Court Opinion

ID: 6501966
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:14:44.530314+00
Date Added: 2024-06-11T15:54:38.221576
License: Public Domain

GOLDTHWAITE, J.
The rules of law by which the several charges given, and refused, by the circuit court, are to be tested, can be better considered by ascertaining what acts each of these corporations was authorised to perform, with reference to the matters in evidence.
The proviso of the 2d section of the charter of the Montgomery Rail Road Company declares, “ that it shall not be lawful for the said corporation to use any part of its capital stock or funds for banking purposes, nor to emit, for circulation, any notes or bills, or to make contracts for the payment of money, except under its corporate seal, and then alone for debts contracted by it.” [Acts of 1834, 119.]
From this, it will be seen, that although the Rail Road Company is permitted to make contracts for the payment of money under its corporate seal, for debts contracted by it, yet it is expressly prohibited from emitting any notes, or bills for circulation.
I think the intention to forbid the emission of any paper evidence of debt for circulation as money, by whatever name the emission shonld be called, is perfectly clear, and that it makes no difference whether it is by means of notes, checks, drafts, bills single, bonds, or tokens. The terms notes and bills, are sufficiently comprehensive to include all those, and possibly, also every other sort of promises to pay. The intention being clear to prohibit the issuance of notes and bills, it is not easy to conceive why the emission of bonds, and bills single should not be considered as a mere evasion of the statute, because the same consequences to the community would flow from either act. ;
But as the corporation, in a certain event, is authorised to give out its obligations for the payment of money, as well as prohibited from emitting them as a circulation, it follows that the intention with which the issue is made, must enter into every emission, and that the act is lawful, or unlawful, as the intention may indicate; neither the amount of the obligation, its shape, manner of engraving, nor indeed any other circumstance of a similar kind,, ■“will render the emission a matter of law, to be determined by the * *255court; but the intention must be ascertained by the jury upon a view of the circumstances; and the mere indebtedness of the corporation will not authorise it to emit bills intended for circulation, although they may be given in the first instance to the creditor. The least consideration will shew that if the emission is made to depend on the indebtedness, it would continue to be perpetual, as the old emission is a debt and could be replaced at any time by a new one founded on it. ■
Then, as to the effect or consequences of making an emission for the purpose of circulating as money; we waive all examination of how far the franchise might be affected by such a misuser, because that is not now the question; but as to the parties connected with the unlawful emission, whether the corporation or its creditors, I think it is clear, both upon principle and authority, that neither the act itself, nor any contract with respect to it, is of any force in law. [Cannon v. Bryce, 3 B. & A. 179.] If bills single then were emitted by this corporation, although in payment of debts actually contracted, with the intention that the same should circulate as money; and this intention was concurred in by the creditor, they were void in his hands, and could not by him be enforced against the corporation, for both parties would in such a case, be equally guilty of the violation of the statute. So likewise they would be invalid in the hands of any other persons to whom they should come for the same purpose, and with the same concurrence of intention to violate the law.
There are limits, however, beyond which this rule ought not to be applied, especially too, where, as here, the prohibition of the statute extends only to a particular act. It will be seen that this jproviso, does not in terms inhibit the actual circulation of, or make ¡void such paper as shall be unlawfully emitted; and we think |that public policy, when the whole enactment is considered, does grot require such a construction to be given. Paper of a descrip-ftion precisely similar, may lawfully be issued by the corporation ¡under certain circumstances, if it be free from the intention to make it a circulation. Now public policy does not require that each individual who is disposed to deal for paper, which at least is lawfully negotiable, should be put upon an inquiry into the intention with which it was made, when under this statute, it may be lawfully issued under some circumstances. It is the emission ; by the corporation for circulation, which is prohibited, and the *256sanctity of the law is sufficiently vindicated, by declaring the paper void in the hands of one immediately connected with the illegal act. The legislature too had not thoughtproper to prohibit the circulation of paper like this, when this transaction took place, nor are we authorised to say that it is so entirely valueless as to furnish no foundation for a suit in the hands of a bona fide holder, innocent of any connexion with the illegal act of emission, and perhaps even beyond this it may be considered as valid, if the immediate holder can trace his title as well as a legal consideration paid to a bona fide holder, who himself might have recovered, although the one to whose hands it ultimately comes, may -have assisted or aided in the illegal issue of similar paper.
