Court Opinion

ID: 5552493
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:34:45.160691+00
Date Added: 2024-06-11T08:35:11.809612
License: Public Domain

McDonald, J.
concurring.
The judgment of the Court below, in this case, is reversed on ■several of the assignments of error, by the unanimous j udgment ©f the Court. Two of the assignments of error arc overruled by tho unanimous judgment of this Court, and there is an affirmance of the judgment, by a majority of the Court, on *354two other assignments — one of the members of the Court dissenting.
The two assignments- of error on which the Court disagree,, are—
First. In the rejection by the Court of the testimony of M. Robinson, as to the value and amount of the assets turn*- ■ ed over to the assignee, and the waste thereof by the assignee¿
Second. The refusal of the Court to charge the Jury, that by the judgment of forfeiture, the debts due by the bank were extinguished.
It is not necessary that I should discuss any other matter’ in the case, than the points on which the Court disagree. I will consider, first, the last of the two above stated assignments.
I have no doubt, that according to the Common Law, on the civil death of a corporation, its debts are extinguished,, and I have as little doubt that the Legislature has power to-prevent that effect. A corporation is factitious; and if the power which creates it, in the act of its creation, or by subsequent constitutional enactment, makes no provision for preserving and continuing the debts due to and from it, on its-absolute dissolution, they perish with it — they become extinct.
If the charter of the Planters’ & Mechanics’ Rank was repealed or annulled, and the corporation was absolutely dissolved thereby, unless they have been prevented by competent constitutional legislation, the consequences ensue to which I have adverted.
The important question in this case then is, was the corporation absolutely dissolved by the judgment pronounced? And if it was, have the debts due to and from it been saved from extinction by the Legislature ?
In considering the effect of the judgment, I will inquire—
1st. Into the origin of the proceeding and its objects.
2d. What was the proper judgment under the proceedings instituted ?
3d. The nature of the judgment pronounced?
*3554th. Whether the judgment operates as a forfeiture, without execution of it ?
1st. What was the origin and object of the proceeding instituted against the Planters’ & Mechanics’ Bank of Columbus ?
Prior to the meeting of the General Assembly in 1840¿ ■some of the banks of this State had suspended specie payments. The Legislature, at the session of that year, made it the duty of the Governor to issue his proclamation, requiring suspended banks to resume specie payments on or before the first day of February thereafter, and on the refusal or failure of any bank to do so, and on due proof thereof, to- order judicial proceedings to be instituted forthwith against it to the end that the charter might be declared as forfeited and annulled, and that the assets of the same he immediately placed in the hands of a receiver, for the benefit of the creditors thereof.
The suspension of specie payments by the bank, and its continuance in a state of suspension, were considered such abuses of its franchise as called for the interposition of the •Government to protect the people from a worthless currency! 'The Legislature, however, did not intend to inflict the great ;evil on the community that would have followed the extinguishment of the debts due to and from the defaulting bank; airi'd therefore, by the strongest kind of implication in the Act of 1840, repealed the Common Law principle adverted to, by providing that on the judgment of forfeiture, the assets should be immediately placed in the hands of a receiver, for the benefit of the creditors.
The General Assembly of 1842, declared its intention still more emphatically, and it may be said, repealed this principle •of the Common Law in these cases, by enacting that on the rendition of a verdict on which a judgment of forfeiture should be pronounced, the Judge should pronounce a judgment of dissolution of said corporation for all purposes whatsoever, saving and excepting as to its power, in its corporate name, to collect and pay its debts, and. to sell arid convey its estate, *356real and personal. Hence, it was not only intended, but actually provided by the Legislature, that notwithstanding a judgment of forfeiture should be pronounced, the relation of debtor and creditor between the bank and its debtors and creditors, should not be interrupted; that there should be no reversion of the real estate to its grantor, and that its personal estate should be applied to the payment of its liabilities.
There can be no question of the validity of these Statutes. The Legislature had the constitutional power to pass them. It had control over the subject. Indeed, proceedings for dissolving a corporation or seizing its franchises, must be instituted by authority of the State. (5 Mass. Rep. 230.) A corporation may be dissolved for some purposes; that is, in part, and in such cases, in England, it may be renovated by a new grant from the King. (The King vs. Passmore, 3 Term. Rep. 241.)
The proceeding had its origin with the Legislature, and its object was, to deprive the bank of its franchise; and while it did that, to protect the community against the effects of a total dissolution, under the rules of the Common Law, upon its debts.
What was the proper judgment, then, on a verdict against the bank, on proceedings instituted under the foregoing authority ?
