Court Opinion

ID: 5552152
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:34:06.563412+00
Date Added: 2024-06-11T08:35:10.970426
License: Public Domain

Denning, J.
dissenting.
Smiley brought an action of debt against Moultrie and others. In his declaration, he alleged that the defendants were the directors of the Commercial Dank of Macon, on the 29th of September, 1847; that the bank then owed, and up to the bringing of that his suit, had continually owed, an amount of debts exceeding three times the amount of the stock of the bank paid in, over and above the amount of moneys actually ■deposited in its vaults for safe-keeping; that he was then a creditor of the bank for one hundred and seventy dollars, besides damages and interest, by being the holder of the promissory notes of the bank to that amount; that he had got judgments against the bank upon these notes, and had had fi. fas. issued on the judgments, and that the fi. fas. had been returned, with the entry on them, of no property to be found.
To this declaration, the defendants pleaded that the existence of the bank, by the act incorporating it, was limited to the first day of January, 1852, a day which (at the time of filing the plea) had passed.
To this plea the plaintiff demurred, and the Court sustained him in the demurrer.
To that decision the defendants excepted, and it is that which they have presented for review to this Court.
On review, a majority of this Court have affirmed that judgment. I did not think that that judgment ought to be affirmed, and therefore I dissented from the judgment of this Court. I am now to state my reasons for my dissent.
The declaration in this case is founded on a part of the eighth rule of the charter of the Commercial Bank of Macon. The eighth rule is as follows: “The total amount of the debts which the said corporation shall, at any time owe, whether by bond, bill, note or other contract, shall not exceed three times the amount of their stock paid in, over and above the amount of moneys actually deposited in their vaults for safe-keeping— in case of excess, the directors under whose administration it *340shall happen, shall be liable for the same in their individual, natural and private capacities, and an action of debt may, in such case, be brought against them or any of them, their or any of their heirs, executors or administrators, in any Court of Record in the United States having competent jurisdiction, or either of them, by any creditor or creditors of the said corporation, and may be prosecuted to judgment and execution, any condition, covenant or agreement to the contrary notwithstanding. But this shall not be construed to exempt the said corporation or the lands, tenements, goods and chattels of the same, from being also liable for and chargeable with the said excess; and such of the said directors who may have been absent when the said excess was contracted or created, or who may have dissented from the resolution 'or act whereby the same was so contracted or created, shall be liable as other directors for said excess. But such directors may be entitled to recover out of the directors assenting to such excess, by action of debt or on the case the amount which they may have been compelled to pay.”
Assuming the declaration to be true, the “ promissory notes” of the bank, considered as consolidated, are evidence of the existence of only one single debt. But the debt is a debt, to the payment of which are “liable” tzvo parties — the bank and the directors. The bills are not evidence of the existence of tzvo “independent” debts, to the payment of one of which is liable the'bank, and to the payment of the other the directors. This, it seems to me is manifest, both from the language and the reason of this eighth rule. This, therefore, I shall assume to be true.
This debt is one which exists, as I think I may say all debts do, by contract — by some contract, either expressed or understood. This debt is one, for the recovery of which, the prescribed remedy in the said eighth rule is an action of debt; and that is an action which always has to be founded on contract.
The debt is also one which is evidenced by “ promissory notes,” and these the charter makes to be contracts as in the eighth rule, when it says: “ The total amount of the debts *341which the said corporation shall, at any time owe, whether by bond, bill, note or other contract, shall not exceed,” &c.; and as in the eleventh, when it says, “the bills obligatory and of credit, notes and other contracts whatsoever, on behalf of said corporation, shall be binding,” &c.
Besides, if the charter is, itself a contract, every provision in it must be some part of the contract — must be matter of contract. And this Court, in the Irvington Bridge Co. vs. Harrison, (6 Ga. R.) decided a charter for the incorporation of a bridge company to be a contract.
This debt exists by contract. Who are the parties to the contract? on one side the bill-holder, on the other the parties liable to pay the bills — the bank and the directors.
Now, when on one side of a contract there is a plurality of parties, they must stand as joint contractors, or as joint and several contractors, or as several contractors. In reference, therefore, to the contract under the eighth rule for the payment of these bills, the bank and the directors are to be considered as occupying the relation of joint contractors or of joint and several contractors, or of several contractors.
And of these parties, thus liable to pay the bills, the one I think is a principal, the others sureties. The directors, in my opinion, are but sureties for the bank — they have been so treated by the plaintiff himself. He first sued the bank, and had a return of no property, as against the bank, and he states these facts in his declaration, as a part of the cause of action which he has against the directors, and the plaintiff is, on one side, the party to the contract — that is to say, is the holder of the notes.
And that the bank occupies the place of a principal in the contract, also appears, I think, from this, that it was the bank and not the directors, it is to be presumed, that got the consideration which there was, for the issue of the notes. If the bank itself had paid these notes, could it, holding on to that consideration, go over upon the directors and make them repay it, what it had paid in taking up the notes ? Whereas, if the directors had paid the notes, what is there to prevent them from having had re-imbursement from the bank ?
