string of decisions, in every one of which Sergeant Williams himself admits that no recovery could be had against the defendant who has been discharged by the nolle prosequi. It is true he attributes this bar to the nature of the action; but this is, at least, acknowledging that the material question in the trespass cases never could arise in the present case. In the only case, however, even in trespass, in which the question in this case came distinctly before the court, I mean the case of Green v. Charnock, Croke, Eliz., 762, in which there was an interlocutory judgment against S., and judgment pronounced against C., and a nolle prosequi as to S., it was adjudged that the nolle prosequi as to S. was a release to him, and therefore to C.; and the judgment against C. was reversed in error brought, and yet there they did not join in the pleading. If, in the present case, the defendants had all pleaded, whether jointly or severally, and verdict had been for the one defendant, on any plea to the merits, it is clear that, notwithstanding a verdict had passed for the plaintiff against the remaining four, he could not have had judgment. 1 Saund., 217. And the distinction between the actions of debt and trespass on this point has been, until now, considered as known and established. 1 Plow., 66, 6; 8 Rep., 120, 133; 2 Lilly Ab., 210, 107. Upon the whole, I am very clear that this judgment ought to be reversed, and judgment below entered for defendants. Judgment affirmed, with costs. FLECKNER v. BANK OF THE UNITED STATES. (8 Wheaton, 338-364. 1823.) ERROR to U. S. District Court, District of Louisiana. STATEMENT OF FACTS.- The Bank of the United States brought an action in the district court for Louisiana district, against William Fleckner (the plaintiff in error), upon a promissory note of Fleckner, dated the 26th of March, 1818, for the sum of $10,000, payable to one John Nelder, or order, on the 1st of March, 1820, for value received; and the bank, in their declaration by petition, made title to the same note through several mesne indorsements, the last of which was that of the president, etc., of the Planters' Bank of New Orleans, through their cashier, as agent. The answer of Fleckner sets up several grounds of defense: 1. That the Bank of the United States purchased the note in question from the Planters' Bank, which was a trading within the prohibitions of its charter. 2. That the transfer was usurious, it having been made in consideration of a loan or discount to the Planters' Bank, upon which more than at the rate of six per cent. per annum was taken by the Bank of the United States. 3. That the cashier of the Planters' Bank had no authority to make the transfer. 4. That the making of the promissory note was not a mercantile transaction, or governed by mercantile usages or laws, because it was given as a part consideration for the purchase by Fleckner of a plantation and slaves from Nelder, and that the notary before whom the sale was executed and recorded, wrote on the note "ne varietur," by which every holder of the note might know it was not a mercantile transaction, and could obtain knowledge of the circumstances under which it was given. And the answer proceeds to state that Nelder had no title to a part of the plantation and slaves, and that the note ought not to be paid until the title was made good; and it then prays that the matters thus alleged and put in issue may be inquired of by a jury. The issue was joined, and on trial the jury found a verdict for the Bank of the United States: and the cause now comes before us upon a writ of error, and a bill of exceptions taken at the trial. The various grounds assumed by the answer, which are substantially the same as taken by the exceptions, will be considered by the court in the order in which they have been mentioned. § 20. There is no violation of charter by Bank of United States in discounting a promissory note. And, first, as to the alleged violation of the charter by the Bank of the United States in purchasing the note in question. The act of congress of the 10th of April, 1816, c. 44, incorporating the bank, in the ninth rule of the fundamental articles, declares (s. 11, art. 9; 3 Stats. at Large, 272) that "the said corporation shall not, directly or indirectly, deal or trade in any thing except bills of exchange, gold or silver bullion, or in the sale of goods really and truly pledged for money lent, and not redeemed in due time, or goods which shall be the proceeds of its lands. It shall not be at liberty to purchase any public debt whatsoever, nor shall it take more than at the rate of six per centum per annum for or upon its loans or discounts." It certainly cannot be a just interpretation of this clause that it prohibits the bank from purchasing any thing but the enumerated articles, for that would defeat the powers given in other parts of the act. The seventh section declares that the bank shall have capacity to purchase, receive, etc., lands, etc., goods, chattels and effects, of whatsoever kind, nature and quality, to an amount not exceeding fifty-five millions of dollars, and the same to sell, grant, demise, alien and dispose of. And where the act means to prohibit purchases of any particular thing, it uses the very term, as in the prohibition of purchasing any public debt in this very clause. And certainly there is no pretense to say that, if discounting promissory notes be a purchase in point of law, it could have been the legislative intention to include such an act in the prohibition. It is notorious that banking operations are always carried on in our country by discounting notes. The late Bank of the United States conducted, and all the state banks now conduct, their business in this way. The principal profits of banks, and, indeed, the only thing which makes them more valuable than private stock, arises from this source. The legislature cannot be presumed ignorant of these facts; and it would be absurd to suppose that it meant to create a bank without any powers to carry on the usual business of a bank. The act contemplates throughout an authority to make loans and discounts. It provides expressly for the establishment of offices of discount and deposit; and the very clause now under