The proceeding adopted by the State’s officer against the bank, was just such as was best calculated to carry into effect the legislative intent. An information in the nature of a quo warranto, was filed against it. What is the proper judgment on such a proceeding ?
■ A quo warranto is the remedy where there is a body corporate defacto, who take upon themselves to act as a body corporate, but from some defect in their constitution, they cannot legally exercise the powers they affect to use. (3 Durn. & East, 244.) Prosecution by information, in the na.ture of a writ of quo warranto, is substituted for the tedious and protracted proceeding by writ of quo warranto.
*357The process is speedier, and the judgment not quite so decisive. It is applied to the mere purpose of trying the’ civil right, seizing the franchise or ousting the wrongful possessor. (3 Bl. Com. 263.) The judgment is, that the parties be ousted, and the franchises seized into the hands of the Government. (2 Kent, 313.) If the party has continued in possession of the liberty by wrong, the judgment is, that lie shall' be ousted; but if he once had title and loses it; the judgment is, that the liberty shall bo seized. (Yelverton's Rep. 192.) The judgment in the case of the City of London, was a judgment of seizure into the hands of the King, and the corporation was not thereby dissolved, for such judgment neither'dissolves nor extinguishes the body politic. (4 Modern Rep. 58.)
Mr. Crrant, in his able treatise on the law of corporations, after an elaborate analysis of the authorites on this subject, states as one of the principles to he deduced therefrom, that for the purpose of punishment, short of annihilation, the proper proceeding where a corporation either abuses its undoubted liberties, franchises, &c. or usurps new liberties, &c. not granted in its charter, is a.n information, by the Attorney General, in the nature of quo warranto, where the judgment for the Crown will be seizure into the hands of the Crown.
This is to be adopted, where the object is- punishment by ■deprivation of corporate rights for a time, not the total and final deprivation of these rights. (Grant on Law of Cor. 301.) The judgment rendered in this case, is a judgment of .■seizure into the hands of the State. It is in conformity to the law in such eases. “ Where it appears that the King or his ancestors, have once granted a liberty, and the liberty is forfeited by mis-user or non-user, the judgment shall be, that it be seized into the King’s hands.” (2 Kyd on Cor.) “ In cases of abuser or non-user of a franchise, once lawfully granted, the King resumes that which originally flowed from Ms bounty; and this course, it has been said, is most beneficial to the subject, who, though by forfeiture, mispleading or ■default, he may lose his liberty, may have recourse to the *358King’s mercy for restitution.” 9lb.) Where it appears that a liberty is usurped by wrong, exercised on no title, by the King’s grant or otherwise, judgment of ouster, only, should be entered. [Ib.) The proceeding in this case, was not the proper proceeding to annul the charter. It was a proceeding on which a judgment of seizure alone could be entered. The judgment rendered, was the usual judgment of ouster, including a judgment of seizure. (2 Kyd on Corp. 407 ; 8 Cowen’s Rep. 721; Grant on Cor. 298, note q.) The judgment in the case, as rendered, does not destroy the corporation. It is in conformity, also, to the legislative intent, that it should not have that effect.
It will be necessary to say but little on the next ground, as to the nature of the judgment pronounced, having had occasion to say so much on that subject.
It is insisted that the judgment rendered, dissolves the corporation. I have shown that an information in nature of a writ of quo warranto, is not the proper proceeding against a corporation to dissolve the charter, and that the judgment therein is a judgment of ouster or seizure.
If the member's of a corporation have abused their liberties, as granted in their charter, and it is desired to annul the corporation, the proper proceeding for that purpose is by scire facias. (Grant on Cor. 301.) The judgment in such case is, that the charter granted to the corporators, that they should have the franchises, privileges, corporate rights, &c. in the charter granted, be revoked, vacated, annulled, and be held vacate, invalid, and taken for wholly null, &c. &c. In such a case, the lands of the corporation, on its dissolution, revert to the donor; debts due to and from it are extinguished, and its personal estate vests in the State or the people. I know of no exception to this except in the case when a prior grantor brings a sei. fa. in the name of the State in respect of something which, having first been granted to him, ■is .subsequently granted, in whole or in part, to another.” .(Grant on Cor. 45.) In this, last case, the judgment should *359proceed further, and add a clause of seizure into the hands of the State that it may be preserved for the prior grantee.
It is argued, however, in this case, that the judgment dissolves the corporation, and that inasmuch as the Court did not render the judgment, with the exception expressed in the Act of 1842, or rather because the exception expressed in the Act is not incorporated in the judgment, the debts of the bank arc extinguished by the judgment — and it is stated to have been the opinion of the Judge who rendered the judgment, that the exception in the Act was unconstitutional: and that therefore, it was purposely omitted in the judgment.
