Court Opinion

ID: 5550827
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:31:13.103842+00
Date Added: 2024-06-11T08:35:05.711856
License: Public Domain

Nisbet, Judge,

dissenting.

I have not been able to bring my mind to concur with my associates in the judgment rendered in this cause. This is to me a source of sincere regret. I esteem it a personal misfortune. I have labored to see this question in the light in which they view it, but have been unable to attain to the same conviction. With profound respect for them, and sincere distrust of the justness of my own conclusions, I am constrained to dissent. On the 4th Oct., 1840, William Glendenning became the proprietor of twenty-five shares of the capital stock of the Augusta Insurance and Banking Company ; a corporation clothed with insurance and banking powers. He afterwards became endorser upon a note discounted by that Bank for $3,500, which about the 1st April, 1842, fell due and was protested for nonpayment. Subsequent to the dishonor of this note, Isaac S. Tuttle (the plaintiff in error) obtained judgment in Richmond Inferior Court against Glendenning, and in January, 1843, caused the execution issued thereon to be levied on the shares of stock owned by him in said *57company, and standing in his name on their books, agreeably to the provisions of the act of 18.22, entitled “ An Act to make Bank and other stock subject to execution.” On 6th June, 1843, when the Sheriff was proceeding to sell, the company gave public notice of their lien upon the stock, by virtue of one of their By-laws, which is in the words following, to wit: “ JSlo stockholder, who is indebted to the institution, as payer or endorser on any note or notes laying over and dishonored, shall be permitted to transfer his stock. The company shall in that case be considered a creditor in possession, and such possession, and such dishonored note or notes, shall constitute a lien on the stock, which shall be held subject to the payment of such note or notes.” At the sale the plaintiff in execution and the plaintiff in error (Tuttle) became the purchaser of the stock, and having procured the Sheriff’s certificate of that fact, made demand upon the defendant in error, (Walton,) who was the secretary and treasurer of said company, charged with the duty of making transfers of the stock, for a transfer of the stock thus brought, agreeably to the act of 1322. Walton refused to make the transfer, whereupon the plaintiff in error brought his action in the court below, to which action the defendant pleaded the lien of the company upon said stock in pursuance of the By law before recited, and the notice of it given at the Sheriff’s sale. Upon the trial the defendant confessed judgment, subject to the opinion of the court on the plea of lien and notice, the plea being admitted to be true in fact.
The court below sustained the plea, and the error is alleged to he in that decision. The decision of the court was excepted to on a number of grounds. It is not necessary to state here, much less to advert with any particularity to many of those grounds of error. The questions made by the record are—
1st. Whether the By-Law of the company be valid between Glendenning and the company ?
2dly. If valid as between G-lendenning and the company, is it valid as between his creditors and the company.
And 3dly. Whether it is valid as between the purchaser at Sheriff’s sale under the provisions of the act of 1822, with notice given at the time of sale, and the company.
