Planters' Bank of Mississippi v. Sharp/Dissent Daniel

Mr. Justice DANIEL.

Differing from the majority of the court in the decision just pronounced, I might, nevertheless, have been disposed to acquiesce in that decision, had it related to questions merely of property or of individual interests; but embracing as it does a construction of the Constitution, and annulling at the same time a legislative act of a sovereign State, I cannot feel warranted in yielding by silence a seeming approbation of conclusions which my judgment entirely repels. My deliberate opinion, then, is, that the statute of Mississippi of February 21st, 1840, by its seventeenth section, comes not in conflict with the tenth section of the first article of the Constitution; that it in no wise impairs the obligation of any contract between the State and the Mississippi Railroad Company, formed by grant of the charter of that company, nor as existing with the plaintiffs in error as claiming under them. An elaborate review of the arguments on which the pretensions of the plaintiffs in error are urged is not here deemed necessary, nor will I enter much in detail upon the reasons by which those arguments appear to be met and overthrown, but will content myself with succinctly stating the decisive conclusions of my own mind upon the only question properly presented by this record, and the legal grounds on which those conclusions are bottomed. The rights of the plaintiffs in error, whatever they may be, it must be borne in mind, are derived from the charter of the Mississippi Railroad Company, or from that of the Planters' Bank of Mississippi, as supposed to possess rights and powers more comprehensive than those vested in the former company; but from whichsoever of those companies the plaintiffs in error may choose to deduce their rights, these must be restricted to the rights and authority vested in the source from which they are drawn. Both the Mississippi Railroad Company and the Planters' Bank of Mississippi are corporations created by statute, deriving their existence and every power and attribute they ever possessed from the laws which gave them existence, and from these only. The doctrine has been long and repeatedly affirmed by this court, that, in interpreting the powers and rights of corporations, an essential distinction must be taken between corporations existing by the common law (often, nay, necessarily, traceable to a remote and obscure antiquity), and those which are created by statute, whose constitutions and powers are defined and ascertained by accessible and visible proofs. Into the composition or practices of the former, tradition, implication, or usage may enter, and thus give room for assumptions of power; with respect to the latter, no such rule, or rather misrule, has obtained or been permitted, especially by the settled decisions of this day. The adjudications of this court, as has been already stated, are too explicit to admit of doubt on this subject. Thus, in the case of Head and Amory v. The Providence Insurance Co., 2 Cranch, 127, Chief Justice Marshall says,-'Without ascribing to this body (the Insurance Company), which in its corporate capacity is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it; to derive all its powers from that act, and to be capable of exerting its faculties only in the manner which that act authorizes. To this source of its being, then, we must recur, to ascertain its powers, and to determine whether it can complete a contract by such communications as are in this record.'

In the case of Dartmouth College v. Woodward, 4 Wheat. 636, it is said by the court, that 'a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being a mere creature of the law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence.' In the case of The Bank v. Dandridge, 12 Wheat. 64, this court said, 'Whatever may be the implied powers of aggregate corporations at the common law, and the modes by which those powers are to be carried into operation, corporations created by statute must depend, both for their powers and the mode of exercising them, upon the true construction of the statute itself.' In the case of The Bank of Augusta v. Earle, 13 Peters, 587, the several authorities just mentioned are cited in the opinion of the court; all of them approved, and none of them, it is presumed, will be questioned as not laying down the law with perfect accuracy.

