Court Opinion

ID: 5550025
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:33:00.306036+00
Date Added: 2024-06-11T08:35:02.733736
License: Public Domain

The Chancellor
held the case under consideration, until-this time: when he delivered his opinion at large, and examined the various topics which had been urged by the counsel of the parties.. His opinion was given orally; and the statement which follows, is merely a recapitulation of the principal propositions which he advanced and discussed, omitting the illustrations and reasoning, by which they were explained and supported.
The Chancellor.
An excess of subscriptions beyond-the limited amount of the capital of this bank, is a case, for which no provision is made, in the act of incorporation.
There must be a power to remove this excess of subscription ; since otherwise, the statute would wholly fail.
This power then, results from necessity, and rests wholly, upon implication.
It seems to reside in the first instance, in the commission-*591%i’s, as agents for organizing the bank s but it may devolve on the courts of justice ; and if the commissioners have exceeded their power, or have violated private rights, the courts are bound to give redress.
Every subscriber acquired a right by subscription and payment.
If there had been no excess of subscriptions, the right of each subscriber to the shares which he had subscribed, would have been absolute and perfect.
Had there been no excess, the agency of the commissioners would have been merely ministerial.
When this excess occurred, the office of these commissioners continuing to be ministerial in some respects, became also, a judicial trust, in respect to the allotment or disposition ■of shares among the subscribers.
When the commissioners are subscribers and they make a Seduction or distribution, they act in effect, as judges in their own cause.
In the language of courts of equity, the commissioners are trustees charged with a trust for the benefit of all the subscribers.
The principle that no man can act as a judge in his own cause, and the rule that a trustee can derive no benefit from his trust, are applicable to this case, so far as rights of property are concerned.
This bank is a public institution ; but the stock is a subject of private property.
Where the legislature expressly confer discretionary power on subordinate agents, such power must prevail.
Such was the case of the Catskill bank ; where the commissioners appointed by law to receive subscriptions, were expressly authorized by the same law, to apportion the excess of shares among the subscribers, as they should judge discreet and proper. Haight against Day, 1 John. ch. 18. In such a case, nothing less than fraud, vitiates the acts of the agents.
But where the legislature are silent, and the power of subordinate agents is inferred, it is not a power merely arbitrary ; but it must be consistent with the principles of justice and equity. In such a case, either fraud or error in the exercise *592of the.power, subjects the case to the revision and control of "'the courts of justice.
When a power not expressly given to a subordinate agent, is inferred as necessary to an end, the courts of justice supplying in effect, the want of express law, must so define the power, that while it may attain the end, private rights may be preserved and protected.
In choosing means to an end, subordinate agents have not the latitude of legislative discretion.
As no rule of apportionment or principle of reduction, is given by this law, the commissioners are not perhaps, bound to adopt any particular and exact rule. .
But as the power to reduce the subscriptions, is derived wholly from construction, the apportionment or distribution must be reasonable and equitable. The implied power must be governed by general principles of equity.
The poyer claimed and exercised by these commissioners, in effecting a reduction, is a power to exclude any subscriber, in their pleasure. Such an arbitrary power infringes the sense of this law, because it considers subscription and payment as giving no right whatever. It is partial and unjust in its operation, because, by large subscriptions and arbitrary preferences to particular subscribers, the whole stock of the corporation may be engrossed by a few persons.
Subscriptions can not be wholly disregarded in effecting the reduction..
The power raised by implication, can not be a power merely arbitrary in the commissioners: and though it is not here necessary to,say, that they could take no stock to themselves,, it is necessary to say, that they can not take all, or any inordinate proportion of the stock of this bank.
These commissioners have allotted to themselves and their mercantile partners, about two fifths of the whole capital of this bank.
This appropriation of so large a portion of the stock,ta themselves, is partial and unjust i and it is so, because it ex-., eludes other subscribers having equal rights.
If the commissioners had appropriated the whole or one half of the stock of this bank to themselves, the act would *593Stave been partial and unjust, only because it would have ex-■eluded other subscribers: but other subscribers are now wholly excluded, by the appropriation of two fifths of the stock to the commissioners.
These commissioners by taking to themselves, so large & part of all the stock, have violated the rights of other subscribers.
This seems to have been done by the commissioners without any fraud on their part; but under a mistaken conception of the nature of their powers.
The commissioners have erred in supposing, that they possessed an arbitrary power to effect the reduction by an entire rejection of subscriptions; and they have observed no equitable rule, in their distribution.
The distribution made by the commissioners being plainly inequitable, the rights of the complainants as subscribers, have been infringed; and this distribution must be rectified.
In the present Mate- of this cause, it is not necessary, to lay down any rule of apportionment; and it is sufficient to declare, that an apportionment more just and impartial, than the distribution made by the commissioners, can be made by the court.
But I regard the rule established in the case of the bank of the united states, as highly equitable, and fit to be applied to every such case of excess of subscriptions. By that rule, the excess of subscriptions is deducted from the largest subscriptions, in such manner, that no subscription is reduced, while any one remains larger. Second section of the act of the tenth day of April 1816, incorporating the bank of the united states.
The complainants have then, a right to some portion of the stock, for which they subscribed. As this right has been withheld; as a new apportionment of the stock must be made; and as the right of voting in the choice of directors, is one of the incidents of the stock, the injunction must be confín.tied.