There doubtless are various ways of stating the points at issue. I think the above form truly states them. It is obvious that the contest here is between tbe lien of the Bank by virtue of its By-law, and the title of the purchaser of the stock, claiming under a judgment against the owner, in favor of a creditor without notice of that lien. J know of no instance in our State, in which the sustainability of such a lien has been directly adjudicated, as between the Bank and strangers ; and no case in the course of the very able argument before this court, has been adduced on either side, wherein that question has been made and decided. In every view of this ease, the court is compelled to pass upon the validity of the By-law. The pleadings with marked distinctness present that question. The defendant comes into the court below with the by-law of the company in his hand, and having plead it in bar of the plaintiff’s action, demands the judgment of the court. He tenders the issue in behalf of the company. Through him tbe company sets up this lien, — upon that issue the judgment is awarded, upon which error is assigned, and the same issue *58is still before this court. The defendant in error has had his day in the court below, and now has his day in this court. It is now the demand of the plaintiff in error that we pass upon the sufficiency of the defence to his action in the court below. That defence was rested upon the lien created by the By-law, and the existence of that lien depends upon the legality of the By-law. The court below (a court of law) is the only tribunal before which that issue could be made. Certainly the only tribunal to which the plaintiff in error could resort, for the purpose of testing the By-law of the company, was that to which he did resort, and the action which he brought, the proper process. He could not go into a court of equity, because of the remedy open to him at law. This was fully settled by Lord Mansfield, in 2 Burrows, 780, also by Lord Eldon in 17 Vesey, 327. The latter is the case of Adley, complainant, vs. The Whitstable Company. This was a company incorporated by act of Parliament for the purpose of dredging for oysters. According to a By-law, any freeman of the company who should send oysters to market, from any oyster grounds other than'the oyster grounds of the company, should forfeit ten pounds, for the use. of the company, and if he refused to pay the forfeiture, he should thenceforth be excluded from all share in the profits to be thereafter realized. The complainant becoming obnoxious to the penalty,- and also to the disfranchisement, filed his bill, insisting that the By-law was invalid, and demanding that the company account with him for his share of the profits. The Chancellor held that if the By-law was pronounced by a court of law invalid, he would hold the defendants to account, but not until then. “ Upon these grounds,” said Lord Eldon, “ unless 1 can be satisfied that the party has such a remedy at law as ought to bar his application to a court of equity, I conceive he has a right to apply here for such relief, as under all the circumstances he is entitled to, provided these By-laws are not valid, a question which I am unwilling to prejudice, by expressing any opinion upon it; but if a court of law will inform me that this is not a good By-law, even on the state of this record, I shall find means of giving to the plaintiff the benefit resulting from his title in this concern if not forfeited at law under the By-law. The mode of trying that question appears to me to be an action, unless some more convenient course can be suggested.” The course indicated by Lord Eldon is precisely that taken by the plaintiff in error — an action against that officer of the company, whose duty it is, under the charter, to make transfer of the stock. In the case decided by Lord Eldon, the action, he thought, ought to be against that officer, charged with the payment of the profits of the company. This authority I refer to for the purpose of proving that the validity of the By-law is properly before this court, and that by the pleadings the ultimate question, upon which the rights of these parties turn, is its validity.
Before entering upon the discussion of the prime question thus before us, a few preliminary facts and principles may, with propriety, be stated. The objects contemplated in the charter of the Augusta Insurance and Banking Company are two-fold, to wit: Insurance and banking.— Prin. Dig. 81,6th and 10th section of the charter. The power of general insurance and banking conferred upon the same company, I will not say is extraordinary in our State, but certainly a very broad grant; the exercise of which should be held strictly within the authority of the charter. By the third section of the charter, the stockholders, among other things, *59are clothed with power “ to make, ordain, and establish such By-laws, rules and regulations, as they may deem expedient and necessary to carry into effect the objects of the institution, provided such By-laws, rules and regulations, be not repugnant to the laws or constitution of this State or the United States.” It is under this clause that the right to make the By-law in question, and before recited, is claimed by the defendant in error.
In relation to private corporations, I remark, they are limited strictly to the exercise of those powers which are specifically conferred. The exercise of corporate franchises, being restrictive of individual right, cannot be extended beyond the letter and spirit of the act of incorporation. — 4 Peters, 108. They can take nothing by implication. When they claim a power, they must show the authority, either in the letter or conclusively ascertained spirit of their charter. And when the exercise of a power and the right of a citizen come in conflict, and the power is doubtful, courts of justice will lean towards the citizen ; for sound and sufficient reason — because all corporate powers are in derogation of common right.
This rule is not too stringent; and its equity and policy will be seen at once, by reference to the vast monitary and commercial advantages, which combined capital, associated mind, and concentrated eflort, give to the corporation over the citizen.
