Coulter v. Robertson

24 Miss. 278 | Miss. Ct. App. | 1852

The opinion of the court was delivered by

Mr. Chief Justice Smith.

A judgment of forfeiture was- pronouiicéd against the late Commercial Bank of Natchez upon an information in the nature of a quo warranto, institutéd under the provisions of the statute regulating the mode of proceeding against incorporated banks for a violation of their charters.

William Robértson was appointed trustee, and as such brought suit against the plaintiffs in error, on a note made by their testator, which was the property of the dissolved corporation, at the time when the judgment of forfeiture was rendered.

The demurrer to the second and third pleas of the defendants in the court below, presents the questions which it beeomes our duty to investigate. For the present, we will direct our attention to that which arises on the demurrer to the second plea. In its general form, the question thus raisédús this: Had Robertson, the trustee, title to sue ? Could he maintain an action on the note ?

In the discussion of this proposition, two points of inquiry naturally suggest themselves. 1st. Whether a full payment of the debts due by the bank, at the date of its dissolution, or the collection from the assets of an amount of money sufficient for that purpose by the trustee, was a full and complete execution of his trust, whereby he became functus officio ? 2d. Whether the trusts which had vested in Eobertson were, in reality, terminated by the payment of the whole of the debts of the bank, or by the collection of funds by him sufficient for that purpose, such matter constituted the basis of a valid defence, of which the defendants below had a right to avail themselves in bar of a recovery ?

1. The effects or consequences at common law of a judgment of forfeiture, rendered against a corporation, have been materially modified by the legislation of this State. Hence, to enable us to respond to the first inquiry a distinct perception, as well of the consequences which followed at common law upon a judgment of forfeiture against a corporation, as of the changes produced by the statutes of our own State, is essential.

The elementary books and the numerous cases decided, are uniform in their language in regard to the consequences resulting from the dissolution of a corporation. They held that upon the death of a corporation, all its real estate remaining unsold, reverts back to the original grantor and his heirs. The debts due to and from the corporation are all extinguished. Neither the stockholders, nor the directors, nor trustees of the corporation, can recover those debts, or be chargeable with them in their natural character. All the personal estate of the corporation vests in the crown, with us, in the people of the State, as succeeding, in this respect, to the rights and prerogatives of the king. Co. Lit. 13 b.; 1 Black. Comm. 484; Angelí & Ames on Corp. 513; 3 Burr. Rep. 1868 ; Commercial Bank v. Lockwood, 2 Harr. 8; 1 Blackf. Rep. 283; Fox v. Horah, 1 N. C. Rep. 353; 2 Kent, Comm. 309.

This we understand to be the settled doctrine of this court. It was said by the late learned chief justice, in delivering the opinion of the court, in the case of the Commercial Bank of Natchez v. Chambers, that it had been urged “ in argument with much plausibility, that even without the interposition of the legislature, the debts due to and from the bank would have survived its dissolution; that these commercial corporations should be regarded as partnerships, and the fund or property owned by them, a trust fund which equity would appropriate to the payment of their debts. The current of decisions seems to have fallen into a different channel, and it may now be regarded as the settled doctrine, that on the dissolution of a banking corporation, the debts due to and from it are extinguished; not by an implied condition in the contract, but from necessity, because there is no person in whose favor or against whom they can be enforced.”

Following the suggestion to which the remarks above quoted are a reply, counsel upon the argument of this cause assumed, and have sustained the assumption with great ingenuity, that the obligation of contracts entered into by a corporation, does not cease upon its dissolution, but continues unimpaired. And the reason assigned why they cannot be enforced is this, there is no person appointed in whom the legal title vests. In other words, that the contracts continue in force, but the remedy has been lost by the dissolution of the corporation.

We do not assent to the proposition, and believe it to be unsustained by authority. There is an obvious distinction between mere credits or debts due by contract unaccompanied with a lien upon property, either general or special, and real estate, and goods and chattels. The latter are matters of substance. They have not merely an ideal being, but an actual existence; hence, they may subsist independent of any ownership, either in being or expectancy. As it is not essential to their existence that there should be an owner, they are not annihilated by the extinction of the corporation to which they previously belonged, but pass upon its dissolution into the hands of those who may take them. “ As they retain their being and remain the subjects of occupancy and possession, the grantor of the land can lay hold of them, and the State, through its proper agent, can take possession of the goods and chattels which belonged to such corporation. But such is not the condition or character of debts owing to such corporation; they are merely rights which rest in action, — they have an ideal but not an actual existence, — '.they are neither tangible nor the subjects of occupancy or possession.” 2 Harr. R. 13. A debtor and a creditor are essential to the very existence of a debt. There can be neither a debt nor an obligation without there be in actual being or in expectancy with a legal possibility of an actual existence, a person by whom the debt may be paid or the duty performed, as well as a person who may receive the payment of the debt, or accept the performance of the obligation. Wherever, therefore, the payor or payee, the debtor or the creditor, or the person by whom a duty is to be performed, or who is to accept the thing which is to be done, ceases to exist without a representative, or the legal possibility of a representative, the debt or obligation ceases to exist, and the obligation of payment or performance is forever at an end.