Another statute is supposed to have a material bearing upon a portion of the facts connected with this case, and must therefore be considered. It is the act of 1830, [Digest, 110, § 52,] which renders it unlawful for any person, or corporation to make any note, bill single, Sec. for a less sum than three dollars, to sub-serve the common purposes of money, and punishes the making with a fine of not less than fifty, nor more than two hundred dollars; this statute also directs the punishment of those who pass off, circulate or aid in the circulation of any such note, bill single, Sec., by a fine not less than five nor more than twenty dollars.
The rule of decision under this statute, is similar to the one we have just considered. Whenever a contract is made with reference to any matter which is in violation of a statute, the contract itself is void; but if the contract itself be innocent, and in carrying it into effect a violation of the law arises, either by ignorance or mistake, the contract remains good, although the offender may be punished for the violation of the law. To illustrate tins rule : if a contract is made for the loan of money, without reference to the kind, and in payment such bills as arc prohibited, are given and received for a part, the contract is not avoided, as it would be if even the smallest sum was contracted to be received in this prohibited kind of money. Indeed, it would be monstrous to hold that the payment of a prohibited bill upon a contract, without reference to such money, would avoid the security given for it. The rule is very fully illustrated in a variety of cases thus, if a druggist sells drugs to a brewer, with the knowledge that' they are to be used to adulterate beer, in violation of a statute,, the contract is void, although it would be innocent in the abs*257ence of the knowledge of the one intended to be made. [Langlee v. Hughes, 1 M. & S. 593.] So, likewise, goods sold with the knowledge of the intention of the purchaser to violate the revenue laws.
Here, the contract was not made with reference to loaning bills of the Rail Road Company of any particular denomination, and it is shown that some of them was for greater sums than threi dollars. There is no pretence that the contract was made witf a view to the violation of this statute, and therefore, although the Bank may be liable for its violation, the contract is not for thai cause, a void one. ,
It is also supposed that the contract by which this bill was purchased, is void as against the policy of the several acts creating Banks in this State ; but this objection may be dismissed, with the single remark, that if the bills single, when held by the Bank, were available to it, and could then have been recovered from the Rail Road Company, they constituted a sufficient consideration for the purchase of the bills of exchange, for such a transaction is nothing but an exchange of one kind of paper for another. The question is not whether the Bank would be permitted to insist on the taking of the bills single, 'when the contract was for a loan' of money, but is, whether it is lawful to exchange one lawful and valuable kind of paper for another, at the request of a party who seeks to be beneiitted by that precise transaction. If the contract is free from difficulty on the other points, we think it is on this.
Having ascertained these principles, there is no difficulty in the conclusion, that the Circuit Court erred in the charge given to the jury, in reference to the first instructions which the plaintiff requested, inasmuch as it then undertook to declare the contract between the Bank and the Montgomery Rail Road Company, void, in point of law, from its inception. We have already shewn that this was a question to be determined by the jury under all the circumstances of the case. The contract of the Bank, in terms, only applies to such notes as the Rail Road Company should lawfully issue; and such it was lawful for the Bank to receive in payment of its debts ; and, if it thought proper, to again put in circulation. But if on the contrary this contract was a mere contrivance to enable the Rail Road Company the better to evade the,'proviso by circulating its own bills as money, although *258they might be paid out in payment of debts before contracted, this concurrence of intention, and aid in the unlawful act, would render this contract void. If, beyond this, it was shown that these bills single were put in circulation in violation of the statute, then it would devolve on the Bank to show that it received them from a bona fide holder, capable of maintaining a suit against Ahe corporation issuing them.
The consideration already given this case will probably be | sufficient for its correct decision, and therefore we omit the exam- ¡ ination of those charges which were refused.
Let the judgment be reversed, and the cause remanded.