The common law is jealous of corporate powers. In England, these bodies are held to their charters with unswerving rigidity and ceaseless vigilance. In this country the rule had better be narrowed than enlarged. Whilst 1 would in no case interfere with the vested rights or conceded franchises of a corporation, no matter how numerous those rights, or how unequal and unjust those franchises, because I believe that all the interests of society would be involved in inextricable embarrassment by such interference ; yet, at the same time, I am satisfied that the safety of those interests demands that courts of justice see to it that the rights and franchises claimed are in fact within the grant from the Legislature. The claim of power here is to make a by-law, which creates a lien in derogation, as 1 believe, of common right. Now, how iar has the Legislature conferred upon the Augusta Insurance and Banking Company such a power ? It is not contended that the power to create such a lien is expressly given in the charter; if it were so given, the question would be at rest. It is contended that the power is conferred in the grant of power to make bylaws. Now, 1 hold that this company has under its chai'ter no more power to make by-laws than it would have had without the provision in the charter in relation to them ; and farther, that this company has under its charier no more powers to make by-laws than any association of individuals, for commercial or other objects, would have at common law. A power to make by-laws is incident to corporations without any grant.— Bacon's Abridgment, Title Corporation, D. Now, what is the restriction imposed at common law upon the powerthus incident to corporations ? They may make such by-laws as are consistent with their charter, and not repugnant to the laws of the land, and none other. — Bacon's Abridgment, Title By-Laws, E. Lord Bacon asserts that it is of the nature and essence of a by-law not to be in contradiction to the laws of the land, “ which,” says he, “ though it may be prater the general law of the realm, it cannot bo contra." By adverting to the restrictions upon the power of *60this company to make by-laws, it will be seen that they are just such as the common law imposes. The power to make by-laws is limited to such, as “ are not repugnant to the laws or constitution of this State or the United States” — in other words, such as are not repugnant to the laws of this realm, the fundamental law, the statute law, and the common law. This corporation stands here, then, just as it -would stand in England under the common law ; and just as it would stand in this country, without any enactment as to the power to make by-laws. The power of legislating in subordination to the laws of the land, to effect a lawful object, as between themselves, is incident to all associations. The only object which the Legislature could have had in saying anything at all about by-laws in this charter, must have been this ; that is, inasmuch as corporations are not creatures of the common law, but exist in this country only by Act of the Legislature, and in England only by Act of Parliament or Letters Patent, to place this corporation, so far as concerns its by-laws, upon the same footing with private associations at common law. It was urged by counsel for defendant in error that the charter extending the power to such by-laws, &c., as the stockholders may deem expedient and necessary to carry into effect the objects of the institution, legalizes all by-laws which they, in their view of what is expedient and necessary, might enact. The answer to this argument is, first, the by-law must not only be expedient, but it must be necessary. And is such security for the debts of this company as the by-law provides necessary to the object either of insurance or banking ? The company might well take risks, and discount paper, without such security. If, indeed, such a by-law is sustained upon the score of its necessity, then, upon the same principle, by-laws which, in their march, tread down all the rights of the citizen, may be sustained. I apprehend that this clause of the charter is to be considered rather as descriptive of the objects about which the company may legislate, than as defining the extent of the legislative power. But, secondly, this clause is certainly subordinate to the proviso of the Act, whose object is to define and limit the power of making by-laws. This proviso is not consistent with that clause, as construed by counsel for defendant in error, but it is consistent with the meaning I put upon it. And in the construction of statutes, it is the duty of the court, if possible, to give effect to all their provisions. I have already stated that the title of the plaintiff in error to the stock of Glendenning is derived under a judgment against him — the stock being brought to sale under the provisions of the Act of 1822, “ Entitled an Act to make bank, and other stock, liable to execution.” It becomes necessary to look more closely to that Act, in order to exhibit the character of the lien of the judgment, and the rights of the purchaser claiming under it, as contrasted with the lien of the by-law. The first section declares that shares or stock owned by any person in any of the banks, or other corporations, in this State, shall be subject to be sold by the sheriff, or his deputy, under execution. The 2d and 3d sections prescribe the manner of the sale. The 4th section requires the sheriff to give to the purchaser a certificate of the sale. The 5th section makes it the duty of the officer of the bank, whose business it is to make tranfers of slock on the books of the bank, or other corporation, upon presentation of the certificate of sale, to make a transfer of the stock sold to the purchaser.