Such being the well-settled rule of this court with respect to statutory corporations, let us inquire into its operation on the case before us. Neither by the charter granted to the Mississippi Railroad Company, or to the Planters' Bank of Mississippi, nor to any other banking corporation within the State, was the power ever directly given to assign bonds, bills, or promissory notes. Is this power necessarily implied in any of the express grants contained in the charters now under consideration? It is admitted on all sides that the clause in this charter of the Planters' Bank which authorizes the bank to discount bills of exchange and notes, and to make loans, contains no such direct grant; but it is said that the bank is authorized to possess and receive lands, rents, tenements, hereditaments, goods, chattels, and effects, to a certain amount, and to grant, demise, alien, or dispose of the same for the good of the bank; and that this authority confers thd power of assigning notes discounted by the corporation. Could the doctrine of implied powers, in contravention of the express decisions of this court just cited, be extended in its utmost latitude to these statutory corporations, still it would seem difficult, even by the greatest violence of construction, to torture the language of this charter into an expression of the meaning here ascribed to it. The right to acquire and to dispose of effects cannot, by the natural import of language, nor by any received intendment, be made to signify the power to discount bills and notes; much less can it be interpreted to mean the power to transfer bills and notes discounted, or securities of any description, and beyond this even, the power (in opposition to the principles of the common law in reference to choses in action) of investing the assignee with the right of maintaining an action at law in his own name. The extravagance of the construction contended for on behalf of the plaintiffs may be seen by bringing it to another test. Let it be supposed that the charters of these companies contained not one word about rights and powers of banking, as then permitted to other corporations in the State of Mississippi; suppose, too, they had been silent as to any right to discount bills and notes, and had been limited to the simple power of receiving and possessing goods, chattels, and effects, and of disposing of such effects for the good of the bank; would it be pretended that, under this latter provision, the power of discounting bills or notes, or of discounting at all, was given by the mere import of the word effects,-that the power of receiving and disposing of effects meant the power of discounting bills and notes? This can hardly be pretended. If, then, this term be not synonymous with the words bills and notes when taken in connection with the power of discounting and of making loans, how can it become so by being connected with the right of acquisition and enjoyment, or with the jus disponendi? The power to sell or assign discounted notes cannot be deduced from the clause in the charter which authorizes the exercise of the usual banking powers granted to the banks of Mississippi, first, because in no charter granted by the State is it shown that such a right is expressly conferred; secondly, it is manifest that a traffic in the sale of its own paper, or in notes or bills discounted, is conformable neither with the regular functions of a bank, nor reconcilable with the purposes of its institution. Banks are usually created for the purpose of making loans, and this in a medium, in theory at least, equal to money; not for the purpose of borrowing, or of raising means to eke out their daily existence by selling off their securities or their own paper. Their establishment rests upon the idea of their possessing funds of their own as the foundation of their credit and of their circulation. The practice of becoming brokers for the sale of their own paper or the paper of their customers, to put themselves in funds, is not, therefore, one of their regular functions, and can flow only from an abuse of these functions, and is a perversion of the legitimate ends of their creation. So, too, it is entirely inadmissible to place this practice of brokerage by the bank upon the mere absence of an inhibition in the charter; such a mode of reasoning cuts up entirely the admission, that the banks have no power except such as is expressly granted or necessarily implied. The fallacy of the idea, that the right to dispose of effects conferred by the charter of the Planters' Bank implied the right of an habitual and unrestricted sale or brokerage of discounted notes, is exposed by adverting to another provision of the charter, by which the amount of effects of every kind which the bank was permitted to acquire and dispose of was positively limited to a specified amount. The power of the bank being thus restricted, that power could by no sound reasoning be made coincident or coextensive with regular and permanent operations on the part of this corporation; for if its banking powers were deducible from such a limited privilege, or were dependent upon it, of course, when this permitted limit should be attained, the operations of the bank would be at an end. It is clear, therefore, that these corporations, restricted as are all statutory corporations under the decisions of this court, to the express grants contained in their charters, and to implications necessary to and inseparable from those grants, never were by the provisions of their charters invested with the power to assign bills or notes, and much less by such assignment to invest their assignee with the right of suing at law; that whatever power of assignment these corporations at any time may have possessed, and whatever the effect implied in such assignment, both were conferred upon them in common with all other persons, natural or artificial, within the State, by a general public law, subject at all times to modification or repeal by the authority which enacted it. Vid. section 12 of the statute, Howard and Hutchinson's Laws of Mississippi, p. 373.

The actual repeal of such a statute cannot correctly be regarded as the violation of any vested right, or the impairing of the obligation of a contract, for no one can claim to have a perfect and vested right, through all future time, in the mere capacity to do an act, from the absence of a law forbidding that act. A pretension like this would forestall and prevent legislation upon every subject. A wholly different state of things would have existed had the assignment to the plaintiffs been made anterior to the repeal of the statute, for then the rights of these parties would have been vested and complete; but the assignment was in this instance subsequent, by more than a year, to the passage of the repealing statute, was a new and separate contract, and entered into with necessary knowledge of its provisions, and made apparently in defiance thereof. This view of the question is clearly and forcibly presented by the Supreme Court of Louisiana, in the case of Hyde and another v. The Planters' Bank of Mississippi, 8 Robinson, 416, a case arising upon the laws and charters now under consideration, and in all its features essentially, nay, mutato nomine, literally, the same with the present. It has been said, that, in the case from 8 Robinson, the note was made after the enactment of the repealing statute. I think that this statement is not warranted by the statement of facts in that case. Certainly the reasoning of the court rests on no such hypothesis, for it covers the whole of the language and policy of the statute of Mississippi, and vindicates them to the utmost extent. In this case, the note was assigned after the enactment of the repealing law, and with full knowledge thereof, and the assignment was an independent and posterior contract which the law had forbidden. The question, then, as to the validity of the statute of Mississippi seems to resolve itself into this inquiry,-whether a sovereign State of this Union possesses the right within her own territory to regulate the formation of contracts, to define the rights and interests such contracts shall give to the parties thereto, and to declare the modes and extent in and to which these may be enforced by her own tribunals. To such an inquiry I can give none but an affirmative answer; and any other, I feel assured, is not evoked either by the language or spirit of the Federal Constitution, and would be highly unjust and inconvenient with respect to the States.