The case above referred to of the Commercial Bank of Natchez v. Chambers, is cited to show that the obligation of the contracts of a dissolved corporation survives its dissolution. The passage quoted from the opinion in that case distinctly announces the principle as the settled doctrine of our courts, that the debts due to and by a corporation upon its dissolution are extinguished. Not such is the condition of a debt where the debtor and creditor survive, but which has been barred by the statute of limitations. The legal remedy has been lost, but the moral right to demand payment and the obligation to pay remain. If the effect of the statute of limitations were held to extinguish the right as well as to bar the remedy, it is manifest that a subsequent promise to pay the debt would be void for want of consideration. For it must be perfectly immaterial whether if a right or debt is extinguished, the effect is produced by a statute bar, the civil or natural death of one of the parties to the contract, or by a payment itself.

The case of Mumma v. The Potomac Company, 8 Peters’ Rep. 281, has been cited for the same purpose. Mumma, the plaintiff in'that case, was a judgment creditor of the Potomac Company, and after its dissolution, which was affected by a surrender of its charter, issued out a writ of scire facias to revive his judgment. The questions presented by the record in that case were, 1st. Whether the corporate existence of the company was not destroyed so as to defeat, the rights and remedies of its creditors ? 2d. Whether the deed of surrender did not violate the contracts of the company, and whether the legislative acts of Virginia and Maryland, though confirmed by the act of congress, were not on that account void ? Both questions were decided against Mumma, and Judge Story, who delivered the opinion of the court, in discussing the second point says: “ The obligation of those contracts, (the contracts of the defunct corporation,) survives, and the creditors may enforce their claims against any property belonging to the corporation, which has not passed into the hands of bond fide purchasers, but is still held in trust for the company or the stockholders thereof, at the time of its dissolution, in any mode permitted by the local laws.” This case was cited in the opinion of this court in Nevitt v. The Port Gibson Bank, and appears to have been regarded as an authority in support of the position, that the obligation of contracts entered into by and with corporations survive their dissolution. We think upon examination it will be perceived that the import of the decision was misunderstood, and that Judge Story was very far from intending to intimate that according to the common law, upon the dissolution of a corporation, the debts due to and by it would not be extinguished.

The pleadings in that case showed that the Potomac Company,'in pursuance and in execution of the provisions of the charter of the Chesapeake and Ohio Canal Company, chartered by the States of Maryland, Virginia, and by the Congress of the United States, had conveyed in due form of law to the said company, all of its property, rights, and privileges of every description whatever; and had, also, in due form, made a surrender of its charter; which transfer and surrender was accepted by the Chesapeake and Ohio Company. The acts incorporating this latter company distinctly show that the assignment or conveyance was for the benefit of its creditors and stockholders. Upon the acceptance of the transfer, an equitable lien attached to the property assigned in the hands of the Chesapeake and Ohio Canal Company in favor of the creditors of the former company; whose debts or claims against it were thus preserved from extinguishment by the provisions of the acts creating the charter of the Chesapeake and Ohio Canal Company, and providing for the transfer. Hence, it was very properly said by the distinguished judge, that “ the creditors of the Potomac Company might enforce their claims against any property belonging to the corporation "which had not passed into the hands of bond fide purchasers; but was still held in trust for the company or the stockholders thereof, at the time of its dissolution, in any mode permitted by the local law.” Besides the twelfth section of the act incorporating the Chesapeake and Ohio Canal Company, makes it the duty of the president and directors of that company, so long as there shall be and remain any creditor of the Potomac Company, who shall not have vested his demand against- the same in the stock of the Chesapeake and Ohio Canal Company, (which the act enables him to do,) to pay such creditor or creditors annually, such dividend or proportion of the-net amount of the revenues of the Potomac Company, on an average of the last five years preceding the organization of the said,Chesapeake and Ohio Canal Company, as the demand of the said creditor or creditors at that time may bear to the whole debt .of $175,800, (the supposed aggregate amount of the debt of the Potomac Company).” “ So that,” continues the judge, “ here is provided an equitable mode of distributing the assets of the company among its creditors, by an apportionment of its revenues, in the only mode in which it could be practically done upon its dissolution.” In fact the legal title of the whole property of the Potomac Company vested in the Chesapeake and Ohio Canal Company, upon the. terms prescribed by the charter, who held it in trust for the creditors and stockholders whose interests were looked to in making the ,arrangement. The case was not materially different in principle from an ordinary assignment by a corporation, of its effects, for the payment of subsisting debts against it, and when, after the assignment, its. corporate existence was terminated by either a surrender, a judicial forfeiture, or by the lapse of time.