Section 6 makes all transfers of stock, by the owner, after judgment *61obtained void, provided notice of the obtainment of the judgment is served on the proper officer of the bank or other corporation. The last section may be dismissed here, as it is considered as having no relevancy to the cause. Before the passage of this Act, bank stock was not liable to levy aud sale. Creditors of stock owners were compelled to go into Courts of Equity, to subject the stock, in which court all counter-claims to, and liens upon, it were cognizable. Now it is placed upon the same footing with any other personal property. The Act of 182,2 recognizes the owner as holding the entire title, and recognizes the stock, in the hands of the owner, like his slaves, as “ prima facie” disencumbered oí liens. It directs a sale, and by necessary implication, gives to the purchaser the absolute title, which title, like any other, is liable to be contested by any lien valid in law, and paramount to the lien of the judgment. The Act farther gives to the purchaser the means of procuring the evidence of his title, to wit, a transfer on the books of the company. It commands the bank to make the transfer. The sovereignty of the State speaks in her law, and obedience must follow, unless the bank can show, upon the authority of the same sovereignty, cause for her disobedience. The onus of setting aside the purchaser’s title is cast by the law upon the bank. In the cause at this bar, she has taken that onus ; first, by refusing to make the transfer, and secondly, by her plea to the plaintiff’» action. The lien of the judgment attaches the moment it is open, and binds all the property of the defendant from that time.— Prin. Dig. 426, 452. At the time the plaintiff’s judgment was rendered, therefore, it created a lien upon all the property which Glendenning held in this stock. It is impossible to escape from the conclusion, that the legislature designed to put bank stock upon the same footing with other personalty. It is true that the purchaser at sheriiT’s sale gets the title of the defendant, and no more. In this case, what title had the defendant in the stock, at the time judgment was rendered against him ? I have shown the entire title, by the Act of 1822, until that title is weakened by a valid lien, or claim, as in any other case of property bought at Sheriff’s sale. Now, in opposition to the purchaser’s title thus acquired, and as a defence to his action, to make that title available, the defendant sets up what he claims to be an older and valid lien, and asks the decision of the court upon the validity of that lien. What, then, is the issue made ? Is it not manifestly an issue made between the lien of the judgment and the lien set up in defence ? If the By-law and the lien which it creates are valid, then Glendenning held only the legal estate in the stock encumbered with the lien, and Tuttle got that legal estate and no more. But if the By-law be invalid for any cause, and the lien be in consequence void, as against the judgment lien, then Glendenning held the whole property in tbe stock, and the purchaser, Tuttle, acquired that and no less. These considerations demonstrate that this is no contest between Tuttle merely, as a volunteer purchaser with notice, and the bank. If that were the contest, it would even then be a serious question, under the law and facts of this case, whether he did not acquire a perfect title. But it is not. It is a contest between the judgment lien of a creditor, and the lien set up by the bank, predicated on the By-law, and that lien, as I have before said, depends upon the validity of that Bylaw. The notice at the sale can avail the bank nothing. If the lien, of *62which she then for the first time gave notice, be invalid, it cannot be helped by the notice. If the By-law be bad, it is bad ab initio, and is as though it had never been. If it be bad, then the rights of these parties are as though it had never been. This decision, as to its legality, goes back to the first moment of its adoption, and in its return covers and protects all rights which are sought to be affected by it. If the court is called upon to pronounce upon its validity, then I submit whether these conclusions are not irresistible; and that it is so called upon both parties admit — by which I mean to say, that it is not only admitted by counsel in argument, but it is admitted by the pleadings. “Pleading is the formal mode of alleging, on the record, that which would be the support or defence of the party in evidence.” — By Buller J. 3 T. R. 159. I proceed to inquire, having thus defined the position of the question, what kind of lien, if any, is created by this By-law ? Liens are either general or particular. A general lien is the right to retain the property of another for a general balance of accounts. A particular lien is the right to retain -A, only for a charge on account of labor employed, or expenses bestowed, upon the identical property detained. The latter kind of lien is favored in law, but the former taken most strictly against the party setting it up. —2 Kent. 634; 3 Bos. and Pul. 496; 4 Burrows 2221. These liens are created either by common law, or by usage of trade, or by express agreement of the parties. — 4 Burrows, 2221.- A lien upon the shares of a stockholder for debts due by him to a corporation, does not exist at common law, nor by usage of trade. When it does exist, it is usually given by statute. — Ang. and Ames, 296. The lien, therefore, of the Augusta Insurance and Banking Company, if it has any at all, which I may once for all deny, is a general lien, created by an implied contract between that Institution and Glendenning. The evidence of this contract is found in the By-law, and in the fact that Glendenning took the stock upon the terms prescribed in it. The parties have in this contract themselves declared what kind of lien the bank is to have. And first, it is declared that the stockholder, . (Glendenning,) who may be indebted to the institution, as payer or endorser, upon any note or notes, lying over and dishonored, shall not be permitted to transfer his stock; and second, in that case the company shall be considered a creditor in possession, and such possession, and such dishonored note or notes, shall constitute a lien upon the stock, which shall be held subject to the payment of such note or notes.