consideration recognizes the power of the bank to make loans and discounts, and restricts it from taking more than six per cent. on such loans or discounts. But in what manner is the bank to loan? What is it to discount? Has it not a right to take an evidence of the debt which arises from the loan? If it is to discount, must there not be some chose in action or written evidence of a debt, payable at a future time, which is to be the subject of the discount? Nothing can be clearer than that, by the language of the commercial world and the settled practice of banks, a discount by a bank means, ex vi termini, a deduction or drawback made upon its advances or loans of money upon negotiable paper or other evidences of debt, payable at a future day, which are transferred to the bank. We must suppose that the legislature used the language in this its appropriate sense; and if we depart from this settled construction, there is none other which can be adopted which would not defeat the great objects for which the charter was granted, and make it, as to the stockholders, a mere mockery. If, therefore, the discounting of a promissory note, according to the usage of banks, be a purchase within the meaning of the ninth rule above stated (upon which serious doubts may well be entertained), it is a purchase by way of discount, and permitted, by necessary inference, from the last clause in that rule. The true interpretation, however, of that rule is, not that it prohibits purchases generally, but that it prohibits buying and selling for the purposes of gain. It aims to interdict the bank from doing the ordinary business of a trader or merchant in buying or selling goods, etc., for profit, and uses the words “deal” and “trade" in contradistinction to purchases made for the accommodation or use of the bank, or resulting from its ordinary banking operations. And that this is the true sense of the rule is strongly evinced by the twelfth section of the act, which enforces a penalty for the violation of this very rule. It enacts that if the bank, "or any person or persons for or to the use of the same, shall deal or trade in buying or selling goods, wares, merchandise or commodities whatsoever, contrary to the provisions of this act, all and every person, etc., shall forfeit, etc., treble the value of the goods, etc., in which such dealing and trading shall have been." The words dealing and trading are used as equivalent in meaning, and they are connected with "goods, wares, merchandises an I commodities," which words, in mercantile language, are always used with reference to corporeal substances, and never to mere choses in action. And as there is no reason to suppose that the penalty was not intended to be coextensive with the prohibitions of the ninth rule, the exception of bills of exchange in that rule was either inserted ex majori cautela or designed to authorize the purchase and sale of bills of exchange at a price above their par valu. At all events, doubtful phraseology of this sort cannot be admitted to overrule a clear legislative intention of authorizing discounts; and if so, as there are no words restricting the discounts to any particlar kind of paper, the right must equally apply to all kinds. The evidence in the case shows that the note in question was discounted for the Planters' Bank by the Bank of the United States, and after de lucting, for the time the note was to run, a sum equal to the rate of six per cent. per annum, the residue was carried to the credit of the Planters' Bank, which it seems was then indebted to the Bank of the United States in a large sum of money. It is immaterial to the decision of the point now under consideration, whether the discount was for this purpose or not, for whether the proceeds were to be paid over, or carried to the general credit of the party, or applied to the payment of a pre-existing debt, the transaction was still in substance a discount, and, therefore, not within the prohibitions of the ninth rule of the charter. The district judge, therefore, who sat at the trial, was perfectly correct in refusing to charge the jury, as the counsel for Fleckner requested, “that the receiving the transfer of the said promissory note, and the payment of the amount in account, as stated in the evidence, was a dealing in notes, and such dealing was contrary to the provisions of the act incorporating the said bank." And he was equally correct in charging the jury "that the acceptance of an indorsed note in payment of a debt due is not a trading in things prohibited by the act." And this was the whole of his charge on this point brought up by the exceptions. It may be added, upon this point, that even if the bank had violated the rule above stated, by this particular transaction, it is not easy to perceive how that objection could be available in favor of Fleckner. The act has not pronounced that such a violation makes the transaction or contract ipso facto void; but has punished it by a specific penalty of treble the value. It would therefore remain to be shown how, if the bank had a general right to discount notes, a contract not made void by the act itself could, on this account, be avoided by a party to the original contract, who was not a party to the subsequent transfer. § 21. Discounting from face of a note the interest for the time the note has to run is not usury. The next point arising on the record is, whether the discount taken in this case was usurious. It is not pretended that interest was deducted for a greater length of time than the note had to run, or for more than at the rate of six per cent. per annum on the sum due by the note. The sole objection is the deduction of the interest from the amount of the note at the time it was discounted; and this, it is said, gives the bank at the rate of more than six per cent. upon the sum actually carried to the credit of the Planters' Bank. If a transaction of this sort is to be deemed usurious, the same principle must apply with equal force to bank discounts generally, for the practice is believed to be universal; and, probably few, if any, charters contain an express provision authorizing, in terms, the deduction of the interest in advance upon making loans or discounts. It has