Jemison v. Planters' & Merchants' Bank

23 Ala. 168

• Court: Supreme Court of Alabama
• Decided: June 15, 1853
• Status: Published

Opinion

PHELAN, J.

When this case was last here, it was decided, that the notice in the case was demurrable, because it did not show that the suit was instituted in the name of the Bank by the direction and authority of the trustees, and the judgment was reversed for that cause. — 17 Ala. 754.

The court below, previous to the last trial, on motion of defendant in error, permitted an amendment to be made, by which, instead of reading “ the P. & M. Bank will move,” &c., the notice was so changed as to read thus; “ The P. & M. Bank, by its trustees named in the certificate annexed hereto, appointed under the act therein specified, will move,” &c.; the words in italics being inserted.

It is now urged by plaintiff in error, that this was allowing a change to be made in the parties to the suit, which, it is said, cannot be done under a motion to amend. No change can be made in the parties to the suit, by way of amendment of the writ or declaration, it is conceded. The authorities to this point are numerous and clear ; and also, that to drop a cestui que use, or to insert one, is to change the parties under our law.—Teer v. Sandford, 1 Ala. 525; 1 Stewart 162.

But what are the facts, and the law of this case, to the point in question 1 When this suit was instituted, there was a judgment in force against the Planters’ & Merchants’ Bank of Mobile, declaring its corporate character defunct. There was also, a public law declaring that the trustees, or the survivor or survivors of them. who were made so agreeably to the provisions of the law, might “ use the corporate name of the said Bank, in the collection of debts due to the same,” “ and all the .modes and powers given to the said Bank by its original charter, or by any subsequent acts of the legislature, for the collection of its debts, in the same manner as if the charter of the Bank had never been forfeited. — Acts of 1844-5 p. 46 §8.

The corporate name was here authorized to be used, in the collections of the'debts due the Bank, just as it had been done; but howl by whom"? By its trustees. The corporate existence of the Bank was gone. If a notice issued, which on its face pre-supposed the continued existence of the Bank, or rather, if the continued, existence of the Bank, as a corporation, was not,¡by some definite and certaimmark or sign, distinctly negatived, the acknowledged law and fact of the case made such a notice demurrable.

The name was right, and its use fully authorized; but an additional fact was necessary to make such name and its use appear lawful; and that fact was the agency of the trustees in the matter. An averment setting forth this agency, would give life, quoad hoc, to a corporation as party plaintiff, which otherwise was defunct.

The idea that this was introducing a new party, or changing the plaintiff, is not defensible. The facts were always the same. The only difference between the first notice and the last, is, that the last makes an existing fact appear which the first did not. Doubtless it was thought by those who instituted the proceedings, that the certificate which was appended to the original notice, and issued with it to the sheriff, did so connect itself with the notice by mere conjunction, and because it was a part of the proof in, the case, as to make this fact appear. This court could not so decide, consistently with what it considered sound principles. But the trustees are not parties in any sense. They are not the nominal party. The Bank is that, in so many words. They are not beneficiaries: for the beneficiaries of all such suits are the creditors of the defunct corporation. They are only those who are designated by law as having the right to use the corporate name of a defunct corporation for certain purposes ; and which name, if used without making this appear, may be treated in a legal proceeding as having no force or virtue. The amendment, then, we consider allowable, according to the liberal practice authorized and required by our statute on the subject of amendments. — Clay’s Dig. 321 § 50. Or, even if it be conceded, that the certificate annexed to the original notice cannot be looked to “ as any part of the record or proceedings,” we are of opinion, that the amendment would be allowable upon the principle of supplying in a declaration (for a notice is both a writ and a declaration,) an averment consistent with the nature of the action, which had been omitted, and for the want of which the declaration had been held defectivo on demurrer. It is good, upon the principle that you may amplify a general complaint by giving any particulars within its scope.

The objection taken to the manner in which it was made, namely, by a reference to the certificate which was annexed to the notice, wc do not consider good. If the trustees were even to be considered parties to the action, the certificate shows who they are, and how they became trustees, distinctly and plainly. '1 he averment in the notice, connects this certificate, and embodies it in the notice, so to speak, by apt and proper words. The certificate is on the same paper with the notice, and the two come under the eye at a glance. The maxim “ id cerium est, quod cerium reddi potest” applies in full force. But, as has been shown, the trustees are not parties to the suit; it is only necessary to' avoid the effect of a demurrer to the notice, that it should appear that the suit was instituted in the name of the Bank by them, or under their direction; and this, beyond question, can be done in the way adopted by defendant in error, that is, by connecting the certificate with the notice by apt words, to show who were the trustees, and how they came to be such, that put this suit in the name of the Bank in motion.

But passing from this question, it is insisted, that the reversal of the judgment of forfeiture of the charter of the Bank, which took place in June, 1847, (12 Ala. 657,) had the effect, ipso facto, to restore the corporation to its franchises ; and that this necessarily took away from the trustees the power to carry on this suit any further in this form.