The lien, then, by the agreement, is that of a creditor in possession for abalance of accounts.^ Again then, our inquiry returns, Have these parties the right at common law, to create such a lien, through the agency of a By-law, thereby excluding creditors, without notice, and purchasers who claim under the lien of their judgments? Is the By-law good or bad, at common law ? If it is bad, then there is no agreement, and no lien.. I now return, I trust, with a clearer view of the whole ground, to my primary threefold division of the question made by the record ; and first, is the By-law valid as between Glendenning and the company, the original parties ? It may be conceded that it is. I can see no good reason, why this company may not prescribe terms to the tenure of their stock, so long as the terms prescribed affect no rights but those of the company and the stockholder. Viewed in the light of *63an agreement between the parties, it is good. As between the original parties, the question of lien does not and cannot arise. As the evidence of an agreement between the parties, the By-law is one thing; as the act of the bank, which is the foundation and proof of a lien, it is a very different thing. It may be good for one purpose, and bad for another. It may restrain the voluntary transfer of the stock, and it may appropriate the dividends, and apply the stock itself, to the extinguishment of the stockholder’s indebtedness, so long as such appropriation and application do not interfere with the rights of third persons. Thus far, it may be considered as not against the laws of the Realm, as not repugnant to the constitution and laws of the State and of the United States. This position is sustained by authority. — Ang. and Ames 297 ; 1 Harrington’s Del. Rep. 27; 2 Peere Williams 207. It is true, too, that such a Bylaw as this has been sustained as between the assignees in bankruptcy of the stockholder, and the corporation. It was so adjudged in the case of 2 Peere Williams. This, however, settles nothing as to the rights of third persons, because the assignees of the bankrupt stockholder occupy his place — are subrogated to his rights, and are subject to his contract with the company. They pay no value — are not creditors or purchasers. The question of lien does not arise. In case of the bankruptcy of the stockholder, the question of lien might be made, perhaps, as against both the company and the' assignees, by one or more of the creditors. Secondly, Is the by-law valid as between the company and the creditors of Glendenning? In my judgment it is not, and according to the views already given of the character of this issue and circumstances of this cause, it is equally invalid as against a purchaser, who claims, under a creditor’s judgment open against Glendenning- — that is to say, the lien set up by the bank is not good against the lien of that judgment. I come now to consider, it will be perceived, the By-law as the basis and proof of lien. And before proceeding farther, I remark, that the authorities read by the learned counsel for the defendant in error, do not make this By-law good as between the bank and third persons. In no case read by him, was the contest between the corporation and the creditors of the stockholder. The case read from Peere Williams, which was relied upon with greatest confidence, as I have before stated, was a case between the assignees of a bankrupt stockholder and the corporation. That case was decided, moreover, upon the express ground that the legal interest in all the stock was in the company, who were trustees for all the members. Angelí and Ames, commenting upon this case, state this to be the ground of the decision. The Chancellor in delivering the opinion of the court says, “ This is a good By-law, for the legal interest in all the stock is in the company, &c.” The By-law in the case in Peere Williams, was substantially the same with that in this case. Now, so far from the legal interest in the stock of the Augusta Insurance and Banking Company being in the company, that interest is in the stockholder, and the company are in the character of trustees of the fund paid for it, to be used by them as such for his benefit. The stock stands in his name on the books of the company. This case cannot therefore negative the position which I last assumed.