These things do not appear in the record. They are altogether traditional. We must act upon the judgment as it is, and determine its legal effect as it stands in connection with the whole proceeding and the law. It seems to me that if the presiding Judge had considered the Act as prescribing the form of the judgment, he would have conformed to it as far at it was in his opinion constitutional. The Act of 1840 declares that the proceedings should be instituted, to the end that the charter of the bank may be declared as forfeited and annulled. The Act of 1842 declares that the Court “ shall pronounce the judgment of the dissolution of the said corpo^ ration for all purposes whatsoever.” Then follows the exceptions. The judgment pronounced does not declare the charter forfeited and' annulled, nor does it adjudge the corporation dissolved for all purposes whatever.
It adjudges, 1st. That the liberties, privileges and franchises, to-wit: that of being a body politic and corporate, by the name and style of the 3?lanters’ and Mechanics’ Bank of Columbus, heretofore used, enjoyed and exercised by the defendant, be seized into the hands of the State.
2d. That the said defendant (treated as an existing, undissolved body) do not, in any manner hereafter, .intermeddle, use, have, enjoy or exorcise any of the liberties, privileges or franchises of a body politic or corporate.
3d. That the defendant be absolutely forejudged and ex-*360eluded from holding, using or exercising any of the privileges, franchises or liberties of a body corporate or politic.
* I will not pause to inquire whether this judgment affects, the grantees of the franchises, &c. It is their grant and contract that were moved against. If it did, it amounts to no-more than a judgment of seizure of the liberties, franchises,. &c. into the hands of the State, and that the bank be prohibited from using any of the franchises, &c. conferred on the-grantees in the charter, and from intermeddling therewith. But granting that by its terms it affects the rights of the-grantees, to what extent does it affect them?
The judgment is on an information in the nature of a quo warranto. Mr. Chant, in his treatise already referred to, says that the proceeding by sei. fa. appears to be the only adverse legal proceeding by which the corporation can be finally annulled, for the effect of a judgment of seizure into the hands of the Crown, of the liberties, franchises, &c, followed by actual seizure, accordingly does not, of itself, operate to annihilate the corporation, which may, at any time-, be restored and revived by the Crown. (295, 297, note o, 301.) What becomes of the assets, debts and liabilities of the corporation upon the seizure ? In England, the Crown,, upon seizure of the franchise, appoints a cusios, who discharges all the functions, duties, &c. of the corporation, until the restitution of the liberties, or revival of the corporation. (Grant on Cor. 302.)
But laying aside all the learning on the subject of corporations, their dissolution, &c. to be derived from the authorities, and our Statutes settle the whole matter. If the Common Law had established a rule-that, on the civil death of a corporation, its estate, real and personal, and its assets,, should be vested in a custos or receiver, to bo appointed by the Crown or the Court, who should sell the estate, collect the assets and pay the liabilities of the corporation, the debts, of course, would survive the dissolution. Our Statutes are surely as- potent as the Common Law; and if there is any *361thing in language, they save the debts of this bank, fenn'ex— tinction.
• It is scarcely necessary to consider whether the judgment can operate as a forfeiture, without an execution of it. I think it cannot. “After judgment, the regular course is, to issue a writ of seizure to the Sheriff, which, after reciting the proceedings in the quo warranto, commands him to seize the-liberties into the King’s hands.” (2 Kyd on Cor. 409.) But this writ, says the author, in point of fact, has not always issued. That the writ has not always issued, by no-means establishes the law to be, that the forfeiture is complete without it.
If the defendant is in Court when the judgment is rendered against him, to restore the patent into Chancery, no process is necessary, unless he refuses to bring in the patent. It is in such cases, I apprehend, that no execution is issued.
If the patent, which is avoided by the judgment, belongs to a corporation, a distringas is the proper process to compel them to bring it in to be cancelled. (Hindm. on Patents, 425; Grant on Cor. 44, note S.)
But how is a judgment to be executed here, where the charter is a public law, all our Statutes being, by express enactment, public Statutes ? It cannot be brought into Court to be cancelled. In England, it is said that patents or charters granted by the Crown, by direction of Parliament, cannot be set aside or repealed by the judgment of a Court. A charter granted by Parliament, cannot be repealed or changed but by Act of Parliament. [Grant on Cor. 10.) All charters in this State are by Statute, and they are by Statutes irrepealable, at least in the first instance. They are irrepealable because,, after acceptance, they become contracts, and the State can pass no law which impairs their obligation. Hence, to adopt the rule above stated, charters, in this State, could never be interfered with by any kind of proceeding. It is not necessary to adjudicate any thing in regard to that matter in this case. I will, nevertheless, say, that a rule might be adopted. *362here accomplish the object of repeal without interfering' with the principles of the Constitution. The only impediment to Legislative repeal, is the constitutional ■ provision to which I have adverted. The Judiciary has no power, by any kind of proceeding, to repeal a Statute, but it has power to'rescind a contract on legal principles.