The decision in the case of Bleakney v. The Farmers and Mechanics Bank of Greencastle, was cited and relied on as authority upon the same point. -Upon a careful examination, we have been unable to perceive its application. It appears that the bank had omitted to pay, as required by law, six per cent, to the State on the amount of its dividend in November, 1819. After this default, the bank took from Bleakney the note made by him, and on which the suit was brought. The defence was based upon the alleged dissolution of the corporation, as having been produced by the failure to pay the six per cent, upon the amount of its dividend. It was admitted that the failure to pay the six per cent', was good cause of forfeiture; but the forfeiture had not been judicially declared. No proceeding, for that purpose, had ever been instituted by the State; on the contrary, by an act of legislation the consequences of a forfeiture were in part waived, and the bank permitted to sue for and collect the debts due to it. It is true the act was passed after the cause of forfeiture had arisen. But there had been previous thereto, no judicial ascertainment of that cause; of course there had been no judgment of forfeiture pronounced against the bank. Hence, the court very properly decided that the suit could be maintained by the bank, as it is settled doctrine that a corporation is not to be deemed in law dissolved by any nonuser or misuser of its franchises, until it has been judicially declared to be so. 2 Kent, Com. 312; 8 Wendell, 645; Angelí & Ames on Corp. 129, 667; Will v. Jenkins, 4 Paige, R. 481; 1 Dev. & Batt. R. 306. And this rule applies equally to cases where it is expressly declared by the law or the charter, that a corporation shall be deemed dissolved upon the commission of the acts which are declared to constitute the cause of forfeiture. Here, then, there was no actual forfeiture, but only an act committed, which was a cause of forfeiture, and which the State alone had a right to enforce. Hence there was no survivor of the obligation of contracts after a dissolution. It is manifest, if this" case can be regarded as deciding any principle, except that the State may waive or insist upon the consequences of a forfeiture of a charter, it must be held to decide, not that the obligation of the contracts of a defunct banking corporation survives its extinguishment, but after a bank “ charter has been forfeited and dissolved ” and become “ unlawful, and every note taken by such bank, null and void,” it is competent for the State, by an act of the legislature, to restore the corporation, and give validity to contracts which are void ab initio. We presume that no such doctrine will be contended for at this day.

2. Considering it conclusively settled, that without legislative interposition upon the .dissolution of a banking corporation, the debts due to and by it are extinguished, we will proceed to inquire, to what extent and for what purposes the rules of the common law in regard to that subject have been modified by the statute law of the State.

The principal act on this subject, is the statute passed on the 20th of July, 1843, prescribing the mode of proceeding against incorporated banks for a violation of their corporate franchises. Hutch. Dig. 329. By the eighth section of this statute, it is provided, that “ upon judgment of forfeiture against any bank or banks, corporation or corporations, person or persons pretending to- exercise corporate powers in this State, as contemplated by this act, the debtors of such bank or banks, corporation or corporations, person or persons pretending to exercise corporate privileges, shall not be released by such judgment from their debts and liabilities to the same; but it shall be the duty of the court rendering such judgment, to appoint one or more trustees to take charge of the books and assets of the same, to sue for and collect all debts due such bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers, and to sell and dispose of all property owned by such bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers, or held by others for its or their use; and the proceeds of the debts when collected, and of the property when sold, to apply as may hereafter be directed by law to the payment of the debts of such bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers; provided, further, that the notes of any such bank or banks, corporation or corporations, or others pretending to exercise corporate powers, shall at all times be received in payment of debts due the same,”

The principal alterations, it will be perceived, introduced by this statute, are, that by a judgment of forfeiture pronounced against a banking corporation, its debtors are not released from their debts. That a trustee shall be appointed with power to sue for and collect the debts due to the dissolved bank, and to sell and dispose of all other property belonging to it, and that the debts when collected, and the proceeds of the sales of the property, shall be applied by the trustee to the payment of its debts, in the mode which might thereafter be directed by law.

It is manifest, that it was the chief object of the legislature by these alterations of the law in regard to corporations, as it then existed, to secure the entire assets of a dissolved banking corporation as a fund, out of which the claims of its creditors might be satisfied.