To make this by-law, and the lien created by it good, notice of the law to the world, and in this case notice to Tuttle, at the time he gave *64credit to Glendenning, was indispensable. Without such notice it is a fraud upon creditors, and void. It is not pretended that there was notice, either actual or constructive. If there had been notice, I do not hesitate to say, that much of the difficulty of this question would be removed. There was no notice. The lien is secret, and this is the radical vice of the whole transaction. For the purpose of encouraging trade., commerce, and the arts, particular liens, such as the liens of artisans, factors, bailiffs, consignees, &c., are favorably regarded by the law, and though secret, are protected. Not so with general liens created by contract. The law does in fact abhor a general secret lien; and to be sustained, it must be founded in the clearest and strongest equity. Modern decisions lean against them. The vendor’s lien for the purchase money of real estate, founded in that clear principle of equity, that the vendor is entitled to a just equivalent for his property, is not much favored in the late cases, because it is a secret lien. It has been determined by the Supreme Court of the United States, that the vendor’s lien cannot be retained against creditors holding under a bona fide mortgage, or conveyance from the vendee, nor against a subsequent purchaser without notice. — 7 Wheat. Rep. 46; 3 Gill & Johns. 425; 5 Yerger, 205 ; 4 Kent, 154.
Chancellor Kent, commenting upon this decision, uses this strong language — “ As the registry of deeds is the policy and practice in this country, I think the decision in Wheaton is correct, and that this latent equitable lien ought not to prevail over bona fide purchasers from the vendee, and for valuable consideration, and that they are not bound to take any notice of this dormant lien, resting, for its validity, on the state of the accounts between the vendor and his vendee.” — 4 Kent, 154. n. The opinion is strongly intimated, in this quotation, that the purchaser’s title would be good against the vender’s lien, even with notice. With what force does not this reasoning apply to the case before this court ? Is the lien claimed by the defendant in error within the policy of the rule which recognizes particular liens at Common Law, or the equity of that which allows the vendor’s lien ? I hope to be able to show that it is not. I say this is a secret lien. How stand the facts ? This corporation declare, by a bylaw, that they are creditors in possession of Glendenning’s stock, and that possession, with a future indebtedness, if perchance he may become indebted, shall constitute a lien in their favor. The law is recorded on the books of the company, which books are not open to the inspection of the world, but are carefully hid away in its vaults. There is no publication of it, nor is there any notice of Glendenning’s indebtedness. That too is, until long after Tuttle has given him credit, a profound secret. Having legislated themselves into a right adverse to all the world, it is not until Tuttle has become the creditor of Glendenning, and reduced his debt to a judgment, and brought the stock to sale, that they make a revelation of that right. They occupy a position wholly anomalous. They are, in a land of laws, the legislators and administrators of justice. Their by-law and their possession is their lien; and at the same time a judgment to which the general administration must yield obedience. Not only is this true, but whilst it is true, they do give notice, semi-annually, that Glendenning is, in fact, the owner of the very stock upon which they claim a lien. Not the holder of the legal estate encumbered with their equity *65but tlicj unqualified owner. — Hotchkiss, 360. That this notice is a requirement of law does not relieve them. Being required to report the names of their stockholders, and the amount of stock owned by each, should, and does constitute a reason why, in good faith to the public, they should give notice also of the encumbrance upon it. Nor is it any answer to say that such publication would be impolitic as to the interest of the bank. As a bank, the law recognizes, in their behalf, no favors nor exemptions but such as are found in their charter. It is a strong legal presumption that it was upon the faith of the ownership of this stock, thus made known, that Tuttle gave credit to Glendenning. The by-law is therefore a fraud in law upon creditors and purchasers, and void. I do not mean to say that notice is indispensable to all liens, but that in the circumstances of this case, notice is indispensable, and the want of it a fraud upon strangers to the corporation. If it be in law fraudulent, it is repugnant to common right and common law, and of necessity void ; and in no stage of these proceedings entitled to the sustaining consideration of courts of justice.
