Commercial Bank of Buffalo v. Sparrow

2 Denio 97 | N.Y. Sup. Ct. | 1846

By the Court, Beardsley, J.

The second, third and fourth pleas of Sparrow, and the,fourth,.ffth and sixth, of Clark, am alike in principle, and may be disposed of on one and the same ground.

By the act to incorporate the plaintiff as a banking corporation, its Capital stock was to be four hundred thousand dollars, and the act declared that it should “not be lawful for said corporation to issue, or to have outstanding br in circulation at any time, an amount of notes or bills loaned or put in circulation as money,'exceeding once and an half its Capital stock then paid in and actually possessed.” (Laws 1834, p. 260. §1 6, 36.) Under this act the issues and circulation of the plaintiff might amount to six hundred thousand dollars, a sum which it is not alleged by either of the pleas has been at any time transcended; Indeed, unless some other and still greater restriction upon the amount of issues than is found in the original act of incorporation, was subsequently imposed On the plaintiff, it will not be pretended by any one that the matters pleaded constitute any thing like a defence to the action.

The act of incorporation contains this clause: “ The legislature may at any time alter, modify or repeal this act, or any of its provisions.” (§ 37 and see 1 R. S. 600, § 8.) On the sixteenth of May, 1837, “an act suspending for a limited time Certain provisions of law, and for other purposes,” was passed, the third section of which declares that “the amount of notes or bills issued and in circulation of the several banks of this state, shall not hereafter exceed the following amounts respectively :”—“ those having capitals to the amount of four hundred thousand dollars, three hundred thousand dollars.” (Laws 1837, p. 515.) By the tenth section, this provision was to continue in force until repealed, which, I believe, has not yet taken place.

The act of 1837 was passed as a majority bill, and did not receive the assent of two-thirds of the members of the legislature. This is ascertained by an inspection of the original act in the office of the secretary of state. (De Bow v. The People, 1 Denio, 11.) The question and the only one on this part of the Cáse, therefore, is, whether the restriction which the act in terms imposed on the plaintiff, reducing the amount .to which its issues might he extended from six to three hundred thousand collars, was a legal enactment under the constitution.

By the constitution “ the assent of two-thirds of the members elected to each branch of the legislature, shall be requisite to every bill” “ creating, continuing, altering or renewing any body politic or corporate” (Art. 7, § 9.) The plaintiff was a body corporate—a point which I suppose will be conceded—and is therefore as plainly as language can make any thing, within this clause of the constitution. Cutting down the power of this corporation to issue bills, from six to three hundred thousand dollars, was certainly, “ altering” it. In principle it was like increasing its capital, changing its location, or reducing the term of time which' it might by its charter continue to exist, either of which would work a plain alteration or change in the corporation. But the legislature cannot pass a bill which shall have the effect of “ altering” a body corporate, by a simple majority of each house. The assent of two-thirds of the members is requisite for this purpose. This bill was not passed by two-thirds, and therefore not in conformity with this clause of the constitution. As to other matters the act may be valid; but not having received the assent of two-thirds of the members, I think this clause was wholly void. I can hardly see that the point could be made more plain by any explanation whatever. Iseems to me obvious at first view that this enactment was not passed as the constitution requires; and if so it could be of no effect whatever. I will not dwell on a proposition so plain: in my estimation its force would only be weakened by discussion.

It was said truly on the argument, that the legislature had reserved in express terms the power to 11 alter" the charter of this corporation; (§ 37, supra;) but it does not follow, as was urged, that this might be done by a mere majority vote. The legislature did not, as I conceive, attempt to acquire any new power by this reservation, but simply to retain that which they then had. The power to filter as well as that to create corporations, is conferred by the constitution, but can only be exerted by the concurrence and assent of'two-thirds of the members. In this manner the plaintiff was brought into being as a body corporate, and under the constitution, no bill “ altering” such body corporate would be valid unless passed in the same way. As a charter, when granted, was assumed to be a contract, the obligation of which could not be impaired by legislation, it became necessary to reserve in the charter a right to alter, modify or repeal it, or it was supposed the power could not be exerted by the legislature in any form. For this purpose a reservation of that right was made part of this charter; the clause however was not inserted with a view to confer any new power, but simply to retain a right to exert that which the legislature then had.

Whatever maybe the extent and character of the. various powers possessed by the legislature of this state, they are derived from and exist in virtue of the state or federal constitution. Legislation can add nothing to those powers, nor can it abridge them. It would indeed be clearly absurd in reason, as it would also be a gross heresy in politics, to hold that a legislature or any other public body could in any manner augment their own powers. But the legislature of this state are not obnoxious to such a charge for inserting in the plaintiff’s charter a right to “ alter, modify or repeal” it at any time. It was plainly intended not to enlarge the legislative power, but to retain in active existence that which they then held under the constitution. The act of 1837 not imposing any valid restriction upon the issues of the plaintiff, it follows that the pleas founded on that act are bad in substance.

The defendant Clark put in two pleas of set-off, which the plaintiff answered by a single replication. No objection was made to either of these pleas: they were therefore virtually conceded to be good both in substance and form. On this branch of the case the only question is as to the sufficiency of the replication.

Various objections were made to the replication, some of which are specially stated in the demurrer and others are not.

1. It is said the replication does not show that the plaintiff was duly organized as a banking institution. This objection cannot be sustained in point of fact; in this particular the replication is very full and complete.

2. That the “ replication contains no proferí or reference to the record” of the proceedings in chancery. This is understood as an objection to the form in which these proceedings are pleaded, and not to their substance and effect. But the acts and proceedings of a court, with the exception of letters testamentary and letters of administration, are never pleaded with a profert in curiam. A proferí is only required where oyer may be demanded; but oyer of records and proceedings in the nature of records, with the above exceptions, cannot be demanded. (1 Chit. Pl. 7th Am. ed. 397 to 399, 464, 5; Steph. Pl. 4th Am. ed. 61 to 72, 437 to 440.)

