Court Opinion

ID: 6409601
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:51:39.845298+00
Date Added: 2024-06-11T15:51:19.677963
License: Public Domain

Metcalf, J.
The fifty eighth section of c. 36 of the revised statutes is in these words: “ No bank shall directly or indirectly make any loan, or grant any discount, unless the amount of the loan or the proceeds of the discount shall be payable by the bank, on demand, in specie, or in the bills of the bank; and every loan or discount, made contrary to the provisions of this section, shall be so far void, that the bank shall not be enabled to recover the amount thereof from the borrower, or from any other person ; and every bank, offending against the provisions of this section, shall moreover forfeit the sum of five hundred dollars.” Applying these provisions to the facts in the first of these cases, it is clear that the plaintiffs cannot recover on the notes in suit. The agreement between them and Dean, Packard & Mills, was, that the plaintiffs should discount their paper, to an amount not exceeding eighteen thousand dollars, and that they should leave in the bank, on *546deposit, one sixth of the several discounts. On the 15th of October, 1849, the plaintiffs discounted a note of f7,596, “ under this arrangement.” Twelve days afterwards, Dean, Packard & Mills informed the plaintiffs’ cashier, that they should extend their discount to the full sum of eighteen thousand dollars, and gave the plaintiffs, at their cashier’s suggestion, a check for one sixth of that amount, to wit, three thousand dollars, (probably a part of the former discount which had not been drawn out.,) and the plaintiffs gave to them a certificate that they had deposited that sum, which was made payable after ninety days’ notice of their desire to withdraw it. Discounts were soon after made by the plaintiffs, which made up the amount of eighteen thousand dollars. And the notes in suit were given in renewal of notes that had been discounted under the foregoing arrangement. The proceeds of the discounts were not made “ payable by the bank on demand,” but a part of those proceeds were put out of the control of the borrowers, and reserved for the use of the bank. The plaintiffs received interest on eighteen thousand dollars, of which the borrowers never had but fifteen thousand.
The arrangement, made with the plaintiffs, by the defendant, on the 21st of June, 1850, when the notes in suit were dated, did not purge the discounts from their original taint, nor impair his right to make this defence. Wynne v. Callander, 1 Russell, 293; Amory v. Meryweather, 4 Dowl. & Ryl. 86, and 2 Barn. & Cres. 573.
In the first of these cases, there must be

Judgment for the defendant.

In the second of these cases, the same reasons that prevent the plaintiffs from recovering against Mills justify the commissioner of insolvency in his disallowance of their claim against the esiate of Dean, Packard & Mills.

Order of the commissioner affirmed.