Ordway v. Central National Bank

47 Md. 217, 1877 Md. LEXIS 98

• Court: Court of Appeals of Maryland
• Decided: June 19, 1877
• Status: Published

Opinions

Alvey, J.,

delivered the opinion of the Court.

If it be true, as suggested by the appellee, that the corporation was actually dissolved at the expiration of six months from the 15th of July, 1874, then, of course, this action must abate; for it is perfectly well settled that a suit can no more be prosecuted and judgment recovered against a dead corporation than against a dead man. Mumma vs. The Potomac Co., 8 Pet., 281 ; Nat. Bk. vs. Colby, 21 Wall., 615.

But has the corporation been dissolved ? We think not. It has suspended active operations as a banking association ; has resolved to go into a state of liquidation ; has deposited the money with the Treasurer of the United States, with which to redeem its outstanding circulation ; and has received, by re-assignment, its bonds deposited to secure the payment of its notes, and it thenceforth stands discharged from all liability on account of such circulating notes ; but the statute has not declared that these acts, of their own mere operation, shall effect an absolute and total dissolution of the corporation. And it would be strange if such were the case.. There are many other obligations to be provided for besides the circulating notes ; and there may be many rights to be protected, which would require the continued existence of the corporation. It is not reasonable to suppose that Congress intended that, upon simply resolving to go into liquidation, and providing for the redemption of its circulating notes, the banking association should be dissolved. If by such acts, it were dissolved, all actions by or against it would at once abate ; and parties might be left utterly without remedy for the enforcement of the plainest right, or recompense for the most grievous wrong.

As we read the sections 5221, 5222, 5223 and 5224, of the Revised Statutes, U. S., no such result was ever contemplated. On the contrary, those sections would seem plainly to contemplate the continued existence of the corporation after the re-assignment of the bonds, and the certificate of discharge from the liability for the circulating notes of the banking association ; and such would seem to be the construction of the Supreme Court of the United States, in the cases of Kennedy vs. Gibson, 8 Wall., 498, 506, and Bank of Bethel vs. Pahquioque Bank, 14 Wall., 383, 398. There has been no actual and formal surrenders of franchises, and no judicial declaration of dissolution ; and acts of a more decisive character than those relied on in the case, have been held to be insufficient to operate a final dissolution. State vs. Bank of Md., 6 Gill & John., 205 ; Brinkerhoff vs. Brown, 7 John. Ch., 217 ; Boston Glass Manf. Co. vs. Langdon, 24 Pick., 49 ; Ang. & Am. on Corp., sec. 773.

It would seem, therefore, that the learned Judge below was entirely correct in holding that there had been no abatement of the action by dissolution of the corporation.

The next question to be considered is that raised by the demurrer to the appellant’s amended declaration ; and that is, whether this action can be sustained in the Courts of this State, the action being founded on a statute of the United States ?

The action is one of debt, brought by the appellant against the appellee, under the 30th section of the National Banking Act, approved June the 3rd, 1864, to recover double the amount of interest unlawfully taken by the appellee. In the section referred to, it is provided that the knowingly taking, receiving, reserving or charging a rate of interest greater than the rate fixed by the previous part of the section, “shall be held and adjudged a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon. And in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in an action of debt, twice the amount of- the interest thus paid from the association taking or receiving the same ; provided that such action is commenced within two years from the time the usurious transaction occurred.” The recited provision constitutes section 5198 of the Revised Statutes, U. S., page 1012, which went into operation on the 22nd of June, 1874. The causes of action set forth in the declaration arose in the year 1873 ; and the suit was brought as of July 25th, 1874.

The 57th section of the Banking Act, under which the appellee was organized, and which was in force at the time of the transactions out of which- the causes of action arose, provided “ that suits, actions and proceedings, against any association under this Act, may he had in any Circuit, District or Territorial Court of the United States, held within the district in which such association may be established; or in any State, County, or Municipal Court, in the county or city in which said association is located, having jurisdiction in similar cases.” This provision of the Act of 1864 was omitted in the Revised Statutes ; but in that revision, by section 5597, it is provided, that “ The repeal of the several acts embraced in said revision, shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced ip any civil cause before said repeal, but all rights and liabilities under said Acts shall continue, and may be enforced in the same manner, as if said repeal had not been made.” And in the next succeeding section, 5598, it is further provided, that “ All offences committed, and all penalties or forfeitures incurred under any statute embraced in said revision prior to said repeal, may be presented and punished in the same manner and with the same effect, as if. said repeal had not been made.” This latter section, manifestly, has reference to public prosecutions alone.