“ The act, in effect,” said this court in the case of Nevitt v. The Port Gibson Bank, “declares the assets of the bank to be a trust fund for the payment of the debts, and makes it the duty of trustees to collect them. This is a trust which would be enforced in a court of equity without any further legislation. Indeed, if the legislature were to attempt to apply the assets to any other purpose than the payment of the debts of the corporation, it would transcend its constitutional limits.” This view of the subject was again, held in the case of the Com. Bank of Natchez v. Chambers, 8 S. & M. 49. These decisions very clearly indicate the opinion of this court as to the character of the interest which vests in the creditors of a banking corporation, upon its dissolution by judgment of forfeiture, and the nature and extent of the duties and the powers which devolve upon and vest in the trustee. The assets of the bank are regarded as a trust fund, irrevocably dedicated to the payment of the debts due by the bank at the time of its dissolution. The trustee to be appointed is regarded not as a mere agent, whose authority may be revoked by the legislature; but as holding a position not unlike that of a trustee appointed by contract.

“ There is a trust fund, (says the court,) a use to which it is to be applied, and a trustee to apply it.” Hence the defendant in error came into possession of the assets of the bank, which are declared to be a trust fund for the payment of its creditors, and whether he should be regarded as assuming a relation strictly analogous to that of a trustee appointed by contract, or looked upon in a two-fold capacity, as an officer of the court in which the judgment of forfeiture was rendered, appointed to execute that judgment, and as an official trustee, charged by law with the performance of certain duties, and clothed with the authority requisite for that purpose, in either event, neither could his power nor the rights of the creditors be divested by an act of the legislature passed subsequent to the judgment of forfeiture. We may, therefore, pass the act of 1846 amending the statute above referred to, and proceed to an examination of the question whether the stockholders, as such, would be entitled to the surplus, if any should remain after the payment of the claims of the creditors. .

We have shown that the obligation of the contracts entered into by and with a corporation, did not survive its dissolution, according to the principles of the common law; but that the demands of creditors and the rights of all parties having an interest in the corporate funds were thereby extinguished.

If, therefore, the stockholders-have a remaining interest which would attach to the surplus, if any exist, it must be by virtue of the act of 1843. The right of the stockholders to the surplus is put upon three grounds. 1st. It is insisted that upon a liberal and equitable construction of the statute, they are entitled to it as creditors. 2d. That as the whole of the assets were saved from extinction, and vested in the trustee, they exist now in his hands, subject to all demands which existed anterior to the judgment. And 3d. That the obligation of the contracts does not cease upon the dissolution of a corporation; although they cannot be enforced, for the reason that there is no person on whom the legal title is cast. Hence it is inferred, that when the trustee is appointed, who takes a legal title, a remedy is supplied and the rights of all parties may be enforced.

This last position is based exclusively upon the idea, that independent of any legislation, the rights of the stockholders would have survived the dissolution of the bank. What we have above said on this subject, is sufficient answer thereto, and we will pass to the consideration of the question whether the stockholders, as such, under the provisions of the statute, stand in relation of creditors of the bank.

If a stockholder, as such, is a creditor, it results, necessarily; that his stock is a debt due by the bank. A very slight examination will show that such a position is absurd and untrue.

A corporation is an artificial person created by law. And in the case of a banking corporation, is composed of the individuals who have become the owners of the stock, each of whom is thereby constituted a corporator, identified with and forming a constituent part of the corporate body. The stockholders, as such, cannot be distinguished from the corporation. Hence, where the stockholders and the incorporated company of which they are components are spoken of, reference is invariably had to one and the same collection of persons. 1 Ed. Ch. Rep. 87.

How then can the bank be the debtor of a stockholder as such on account of the stock which he owns in it? Or how can a stockholder, because he is the joint owner of the corporate fund, be a creditor of the bank, if the stock of a bank is a joint or common fund, owned by the stockholders in their corporate character, who as such, in the estimation of the law, constitute but one person. A debt is a duty or obligation which one person owes to another. The idea of a debt in the legal sense, necessarily implies the existence of two distinct persons or bodies; a debtor and a creditor. Hence, it cannot be said with greater propriety that the stockholders of a corporation because they are stockholders are its creditors, than that the members of a partnership are creditors of the firm because they are the owners of the partnership stock.

The distinction between ^creditors and stockholders is recognized without exception in all the books. In Ang. & Ames on Corp. it is laid down that the stockholders of an incorporated company are not the creditors of the company. In the case of Verplank v. The Mercantile In. Cor. 1 Ed. Ch. Rep. 84, which contains a very distinct explanation of the relation existing between a corporation and its stockholders, it is expressly stated that the latter are not the creditors of the corporation.

