Court Opinion

ID: 6554449
Source: CourtListenerOpinion
Date Created: 2022-07-20 18:55:05.346302+00
Date Added: 2024-06-11T13:28:56.380011
License: Public Domain

By the Court

—The first question in this case is, was Samuel M‘Dowell, in Jan. 1819, indebted to the bank? This includes a question of law. The plff. indorsed a note to deft’s, on failure to pay which, he became liable as the indorser. Suit has been brought and judgment obtained against him on this responsibility. It is not contended that this judgment has been actually paid, but that it has been discharged by an agreement between the bank and the drawer. The actual payments under this agreement must, of course, be applied. But it is also said that this judgment has been discharged by the bank permitting the drawer to check out funds which they might have applied to it. If this question were on the note simply, it might be a discharge; but here is a judgment, and you cannot discharge a judgment by matter of a less grade. This is the rule at law. Nothing but actual payment, or release, will discharge at law. The indebtedness therefore, of the plff is established.
Second. Whether, under the by-law, the bank has a lien on this stock, and could lawfully prevent its transfer. We would like more time to examine this question, but must now decide it on the best consideration we have been able to give it. This bank commenced under certain articles of agreement, one of which gives the board of directors authority to make rules concerning the transfer of stock. It invests them with a general power to regulate this matter. A bylaw was made in 1826, prohibiting any member of the corporation from transferring his stock whilst indebted to the bank. The charter, 4 D. L. 328, confirms these articles and also gives the power to make by-laws. These by-laws must be reasonable and consistent with the laws of the state. We see nothing in this one unreasonable *32or repugnant. It does not affect other than members of the corporation whose privilege and duty it is, before they become such, to acquaint themselves with the rules of the institution, so far as they would affect their interests. In reference to the institution it is a very salutary rule; greatly to the security and advantage of the stockholders, and to the public, by facilitating loans. It is, therefore, in our opinion a valid by-law, and binding on all the corporators. In this opinion we are supported by the decision of a very able man, reported in 2 Peere Wins., 207, in the case of Child vs. Hudson’s Bay Co., where it was decided that the company could take the stock of a member for his debts, under a by-law similar to this. The legal interest in all the stock is in the corporation for its benefit. We therefore think that, under the circumstances of this case, supposing the indebtedness of plff. to the bank proved, they were authorized to refuse him permisson to transfer his stock.
J. A. Bayard and Read, Jr., for plff.
Rogers and Wales, for deft.
On motion, rule to show cause why the judgment of non pros, should not be set aside, and a venire facias de nova awarded, on the ground of a misdirection. This motion was not prosecuted, and the rule was, of course, discharged.
The plff. being called, was non pros’d.