If the objection that no reference is made to the record and proceedings in chancery, means that they are not pleaded with a prout patet per recordum, it would be sufficient to say that this supposed imperfection is not “ specially expressed in the demurrer,” as the statute requires. (2 R. S. 352, § 4.) But1 if these proceedings could be regarded as matters of record, it was unnecessary to plead them in this form. They are not the foundation of the action, or of the right which the replication asserts. Of themselves they cannot bar the set-off, although when combined with other matters such may be their conjoint effect. The gist of the replication is that the notes which constitute the set-off were transferred to the defendant after the cause of action for which this suit was prosecuted, had vested in the receiver, and to this the chancery proceedings were but inducement. . When an action is brought for a false return to an execution, or for an escape from final process, the judgment and such process must .be alleged in the declaration, but they are only inducement and there is no occasion to refer to them by a prout patet.per recordum. Where the record is the ground of the action or of the right set up, this averment is proper; but “it is fully established,” said Ch. J. Abbott, “by the passage referred to in Co. IAtt. 303, a., and the case of Wate v. Briggs, that where a matter of record is insisted upon only by way of inducement, and not as the very foundation of the action, the party insisting upon it need not conclude prout patet per recordum.” (Stoddart v. Palmer, 3 Barn. & Cress. 2; see also Wate v. Briggs, 1 Ld. Raym. 35; Morse v. James Willes, 127; 1 Chit. Pl. 404, 590, 1; 2 id. 417, and note, 420 and note.) I think it would be found on examination that proceedings in chancery are never stated in this form; and that the averment is only necessary in such pleadings as should conclude with a verification by the record, and to which mil tiel record may be answered. But these questions need not now be examined, as a sufficient answer to the objection has already been given.

3. The protestando is said to vitiate the replication. But although it may be idle, repugnant or inconsistent, it cannot affect the pleading. As to this suit the protestando is a nullity, and whether good or bad, it may be rejected as surplusage which cannot vitiate. (1 Chit. Pl. 651, 262; 2 Saund. 103, a, note; Com. Dig. Pleader, N.; Grannis v. Clark, 8 Cowen, 42.)

4. The plaintiff seeks to bar the set-off by showing that before it accrued in favor of the defendant, Clark, the property and effects of the plaintiff, including the right of action in this case, were vested in the receiver as well by virtue of “an assignment in writing” as by the proceedings in chancery. But the replication does not show when or by whom in particular this assignment was made. It must have been under seal, but no profert is made which is specially stated as cause of demurrer. The assignment is not well pleaded' and the replication is bad. (1 Chit. Pl. 397, 8.)

5. The replication is in avoidance of the pleas, new facts being for this purpose alleged; but it is objected that the truth of the matters pleaded by the defendant is not admitted, for which cause the replication is vicious.

It is an established rule, applicable to pleas in bar and ail subsequent pleadings, that where new facts are introduced in avoidance of the pleading answered, the truth of the matters so answered must be admitted. A party may traverse what his adversary has alleged, or he may set up new matter in avoidance ; but he cannot do both in the same pleading; and if new matters are relied upon the truth of the pleading answered must be conceded. (1 Ch. Pl. 556, 565, 610, 680, 6, 9; Steph. Pl 52,138.) “If a pleading, therefore, purporting to be by way oí confession and avoidance, (or in other words, not pleaded by way of traverse,) does not import a confession of the adverse allegation, it is defective and insufficient.” (Id. 200.)

In this case the pleas set up that the plaintiff owed a large sum to the defendant, Clark, which he was ready and willing to set off and allow in satisfaction of the plaintiff’s demand To avoid this bar to the action the plaintiff introduces new facts which, if well pleaded, may perhaps attain the object; but in doing so the plaintiff was bound to admit the indebtedness as pleaded. This was not done unless an allegation in the replication “ that such pretended indebtedness, if it exista at all,” amounts to such an admission, and that it does not has been repeatedly adjudged in the English courts. Indeed, it seems to be entirely settled in all their courts, that this hypothetical form of admission is not-sufficient. (Griffiths v. Eyles, 1 B. & P. 413, 418; Gould v. Lasbury, 1 C. M. & R. 254; Eavestaff v. Russell, 10 Mees. & Wels. 365; New-York Legal Observer, 1 vol. 239; Margctts v. Bays, 4 Adol. & Ellis, 489; McPherson v. Daniels, 10 B. & C. 263; 1 Ch. Pl. 272, 556; Steph. Pl. 200.) ^(a) A precedent for a plea in this form may be found in some of the late editions of Chiity on Pleading ; (3d vol. 941, 7th Am. from 6th Lond. ed.) although it was otherwise in earlier editions. (3d vol. 941, 5th Am. from 4th Lond. ed.) But this form of pleading is against principle and authority and cannot be sustained.

An objection was made in the demurrer that the replication does not show the receiver to have been duly appointed by the court of chancery, so as to vest the estate and effects of the plaintiff in him. But the point was not discussed on the argument nor was any reference made to the various statutes touching the appointment and the powers of such receivers, and the right of set-off as against them. It may be inferred from this that both sides regarded this point as abandoned, and it iias not been examined.

Some other and formal objections were taken, but none which in my opinion are available, or which require particular notice.

The plaintiff is entitled to judgment on the demurrers to the second, third and fourth pleas of Sparrow, and the fourth, fifth and sixth pleas of Clark; and the defendant, Clark, on the demurrer to the replication to his second and third pleas.

Judgment accordingly.

(a) See Conger v. Johnston, (ante, p. 96.)