It is now the prevailing opinion, that the capital stock of banks is a pledge or trust fund for the payment of debts contracted by the bank. Beyond a doubt, it is a fund which cannot rightfully be withdrawn or diverted from that purpose. In Wood v. Dummer, 3 Mason, R. 307, which was read as an authority to show that the stockholders were creditors of the bank, this view is distinctly taken. “During the existence of the corporation,” says Justice Story, “it (the capital stock) is the property of the corporation, and can only be applied according to its charter ; that is, as a fund for the payment of its debts, upon the security of which it may discount and circulate notes.” As the capital stock is pledged for the payment of debts, contracted by the banks, upon a winding up of its concerns, the creditors have a prior exclusive right to be paid out of its effects, as contradis-tinguished from the stockholders. And upon that ground, the court in this case decided that dividends received by the stockholders upon the amount of their stock, might be followed into their hands and applied to the payment of the debts. This is perfectly inconsistent with the idea that the stockholder as such is a creditor, or that the stock owned by him is a credit in his favor and against the bank. Indeed, upon the principles of common sense, as well as upon authority; it would seem to admit of no doubt that the stockholders, as such, are not the creditors of a bank.

But it is insisted that we should so construe the statute as to embrace within its provisions the rights of the stockholders, as well as the claims of the creditors, as such a construction would be promotive of a liberal, wise, and just policy. It is sufficient to say that considerations of such a character are entitled to weight in the construction of statutes only in cases of doubtful interpretation, and where the meaning and intention of the legislature appear to be opposed to the literal import of the language of the act.

A just as well as an enlightened policy might have dictated the propriety of shielding the stockholders as well as the creditors from the common law effects of a judgment of forfeiture. But such has not been the policy of our law. Until the act of 1843 was passed, as we have seen, creditors and stockholders were equally affected by the dissolution of the corporation. That act in terms applies to the creditors only, and in cases where the dissolution has been produced by a judgment of forfeiture; leaving the effects of a dissolution, accruing either by a surrender or by the efflux of time, to the unmodified control of the common law.

In most, if not all of the States, except the State of Mississippi, in which the legislature has deemed it expedient to repeal or modify the principles of the common law which apply on the dissolution of a banking corporation produced by a judgment of forfeiture, express provision has been made by which the stockholders may take the surplus after the payment of debts. In this State, a different course has been pursued. The claims of the creditors are expressly protected, but not a word is said in regard to the interests of the stockholders. This circumstance is strongly indicative of the intention of the legislature. It leaves little ground to doubt that it was the intention of the legislature to leave them to their fate under the law as it had previously existed.

If the stockholders were not personally irresponsible for the debts of thg bank, it would nevertheless be exceedingly unjust to permit them to share the assets of a defunct and insolvent corporation on equal terms with those who are in a strict legal sense of the term, the creditors. But such a result. would inevitably follow, if the stockholders, under the act, were held to occupy that relation. It cannot be doubted that this would be the case, as the saving in the statute is for the creditors generally, without distinction or classification. They would alb stand on the same platform.

Upon the whole, we do not think that it was the intention of the legislature to keep the debts alive for the benefit of the stockholders.

We now proceed to the consideration of the next assumption upon which it is maintained that the rights of the stockholders survived the dissolution of the corporation, and attach to the surplus in the hands of the trustee. We have above endeavored to show that the obligation of the contracts does not survive ; in other words, that the rights and liabilities of all parties, creditors, debtors, and stockholders, become totally extinguished upon the civil death of a corporation. We have also seen that the contracts of the debtors and creditors by the act of 1843, were preserved from extinction, and that the entire assets of the bank constituted a trust fund, dedicated to the payment of the debts. We have also seen that the contracts of the debtors and creditors by the act of 1843, are preserved from extinction, and that the entire assets of the bank were established as a trust fund dedicated to the payment of the debts. We have likewise endeavored to prove that under the operation of the statute, any right in the stockholders to the surplus did not survive, either by an express provision for that purpose, or as embraced under the head of claims of creditors.

We have next to ascertain whether the rights of the stockholders, independent of any legislation for that purpose, attached to the fund as necessarily incident upon the preservation of the assets and the appointment of a trustee.

It is obvious that this position and the argument in support of it, proceed upon the supposition that there was a right in the stockholders unaffected by the judgment of forfeiture. If-so, it undoubtedly attached. The true question, then, is, did the right survive under the operation of the act of 1843 ?

It will not be contended that the legislature had not the power to repeal, in whole or in part, the consequences of a judicial forfeiture. One of these consequences, as we have seen, was at common law the total'extinguishment of the interest of the stockholders in the corporate property. The question, then, is, has the statute remitted that consequence, or repealed that principle of the common law by which it was produced ? If it has not, by express enactment or necessary implication, then we must regard it as still in force. We have above remarked, that there is no express provision which saved the rights of the stockholders, nor any thing by which we could infer that such was the clear intention of the legislature, though not embraced in the language of the statute.

