Sherman v. Smith

Writ of error to the Supreme Court of New York.

Oliver Lee & Company's Bank, at Buffalo, was organized in January, 1844, under the act of the Legislature to authorize banking, passed 18th April, 1838. Watts Sherman was one of the shareholders. In the articles of association it was agreed that the shareholders should not be liable, individually, for the debts of the bank, and this was in accordance with the act of 1838, under which the association was organized, and which declared that no shareholder should be liable unless the articles of association signed by himself made him so. But this act contained a provision that the Legislature might at any time alter or repeal it. In 1846 a change was made in the constitution of the State which imposed ind vidual liability on the stockholders of banks, and in 1849 the statute was passed under which this proceeding was commenced and carried on to enforce that responsibility.

In 1857 Henry B. Gibson, one of the stockholders, presented his petition, agreeably to the act of 1849, to a judge of the Supreme Court of the State, setting forth that this bank was insolvent, and praying that it might be declared so and a receiver appointed, and such other relief given as might be required. The proceeding thus begun ended in a judgment of the Supreme Court, affirmed by the Court of Appeals, making Watts and the other stockholders liable in their individual capacity for an amount of the debts equal to their stock. James M. Smith, the defendant in error, was appointed receiver.

The question argued here was, whether the constitution of 1846 and the statute of 1849 were or were not in conflict with that provision in the Federal Constitution which forbids the States to make any law impairing the obligation of contracts. The point was raised below, but was decided against the stockholders in every court to which the cause was carried, including the highest.

Mr. Peck, of New York, (with whom was Mr. Porter and Mr. John Van Buren,) for the plaintiff in error, cited: 1 Parsons on Contracts, 399; Miller vs. N. Y. & Erie R. R. Co., (21 Barbour, 513, 519;) Ham vs. McClairs, (1 Bay., 93;) Calder and Wife vs. Bull and Wife, (2 Dall., 398;) Bennett vs. Boggs, (1 Bald., 74;) Schuyler et al. vs. McCrea, (1 Har. & J., 249;) Commonwealth vs. McCloskey et al., (2 Rawle, 374;) Allen vs. McKean, (1 Sumner, 302, 303;) State Bank of Ohio vs. Knoop, (16 How., 385;¢ The L. & C. Co. vs. Town, (1 N. H., 44;) Winter vs. Muscogee R. & Co., (11 Georgia, 438;) Kean vs. Johnson et al., (1 Stockton, 401;) Ex parte Johnson, (31 Eng. L. & Eq.;) 21 Barbour, 519, supra; Livingston vs. Lynch et al., (4 Johnson Chy., 573, 582, 595-598;) 1 Sumner, 314; Laws of 1849, 340, Sec. 3; Hartford R. R. Co. vs. Crosswell, (5 Hill, 383, 386;) Green vs. Biddle, (8 Wheaton, 2, 92;) Dodge vs. Woolsey, (18 Howard, 331, 359;) Piqua Bank vs. Knoop, (16 Howard, 369;) Allen vs. McKean, (1 Sumner, 278, 313, 314;) Livingston vs. Lynch et al., (4 Johnson Chy., 573, 582, 595-598;) R. vs. M. & I. R. R. Co. and P. & I. R. R. Co., (21 Howard, 442;) Mason vs. Finch, (2 Scam., 223;) McFarland vs. State Bank, (1 Pike, 410;) State vs. Williams, (2 Strobh., 474;) Town Ottawa vs. County La Salle, (12 Ill., 339;) 2 Roll. Abr., 409; Taylor vs. Homersham, (4 M. & S., 426;) 2 Parsons on Contracts, p. 13, N. r, and cases there cited; Lyman vs. Clark, (9 Mass., 235;) ''Jackson ex dem. Stevens vs. Stevens, (16 Johnson, 110;) Covington vs. McNickle, (18 B. Monroe, 262;) Jackson vs. Stackhouse, (1 Cowan, 122;) Torrence vs. McDougald'', (18 Georgia, 526;) 7 Bar. and Cross., 643, Bu. and Brandling; Townley vs. Gibson, (2 Tenn., 701;) 1 Coke, 68, Alton Woods; Plowden, 365, Duke of Norfolk's case; 5 Greenleaf's Crim., 19, Sec. 44; 5 Greenleaf's Crim., Tit. Private Acts and King's Grants, pp. 1-53; 4 Greenleaf's Crim., 174, Sec. 26-300, Sec. 8-303, Sec. 15-345, Sec. 62, note 1; Mitchell vs. Doggett, (1 Branch, 356;) Henry vs. Tilson, (17 Verm., 479;) City of St. Louis vs. Russel, (9 Miss., 507;) Fletcher vs. Peck, (6 Cran., 87;) Dash vs. Van Kleek, (7 Johnson, 417;) People vs. Clark, (3 Selden, 385;) Gilmore vs. Shuter, (2 Mod.;) Couch vs. Jeffries, (4 Burr., 2460;) Sayer and Wife vs. Wisner, (8 Wendel, 661;) 1 Harr., 285, supra; 1 Branch, 356, supra; Hooker vs. Hooker, (10 S. & M., 599;) Bruce vs. Schuyler, (4 Gilm., 221;) Morlot vs. Lawrence, (1 Blatch. Ct. Ct., 608;) United States vs. Cases Cloths, (Crabbe, 356;) 4 Pike, 410, supra; Tow Ottawa vs. County La Salle, (12 Ill., 339;) Brown vs. County Comm's, (21 Penn.;) Sackett vs. Andross, (5 Hill, 527,) elaborate opinion of Brown, J.; Quackenbush vs. Danks, (1 Denin, 128;) Dewart vs. Purdy, (29 Penn., 113;) U.S. vs. Stane, (1 Hemp., 469;) Aurora and L. T. Co. vs. Holdhow, (7 Ind., 50;) Brown vs. Fifield, (4 Mich., 322;) People vs. C. Comm's, (3 Scam., 153;) Barnes vs. Mayor Mobile, (19 Ala., 707;) Bruce vs. Schuyler, (4 Gilm., 221;) Brown et al. vs. Lever, Sheriff, &c., (5 Hill, 221.)Mr. Ganson, of New York, contra, cited 21 N. Y. Rep., 9; 22 N. Y. Rep., 9; 1 Rev. St., 600; Pl. R. Co. vs. Thatcher, (1 Kernan, 102;) R. R. Co. vs. Dudley, (4 Kernan, 336;) Northern R. R. Co. vs. Miller, (10 Bach., 260;) White vs. R. R. Co., (14 Bach., 559;) Stanley vs. Stanley, (26 Maine R., 191;) Charles River Bridge vs. Warren Bridge, (11 Pet., 549;) ''Ohio Ins. & Tr. Co. vs. Debolt, (16 How., 416;) Bank of Columbia vs. Attorney General'', (3 Wend., 588.)

Mr. Justice NELSON.