Burkholder v. Beetem's Administrators

65 Pa. 496 | Pa. | 1870

The opinion of the court was delivered, July 7th 1870, by

Sharswood, J.

There have been twenty errors assigned on this record; but as the counsel for the plaintiff concede in their printed argument, all those which are founded upon the charge and the answers of the court to the points presented are resolvable into two questions. The first is as to the character of the relation between the parties, and the second as to the effect of the Act of Assembly of April 15th 1850, sect. 10, art. 5th, Pamph. L. 482, entitled “An Act regulating Banks.”

The action was instituted to recover from the defendant as administrator of William M. Beetem, who in his lifetime was cashier of the Carlisle Deposit Bank, the sum of §8000 alleged to have been paid to him by the plaintiff as the consideration for the purchase of sixty shares of stock of the Glenville Coal Company. The ground of it was that the contract of sale was fraudulent or illegal, and the plaintiff claimed the right to rescind it and recover back the purchase-money.

The evidence was very bald and meagre as to the circumstances of the sale. It tended to show that Beetem was the owner of 800 shares of the stock, which he had transferred to Spencer, Yila & Co. of Boston to hold for him: then a transfer of sixty of the shares by them to the plaintiff, dated January 18th 1865, and the payment by the plaintiff to Beetem of §2499.84 by a cheek dated February 4th 1865, and a note of the plaintiff of the same date, to the order of and endorsed by G. W. Hilton, for §500, which was deposited by Beetem in the Carlisle Deposit Bank as cash and paid April 8th 1865. In addition there were in evidence letters from Beetem to his brokers in Philadelphia, relating to the purchase for him of the 800 shares, from which it might be inferred that at the close of the year 1864 he apprehended loss by the investment or speculation. On the supposition that Burk-holder and Beetem were simply vendor and vendee there certainly was no evidence of any misrepresentation or fraud in the sale. Beetem bought the stock at §40 a share, and his mere expression of an apprehension that he would lose certainly did not even tend to prove that he had used any deceit in the subsequent disposition. It was urged that the fact that the stock stood in the names of Spencer, Yila & Co., and that the transfer was direct from them to the plaintiff, was sufficient primá facie to authorize the inference that Beetem had acted as the agent of Burkholder in making the purchase, and had concealed from him the fact that he was the beneficial owner. Substantially the court in their answer to the plaintiff’s sixth point, submitted this question to the jury. “If Mr. Beetem in place of making a purchase of the stock for Mr. Burkholder, in fact had stock, which he then held, assigned through another to Mr. Burkholder at greatly more than he knew to be its actual value, this would authorize a rescission of the contract by Mr. Burkholder and a recovery of the money paid by him to Beetem.” There was no evidence in the case, as the court properly instructed the jury in their charge, to show any agreement, contract or representation between the parties in reference to the purchase of stock by Beetem for the plaintiff. The first four assignments of error are therefore not sustained.