In coming to this conclusion, w.e have followed, as we believe, the previous and deliberate adjudications of this court. In the case of the Commercial Bank of Natchez v. Chambers, referring to the ease of Nevitt v. The Port Gibson Bank, the late chief justice of this court said: “We also decided that the act, in effect, declared the assets to be a trust fund for the payment of debts which would be enforced, in a court of equity, without any further legislation; and that, if the legislature were to attempt to apply them to any other purpose than the payment of the debts of the corporation, it would transcend its constitutional limits. We still adhere to this construction of the act.” Again, in the same case: “ When a trustee is once appointed, he is amenable to the judicial authority only. A court of chancery may remove him for an abuse of the trust, or compel him to perform it. The title of the creditors is equally clear. It resulted, as a necessary consequence, from the declaration that the debts due the bank should not be extinguished, and that a trustee should be appointed to receive them. It was recognized and strengthened by the declaration, that the trustee should apply the proceeds to the payment of the debts of the bank. Although the act does not, in so many words, say that the debts due from the banks shall not be extinguished, yet this is the necessary "consequence of what is said. The debts due the bank could have been kept alive for no other purpose; and besides, the declaration that the funds should be applied to the payment of debts, necessarily kept the claims of creditors in existence to receive the fund. So it is, too, with regard to the property; the intention was to save all for the creditors, as the property was to be converted into money.”

It has been urged, that neither in the case against Chambers, nor in Nevitt v. Port Gibson Bank, was there a direct adjudication upon the right of stockholders to the surplus. This is true. There was no express reference made to that subject in either case; and it is difficult to account for the silence of the court, except upon the supposition that no such right was believed to exist; for, undoubtedly, the subject was brought to the mind of the court in both cases. Particularly in the Chambers case, in which the principal question was, whether under the act of 1843, and by the judgment of forfeiture against the Commercial Bank of Natchez, rights had not vested, which it was incompetent for the legislature to divest. In that case, the broad ground was taken by the counsel, that the common law effect of a forfeiture did not apply to trading or banking corporations, which should be regarded in the light of commercial partnerships. Hence, that the principles which would govern the contracts and rights of parties interested in the property of a partnership, would apply upon the dissolution of a banking corporation. This position received the particular notice of the court. The question was, what were the rights, and in whom were they vested, by the judgment, under the law ? In examining the point as to the parties in whom rights were vested, if any were indeed vested in the stockholders, it is difficult to imagine how such fact escaped the attention of the court. And if it did not, it is more difficult to conceive why it was not noticed, for, as a matter of principle, it was quite as important that rights were vested in the stockholders as in the creditors. We cannot, therefore, doubt that where the court held that there could have been no other purpose in keeping the debts alive than for the payment of the debts of the bank; that the assets of the bank were, in effect, constituted a trust fund for that purpose, and that an attempt, by the legislature, to apply them to any other purpose than the payment of the debts, would be a transcending of their constitutional authority, they intended, with a full view of the subject, to decide that the creditors were the only parties whose rights were saved by the operation of the act. At all events, in yielding our assent to what we believe to be the previous deliberate judgment of this court, we do so, not only on the principle which invests the solemn adjudications of this court with a commanding authority, but from a conviction, after a patient examination, of its correctness.

Much was said on the argument with regard to the impolicy and injustice of the rule at common law, which regulates the effect of a judgment of forfeiture. It is probably true that this ancient rule is unsuited to the present altered condition of things, and in utter hostility to the more enlightened spirit of the age. Hence, that it should give way to rules, better suited to the emergent interests of society, and consequently more in accordance with the principles of an enlightened jurisprudence. But the subject has been before the legislature, who have decided it expedient to modify the rule in regard to the creditors and debtors of a bank; but have left the stockholders to their fate at common law. We are called upon neither to approve nor to condemn their course. Our business and our duty here are, to give to the laws which we are required to administer their just construction, and to apply them accordingly. We are always satisfied whenever we can effect this purpose, and cheerfully concede to another branch of the government the exclusive right to decide upon their policy or impolicy.

Having seen what were the consequences which followed at common law upon the dissolution of a corporation, and having ascertained how far they have been modified or repealed, we proceed to the consideration of the question which constitutes the first branch of our inquiry, to wit, whether the payment of the debts, or the realization from the assets of the bank of sufficient funds for that purpose by the trustee, was a full and complete execution of his trust, whereby he became fundus officio.

