State v. Tombeckbee Bank

2 Stew. 30

Opinion

By JUDGE CRENSHAW.

This was a proceeding on a quo warranto, calling on the Tombeckbee Bank to shew cause why its charter should not bo adjudged to be forfeited; on the grounds: 1st, Because the Bank has failed to pay specie on demand for its notes; 2d. Because the bank has, on loans, and discounts, taken more than six per cent per annum; And 3d. because the Bank has neglected tp elect annually thirteen directors. The second and third grounds have been abandoned. The first, is alone relied on; and is now urged as sufficient to reverse the judgment which was given proforma in favor of the Bank.

In the creation of..every corporation, it is implied in law, that a misuser, or nonuser, shall effect a forfeiture of the charter. It is therefore important to inquire, whether a failure to pay specie is such a misuser, or nonuser, as will work a forfeiture of the charter. The act of incorporation has not so declared it, it is not so expressed -by the letter of the act, nor can it be fairly inferred by implication.

The Supreme Court of New York

a has decided, that the suspension of specie payments is no cause of the forfeiture of a bank charter, unless a provision to that effect he inserted in the charter.

The refusal to pay specie was a contingency contemplated by the act of incorporation; and was provided for by authorizing suits as well against the stockholders as against the corporation. The Legislature therefore, at the time of its creation, did not consider this as a cause of forfeiture. The act of incorporation was in the nature of a ■contract between the State and the corporation, and it was incompetent to the Legislature, by any subsequent act, to annex new conditions, not expressed in thebharter.

In the case of Logwood against the Huntsville Bank, decided in this Court, at a former term,a it was declared that a hank charter is in its nature and effect a contract, and that its terms cannot be varied or altered by cither of the contracting parties, without the consent of the other. In that case, the Court says, “that any attempt to alter or abridge the provisions of the charter, without the consent of the individuals composing the corporation, would not be valid. And so long as it confines itself to the provisions of the grant, it is independent of legislative control.”

The act therefore, of December, 1821, nas no application to the case before us. That act provides, that if any incorporated bank within this State, shall not at the expiration of six months after the passage of the act, make regular specie payments, it shall produce a forfeiture of the charter, &c. This act cannot affect the bank charter, because the act was passed subsequently to granting the charter, without the consent of the members of the corporation; and annexed a cause of forfeiture which was unknown to the charter.

It might also with some plausibility be contended, that the section of the act relied on has long since expired by its own limitation; that the act intended to give the banks of the State, six months from its passage, in which to resume specie payments, and if at the expiration of six months they failed to pay specie, the charter would become forfeited. But it is not necessary to resort to a construction of this act in order to attain a correct conclusion in the case under consideration.

The Court are unanimous in the opinion, that a failure to pay specie, does not, by the terms of the act of incorporation, amount to a forfeiture- of the charter; nor is it implied by the general law, as applicable to corporations: That the act Í 821, relied on, having annexed a cause of forfeiture unknown to the act of incorporation, and without the consent of its members, cannot bind the corporation.

Judgment affirmed.

Tho Ceie? Justice and Judge Satfous not sitting.

6 Cowen. 215. 219.

Minor’s Ala. Rep. p. 23.