*342Does not the same thing appear too from this ? The charter, by the fifteenth rule, provides that the stockholders shall be bound, in person and property, for the ultimate redemption of the bills issued by the bank, meaning does it not, such bills as shall be issued not in “excess” — the eighth rule having said, that for the redemption of those issued in excess, the directors, as well as the bank, should be liable. Now, under a similar provision to this fifteenth rule, contained in another bank charter, this Court has said that the relation which the stockholders sustained towards the bank, was that of sureties. (11 Ga. R. 517. 8 Ga. R. 478.) And whatever reasons exist for saying that as to the bills issued not in excess, the stockholders shall be sureties and the bank principal, the same reasons exist for saying that as to the bills issued in excess, the directors shall be sureties and the bank principal. So to me it seems.
I think I may say, then, of these parties, thus liable by contract to pay these bills, the one party stands as principal, and that is the bank; the other as surety, and that is the directors.
If this be so then, as by the law of principal and surety, whatever even discharges the principal, although it does not extinguish the debt, discharges the surety — the dissolution of' this corporation was the discharge of the directors from this liability; for the dissolution of a corporation is, without dispute, the discharge of the corporation itself from its debts.
But say it is not true that the directors are only sureties for the bank, then the debt being but a single debt, they must be liable to pay it either as joint contractors with the bank, or as joint and several contractors with the bank, or as several contractors. Let them be considered as liable in one of these ways.
.Now it is a general principle of law, that when what is but a single debt exists against several persons, whether as joint contractors or as joint and several contractors, or as several contractors, whatever extinguishes the debt as to one of the contractors, extinguishes it as to all.
This principle follows from the nature of extinguishment. What is the nature of extinguishment ? “Extinct commeth of *343the verb extinguiré, to destroy or put out; and a rent is said to be extinguished when it is destroied and put out”. (1 Coke Litt. 147 b.) “ Extinguishment in contracts, the destruction of a right or contract, the act by which a contract is made void.” (Bouv. Law. Dic.) “ Whenever a right, title or interest is destroyed or taken away by the act of God, operation of law,, or act of the party, this, in many books, is called an extinguishment”. (3 Bac. Abr. Extinguishment’)”. These definitions, indeed, give but the common import of the word extinguishment.
Now when a debt is “ destroyed,” “put out,” extinguished, as to one of the parties to it, the debt is, of necessity, as to all, destroyed — put out — extinguished. To destroy, to put out, to extinguish a thing at all, or as toany other thing, or for any other purpose, is to destroy, to put out, to extinguish the thing wholly, as to all other things — for all purposes. To say differently is to say that a thing may at one and the same time be dead, and yet alive. Can a thing be more than extinguished ?
A common instance of extinguishment happens when one of the parties to a contract for the payment of money pays the money. Let say a bill of exchange be paid by any of the parties to it — by the drawer — by any endorser — by the acceptor— the debt due to the holder is totally extinguished. He, if paid by the acceptor, (say) cannot also get payment from the drawer. His debt, by one payment of it, is wholly extinguished. That is to say, when his debt is extinguished, as to one of the parties liable to him, by a payment made by that .party, the debt is, as to all the parties liable to him, equally extinguished.
So, let it be supposed, that in this case this debt had been once paid the bill-holder, by either the bank 'or the directors, can there be a doubt that the debt would not have been extinguished, as to both the bank and the directors ?
But payment is but one of the means which exist for extinguishing a debt. And there can be no difference, as to consequences between an extinguishment of a debt, produced by one means, and the extinguishment of it produced by any other. If, therefore, a debt is, by any means, as to one of the parties *344liable to pay it, extinguished, it is extinguished as to all the parties liable to pay it. Payment can do no more than extinguish a debt — whatever extinguishes a debt does as much as payment can do.
The general rule then is, that whatever extinguishes what is-but a single debt, as to one of the parties liable to pay the debt extinguishes the debt as to all the parties liable to pay it.
Now one of the effects of the dissolution of a corporation is, that all of the debts due to and from the corporation are extinguished.
That this is one of the effects has, after the most elaborate argument, been held by this Court. In Thornton vs. Lane (11 Ga. R. 491,) the language of this Court is — “why so much time and talent, labor and learning have been employed to-establish a proposition which no body denies, viz: that the debts of a corporation, either to or from it, are extinguished by its dissolution, I am at a loss to comprehend. Certain it is,, that it was recognized by this Court, at this place, two years ago, as it had been on more than one occasion previously”. Indeed, in this case, this proposition was admitted, both by the Counselfor the defendant and by the majority of the Court.
It follows, that when this bank was dissolved by the expiration of the term of its charter, this debt, which it owed to this bill-holder, was extinguished; and the debt having been extinguished, as against the bank, it follows, from the nature of ex-tinguishment, that it was also extinguished as against the directors.
This, plainly, is the necessary conclusion from the foregoing propositions. It is therefore true, if the propositions are true.. I have endeavored to show that they are true.
It was argued, however, for the defendant in error, that one of these propositions is not true in the absolute form in which it has been stated, viz: the proposition that on the dissolution of a corporation, the debts to it and from it are extinguished. It was contended that this proposition, to be true, should have had annexed to it a condition — such a condition as would have made it assume this form: on the dissolution of a corporation, *345the debts are extinguished, provided there is not some one in existence to' sue for the debts the corporation owns, and to be sued for those it owes ; but if there is. any such person in existence, then they are not extinguished. The addition of this condition was made necessary, it was urged, by the character of what was alleged to be the'reason of the rule of extinguishment —that reason being alleged to be the non-existence, on the dissolution of a corporation, of any person to sue for the debts due to the corporation, or to be sued for those due from it.