The whole of the assets of the bank, consisting of credits or debts due to it, chattels and real estate, upon the rendition of the judgment of forfeiture, became a trust fund for the sole purpose of paying the debts due by the bank at the time of its dissolution. The debts were to be collected, and the property of all descriptions was to be sold and applied to that purpose. The defendant in error, under the appellation of “ trustee,” was appointed under the act to perform these duties, or to execute the trust thus created in favor of the creditors. His character and duties have been assimilated to those of a trustee appointed by contract; but it is not important to determine whether he should be regarded in that light, or rather as an officer of the court for certain purposes, and as a special statutory trustee appointed by the court, whose authority and duties are distinctly defined in the statute. Nor is it very material to determine whether, in a strictly technical sense, the legal title to the property of the bank, real and personal, vested in the trustee on his appointment, or whether the interest and title which did in fact vest, more resembled that of a sheriff in reference to chattels and lands, arising by reason of a levy of an execution, or of a receiver appointed to take charge of and administer a particular fund for specific purposes; as it is not contended that whatever was the character of the estate acquired by the trustee in the the assets, his authority was not amply sufficient to a full execution of the trust; and as it is not perceived that a different rule would be applicable in either case, in order to test the continuance of his authority.

At this point, then, the inquiry is, can the trustee, thus constituted, having paid off and discharged the whole of the debts of the bank, sue for and recover the debts which were due to it, and which are still outstanding and unpaid? We answer, that he cannot; that his power to sue was terminated by the execution of his trust, which was fully performed when the demand of the last creditor was paid. This conclusion seems to follow from the very powers and character of the trustee. The assets of the bank, by the judgment of forfeiture, become a trust fund, constituted for the sole purpose of paying the debts of the bank. The trustee was appointed to execute the trust. In regard to the trust property, he took either a naked power or the legal estate without any beneficial interest whatever. When the debts were all paid, there was no remaining purpose or object for which his authority could be exercised. The trust having been fully performed, the objects for which his powers were conferred having been accomplished, it would seem, upon the plain principles of common sense, that his authority should also be at an end.

Again, by the dissolution of the bank, all remedy by action against it was lost; but the statute, by providing a trustee who should take charge of its effects and hold them in trust for the benefit of the creditors, furnished a means by which the credi-itors to the extent of the assets, might obtain satisfaction of their demands. In effect, by the appointment of the trustee with his duties and powers, a remedy was supplied to the creditors by which their claims might be enforced against the debtors and property of the defunct bank. Hence, when their last demand was paid off and discharged, the remaining creditors were released, not by reason of the judgment of forfeiture, for that effect was prevented by the statute; but because there was no person who had a right to demand payment. The creditors could not require the application of the remedy, for they had no rights to enforce. Nor could the trustee rightfully sue for the remaining debts, because he had no beneficial interest; and because it would be in the last degree absurd to permit him to employ his naked legal title for the collection of money to which neither himself, his cestui que trust nor any body else would be entitled. Fox v. Horah, 1 Red. Ch. R. 358.

It is also clear upon the authority of cases decided, that the right of the trustee at law and in equity to sue for and collect the claims outstanding when the debts were paid, ceased to exist.

It is a general rule in all cases where it is doubtful what estate the trustees have in them, that the trustee is presumed to take an estate large enough to enable him to accomplish the purposes of the trust. Hence, where the estate arises by implication alone, a fee will be implied when there are trusts to be performed which require the trustee to be invested with an estate in fee in order to enable him to effectuate them. West v. Hanning, 5 East, 97; 3 Burr, 1886. This is the general rule as to the character or extent of the estate, where by'the terms employed it is left uncertain what estate had vested.

But on the other hand, the trustee will never by construction, be held to take a greater estate than the nature of the trust demands. Doe dem. White v. Simpson, 5 East, 162; Doe dem. Woodcock v. Barthrop, 5 Taunt. 383. And even when a greater estate than is necessary for performance of their trust is devised to trustees, and there are uses limited upon that trust which may be executed by the statute, they will be construed to be executed in remainder, a particular estate only abiding in the trustees. This rule is recognized in the case above cited from East, where it is said by Lord Ellenborough, that when the purposes of a trust can be answered by a less estate than a fee simple, a greater estate than is sufficient to answer such purposes shall not be permitted to pass to the trustee; but that the uses in remainder limited on such lesser estate so given to them, shall be executed by the statue. Doe dem. Compere v. Hicks, 7 T. R. 433; Curtis v. Price, 12 Ves. 89.

Apply the doctrine recognized in these cases to the question under examination, and it will be clearly seen that the trustee, in regard to the real estate, was not vested with the fee.

