Court Opinion

ID: 7895900
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:52:29.111456+00
Date Added: 2024-06-11T16:32:05.191107
License: Public Domain

Miller, J.,
dissented and filed the following opinion :
In my opinion a Savings Institution incorporated under the Act of 1868, ch. 471, has the power to discount promissory notes. In section 29 of that Act, Savings Institutions are mentioned as one of the classes of corporations authorized to be formed under the general provisions of the statute; and by section 152 it is enacted “that any Savings Institution incorporated under this Article, shall be capable of receiving from any person or persons, or bodies corporate or politic, any deposit of money, which shall be invested or loaned out on good security in the discretion of the directors ; provided no part of the funds of said corporation shall be loaned to any officer or director of such corporation.” The power to receive deposits and the power to invest or loan them out on good security, are powers essential to the existence of such institutions. The question then is, does the power to invest or loan out the deposits on good security include the power to discount bills or notes. Thirty years before this Act was passed, language substantially and almost identically the same, had received an authoritative construction by the Court of Appeals in the case of Duncan vs. Maryland Savings Institution, 10 G. & J., 299. In that case the institution sued the maker of a promissory note which it had discounted, and one of the main questions to be determined, as stated by the Court, was, had the plaintiff “the power of lending out any portion of its deposits, or of discounting therewith, promissory notes or other *145securities for debt?” Its charter provided that “said corporation shall he capable of receiving from any person or persons, any deposit or deposits of money, and that all moneys so received shall he invested in stocks or other securities at the discretion of the directors, and in the manner deemed most safe .and beneficial,” with a proviso that no part of its fund should be loaned to any officer or director of the corporation. This was the provision construed in that case, and it becomes necessary to quote the very language of the Court, as delivered by Judge Donsby, to see what construction was placed upon it.
“ In incorporating this company,” say the Court, “it was not the design of the Legislature to create a mere stock-jobbing institution, the funds of which were to he kept employed in buying and selling stocks, which, from the nature of business in receiving and paying off deposits, must have been the case, if all funds were exclusively-appropriated to the purchase of stocks. Its charter, therefore, gave to the directors a discretionary power to make investments in stocks or oilier securities. What is the nature of the security here alluded to? Anything given or deposited to secure the payment of a debt. The words ‘other securities’ therefore embrace hills, bonds, notes, mortgages, &c., and the authority to maize investments therein, clothes the institution with the power of making •loans by way of discount. The concluding proviso to this section of the Act of Assembly, ‘ that no part of the funds of said corporation shall he loaned to any officer or director of said corporation,’ demonstrates the existence of the power wo have ascribed to it. The People vs. The Utica Insurance Company, 15 Johns., 392.”
The decision upon this point, thus plain and emphatic, is not modified by, nor is it in any way dependent upon, anything else in the Court’s opinion. The question whether the Savings Institution had the power, under this provision of its charter, to discount the note-sued on, *146necessarily arose, and had to he first decided, because it-was a vital part of the plaintiff’s case. Whether the enactment of a charter containing such power as well asfhe power to receive deposits, was in violation of the pledge given to the existing hanks by antecedent laws, was a matter entirely apart from the question as to what, powers this clause of the charter actually conferred. I take it then, that this is an unqualified adjudication, that the-provision in the charter, above quoted, comprehended and granted the discount power. When, therefore, the Legislature of 1868, said that deposits in savings institutions,. “ shall be invested or loaned out on good ■ sécurity in the-discretion of the directors,” with a proviso that no loan shall be made to any officer or director of such corporations, they did not use' terms, requiring a■ construction now to be placed upon them for the first time, hut terms which long before had been construed by the Appellate Court,, as conferring the discount power, a power everywhere .acknowledged to be a banking privilege; and the inference seems to me irresistible, that they employed these terms for the very purpose of granting such power. ' Where the construction and effect of certain language in an antecedent statute, has been settled by the Courts, and the same-terms are found in a subsequent statute upon the same-subject, -the presumption is that the .Legislature had knowledge of, and adopted such construction, and that, they used the same language with the- intent that it; should have the same effect. Eor these reasons, I am convinced that sec. 152, confers the discount power, just as effectually as if it had been so stated in totidem verbis; and holding this to he the effect of that section I do not deem it necessary to consider the general prohibitions against the exercise of hanking privileges, contained in the second section of this Act, because it is a familiar canon of construction, that where there is a general intention expressed’ in a statute, and in a subsequent part of the *147same statute, there is also a particular intention expressed incompatible with the previous general intention, the particular intention must he considered in the sense of an exception. Dwarris on Statutes, 765; Stockett vs. Bird, 18 Md., 484. Upon this ground, I rest my dissent to so much of the opinion of the majority, as decides that this Savings Bank had no power to discount the note sued on.