The truth of this, one of these propositions, has perhaps another objection to struggle with — one which, however, was not urged in this case, although in the case of Thornton vs. Lane, (11 Ga. R. 496,) it was relied upon and slateddn these words : “ And why should it be thought a strange thing for the corporation, itself, which is primarily liable to be exonerated under the operation of the Common Law rule to which we have adverted, and for the personal liability of the stockholder, which is secondary only, to be retained and enforced ? It would not be pretended that a debt due by the bank, and upon which there was an indorser, could not be enforced against the latter, notwithstanding the discharge of the principal. Nor is this any now principle, either in legislation or jurisprudence. It has occurred a thousand times and oftener, no doubt, under the bankrupt acts of England and of this country, that the principal debtor has been released by law, while the debt has been enforced against other parties to the paper, who were in no way interested in its consideration, which cannot be said, by the by, of these corporations”.
This objection, if allowed to prevail, would produce a radical change in the proposition or rule — it would expunge from the rule the w'ord extinguish, and substitute words expressive of a different idea — it would make the rule take this form: on the dissolution of a corporation, the corporation is ‘■‘■exonerated” from the debts due from it, but the debts themselves are not extinguished. They remain in existence, and may be enforced against any other persons who happen also to be par*346ties to them. As to the debts due to the bank, the rule, if :made to take this form, is silent.
Ought the statement of the rule to be modified, in one or both of these ways ? This is the question which I will now try to answer.
I think the rule is not to be modified in either of these ways. . And my reasons for this opinion are — First. That in all of the many places in which I have seen the rule stated, there is not one in which it is stated with either of these modifications ; and the modifications are so very important as to make me feel sure that if they existed, they would, in some place, at some time, by some body, have been mentioned in connection with the rest of the rule. Secondly. I have read a good number of decisions, made by different Courts, which, if this rule be subject to these modifications, must have been the reverse of what they are. Thirdly. What I regard as the reason of the rule, will not permit the rule to take these modifications.
As to my first reason, I find the rule stated in Blaekstone, in these words : “ The debts of a corporation, either to or from it, are totally extinguished by its dissolution; so that the members thereof cannot recover or be charged with them, in their natural capacities”. (2 Black. Com. 484.) In Kent, in these: “ The debts due to and from the corporation, are all extinguished. Neither the stockholders nor the directors or trustees of the corporation, can recover these debts or be charged with them, in their natural capacity”. (2 Kent’s Com. 353.) In Angell & Ames, in the same words as in Blackstone. (Ang. & A. §779.) In Grrant, the latest English work on corporations which I have seen, the rule is stated in these words: “The corporation (by dissolution) is wholly gone; and with it are lost and avoided all its claims, debts and liabilities, of all kinds. Roth the property choses in action and other rights of the corporation, as well as its liabilities, ipso facto, pass from it on. the event of dissolution”. (Grant on Corp. 303.)
Now, to give the rule exactly as it is, was part of the spe*347cial business of these writers. It is to be inferred, therefore, that if the rule is subject to the aforesaid modifications, these writers did not know of it.
In every decision of any Court w'hich I have seen, in which the rule is stated or acted on, except that of Thornton vs. Lane, (11 Ga. R.) it is stated or acted on, in a sense the same as that expressed by the writers aforesaid. Of these decisions, however, I will refer only to such as also support my second reason, which is, that there are decisions in good number, which, if this rule be subject to these modifications, would have had to be the reverse of what they are. These I will mention.
The first is a decisioh made in Delaware, and made on these facts: An incorporated bank got a judgment against a debtor of it. Afterwards the bank was dissolved by the limitation of its charter. A year or two after the dissolution, the Legisla*' ture passed an act “reviving, renewing, continuing and extend*' ing the corporation from the first day of March, which was in the year 1830, until the first day of March, 1835,” and “ reviving, renewing, granting, continuing and extending the powersj' privileges, rights and immunities theretofore granted the said' corporation.” After the passage of this act, the bank took out' scire facias on the judgment,- to revive it. The defendantj among other things, pleaded that by the dissolution of the cor* poration, the judgment was extinguished. This plea was held ■by the Court to be a good bar. Commercial Bank vs. Lockwood (2 Harrington, 14.) The language of the Court is this': When, therefore, the Commercial Bank, by the positive provision of its continued charter, had, after the first day of' March, 1830, ceased to exist and was then dissolved without ■either a representative or the possibility of one, as no provision is made by our laws for a representative in such a case, the debts due to it became, at the instant of dissolution, in the emphatic language of the law, extinguished — not the right to or remedy for the debt suspended merely, but the debt itself annihilated.” The word of the Court is “annihilated,” not “exonerated”. And the act of the Court is according to the word. Now here was a case in which, notwithstanding the dissolution, there was *348some body .to bring suit — the revived corporation. Yet the ■decision was, that the revived corporation could not bring the suit — whereas, the decision should have been just the reverse of that, had the rule been that dissolution extinguishes a ■corporation’s debts only, when there is no body to sue or be sued-
The next decision to which I refer, is one made in Tennessee, in White vs. Campbell et al. (5 Humph. 38.) It was made on these facts: After the expiration of the charter of an incorporated bank, that of the Bank of the State of Tennessee, one of the bank’s debtors, gave the president, directors and company of the bank a note for the debt; and to secure the note, executed a deed of trust — on this note, judgment was rendered at law, and on the judgment, a fi. fa. was issued, which was levied on the property contained in the deed of trust. Afterwards, the person to whom the deed of trust was made, filed a bill to have that deed set aside as illegal.