The facts of the case go to prove, that, after the decision of tho quo warranto against the Bank, its franchises were seized by the State, and powers conferred on commissioners by the act of 1843, and afterwards on trustees chosen by the stockholders under the act of 1845, to wind up and make an end of the affairs of this corporation. The very trustees who direct this suit, had to be chosen by the stockholders. Again; in 1850, a period subsequent to the reversal of the judgment of forfeiture, an act was passed for “ the final settlement of the affairs of the Planters’ and Merchants’ Bank of Mobileand by this last act, these very trustees who instituted this suit, and who were chosen by the stockholders to do that and all other things necessary to wind up and settle finally the affairs of the Bank, were directed, after due notiee to all persons to present their claims against the Bank by a given day, or be forever barred, to make public sale, “ for cash, of all the remaining property, claims, rights and assets belonging to said Bank fund,” and to make final distribution among all concerned.

The purchase by Bell and others of the Bank’s interest in this claim, was made at that sale. In addition to this, it appears that the stockholders have never taken any step towards resuming their corporate powers and privileges, but have acquiesced in and acted under the law passed 12 February, 1850, for winding up finally tho affairs of the corporation.' — See Acts 49-50 p. 126.

If, under these circumstances, the stockholders should interpose themselves to arrest the progress of this action, they could not do it in this proceeding; and if they resorted to another forum, that forum would be bound to see that no injustice was done to third persons. The action was lawfully begun, at the time it was begun. There was then a judgment of forfeiture against the Bank. Under the act of 1845, the stockholders had chosen trustees — these very trustees — to wind up and set.tle the affairs of the corporation; and in pursuance of that authority they instituted this suit in the name of the Bank. Being then right and lawful, and new rights and interests attaching to it, and growing up under it, the law will not permit those rights and interests to be disturbed or affected at their instance by anything occurring subsequently, which those newly interested could not be expected to foresee or provide against.

If the stockholders themselves could not interpose in this suit the reversal of the judgment of forfeiture, it follows very clearly, that a debtor of the corporation could not do so. A judgment in this action, go as it may, will undoubtedly protect the defendant from any subsequent action, and that is all he can claim.

But- it is contended, that the act of February 12, 1850, (Pamphlet' Acts 126 § 2,) pursuant to which these notes, then in suit, were afterwards sold by the trustees of the Bank, was a repeal, by implication, of the former act, which authorized trustees chosen by the stockholders to use the name of the Bank, and all the modes of proceeding which the Bank, while in existence, could use, to wind up and settle its affairs. Whether a repeal of that, act, (the act of 1845,) in so many words, would have the effect of destroying the right of a lawful assignee from the trustees to use the name of the Bank to sue, it is not needful now to decide ; but it is certainly not clear that it would.— Repeals by implication are never favored ; and if we look at tho nature of the case throughout, we shall find no reason to suppose that the legislature, by the act of 1850, intended to do anything but to promote, as far as it could, the settlement and close of the affairs of this Bank, in a way the most advantageous to creditors and stockholders.

The second section of the act of 1850 simply directed, that all the “ remaining property, claims, rights and assets belonging to said Bank fund,” should be sold for cash, by the trustees, and the proceeds distributed. It is a general principle of law, that a note or other claim in suit may be sold and assigned; and when so sold, the assignee buys with it, if nothing is said, the right to continue the suit in the name of the seller, he being secured, if he requires it, against the payment of costs. The buyer or assignee takes the claim in suit, with every right, and under every liability, which appertained to it in that condition in the hands of his assignor. This is familiar law, and every day’s practice. When, therefore, the legislature said to the trustees, “ Sell all the Bank’s claims by a certain day,” they must have intended the claims in suit as well as others. But wo must further suppose, when no restrictive words are used, that they intended to leave the claims in suit to the general rule governing such sales. This was for the benefit of the stockholders, and it is the common and natural interpretation to be put upon the act. Who would buy a note in suit, if the right to continue the suit did not go with it ?

But, that the Bank is the bona fide owner of the note in suit, must be certified by the trustees, as an indispensable fact to give jurisdiction to a suit by notice and motion; and how can this be truthfully done, it is asked, when the Bank is no longer bona fide owner, but when Bell and others are owners in factl A jurisdictional fact must exist at the time to which the question of jurisdiction, if it be tried, relates; and when is that 1 To the commencement of the suit.

A notice issues in the name of the Bank against the defendant, which describes accurately a certain note on which he is sued. To this notice is appended a certificate of the trustees, saying, “ the debt specified in the notice aforesaid, is really and bona fide the property of said Bank.” If those signatures be genuine, that certificate, under the law, is proof of the jurisdictional fact to the end of the suit; and there is no need for any future certificates, should the note in suit be sold or assigned twenty times. Each purchaser would succeed, among other things, to the benefit of that proof, as incident to the note__ There was proof, also, that the trustees expressly stipulated that the suit might proceed as it stood.