But this by-law, in its terms, creates the lien of a creditor in possession, to secure a contingent indebtedness ; by which is meant, I suppose, a general balance, which at any time may be found due by the stockholder to the company. Creditors in possession at common law have a lien, under certain circumstances. The facts of this case do not give the company the position of creditors in possession. The lien of creditors in possession arises in cases where property is placed in possession of an individual, or company, upon which labor or expense is to be bestowed by agreement made between the parties, or implied in law. The depository has a lien upon it for his labor and expense. Also, in other cases, when a contract is made or implied, that the property is to be retained to secure a present or continuously recurring indebtedness. Now in this case, at the time of making the by-law, there is no labor to be bestowed on, or expense to be incurred about, the stock. The lien is not claimed on account of either. Nor is there any present indebtedness, or running account between the parties. It is admitted, that at the lime the by-law is made, and at the time Glendenning became a stockholder he owed the company nothing, nor did he become its debtor until about eighteen months afterwards. So that the declaration in the by-law, that the company shall be a creditor in possession, does not in fact make them so. They cannot be, by their own act, remitted to the rights of a creditor in possession. On the contrary, the facts in the case show the bylaw to be repugnant to those principles of the common law which recognize the lien of creditors in possession, and is on that account void. — . See Montague on Liens, Titles — Factor, Common Carrier, Banker, Bailee, Attorneys, Ship-builders, &c. Nor can this be looked upon as a pledge of the stock, which creates a lien upon it. Pledges may create a lien to secure precedent or contemporary debts, or existing debts and future advances. But I believe no case can be found of a lien created by pledge without any existing debt, to secure payment of a future debt, which may or may not exist. — See 2 Kent, 576-7, 583. The same doctrine holds, as to mortgages, only with greater strictness. There can bo no mortgage without a present indebtedness, or liability on the part of the mortgagee for the mortgagor. And although a mortgage may be *66good for debts to be contracted as well as for debts due, yet notice of such intent between the parties, has been held necessary. — 2 Johns. C. R. 309; 2 Viner’s R. 52 ; 4 Conn. R. 158. According to the Napoleon code a conventional mortgage, (that is, a mortgage created by the act of the parties,) is not valid except so far as the sum for which it is granted is certain and determined by the act. — Code Napoleon, 581. No one can fail to have remarked how careful the Legislature of Georgia has always been to require notice of liens created by statute. The policy seems to have been never to create a secret lien, always to maintain the rights of the people, equal under the law. Particularly is it true, that our Legislature has labored to keep the rights of creditors equal. This is apparent in our stringent registry laws.. Deeds, mortgages, masons’ and carpenters’liens are required to be registered. — Hotchkiss, 420, 623-4-5. All statutory liens are made public in the publication of the law which creates them. The policy of the Legislature is in accordance with the spirit of the age and the genius of our institutions. There is no element of monopoly or favoritism in our fundamental law. Is there anything in corporations to commend them to special favor ? Does any consideration of public convenience require that they should be favored ? I think not. And were it necessary, this could be demonstrated. Infinitely stronger is the reasoning in favor of conferring special favors upon individuals. The course which enlightened policy suggests, is that which our legislature has taken, — a stern determination to make the laws of the State equal. Can it, therefore, be presumed that the Legislature meant to confer upon this corporation the power of creating for itself a lien which she has nowhere given to the citizen. The idea seems to me to be unreasonable. The power has been exerted in this By-law. It is void in my judgment, because it is repugnant to the whole drift and policy of our legislation.