The Court say “that The Bank of the State of Tennessee was not in existence at the time the note and deed of trust were executed, is not and cannot be controverted. The necessary consequence is, that both the note and the deed of trust are inoperative and void, the one for the want of a payee, the other for the want of a cestui que trust.” And they cite what I have quoted from Kent. The Court add, “But it is argued that it appears from the answer of the defendant, that the debt was fairly due from the defendant, Campbell, and that the intention in executing the note and deed of trust, was to secure the stockholders in that amount, and not the institution. This argument is a fallacy. We cannot recognize the existence of stockholders of a defunct corporation,” &c.
Now here was some body to sue and be sued, viz: the parties actually contracting with each other; and here was the intention on the part of those parties, that one might sue the other; for it appeared “ that the debt was fairly due from Campbell, and that the intention in executing the note was to secure the stockholders, and not the institution”. Yet, the Court held that one party could not sue the other. So com*349pletely was the old debt extinguished, that it could not serve as the foundation or consideration for a new promise, secured by an instrument under seal. This seems to have been the view of the Court.
The next decision to which I refer, is one made in Alabama, in Paschall vs. Whitsett, (11 Ala. N. Series, 472.) It was made on these facts : “ The plaintiff in error having recovered a judgment against the Gainsville & Nankeetah Railroad Company, a corporation, caused the defendant to be summoned as a garnishee”. He answered, among other things, “that the company, previous to the issuing of the garnishment, ceased to have any legal existence”. This answer the Court held to be a sufficient one. The language of the Court is, “ But for whatever cause it may become defunct, we have seen that the debts due to and from it, are totally extinguished; and in no just sense can one be said to be its debtor, either as a stockholder or otherwise”. Yet, in the case, there were parties and a proceeding between them, the garnisher and garnishee— the garnishment. The garnishment was founded upon a judgment obtained against the corporation, before its dissolution; and in ordinary cases, a judgment may be enforced against property, even if there- is no existing party defendant to the judgment, if, since judgment, the defendant has died. But not in the case of a judgment against a dead corporation. In that case, the debt, say the Court in italics, is extinguished. That is the word, not “exonerated” — not that the defendant is personally exonerated, and the debt left open against his property and his sureties. They do not say this.
I next refer to a decision from Mississippi — that made in the President, &c. of Port Gibson vs. Moore, (13 Smedes & Marshall’s R. 158) on these facts. Moore had an account against the President, &c. of Port Gibson. After the account had become due, the charter of the President, &c. was repealed. Shortly after its repeal, it was revived. After the charter had been revived, Moore sued the revived corporation for his >ac•count.
The Court say, “ The Act of repeal, when accepted by the *350corporation, was a dissolution. It is now the settled doctrine, upon Common Law principles, independent of any Statute declaring a different rule, that upon the dissolution of a corporation, the debts due to and from it are extinguished. This is conceded in argument”. And they hold the account to be extinguished. Yet, here is somebody to sue and be sued. If the rule is such as not to extinguish debts, but only to suspend them until somebody can be found to be sued, here was the place for it to have come in and made the Court give a judg■anent just the opposite of that which it gave. Here the old ■debtor, himself, was again made alive. And if the rule would not let him be sued, would it have let his surety be, supposing he had had one ? This Court, I think, would have said not. It would have said “ extinguishment” must have its effect.
I come, now, to the decision in Fox vs. Horah, made in N. Carolina, (1 Iredell’s Eq. R. 358) on these facts : A loan was obtained by Hoskins, with Fox and Long as sureties, from the State Bank of N. Carolina. The note was made payable to Horah, cashier. Upon this note, Horah sued the parties to it and got a judgment against them. Pending the action the charter of the bank expired, and an attempt was then made to set up this occurrence as a legal defence: but it failed, because the Court held that “ the legal interest in the debt was in Horah, and the action properly brought by him, and whether he was a trustee for the bank, or any other person, was an inquiry with which a Court of Law had no concern.” Then Fox filed a bill against Horah, in which he insisted that by the expiration of the bank’s charter, the debt had become extinguished in equity, notwithstanding that at law, in consequence of the legal title to the debt being in Horah, the debt might not be extinguished. And the Court sustained his bill. The opinion was delivered by Craston, J. and it seems to have b'een well considered. It is certainly very clearly expressed. The opinion has in it these words: “ When the creditor corporation died, and there was no successor — no representative — the relation of debtor and creditor ceased, and the debt became necessarily extinct.” “Upon the death of the bank, *351without succession or representative, this debt became, by lawr as completely extinguished as it would have been by a release from the corporation.”
Now in this case, there was some body to sue — some body t© be sued — there was, in fact, a suit at law, and what is more, a judgment of recovery in that suit — and a judgment resting upon a title good at lato against the world.