But the more important question in the cause is as to the effect of the Act of 1850. It provides “ that it shall not be lawful for the cashier of any bank to engage in any other profession, occupation or calling, either directly or indirectly, than that of the duties appertaining to the office of cashier; and if any cashier of the bank shall directly or indirectly engage in the purchase and sale of stocks, or in any other profession, occupation or calling other than that of his duties of cashier, such cashier upon conviction thereof in any court of criminal jurisdiction shall be sentenced to pay a fine not exceeding $500.” The main object of this provision undoubtedly was the security of the bank — to remove from the cashier, who necessarily has possession and control of the money and securities, all temptation to use such funds in his private speculations. Yet it cannot be questioned that, according to well-established principles, it invalidated all his contracts contrary to its mandate. The act is a public general statute of which all are bound to take notice. When an act or contract is prohibited under a penalty, it is unlawful and void, though the statute does not expressly so declare: Mitchell v. Smith, 1 Binn. 110; Seidenbender v. Charles’s Adm., 4 S. & R. 151; Columbia Bank and Bridge Co. v. Haldeman, 7 W. & S. 233. In Hall v. Franklin, 3 Mee. & Welsby 259, to an action of assumpsit by the endorsees against the endorser of a bill of exchange, the defendant pleaded that the bill was made and endorsed after the passing of the statute 17 Geo. 3, c. 99, which restrained spiritual persons from being occupied in any trade or dealing, that the plaintiffs were a banking company, of which certain spiritual persons holding benefices were partners and members, whereby said endorsement and promise in the declaration mentioned were void, it was held on demurrer that the plea was good. And see Young v. Robertson, 23 Legal Int. 365, a case decided in the District Court of Philadelphia on this provision of the Act of 1850. The proviso to the section of the Act of 1850 in question is, that it “ shall not be construed in such manner as to prevent any cashier from managing his own real estate or private property as heretofore, if such private property be not vested in mercantile, mechanical or manufacturing operations.” It may be that a purchase of stock in a coal company for investment merely, or a subsequent sale, would not be within, the prohibition, but when there is evidence, as there was in this case, that the cashier was engaged in speculating in stocks— buying for the mere purpose of making profit by a rise in the market price, especially when he was engaged in more than one transaction of the kind, the case is clearly within both the letter and spirit of the act. It is true that when a contract so prohibited by statute has been executed, both parties being in pari delicto, an action cannot be maintained by either party to rescind the contract: Addison on Contracts 149; Boutelle v. Melendy, 19 N. H. 196. The party who has paid the consideration cannot recover it back. Bat the law implies a promise to refund money had and received under an illegal contract where the plaintiff seeking to recover such money does not stand in pari delicto with the person who has received it, and from whom it is sought to be recovered: Addison on Cont. 67. Upon the evidence then was Burkholder the plaintiff in pari delicto with Beetem? Upon the face of the transaction, so far as it appears that he had any knowledge of it, he did not purchase the stock of Beetem, but of Spencer, Vila & Co. There is no evidence that he knew that the stock belonged to Beetem. There was nothing unlawful in the employment of a cashier as an agent to purchase the stock. The learned judge below recognised this to be the law, and instructed the jury that if Burkholder was not a party knowingly to the illegal transaction of Beetem he would not be affected by it, or precluded from rescinding the contract on the ground of fraud. He then proceeds to submit to them the question of fraud: “ Was there any fraud, deceit, false representation or concealment of the truth with a fraudulent intent, acted or practised by Beetem, to induce Burkholder to purchase this stock ? If there was, then the plaintiff may rescind the contract and recover the money paid. If on the contrary the purchase was fair and honest, not induced by any deceit or misrepresentation on the part of Beetem, the plaintiff cannot recover.” But if the facts were as supposed, why was this limit placed upon the right of rescission — why was Burk-holder at liberty to rescind the contract only on the ground of fraud and not simply on the ground of illegality ? If Burkholder had every reason to believe that he was purchasing of Spencer, Yila & Co., and that he was paying the money to Beetem for them, and there was no evidence to show that he knew that Beetem was violating the law by indirectly selling stocks, he must be regarded as an entirely innocent party. He was not particeps criminis, and there was nothing to preclude him from setting up the illegality of the contract, and recovering back the money paid. We think, therefore, that the learned judge erred in this instruction to the jury, and the 6th, 7th and 8th assignments of error are sustained.

We see no error in the several bills of exceptions on account of the rejection of testimony. The imaginations, thoughts, impressions and presumptions of witnesses who know nothing of the facts are surely inadmissible. When a witness states in a deposition no material facts, but denies his knowledge of any of the matters inquired of, the whole may be rejected as irrelevant, unless some special object is to be attained by showing his want of knowledge. That does not appear in regard to Earley’s deposition ; at least it was not stated that it was offered for that purpose. Transactions by Beetem with other persons, or representations made by him to others as to the value of Grlenville stock were clearly inadmissible; nor was the inventory of his estate, as to the appraised value of this stock in August 1865 at all relevant. This disposes of all the remaining errors except.the 20th.

There were several counts in the declaration, some in form ex contractu, and one in tort. At the opening of the cause the court required the plaintiff to elect on which counts he would proceed. The plaintiff then elected to proceed on the counts in assumpsit, and excepted to the ruling of the court. This is certainly a novel proceeding. I have looked in vain through the books for any precedent or authority to justify it. The mode of taking advantage of a misjoinder of counts is by demurrer in the first instance. The English books say that the declaration will be bad on general demurrer, in arrest of judgment or upon error: 1 Chitty on Pl. 206; 1 Saund. PL & Ev. 418; Brigden v. Parkes, 2 Bos. & Pul. 424. But in Martin v. Stille, 3 Whart. 337, in very much such a misjoinder as here, it was held that it could only be taken advantage of by special demurrer. In some cases in England a misjoinder will be aided by intendment after verdict: 1 Saund. Pl. & Ev. 418. If the defendant chooses to plead in bar, and go to trial on such a declaration, there is no authority in the judge to strike out any count, or to put the plaintiff to his election between a count in assumpsit and another in tort. For this error, however, we would not reverse; for it is plain that it did the plaintiff no harm. There was no evidence which he could have given under the count which he abandoned which was not admissible under the money counts.

Judgment reversed, and venire facias de novo awarded.