In this case, the cause of action is a forfeiture, a penalty of a civil nature, for the exacting and taking of usurious interest upon money loaned ; and the remedy given by the statute is by private civil action of debt to the party grieved. The government or the public is not concerned with it. It is, therefore, a private right, pursued hy a private civil action. And it has been decided that the section of the statute upon which the action is founded is remedial as well as penal, and 'is to be liberally construed to effect the object which Congress had in view in enacting it. Farmers’ Nat. Bank vs. Dearing, 91 U. S., 29, 35.

This is not unlike, in principle, the case of debt brought by a landlord against his tenantjfor double value for not quitting in pursuance of notice given, under statute 4 Geo. 2, ch. 28. In such case, because the penalty or forfeiture • prescribed by the Act is made to accrue to the party grieved, and to he recovered by private action of debt, the Courts have taken a distinction between such penalty and a penalty prescribed as criminal punishment, and hold the statute to be remedial. Wilkenson vs. Colley, 5 Barr., 2694 ; Lake vs. Smith, 4 Bos. & Pul., 174. In the last case referred to, being an action of debt on the statute, Heath, J., said: “The double value has been called a penalty, and it is so in some degree, but the law is also a remedial law.” And Rooke, J., observed: “The Act indeed does give a penalty, hut it is to the party grieved ; and this is a distinction which has often been taken between remedial and penal laws.”

The action of debt is an ordinary common law remedy ; and it lies in the Courts of this State, having general common law jurisdiction, as the Court in which this action was instituted, on statutes at the suit of the party grieved, either where it is expressly given to such party, as by the statute under consideration, or where a statute prohibits the doing an act under a penalty or forfeiture to he paid to the party grieved, and there is no specific mode of recovery prescribed. This is the well established doctrine in England; 1 Chitty Pl., 112, and authorities there cited; and it is the law here. There is, therefore, no question hut that the Court below has jurisdiction in similar cases to that provided for by the statute imder which this action was brought.

Rut it is contended, that, notwithstanding the comprehensive and explicit terms employed in section 57 of the Act of 1864, ch. 106, giving the right to sue in the State Courts, inasmuch as the cause of action is a penalty or forfeiture, the remedy can only be sought in the Federal tribunals. It is contended, 1st, that the language of the 57th section should he construed with reference and in subjection to the pre-existing law, and that, by the pre-existing law, the jurisdiction of the State tribunals, in such cases as the present, was excluded by express provision of the statute; 2nd, If such construction be not adopted, then, that the savings in the Revised Statutes do not embrace the right to sue in a State Court in a case like the present; and 3rd, That though the statute may confer the right, Congress has no constitutional power to give the State Courts cognizance of penal actions, and those Courts should refuse to take such cognizance.

The argument in reference to the'first proposition, that is, on the construction of the 57th section of the National Banking Act, is founded upon the 9th section of the Judiciary Act of 1789, 1 St. 76, wherein the jurisdiction of the District Courts of the United States is defined. In that section of the Judiciary Act, it was declared that the District Courts should have, exclusively of the Courts of the several States, cognizance of all crimes and offences that were cognizable under the laws of the United States, committed wdthin their respective districts, etc ; and, among other subjects of jurisdiction, it was declared that such District Courts should “have exclusive original cognizance of all seizures on land, or other waters than as aforesaid made, and of all suits for penalties and forfeitures incurred under the laws of the United States.” This latter provision, in regard to penalties and forfeitures, has been inserted in the Revised Statutes in section 711, in defining the jurisdiction of the United States Courts that is exclusive of the Courts of the several States.