If, then, in such a case, the Court held the debt to be extinguished even in equity, it is certain that the Court could not have considered the true rule to be that on dissolution, the debts are not extinguished if there remains any one to sue or be sued. But let it speak for itself: “It is urged that although the defendant has no equitable title to this money, neither has the plaintiff, and therefore the Court ought not to interfere, but suffer the law to prevail. Now, without repeating what has before been stated, that the extinguishment of the creditor’s equitable right annihilates the equitable debt, s©> that the plaintiff no longer ows,"and therefore in equity, has a perfect right to this money, it is enough that he does not owe it to the defendant, to give him an equity against the defendant. The money is yet in the plaintiff’s hands, and he has a right to keep it against all the world, unless it be required from him by one to whom it is due, or in behalf of one to whom it is due. Melior conditio possidentis.
In short, the Court rides rough shod over the idea, that because there may be some body to sue and be sued, the debt is not extinguished.
Now these decisions are all certainly in point, to show that on the dissolution of a corporation, the extinguishment or nonextinguishment of the debts, does not depend on whether there is any body to sue or be sued. They are in point, to show that notwithstanding there may be somebody to sue and be sued, yet the debts are extinguished.
But these decisions being the decisions of Courts which have never been made the exponents of what the Law of Georgia is, are, it is true, not to be considered authoritative to her Courts. Still, perhaps, they may be regarded as some evidence of what *352is the Common Law upon the question, and that is the part of the Law of Georgia which governs the question.
They are, some or all of them, in point too, to show that extinguishment of the debts does not mean suspension of the debts — “exoneration” from the debts.
I will now turn to a couple of cases that are more authoritative — a couple of old English cases :
“ A parsonage appropriated to a prior alien, was charged with an annuity, and after, was seized into the King’s hands, and it was enacted by Parliament in time of H. V, that the possessions of prior aliens should remain in the King and his heirs forever ; and the King granted the parsonage to another and his successors, as it ivas in the King’s hands ; and the chargee brought a writ of annuity against the grantee of the parsonage, &c. And the best opinion was, that the annuity is determined, for the corporation is dissolved. ■ (Viner’s Abr. Rent, B. b. 4.)
Now if by the dissolution of this corporation, the annuity which it owed, was merely suspended for want of some’ one to be sued for it, that want was supplied by the revival of the corporation in a new parson; and the decision should have been that the new parson was liable to pay it. The decision, however, was, that by the dissolution of the corporation, the annuity was “ determined.”
“Money was borrowed by the Company of Woodmongers, who were incorporated, and a bond was sealed with their common seal, and subscribed by the defendants, who were two of the principal of the company. The bond was noverint universi ¿•e. Kos registrum and guardianes, ¿•c. of the company of Woodmongers, tener i, <fc.; and now, the company being dissolved, action was brought against those who subscribed the bond, but ruled that it could not lie, so the plaintiff was non-suit.” (Viner’s Abr. Corporations p. 5.)
It seems that in this case, two members of the corporation subscribed the bond; and that the corporation sealed the bond.
The defendants did not plead non est'factum. So I infer that they signed the bond as sureties. Indeed, I see no reason. *353why they should have signed it at all, except it is that they might become bound; still, I may be mistaken in this. If so, the report of the case which is in Lev. 237 — it being Edmonds vs. Brown, will probably correct me. That report is not within my reach.
Assuming that I am right — assuming that these defendants, by subscribing the bond, intended to bind themselves, then the case is directly in point, to show that the extinguishment of the debts which follows the dissolution of a corporation, is one which follows, whether there is any body left to sue or be sued for the debts or not; and also to show, that this extinguishment means the extinguishment of the debt — not a suspension of the debt — not an exoneration from the debt.
In relation to this last point, viz : whether the extinguishment of the debts consequent on a dissolution of a corporation, is not to be considered merely as a discharge or exoneration of the debtors from the debts, in the same way as the discharge of a bankrupt is a discharge or exoneration of him from his debts, I have a few more words to say.
It was not insisted in the argument of this case, that the extinguishment of corporation debts, on a dissolution of the corporation, is of the same nature as that of the discharge of a bankrupt on his bankruptcy, from his debts. It was, however, said to be of the same nature, by this Court, in the case of Thornton vs. Lane, as may be seen in the passage from that case which I have quoted. Hence, I think it my duty thus further, to notice the point.
In the first place, then, the language of the law which defines the consequences of bankruptcy to the debts of the bankrupt, is diiferent from that which defines the consequences of dissolution to the debts of the corporation. The language for the former is, that the bankrupt shall be discharged from all debts due by him at the time he became a bankrupt — not that the debts shall be extinguished. On the contrary, there is another part of the same law which says that the debts are to get thier dividends of the bankrupt’s estate, which they could not do if *354they were things that had been extinguished. The language of the law, with respect to the consequences of dissolution, uniformly is, that the debts are extinguished.
Rut in the second place, the Bankrupt Acts, themselves, provide for keeping the bankrupt’s debts, after his bankruptcy, alive-against other persons liable for the same debts. “By the Statute 10 Ann. 15, the discharge of a bankrupt from his debt, shall not be construed to release any other person who was partner in trade, or jointly bound, or liable to the same debt with the bankrupt”. (Com. Dig. Bankrupt D. 34.) This provision was carried into the new general Bankrupt Act of 6 Ga. 4, 16. (Eden Bank. Law, 396.)
In the Bankrupt Act of the United States, passed in 1841, a similar provision was inserted. It is in these words: “Provided, that no discharge of any bankrupt, under this Act, shall release or discharge any person who may be liable for the same debt as a partner, joint contractor, indorser, surety or otherwise, for or with the bankrupt”. (Sec. 4.)