Having decided that the plaintiff had no power to discount the note, the opinion of the majority further declares that it does not follow as a consequence, “that recovery cannot he had,” and the judgment is reversed and a new trial awarded. To this also I am constrained to dissent, because I regard the proposition as in direct conflict with what was recently decided in the case of Lazear vs. The National Union Bank, of Maryland, 52 Md., 78. In that case the defendant had given the bank a written guaranty, to the effect that he would be responsible for “ all liabilities of Lazear Brothers to the bank,” to the extent of $25,000, and the suit was brought on this instrument. Among the items which the bank claimed was a note for $5000, drawn by Lazear Brothers which it had purchased. The defendant contended that the bank had no power to purchase this note, and having no such power, Lazear Brothers were not liable therefor to the bank, and consequently it was not within the terms of his guaranty. The question was therefore directly presented whether the hank could recover upon this note against Lazear Brothers, the makers, or in other words, whether the makers were liable therefor to the bank, and it was expressly so treated by the Court. It was, moreover, a new question in this State, and was twice elaborately argued by eminent counsel. In the opinion of a majority of the Judges who heard the case on re-argument, delivered by Judge G-HASOif, it is said : “ This question was most thoroughly and ably argued by the counsel of the respective parties, and after a very careful consideration of the case, it was *148held that the appellee acquired the note in question by purchase and not by discount, that such purchase was not authorized by the Banking Act, and that the appellee acquired no title to 'the note and could not recover upon it. The question has again been very fully argued upon notes filed by the counsel of the respective parties, and has again been carefully considered, and a majority of the Court concur in the opinion heretofore -filed in the case, and in the conclusions therein reached.” Besides this, the two cases of Farmers’ & Mechanics’ Bank vs. Baldwin, 28 Minnesota, 198, and First National Bank of Rochester vs. Pierson, 24 Minnesota, 140, referred to and relied on as sustaining the Court’s own reasoning, upon the subject, were cases in which suits were brought directly by the banks against the makers and endorser of the purchased notes, and in both, after elaborate discussions of the question, it was decided the banks acquired no title to the notes by purchase, and therefore could not recover upon them. So far as my experience has gone, no question was ever more thoroughly argued, more carefully considered, or more deliberately decided, than was this in Lazear’s Gase. I cannot suppose it is the intention of the majority of the Court in this case, to overrule that decision, but where the distinction is, I am unable to discover. If the Union Bank in Lazear’s Gase acquired no title to the note, and could not recover upon it, because it had, under its charter, no power to purchase it, how can it be said that this bank has acquired title to this note, and can recover upon it, notwithstanding it has, under its charter, no power to discount it ? If want of power in the one case is fatal to title and recovery, it must be so in the other.
The position taken- is that if the defendant received the bank’s money, “ or was the knowing instrument of some one else doing so, he ought not to escape liability to pay ” on the ground that the bank had exceeded its legitimate *149powers in obtaining the note by discounting it. The defendant, as the record discloses, is the endorser of this negotiable promissory note, but it was not discounted for bis benefit, nor did he receive any of the hank’s money in the transaction. It is true he placed his name upon the note as endorser at the time the bank discounted it, and he unquestionably did so for the purpose of given credit to the paper, and to aid the party who obtained the money, in having it discounted. In this sense, and in no other, was lie the “knowing instrument” of some one else receiving the hank’s money. But the same thing may be said of every one who endorses a note under like circumstances. It is a common practice for parties desiring to borrow money, to draw notes, procure the endorsements of their friends, and then take them to banks to be discounted. A very large proportion of the paper discounted by banks comes to them in this shape, and it would he a novel doctrine to hold that a party who thus endorses a note, enters into any other contract, or incurs any other liability, than that of endorser. 1 take it for granted that no holder of such a note, no matter how or under what circumstances he obtained it, could recover against the endorser, except upon proof of demand and notice1. The suit, as against him, must therefore be upon the note, to on force his contract as endorser, and if the decision in Lazear'/s Case he law, it is competent for him to set up as a bar to the action, want of corporate power in the plaintiff bank to acquire the note either by purchase or discount. The Lazcar Brothers when they drew the $5000 note and placed it the hands of a broker to be sold or discounted, did so for the purpose of obtaining money from some one who would purchase or discount it, and they actually received the bank’s money; and yet it was plainly decided in that case, that want of power in the bank to purchase the note, was a bar to recovery, and absolved them from all liability to the hank therefor. Upon the *150assumption then that this Savings Bank had no power to discount this note, I do not see how it is possible for the plaintiff to recover in this case, unless the recent and carefully considered decision in Lazear’s Case he overruled.