Now, looking at the broad, unqualified language employed in section 57 of the Act of 1864, there would seem to be no doubt but that it was the design of Congress that the State Courts should take cognizance of actions like the present, as well as all other civil actions against banking associations ; and that, if it had been the design to exclude the State Courts in such cases, appropriate terms would have been employed to express the intention, as in other Acts of Congress when conferring jurisdiction. And though the particular provision has been omitted from the Revised Statutes, yet the saving, by section 5597, is ample to continue the jurisdiction in the State Courts, as to all transactions occurring before the Revised Statutes were adopted. It is expressly provided, that all rights and liabilities under said Act shall continue, and may be enforced in the same manner, as if said repeal had not been made.

But if it was conceded that such construction is erroneous, then the question would arise, what is the proper construction of that provision in the Revised Statutes, in reference to the exclusive jurisdiction of the Federal Courts of all suits for penalties and forfeitures, which was taken from the Judiciary Act of 1*789 ? And, in answer to this question, it would seem to require no strained construction to warrant the conclusion that that provision of the statute has no application to this case whatever; that it has reference to, and contemplates only, those penalties and forfeitures of a public nature, which may be sued for by the government, or some person in its behalf. And this construction is strongly enforced by several provisions to be found in the Revised Statutes ; such as that which requires the district attorneys to furnish statements of all suits instituted by them for the recovery of any fines, penalties or forfeitures. Sec. |7|72. There is great reason for confining suits of that character to the Federal jurisdiction, but none, it would seem, for excluding the State jurisdiction in a .case like the present, where the right is private, and is being pursued by a private civil action by the party grieved.

Having shown that there is nothing in the statutes of the United States to exclude the State jurisdiction in a case like the present, the question is, 1st, Whether, in the absence of express terms conferring jurisdiction on the State Courts, those Courts have jurisdiction to enforce a right under a statute of the United States, in a case of the character now under consideration ? and if not, 2nd, Whether Congress can, rightfully, by express terms, confer such jurisdiction ?

The position and argument of the appellee, if sustained, would result in both these questions being resolved in the negative. If, however, either be résolved in the affirmative the judgment appealed.from must be reversed.

The question of the concurrent jurisdiction of the State Courts with those of the United States, has been the subject of a good deal of discussion both by statesmen and the Courts of the country. It was one of the objections urged against the adoption of the Federal Constitution, that it would detract from and materially impair the existing jurisdictions of the State Courts. This objection was answered by Mr. Hamilton, in the 82nd number of the Federalist, in which he maintained that the Congress of the Union, in the course of legislation upon the objects entrusted to their direction, might or might not commit the decision of causes arising upon the regulation of any particular subject to the Federal Courts solely, but that, in every case in which the State Courts are not expressly excluded hy the statutes, they would of course take cognizance of the causes to. which those Acts might give origin. This he inferred from the nature of judiciary power, and from the general genius of the system. And Chancellor Kent, taking the same view of the subject, and after a full review of the course of decisions, State and Federal, down to the time he wrote, concludes that in judicial matters, the concurrent jurisdiction of the State tribunals depends altogether upon the pleasure of Congress, and may be revoked and extinguished whenever they think proper, in every case in which the subject-matter can constitutionally be made cognizable in the Federal Courts; and that, without an express provision to the contrary, the State Courts will retain a concurrent jurisdiction, in all cases, where they had jurisdiction originally over the subject-matter. 1 Kent’s Com., 396, 400.

The reasoning of the two distinguished writers just mentioned has remained without successful refutation; and without re-statement of their arguments, or an attempt to review the decisions upon the subject, it is sufficient to refer to the recent case in the Supreme Court of the United States, which would seem to conclude the very question now under consideration.

The case to which we refer is that of Claflin vs. Houseman, Assignee, 93 U. S., 130. In that case, the action was brought in a State Court by an assignee in bankruptcy, to recover against the defendant an amount of money which the latter had collected on a judgment recovered against the bankrupt within four months before the commencement of the proceeding in bankruptcy. The defence taken was, that inasmuch as the assignee was a creature of an Act of Congress, and derived all his rights and powers from the Bankrupt Act, and the right to recover was exclusively referable to that statute, the action could not be sustained in a State Court, but should have been brought in a Court of the United States. This was the only question considered by the Court ; and the opinion was unanimous that the State Court had complete cognizance of the action.