What is it, then, but these statutory provisions that prevents the mere discharge from his debt, of even a bankrupt, from operating as a discharge of all those bound with him or for him, to the payment of the same debt ? But there are no such provisions of law to control the much stronger thing, extinguishment of the debt, consequent on the dissolution of a corporation. Must not that thing then have its full operation ? I think it must.
My third reason for thinking that the true rule, as to extinguishment, does not take this form, viz : that the debts are extinguished only in case there is no one to sue or be sued for-them is, that the only argument which I over heard used in favor of the rule’s taking that form, seems to me not to be well founded. That argument is, that on dissolution, the debts are-extinguished, because then there is no one to sue or be sued for them. This, according to the argument, is the reason of the rule. What I have already said, shows, I think, this not to be the reason. In addition, I wish to hazard a word as to what is the reason.
*355This rule, as to extinguishment of the debts on dissolution, is 'but a part of the general rule which defines the whole consequences of dissolution. That general rule is stated by Angelí Ames, correctly no doubt, in these words: “ At Common Law, upon the civil death of a corporation, all its real estate remaining unsold, reverts to the grantor and his heirs; for the reversion, in such an event, is a condition annexed by the law, inasmuch as the cause of the grant has failed. The personal estate in England vests in the King, and in our country in the people or State as succeeding to this right and prerogative of the Crown. The debts due to and from it, are totally extinguished ; so that neither the members nor directors of the corporation can be charged with them in their natural capacities.”
Now, it seems to me that the reason of the latter part of this rule is to be found in the existence of the two former parts. After these two parts of the rule had stripped the corporation -of its whole property — had deprived it of its entire means of paying its debts, the best thing remaining to be done with the debts was to extinguish them ; so that, as to him who owned ■them, they might not serve as a source of vain hope ; and as to :those whom he might suppose to owe them, the disjointed members of the dissolved corporation, they might not be turned into an instrument of useless harrassment and expense. And to extinguish them was best, even though there might be others bound as sureties for their payment. Eor in such case, the sureties, if made to pay them, would, themselves, become, by ■ such payment, the holders of the same debts, and as much entitled to have the debts paid by the corporation, as the original •creditors had been. And the original creditors and the sureties, thus become creditors, would be parties equally innocent— equally meritorious. There is no reason, therefore, why the •sureties, rather than the original creditors, should be made the sufferers. There are some reasons why they should not be.. More of evil would come of making them the sufferers than would of making the original creditors the sufferers. To make them the sufferers quiet things would have to be disturbed; there would have to be arrangements for getting the money to *356pay the debts, &c.; the conveyance of the money, when got, to the creditors; the adjustment of the sums due; the writing of acquittances, &c. — trifles it is true, yet implying some degree of evil; the loss of some little time and labor; the incurring of some little expense; the undergoing of some degree of trouble and vexation. All this evil, such as it is, would be saved by making the original creditors, instead of the sureties, be the sufferers. In all other respects, the two classes would stand equal. The maxim, that of two innocent parties, one of whom must suffer melior est conditio possidentis, is not only law but wisdom.
This, as to the debts due from a corporation. As to those due to it this: By one of the two first parts of the general rule, the goods, that is the dioses in possession, pass to the King. The debts due to the bank, if collected, would become dioses in possession; and so, by that part of the rule, they would merely follow the course of the other goods and pass to the King. Why did not the rule, instead of extinguishing debts of this sort, require them to be collected and paid over to the King ? Perhaps, for the reason that at the early time when the rule was a making, such debts were trifles not worth the King’s pursuit, or perhaps as the question whom such debts should go to was a question of pure bounty, it was thought by the makers of the rule that the “ poor debtor” is a more deserving object of bounty than the great King.
I hazard, then, the opinion, that the true reason why the law extinguished the debts due by a corporation on its dissolution was, that it had itself first extinguished all the means by which the debts could be paid: by giving back the corporation’s real property to the person from whom it had come, and by transferring its personal property to the King.
Indeed, could the law-maker, when making this rule as to extinguishment have said, it is necessary to extinguish the debts becaitse there is no one to be sued for them ? For the law-maker must have known, that by the law as it stood, when he was making the rule, a debt is not necessarily extinguished, because there is no one to sue or be sued for it. When a man *357■dies, there is no one, at first, to sue or be sued, as to Ms debts, yet the debts are not extinguished. So, when a trustee dies ■or is removed from his trust; so when a debtor is without the Jurisdiction. Was it ever thought that inability to bring suit in these cases, was a reason which made it necessary to say the debts should be extinguished ?
Unless, therefore, the law-maker had had for making this rule of extinguishment some other reason than that which exists in these cases, viz: a mere want of some body to sue or be sued, would he have made the rule the rigid one of oxtin.guishment, which it is ? Would he not rather have made it one similar to that which exists in the case of the dissolution of a natural person, which is that the collection of the debts due to and from such person, shall be suspended until a successor can be appointed to take the place of the deceased person, but no longer ? How easy for the law-maker to have said this, if his -whole want was some body to sue and be sued. But this he did not say. What he said was, that on the dissolution of an ■artificial person, its debts should be extinguished — its property ■should not be administered for the benefit of creditors, but ■should go by the mere operation of law to others — the land to him from whom it had come — the goods to the King.
