquired the bill in some mode authorized by the statutes, we think that as the power to discount bills asa business transaction is taken away by the forfeiture from the bank, the averment in the pleas, that the bill was acquired by discount, is sufficient prima facie to show the transaction was unauthorized, and to cast upon the bank the necessity of showing, that the transaction came within the scope and design of the statutes continuing its existence. Hence, these pleas should have been replied to. In respect to the fourth plea, which merely avers that the plaintiff became the holder of the bill after the forfeiture of its charter, it is manifestly bad. The bank, for the purpose of collecting its debts, retained all the powers which its charter, or any subsequent statute conferred upon it. If, as the bill of exceptions states, “ Harris was in failing circumstances, and the bill was received by the bank as a payment, to make the amount of the debt secure to the bank,” although the negotiation was made *678without the consent of Harris, or any party to the judgment, the transaction was legitimate. As, then, the bank, under certain circumstances, had full power to take the bill by virtue of the statutes which we are bound judicially to notice, we must, as before mentioned, presume, in the absence of an averment in the plea to the contrary, that it acquired the bill in some of the modes sanctioned by law. Insurance Co. v. Sturgis, 2 Cow. 674; Folger v. Chase, 18 Pick. R. 661. As this presumption is not repelled by the averments of the fourth plea, the demurrer to it was properly sustained.
We would further remark, with regard to the power of the bank under the law to make the transaction with Wilson, as indicated by the proof set out in the bill of exceptions, the •statute authorizing it to use all the means, and exercise all the powers theretofore possessed by it for the collection of its debts, being remedial, must receive a liberal construction, and embraces not only the power to bring suits upon its choses in action, but extends to all the usual and appropriate modes of securing the ultimate collection of its demands. If third persons choose to interpose and pay, or secure by bill or otherwise, the payment of a bad or doubtful debt, there is nothing in the statute which prohibits the bank from availing itself of such means, for the satisfaction or security of its demands. If, however, under the pretext of security, the bank should engage in trafficking upon its assets in the purchase of bills by discount for profit, such transactions would clearly be without authority of law, and void. As to powers of the bank, see Angelí & Ames on Con. 200.
The above will sufficiently indicate our view of the law as applicable to the charge of the court respecting the power of the bank to purchase the bill. Upon the question of usury, We have considered the argument of the counsel for the defendant in error, that inasmuch as some of the parties to the bill were debtors to the insurance company, to renew which debt the bill was indorsed, and if the company could have enforced the trust While the bill was in the hands of Bower & Co., the plaintiff in error cannot be regarded as an accommodation indorser of Bower for the purpose of enabling him to borrow money, and therefore the transaction between Bower and Wilson was a sale of the bill, and not the borrow*679ing of money upon accommodation paper made for that purpose. If we rightly apprehend the position, we arc unable to discover how the equitable rights of the insurance company could in any way affect the liability of the plaintiff in error. The bill, never having been negotiated or passed to that company, although indorsed for that purpose, is placed upon the same footing as if it had not been made for the purpose. The witness, Hill, proves that Bower was the agent to fill up the blank as a security to the insurance company; he violates the trust, and assumes an agency to fill it up for a different purpose, viz., to obtain money from Wilson, say at twenty per centum discount. Now, we cannot conceive, how a violation, or breach of trust on the part of Bower, could impose on Saltmarsh a higher obligation, or place him in a worse condition, than if the negotiation to Wilson had been fully authorized by him.
We think the proof recited in the bill of exceptions, in this case, tends to show the transaction as between Wilson and Bower <fc Co, to have been usurious. Bower & Co. received from Wilson five thousand dollars, and the bill sued on was filled up by them, having been endorsed for their accommodation by one Coleman and Saltmarsh, for six thousand dollars, the bill having twelve months to run.
This bill was endorsed solely for the accommodation of the acceptors, and while in their hands created no obligation upon the endorsers to pay. The acceptors being the holders, of the bill, is evidence to charge the endorsee, Wilson, that it was drawn and endorsed for the accommodation of the acceptors, who, by negotiating the bill gave it vitality.
In Wallace v. The Branch Bank at Mobile, 1 Ala. Rep. 565, it was held, that if the maker of a promissory note carries it to a bank to get it discounted on his own account, with the name of a third person endorsed thereon, the transaction on its, face shows that it is a mere accommodation in-dorsement, or the note would not be in the hands of the maker.
In Metcalfe v. Watkins, 1 Porter, 57, it was held, that under our previous statute against usury, which made the whole contract void, a note or bill made for the especial accommodation of an individual, to enable him to raise money by its *680discount, at a rate beyond the legal interest, is usurious in the hand of an innocent purchaser, and that he cannot maintain an action upon it, being void in its original formation.
In New-York the law is well settled, by numerous adjudications, that if the note or bill could not support an action as between the original parties before it had been sold, then if it is sold at a rate higher than the legal interest, it will be usury. Powell v. Waters, 17 Johns. Rep. 179; Mun v. The Commission Co. 15 Johns. Rep. 55. The same doctrine Is held in Maryland—Saurnine v. Brunner, 1 Har. & Gill, 477; Cockey v. Forrest, 3 Gill & Johns. 482.
In Cameron v. Johnson & Nall, 3 Ala. Rep. 158, it is held, the change of the statute which avoids the note or bill, as to the interest merely, makes such change in the character of the contract, as to authorise an innocent purchaser of it to recover the amount advanced by him. Our present statute avoids the note or bill, only as to all but the principal sum. Digest, 591, <§. 9. It is clear, in the present case, that Wilson could have recovered from the acceptors only the $>5000 advanced by him by reason of the usury, having received the ' bill from them at the rate of 20 per cent, discount; and by the well settled law, the statute avoiding the bill as to all but the principal sum, as between the original parties, the bill is void to the same extent in whose soever hands it may after-wards go. It is, however, unnecessary to elaborate this point, as having had occasion to examine the question of usury, at considerable length, in the case of Saltmarsh v. Tuthill, at the last term of this court, it is unnecessary further to notice it here.
The charge of the court affirms, the evidence did not tend to show usury in the transaction, as between Bower & Co. and Wilson. This charge, as we have seen, was erroneous. The question should have been left to the jury to determine the fact of usury, upon the well established rule, that when-the evidence is doubtful or conflicting, the court cannot charge upon its effect. Boyd v. McIvor, 11 Ala. Rep. 822.
It remains only to say, the judgment of the circuit court is reversed, and the cause is remanded.