It was there held, that inasmuch as the Bankrupt Act gave no exclusive jurisdiction to the Courts of the United States, the assignee might well maintain a suit in the State Court to recover the assets of the bankrupt; and further, that the statutes of the United States, made in pursuance of the Constitution, are as much the law of the land in the States as the statutes of the States can be ; and although exclusive jurisdiction for their enforcement may be given to the Federal Courts, yet where it is not given, either expressly or by necessary implication, the State Courts, having competent jurisdiction in other respects, may be resorted to for the enforcement of rights under such statutes.

The whole subject is well reasoned in the opinion, and the decisions reviewed; and the Court very justly observe that when the structure and true relations of the Federal and State governments are considered, there is really no foundation for excluding the State Courts from the exercise of such jurisdiction. In discussing the relation of the two governments, and the operation of the laws of the Union, the Court say:

ci The laws of the United States are laws in the several States, and just as much binding on the citizens and Courts thereof as the State laws are. The United States is not a foreign sovereignty as regards the several States, but is a concurrent, and, within its jurisdiction, paramount sovereignty. Every citizen of a State is a subject of two distinct sovereignties, having concurrent jurisdiction in the State, — concurrent as to place and persons, though distinct as to subject-matter. Legal or equitable rights, acquired under either system of laws, may be enforced in any Court of either sovereignty, competent to hear and determine such kind of rights and not restrained by its constitution in the exercise of such jurisdiction. Thus, a legal or equitable right acquired under State laws, may be prosecuted in the State Courts, and also, if the parties reside in different States, in the Federal Courts. So rights, whether legal or equitable, acquired under the laws of the United States, may be prosecuted in the United States Courts, or in the State Courts, competent to decide rights of the like character and class; subject, however, to this qualification, that where a right arises under a law of the United States, Congress may, if it see fit, give to the Federal Courts exclusive jurisdiction.”

And again, in pursuing the argument, it is said: “ This jurisdiction is sometimes exclusive by express enactment and sometimes by implication. If an Act of Congress gives a penalty to a party aggrieved, without specifying a remedy for its enforcement, there is no reason why it should not be enforced, if not provided otherwise by some Act of Congress, by a proper action in a State Court. The fact that a State Court derives its existence and functions from the State laws is no reason why it should not afford relief; because it is subject also to the laws of the United States, and is just as much bound to recognize these as operative within the State as it is to recognize, the State laws. The two together form one system of jurisprudence, which constitutes the law of the land for the State; and the Courts of the two jurisdictions are not foreign to each other, nor to be treated by each other as such, but as Courts of the same country, having jurisdiction partly different and partly concurrent.”

That case leaves nothing to be said as to either aspect of the question here involved; and therefore, whether the right to maintain this action be placed upon' the express terms of the statute giving cognizance to the State Courts, or simply upon the non-exclusion of State jurisdiction, in either case the action is maintainable. And that the cause of action is a penalty, to be recovered in a civil action of debt by the party grieved, constitutes no objection ta the State Courts taking cognizance of it, and enforcing the right.

The case of the First National Bank of Plymouth vs. Price, 33 Md., 487, has no similitude to the present, except in that case the action was to enforce a liability in the nature of a penalty. There the penalty was given hy a statute of Pennsylvania, and the decision proceeded upon the principle, that, as the law had no extra-territorial operation, the Courts of one State will not enforce penalties imposed by the laws of another. But, as has been clearly shown, no such reason or principle applies as to the laws of the United States, when sought to be enforced in the Courts of the several States. The Constitution and laws of the Union are the supreme law of the land, and are as much a part of the law of each State, and as binding upon its Courts and people, as its own local Constitution and laws.

Prom what has been said it follows that the demurrer, so far as it is grounded upon the want of right or power in the Court to take cognizance of the case, must be overruled.

There are certain other objections raised under the demurrer fo the amended declaration, of a purely technical character; but these objections appear to be without any substantial foundation, and therefore may be dismissed without comment.

(Decided June 19th, 1877.)

For the reasons assigned, the judgment of the Court below must be reversed, and the demurrer overruled, and cause remanded to be proceeded with in regular course.

Judgment reversed, and cause remanded.

Miller, J., dissented.