So much as to what is and what is not the reason of the rule.
The result of the whole inquiry, in my opinion is, to make the true meaning of the rule, that on the dissolution of a corporation its debts are extinguished this, that on such dissolution, the debts are annihilated — annihilated absolutely, not ■conditionally — not on condition that there is no one to sue or be sued for them.
If this be the true meaning of the rule, it follows that on the dissolution of this corporation, this debt was totally annihilated — annihilated, both as to the corporation and a? to the ■directors.
And the practical result would be, that the plea of the directors ought to be considered a good bar.
Thus far I have treated the case as having but one aspect— that which presents the bank notes as constituting, each, only *358one single debt; but that a debt due by contract, not by tort, ■and due by two separate parties — the bank and the directors— and the result at which I have arrived, ha's been, as above stated, the extinguishment of the notes, both as to the bank and directors. And this, it seems to me, is the only aspect which the case has.
Let us suppose, however, that it has another — an aspect of ■tort. Let us suppose, that though there is only a single debt ■due, but due from both the bank and the directors; yet, it is •a debt founded on a tort. Let us suppose, if we can, that although the charter is a general contract, and the notes to be be paid are each particular contracts, and the liability of the ■directors is a liability growing exclusively out of the charter, and a liability to pay these notes; yet, notwithstanding all this liability, on the part of the directors, is a liability sounding in tort, and not in contract, whilst the liability, on the part •of the bank itself — a liability growing out of the same charter — a liability to pay the same notes, is one sounding in ■contract and not in tort. If this be supposable, let us suppose it. Then the question will be, the bank and the directors being each liable for this one single tort, i. e. one tort for each bank note, does the extinguishment of that liability,'as to the bank, extinguish it as to the directors? And I say it does.
“ Also, if two men doe a trespasse to another, who releases ■to one of them, by his deed, all actions, personalis ; and notwithstanding, sueth an action of trespasse against the other, the defendant may well show that the trespasse was done by him and by another, his fellow, and that the plaintiff, by his de^d, (which-he sheweth forth) released to his fellow all actions, personalis, and demand the judgment,” &c. This is the text of Littleton, and the commentary of Coke corresponds with the text. (Coke. Litt. 232, a.)
If a release of the right of action for a tort, given to one of two tortfeasors, releases the other, much more would an extinguishment of the debt or damages due for a tort, as to one of two tortfeasors, extinguish the debt or damages as to the other. Can there be a doubt of this ?
*359Whether the debt of the directors, then, be one by tort or by contract, the effect is the same. The extinguishment of the debt, as to the bank, is the extinguishment of the debt, as to the directors.
Hitherto, I have gone on the supposition, that the bill-holder, in this case, had but one debt due to him on each of his bills, though it was due to him by each of two parties — the bank and the directors — and consequently, that he was entitled to< but one payment. Say, however, that this supposition, so self-evidently true, as to me it appears to be, is yet untrue. Say that the bill-holder had the right to have payment of each of his bills twice — once from the bank and once from the directors. Say that the liability of the directors is distinct from and independent of the liability of the bank, so as to be totally unaffected by anything which affects the liability of the bank, then the' question is, whether the liability of the directors, it being such as this, survives the expiration of the bank charter.
That being the question, my answer is, that the liability of' the directors does not survive the expiration of the charter. And it is in the answer to this question, perhaps, that I differ' most from the opinion of the majority of the Court; for they, if I understood them aright, put their judgment upon the idea, that by the charter, the liability of the directors was an “ independent liability”; was one which would exist, even though the liability of the bank, itself, should cease to exist. They considered, that with respect to the liability of the lanJc, the liability had ceased, having become extinguished by the dissolution of the bank. Indeed, that this was so, was not consid--*' ered an open question, it having been decided by the Court, after most thorough argument, in the case aforesaid, in 11 Gfa. li. And that it was so, was not disputed by the Counsel for the bill-holder. The debt, then, as to the bank, having to be considered as extinguished, and yet, the majority of the-Court still considering the directors liable to pay the amount of the debt, it was absolutely necessary, as it seems to me, for the Court, in order to have a foundation for this judgment to rest on, to hold the debt against the directors to be an inde*360pendent debt; that is to say, to hold, that before the dissolution of the bank, each of these bank notes was evidence of two distinct, independent debts — one against the bank, the other against the directors. If the notes were evidence, each, of but one debt, though that might be a debt against two parties, how could that debt, when extinguished — destroyed—annihilated, exist at all — exist against either of the parties;, therefore, how could it exist against the directors? How could it exist against the directors, even should we assume the most unassumable of things, viz : that the directors were principals, and the bank but a surety ? Eor if even a surety pays a a debt — if as to surety even a debt becomes extinguished, it is equally extinguished as to the principal. The holder cannot, then, call on the principal for payment, although, if the extinguishment be by payment of the debt, on the part of the surety, the surety may call on him for the payment of the new debt thus arising. Of course, if, as to the principal, the debt, by any means, becomes extinguished, much more is it true that the debt becomes extinguished, as to the surety. This all, however, I have already endeavored to show, and. think I have-shown.