With regard to the plaintiffs in error, no injustice nor hardship of any kind is perceived in enforcing against them the provisions of the statute of 1840. In the first place, they have, with full knowledge of the law, placed themselves directly in the attitude of resistance thereto; for they have entered into an agreement explicitly inhibited upon grounds of public policy, and this long after such inhibition was proclaimed to every person within the State. In the next place, there surely can be no merit in a combination, the effects and manifest purposes of which were to deny to the holders of the notes of these banking corporations the power of making payment to them in their own currency, and to enable the latter to seize or to appropriate to themselves or their favorites the substance of those very note-holders to whom such right of payment was denied. A proceeding thus subversive of justice has not been heretofore sanctioned by this court, and in one instance has been, to a certain extent,-indeed, as I think, to the whole length of the present case,-directly condemned. The case of the United States v. Robertson, 5 Peters, 641, was a case in which a judgment had been recovered by the United States against the Bank of Somerset for an amount of money which had been deposited by a collector in that bank. By an act of Congress of the year 1818, it was provided, that, in any suit thereafter instituted by the United States against any corporate body for the recovery of money upon any bill, note, or other security, it should be lawful to summon as garnishees the debtors of such corporation, who were required to state on oath the amount in which they stood indebted at the time of serving such summons, for which amount judgment should be entered in favor of the United States, in the same manner as if it had been due and owing to the United States. On the 9th of February, 1819, a year after the act of Congress giving the remedy by attachment to the United States, the legislature of Maryland passed an act declaring that, in payment of any debt due to or judgment obtained by a bank within that State, the notes of such bank should be received. Attachments were laid in behalf of the United States, after their judgment against the Bank of Somerset, on debts in the hands of various debtors to the bank, and on some of these attachments judgments had been obtained. It was contended in behalf of these garnishees, that they had a right to discharge their debts in the notes of the Bank of Somerset, as well in those cases in which judgment had been obtained on attachment by the United States as in those wherein there were no judgments. Upon this question Chief Justice Marshall, in delivering the opinion of the court (p. 659), remarks, first, upon the act of Congress of 1818, 'That it operates a transfer from the bank to the United States of those debts which might be due from the persons who should be summoned as garnishees. They become, by the service of the summons, debtors of the United States, and cease to be debtors of the bank. But they owed to the United States precisely what they owed to the bank, and no more'; 2. 'That the act of the legislature of Maryland of 1819, so far as respects debts on which judgments have not been obtained, embodies the general and just principles respecting effects, which are of common application. Every debtor may pay his creditor with the notes of that creditor. They are an equitable and legal tender. So far as these notes were in possession of the debtor at the time he was summoned as garnishee, they form a counter claim, which diminishes the debt due to the bank to the extent of that counter claim. But the residue becomes a debt to the United States, for which judgment is to be rendered. May this judgment be discharged by the paper of the bank? On this subject the court are divided. Three of the judges are of opinion, that, by the nature of the contract, and by the operation of the act of Maryland upon it, an original right existed to discharge the debt in the notes of the bank, which original right remains in full force against the United States, who come in as assignees in law, and not in fact, and who must therefore stand in the place of the bank. Three of the judges are of opinion, that the right to pay the debt in the notes of the bank does not enter into the contract.' May not this decision, I inquire, be considered as substantially covering the whole ground of the case before us? For, after stating that the garnishees became by the service of the summons the debtors of the United States, and ceased to be the debtors of the bank, it goes on to declare, that they owed to the United States what they owed the bank, and nothing more; that, by the just and general principles of set-off, every debtor may pay his creditor with the notes of that creditor, which as to him are an equitable and legal tender. And by the unanimous declaration of the court, not until after the claim against the garnishee was carried into a judgment, and after the allowance of all rights of tender and set-off in the notes of the bank, could payment be coerced from him in any other medium than the notes of the bank. On half the court deemed the garnishee, even after judgment, entitled to the same privileges against the creditor of the bank which he possessed against the bank itself. This right, as between note-holders and the assignees of a failing or insolvent bank, is fully sustained by the Court of Appeals of Maryland in the case of The Union Bank of Tennessee v. Ellicot, Morris, & Gill, 6 Gill & Johns. 364, and in that of The Bank of Maryland v. Ruff, 7 ib. 448, in which last case the authority of this court is relied on. But, at all events, the principles of these decisions are broad enough to vindicate the legislation of Mississippi, and the objects of that legislation, against the imputation of oppression or hardship as respects these plaintiffs, and all who may occupy a similar position, if legislation can need vindication or apology, the purposes of which are to prevent, if possible, the paper of these corporations, spread over the community by them, from utterly perishing on the hands of the note-holder, and to disappoint dishonest combinations to set the public laws at defiance, and, further, to oppress and ruin the note-holder by taking his property, and leaving him the worthless and false and simulated representatives of an equivalent. I am of the opinion, that the judgment of the Supreme Court of Mississippi should in both these cases be affirmed.

This cause came on to be heard on the transcript of the record from the High Court of Errors and Appeals of the State of Mississippi, and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this court, that the judgment of the said High Court of Errors and Appeals in this cause be and the same is hereby reversed, with costs, and that this cause be and the same is hereby remanded to the said court, to be proceeded with in conformity to the opinion of this court, and as to law and justice shall appertain.