If this lien is sustained, then the law invites to collusion between the company and stockholder, and patronizes immorality. I need not linger to point out how easily this collusion may be effected, how easy it would be for a dishonest debtor, by the aid of such a By-law, with the co-operation of the company, to cheat his creditors. He is not only an individual, but he is also a corporator — he is, if such a thing can be, part of both parties. Interested, as he is, in the corporation, the arrangement inures as well to his benefit as to the benefit of other stockholders. It increases the strength and resources of the company of which he is a member. It has been decided that the By-law of a corporation, whose charter makes the stockholders individually liable for its debts, permitting the stockholder to forfeit his stock to the company, is void, because a fraud upon his creditors. In the case now referred to,the creditors were creditors of the company, and, at the same time, in the event of its insolvency, creditors of the stockholder. The principles involved are like those involved in the case at bar. The contest was between the creditor of the stockholder, (for it was admitted that the company were insolvent,) and the company, as to the validity of a By-law which forfeited to the use of the company his stock. In this case the court declared the By-law void and inoperative, upon the ground that it was against the fundamental principles of law and equity, and legally fraudulent. — 19 Johns. Rep. 477, 478.
By the judiciary act of 1799, all the property of a defendant against *67whom verdict has been rendered, is bound from the signing of the judgment thereon. — Hotchkiss, 597. By the act of 1822, bank stock is made property liable to levy and sale, and upon which a judgment lien attaches. . By the same act, the purchaser of bank stock, under that judgment, is entitled to a transfer of the stock upon the books of the Company. The law, as I have before stated, commands the transfer. In this cause, the demand of the transfer was duly made, and the transfer duly refused on account of the by-law of the bank. Here we have the law of 1822 requiring the transfer, and the by-law of the bank prohibiting it. Is the by-law consistent with the act of 1822, or rather, is it not repugnant to it ? Both cannot prevail — the two do not harmonize. If they are not in conflict, why this case now before this court ? If they are in conflict, which shall yield ? Unquestionably the by-law must yield, by the very terms of limitation upon the law-making power, contained in the charter of the company. If, at this point in the proceedings, such direct antagonism existed, does not the antagonism still exist ? The plaintiff, then, was arrested in the process of asserting his rights, by the interposition of the By-law — so is he now by the defendant’s plea, of the lien of the Bank founded upon the By-law. Then he could not command the Judgment of a court, to settle this conflict of laws, now he can, and that fact constitutes all the difference. This conflict is the more apparent in this, that the act of 1822 is anterior to the charter of the Bank. The charter was passed in the face of the act of ’22, and we must presume, with the provisions of that act in the eye of the Legislature. And this fact makes it also easier for me to end the conflict, by sustaining the statute against the by-law. There is therefore a special repugnance between the bylaw and the act of ’22, and for that reason the former is void.
It has been already stated that no case has been found, directly adjudicating the validity of such a by-law as this, as between the corporation and creditors of the stockholder, or as between the corporation and a purchaser claiming under the judgment of such a creditor. In the absence of direct authority, a doubt expressed by learned jurists as to the validity of such a by-law, ought to be received as influential in settling the question. Such a doubt is stated to exist, by Angell and Ames. — Angell and Ames, 297.
The Washington Bank was incorporated by the Legislature of Massachusetts. This corporation made a by-law pledging the stock of every member for any and all sums of money which said member might at any time owe the bank — the same, in substance, with the by-law of the Augusta Insurance and Banking Company. A stockholder having assigned his shares brought suit against the bank for the use of the assignees for dividends due upon the stock. In delivering the opinion of the court, Chief Justice Parker holds this language: “We need not, in order to decide this case, go into the consideration of the validity of this by-law against any creditor of a stockholder, though it may be worth inquiry to the corporation whether such a by-law can be of any avail, except between them and the debtor. We suspect it is a first attempt by a general declaration of this kind to give themselves a preference over other creditors, without taking the usual means of pledge or transfer of the particular stock they intend to hold.” This, to my mind, amounts to a solemn affirmation of what is put in the form of a query. Can it be doubted what *68would be the decision of this judge upon such a by-law in a case made before him ? There seems to be in the peculiar manner in which he expresses himself a conviction of the invalidity of the by-law ; also an anxiety to depart from the necessities of the case before him, so to adjudicate it. — 6 Pick. 329. This, then, is the opinion of one of the most distinguished lawyers of New England, confirmatory of the opinion I am forced to give, and that is, that this by-law is void as against the title of the stock in the plaintiff in error — that being void, there is no lien created by it, and that the decision of the court below ought to be reversed.