If I have, then it follows, that when the majority of the Court hold the debt — hold a debt still to exist against the directors, they must hold that there had, before the dissolution-of the bank, been existing for each bank note two debts, one against the bank, the other against the directors; and that of these two debts, it was only one which, by the dissolution of the bank, was extinguished, viz: that against the bank. This, to my mind, follows, of necessity.
Eor argument’s sake, let it be admitted, therefore, that the bank notes constitute, each, evidence of two debts — one debt against the bank and another,, and an “independent” debt against the directors, then did that one of the debts which was against the- directors, expire with the expiration of the charter ?
That one of the debts, if it existed at all, existed by virtue of the charter. ' This is clear.
If it existed at all, it existed too, as a penalty. The directors *361got no benefit from issuing the bills. The consideration for the issuing of the bills went to the bank. But such bills — that is those thus issued in excess, being forbidden to be issued, and it having been put in the power of the directors to prevent their being issued, this liability to pay them, if issued, was imposed on the directors,, as a punishment for not preventing the doing of that, the doing of which it was made their duty to prevent. That this debt was a penalty, therefore, it seems to me is equally clear.
The question, to my mind therefore is, will a penalty survive that which imposes it ? Now although this penalty (as I call it, on the assumption I am now going on, of its being an independent debt,) clearly results from the charter and from nothing else; yet, it was considered by the majority of the Court, if I understood them aright, as resulting from a law, the charter being, in this respect* to be considered, in the opinion of the majority, notas a contract, but asa law.
Let the charter then be considered as a law. Then I think the question, whether a penalty will survive the lawr which imposes it, has been settled by this Court.
In the Bank of St. Marys vs. The State, (12 Ga. R. 496,) this Court say, “ we fully and unanimously concur, then, in the following conclusions: that the authorities cited, abundantly sustain the position that an informer who commences suit under a Penal Statute, does not acquire thereby a vested right — that Ms claim to the penalty, at most, is inchoate only, and cannot be fixed or vested, except by judgment — that no judgment can be rendered on a repealed Statute — that the repeal of the Statute prevents the imperfect right from being consummated or from becoming a vested right or contract; and that it is perfectly within the legislative competency to pass such repealing Statutes before final judgment".
-These “ conclusions” more than cover this case. They aré broad enough to cover it, had it, instead of being what it is, been such that the Legislature had repealed this eighth rule in the charter, long before the time of its expiration, provided the *362repeal had been made, also, before these bill-holders had got actual judgment against the directors. And these “conclusions” rest upon a most solid foundation, as any one may see,, who will be at the trouble to read the able opinion, of which > they are the result.
They are recognized and affirmed in Lyon vs. the State, in 15th Ga. R. a case of the repeal of a law giving a right to the Solicitor General, &c. to have his costs out of penal bonds, &c. as far as one particular bond was concerned.
They have been recognized, in other cases, by this Court.
Is there any difference between the effect of the expiration of a law, and that of the repeal of the law? It was so argued, and two cases wore cited to prove the argument. (8 Mees. & Wels. 234. 3 Adolph. & Ell. 690.) These cases, however, prove nothing of the sort. It is true, in these cases, the law in question had expired; and yet, the decisions were, that the rights given by the law, had not expired with the law. But-the decisions were not put upon the ground, that there was a difference in the effects, between the expiration and the repeal of a law: but on the ground, that before the expiration of the law, the right given by the law had become a completely vested one. But according to the Bank of St. Marys vs. The State, a right to a penalty, never does become a completely vested one, before a judgment has been rendered for the penalty.
In the nature of the thing, it is impossible for any difference to exist between the effects of expiration and those of repeal.
By expiration, a law ceases to be; can repeal do more than make a law cease to be ?
Thus,, then, I have gone through with all the arguments which were presented to the Court, or which I can think of, to show that notwithstanding the expiration of this charter,, the liability of the directors still remained; and the conclusion to which I have come is, that those arguments do not show it;. On the contrary, on a careful survey of the whole ground, it seems to me most clear, that with the expiration of the chartier, expired all liability, on the part of the directors.
*363Indeed, I may say, that to my mind, nothing is left for argument when it is once admitted, that on the dissolution of a corporation, the debts which it owes are extinguished. Eor to say that the debt which is produced by the issuing of a bank bill, “in excess” is not a single debt, to the payment of which two parties are liable — the bank and the directors — but is a double debt, to the payment of one half of which, as an independent debt, one of those parties is liable and the other of them, to the payment of the other half, is a proposition which, I think, will not bear stating. It becomes necessary, therefore, to admit that the debt is a single debt; but a debt, to the payment of which two parties are liable. And to say that when a debt, to the payment of which two parties are liable, is extinguished as to one party, it is yet not extinguished as to the other, is to say what would, I think, make a revolution in the law of contracts. Would it not produce a revolution in that law, to say that payment by one of the parties liable to pay a debt, should not count for the other parties ? And yet, what is payment but one out of many modes of extinguishing a debt ? The very utmost that payment can do, is to extinguish the paid debt. And whatever else extinguishes the debt, does as much as payment can do. And this extinguishment of the debt, is the thing from which the consequences flow — the thing which, even in the case of payment, sets free the parties.
My conclusion, therefore, upon the whole is, that with the expiration of the charter, expired the liability of the directors to pay these bank bills. And for this conclusion, I have stated my reasons.
In the other case, that of Moultrie vs. Neal, which is like •this, in all respects, I also dissent, and for the same reasons.