It is insisted that, at the time these notes were transferred, it was not possible to put the legal title to them in the Bank, because it was then a defunct corporation. But the powers of the Bank for maintaining suits, and its corporate name, were expressly continued in existence by the act of 13th February, 1843, and the subsequent acts for the purposes of settlement of the affairs of the Bank by trustees. This is the idea continually kept in view in all the acts. To hold that a transfer of a note or bill could not be made in such manner as would alone give force and effect to these provisions, would be inconsistent with the manifest intention of the act. The right to tako the legal title to the Bank, by its corporate name, is necessarily implied in the power given to the trustees to bring suits by notice and motion in that name. The only question really to be determined respects the right of the trustees to take these notes at all. For, if they possessed this right at all, the right to tako them, and the title to them, in that way and manner which would enable them to use the corporate name of the Bank, and the summary remedy in collecting them by suit, is clear. This was the express design of the act of 13th February, 1843, and of the act of 1845 before quoted.

Now, as to the right of the trustees to acquire these notes. This depends upon whether they were taken from a debtor in failing circumstances, or to secure a u bad or doubtful debt.”— See 14 Ala. 668. The proof shows that these notes were taken by the trustees, through their agent, in settlement and part liquidation of a long standing balance which the Planters5 and Merchants5 Bank held against the Commercial Bank of Columbus, an institution which had suspended specie payments. This is enough to show that the trustees had the right to acquire these notes, since a balance so due from a suspended Bank cannot he considered otherwise than a had or doubtful debt.

This brings us to the question concerning the constitutionality of the statute passed by the Mississippi Legislature, in 1840, (Hutchinson’s Miss. Dig. 324 et seq.,) by which the Banks of that State were forbid “ to transfer, by endorsement or otherwise, any note, hill receivable or other evidence of debtand which declared, that, “ if it shall appear in evidence, upon the trial of any action upon any such note, bill receivable, or other evidence of debt, that the same was transferred, the same shall abate upon the plea of the defendant.”

The facts of the case show, that the notes in suit were discounted by the Commercial Bank of Columbus, Mississippi, in 1842, and held and owned by said Bank until 6th April, 1843, ■when they were transferred by endorsement to the Planters’ and Merchants’ Bank of Mobile, in part payment of a debt due from the former to the latter Bank.

The following extracts from the charter of the Commercial Bank of Mississippi, passed in 1836, will show the powers which were conferred on that corporation in relation to the right of selling, transferring or disposing of her property and effects. The second section of the charter (Miss. Acts of 1836, p. 146) declares, that said Bank “ shall be able and capable in law to have, purchase, hold, &c. to them, their heirs, successors or assigns, lands, tenements, hereditaments, goods, chattels and effects, of what kind, nature, or quality so ever, &c., and the same to grant, alien, sell or dispose of at pleasure,” &c. Section third gives the power to discount notes; and section four, “ to deal in exchanges, foreign and domestic.”

These portions of the charter of the Commercial Bank are not materially variant from the corresponding portions of the charter of the “Planters’ Bank” of that State. That charter gave power to the Bank “to have, possess, &c. lands, tenements, hereditaments, goods, chattels and effects of what kind so ever, nature and quality ; and the samo to grant, demise, alien, or dispose of, for the good of said Bank.” It also had the power “to discount notes payable and negotiable on their face at some Bank or Branch Bank, and bills of exchange.”

The two charters may be treated, and indeed have been treated by the courts of Mississippi, as being equivalent in these particulars.—Columbus Bank (use, &c.) v. Thompson et al., 7 Sm. & M. 443.

This being so, we are relieved from the necessity of considering the question of the constitu tionality of this statute prohibiting transfers, as a new question. It has been decided, apparently with great consideration, and after labored arguments on both sides, by the Supreme Court of the United States on appeal, that the statute violates the provision of the constitution of the United States. (Art. 3, Sec. 10,) which declares that £No State shall pass any law7 impairing the obligation of contracts.’ The charter of the Commercial Bank is holden by that court to be a contract between the corporators and the State; and among the obligations of that contract, the obligation on the part of the State, evinced by the words which have been quoted from the charter, to allow the Bank, if she saw proper, to endorse, assign, or transfer any notes which she had acquired in the course of her business, is held to exist.—Planters’ Bank Miss. v. Sharp et al., 6 Howard U. S. 301.

The Supreme Court of Mississippi, by one decision, seemed inclined to construe the statute of 1840 prohibiting transfers by Banks as only intended to prevent an assignee of a Bank from suing in his own name, and not as intended to render the note actually void after an act of transfer.—Baldwin v. Payne, 3 Sm. & M. 681.

But in a subsequent case, (Planters’ Bank v. Sharp, 4 Sm. & M. 28,) the Supreme Court of Mississippi finally decided, that the act of transfer according to the statute made the note void ; and that no suit could afterwards be maintained upon it, either by the assignee in his own name, or in the name of the Bank,.

The Supreme Court of the United States, 6 Ploward, supra, also hold this to be the true construction of the Mississippi statute of 1840, and, so holding, decido that it violates the obligation of the contract between the State and the Bank, and is therefore itself violative of the constitutional provision bearing on that point, and for that reason void.

We feel no hesitation in following that court on both the questions, that of construction and that respecting the consequences which follow such construction. The Supreme Court of Mississippi has since acquiesced in that construction.—Grand Gulf R. R. & B. Co. v. The State, 11 Sm. & M. 429.

It results from what has been said, that we find no error in the record, and the judgment below is affirmed.

Gibbons, J. did not sit in this case.