always been supposed that an authority to discount, or make discounts, did, from the very force of the terms, necessarily include an authority to take the interest in advance. And this is not only the settled opinion among professional and commercial men, but stands approved by the soundest principles of legal construction. Indeed, we do not know in what other sense the word discount is to be interpreted. Even in England, where no statute authorizes bankers to make discounts, it has been solemnly adjudged that the taking of interest in advance by bankers, upon loans in the ordinary course of business, is not usurious. § 22. The taking of usurious interest is a violation of the charter of the bank, but the debtor cannot set it up. If, indeed, the law were otherwise, it would not follow that the transfer to the bank of the present note would be void, so that the maker of the note could set it up in his defense. The statutes of usury of the states, as well as of England, contain an express provision that usurious contracts shall be utterly void; and without such an enactment, the contract would be valid, at least in respect to persons who were strangers to the usury. The taking of interest by the bank beyond the sum authorized by the charter would, doubtless, be a violation of its charter, for which a remedy might be applied by the government; but as the act of congress does not declare that it shall avoid the contract, it is not perceived how the original defendant could avail himself of this ground to defeat a recovery. The opinion of the district judge that the discount taken in this case was not usurious, and would not defeat the right of recovery of the plaintiffs, was, therefore, unexceptionable in point of law. The next point is, whether the indorsement of the note, by the cashier of the Planters' Bank, was sufficient to transfer the property to the original plaintiffs. The evidence on this point was, that the board of directors of the Planters' Bank, on the 21st of October, 1818, passed a resolution, "that the president and cashier be authorized to adopt the most effectual measures to liquidate, the soonest possible, the balance due to the office of discount and deposit in this city [New Orleans], as well as all others presently due, and which may in the future become due to any banks of the city." The indorsement was made to the Bank of the United States on the 5th of September, 1819; and before the commencement of this suit, namely, on the 27th of June, 1820, the board of directors of the Planters' Bank passed a resolution, to which the corporate seal is annexed, declaring that the two notes of the defendant (of which the present note was one) "were indorsed by the late cashier of the Planters' Bank, by authority of the president and directors, and delivered to the office of discount and deposit of the Bank of the United States, and the amount passed to the credit of the Planters' Bank, and that the said board of directors do hereby ratify and confirm the said act of their said cashier as the act of the president, directors and company of the Planters' Bank." The act incorporating the Planters' Bank has been examined by the court; and as to the appointment of the cashier, and the authority of the board of directors, it does not differ materially from acts incorporating other banks. 23. Acts done by the cashier of a bank in the ordinary course of his business are prima facie evidence of authority. It authorizes the president and directors to appoint a cashier and other officers of the bank, and gives the president and directors, or a majority of them, "full power and authority to make all such rules and regulations for the government of the affairs and conducting the business of the said bank as shall not be contrary to this act of incorporation." Act of 15th April, 1811; 1 Martin's Dig., 568 et seq. It contains no regulations as to the duties of the cashier, nor any express authority for the corporation to make by-laws. The whole business of the bank is confided entirely to the directors, and of course with them it would rest to fix the duties of the cashier or other officers. Whether they have in fact made any regulations on this subject does not appear; but the acts of the cashier, done in the ordinary course of the business actually confided to such an officer, may well be deemed prima facie evidence that they fell within the scope of his duty. § 24. Acts of a corporation binding although no corporate seal was used. The first objection urged against this evidence is, that the corporation could not authorize any act to be done by an agent by a mere vote of the directors, but only by an appointment under its corporate seal. And the ancient doctrine of the common law, that a corporation can only act through the instrumentality of its common seal, has been relied upon for this purpose. Whatever may be the original correctness of this doctrine, as applied to corporations existing by the common law, in respect even to which it has been certainly broken in upon in modern times, it has no application to corporations created by statute, whose charters contemplate the business of the corporation to be transacted exclusively by a special body or board of directors. And the acts of such body or board, evidenced by a written vote, are as completely binding upon the corporation, and as complete authority to their agents, as the most solemn acts done under the corporate seal. In respect to banks, from the very nature of their operations in discounting notes, in receiving deposits, in paying checks, and other ordinary and daily contracts, it would be impracticable to affix the corporate seal as a confirmation of each individual act. And if a general authority for such purposes, under the corporate seal, would be binding upon the corporation because it is the mode prescribed by the common law, must not the like authority, exercised by agents appointed in the mode prescribed by the charter, and to whom it is exclusively given by the charter, be of as high and solemn a nature to bind the corporation? To suppose otherwise is to suppose that the common law is superior to the legislative authority, and that the legislature cannot dispense with forms, or confer VOL. III-6 81 |