The ground on which charters are forfeited, is that a corporation cannot be allowed to take a grant and repudiate the-conditions on which it is made; and therefore, a breach of' the conditions, is punished by withdrawing the grant.
A judgment of forfeiture annuls the contract and removes all constitutional difficulties from the subject, and the Legislature may then repeal the charter without encountering the prohibition of the Federal Constitution.
The conclusion to which I have come is, that the Court' below was right in refusing to charge the Jury, that by the judgment of forfeiture pronounced in this case, the debts of' the bank were extinguished.
The Court committed no error, in my opinion, in rejecting the evidence of M. Robinson in regard to the value and waste of the assets which had been turned over to the assignee.
The Act of the Legislature, by declaring the assignments-legal and valid, to all intents and purposes.whatsoever, only affirmed the Common Law on that subject. It was legal and’ valid without the Act. The Statute was not' certainly intended to operate beyond its words. It cannot have the effect of fixing the assent of creditors to it, even if that affected the case.
The plaintiff in error is not a surety ; he is a principal. It is true his liability is ultimate ; but by accepting the charter, he assumed that liability as a principal. The bank is owned by the stockholders, and every stockholder assumed the same kind- of liability ; and if they are sureties, they are sureties for themselves.
But if they are sureties, the creditors are not affected by the waste of the assets by the assignee, who became receiver-*363fey the Act of 1848. That Act Ayas passed after the judgment, on the information against the bank. No receiv'd- had' been appointed, and no competent person was found Avho would accept the appointment. The assignee Aras converted into a receiver, and was invested with poAver to sue, and was •subjected to suits at the instance of creditors.
It is not pretended that the creditors Avere parties to the •assignment, Avhen it was made; then what was the effect of the assignment as to the creditors ? Did.it constitute them cestui que trusts, as is contended ? “A man Avho, Avithout any ■communication with his creditors, puts property into the hands of trustees, for the purpose of paying debts, proposes only a benefit to himself by the payment of his debts ; his object is not to benefit his creditor; it would therefore bo a result most remote from the contemplation of the debtor, if it ■should be held that any creditor discovering the transaction, ■should be able to fasten on the property and invest himself with the character of a cestui que trust.” (Bill vs. Cureton, (2 Mylne & Keene, 503.) The ratification of the creditors must be inferred from their oAvn acts, and not from the acts' of the debtor.
The Legislature cannot make contracts for individuals, and no assent of creditors to the assignment can be inferred from the Act of 1843. The object of that Act Avas to convert the assignee into a receiver, and to impose on him the duties and liabilities of that office. It was with him to acquiesce' in or reject the responsibilities thus thrown upon him.
As Ave hear of no complaint from him,, it is to be presumed ■that his conduct has amounted to an acceptance, Avhich he is not now at liberty to AvithdraAV. By that Act he stands in the place of the bank; he is its representative, except as to individual liability for the debts; he is to be sued instead of the bank. Does a suit by a creditor against him, amount to ■a ratification of the assignment ? By the suit the creditors recognize the defendant as the assignee or receiver, but do not adopt the assignment in the sense contended for by defendant.
*364To obtain the benefit of the ultimate liability of the defendant, it is held that the creditors must show a judgment and execution against the bank or the assignee, who is, as receiver, its representative, with a return of “ nulla bona.y> But it is contended, that by using the only possible means to enforce their rights, they forfeit them. Such a position cannot be supported. The assignee is not the agent of the creditors; he is not subject to their contract; he was made assignee without consultation with them; they have relinquished no right which they had against the bank or stockholders, by suing him; the bank might have been sued by them notwithstanding the assignment; they have neither directly nor indirectly, in consideration of the assignment, released the bank from liability; the bank could not plead in bar the assignment; the creditors cannot be forced, by the debtor, now that we have no bankrupt law, to accept an assignment in satisfaction; this can be done by contract alone, and there is no contract, express or implied, demonstrated by the evidence, which discharges the bank or stockholders from liability, in consequence of the assignment. This is not the case of collaterals, pledged to a creditor for the payment of his debt, and he loses them by negligence. The waste of assets by an executor, given him in trust for the payment of debts, does not relieve a security for a debt, though the creditor may have exhausted all legal and equitable remedies against the executor.
The Court, therefore, in my judgment, very properly rejected the evidence of the amount of assets assigned.