The language of the statute is, “ that he shall sell the property owned by such bank.” The trustee could at most, take only a power to sell and dispose of the real property, because such power would be fully sufficient to enable him to carry into effect the purposes of the trust. His power of sale is strictly analogous to those of a sheriff or commissioner proceeding to sell by virtue of an execution levied upon lands, or in pursu-anee of a judgment or decree of the court. The trustee was charged with the payment of the debts out of the assets. That was his trust, and his power of sale was limited by the purpose for which it was granted. Hence, when lands sufficient for the payment of the debts were sold, his further power to sell was necessarily at an end. This principle is fully recognized in the case of Robinson v. Taylor, 1 Vesey, Jr. 44, where Lord Thur-low held that “ where property is given for particular purposes in trust, nothing more is subject than those purposes require.” This doctrine is again distinctly recognized in Chitty v. Parker, 2 Ves. Jr., 271; Wright v. Wright, 16 Ib. 188. Indeed, it is too well settled to require the citation of authority. There is no greater reason for holding that the power of sale would continue in the trustee, after a sufficient amount to pay the debts had been realized, than there would be for continuing in the sheriff a right to sell under an execution in his hands, after the judgment was satisfied.

In regard to the choses of the bank, this court has decided that the legal title vested in the trustee. The grant of power in the statute was “ to sue for and collect all debts due the bank.” This was held by implication to transfer the legal title, which was in the bank, and to vest it in the trustee.

"We have above seen that a trustee will never be construed to take a greater estate than is required for the purposes of the trust. Hence, the power over the choses of the bank, or the legal title thereto which vested in the trustee, will not be held to be larger or of greater extent than is necessary to enable him fully to carry into effect the purposes of the trust. That trust was the'payment of the debts of the bank. When they have been paid, there is no longer a reason why the implied legal estate of the trustee should be held to exist. Like the power to sell and dispose of the real estate, the right of the trustee to sue for and collect the debts, as it would appear, should terminate upon the payment of the debts of the bank.

If there was. a resulting trust in favor of the stockholders, the case would be different. But we have seen that their right to the surplus did not survive the forfeiture. There can be no trust without a cestui que trust entitled to take it. Hence there could not be a resulting trust in favor of the stockholder, for the obvious reason that they have no equities attaching to the surplus.

If, as we have decided, the assets of the bank are a trust fund exclusively for the benefit of the creditors, and that the stockholders have no claim upon it as creditors, for what purpose, it may be asked, should the power of the trustee to sue for and collect the outstanding debts, be held still to exist ? The power could be exercised for no rational purpose, as there would be no one entitled to the fund when reduced into possession by the trustee. And for this reason alone, it is clear that a court of chancery would not compel the trustee to bring suit for the purpose of collecting these debts.

This shows conclusively, that in equity the authority of the trustee to sue for and collect the remaining debts would be considered at an end. The case of Fox v. Horah, above cited, is a decision in point. In this case, where a note was made payable to the cashier of the State bank, as trustee for the use and benefit of the bank, by whom it was discounted, and the bank charter afterwards expired by its own limitation, before it could be collected, it was held after judgment was obtained on the note by the cashier, that as the bank in equity had the sole right to the money secured by the note, and as that right had become extinct by the dissolution of the corporation, that the maker of the note was entitled to a perpetual injunction to restrain the collection of the note.

In delivering the opinion of the .court in that case, Judge Gaston said: “ The bank was in truth the creditor; the note and the judgment were but securities belonging to the bank, and proper to be enforced to compel payment to the bank of what was due to it. No one could rightfully put these securities in use, but by the expressed or presumed direction of the bank. Upon the death of the bank, without succession or representative, this debt became, by law, as completely extinguished as it could have been by a release 'from the corporation. While there was a debt and a creditor, the trustee could not rightfully enforce the securities, but for the payment of the debt to the creditor. After the extinguishment of the debt, he cannot rightfully enforce the securities because there is no debt to be paid, and no creditor to be satisfied.”

It is clear, then, in equity, that the right or title of the trustee to sue after the execution of his trust, would be considered at an end.

At law, it is the settled rule that a trust estate given for specific purposes, should continue for so long a period, only as is necessary to effect the purposes of trust. In the case of Doe dem. Player v. Nichols, 2 Dow. & Ry. 458, it was said by Hol-royd, J., “ that the rule of law lately established by several of the late cases shows that the estate of trustees, even where there are words of inheritance used, shall continue in the trustee no longer than necessary for the performance of the trust.” The same rule is recognized in Doe v. Barthrop, 5, Taunt. 382, and in Doe v. Simpson, 5 East, 162.

In the case of Brown v. Weast, it was decided by this court, that where one purchased land with the money of another, and has a conveyance made to himself, or has been paid the purchase-money of land, and has not conveyed, he is a trustee of a satisfied trust, and neither he nor his heir can recover upon his legal title against the beneficiary. 7 How. 181.

According to the rule of law recognized in these cases, it may clearly be inferred that ithe estate of the trustee in the assets, ceased upon the execution of his trust. His power or authority over the choses of the bank, or in other words his title to sue for and collect them, could not continue longer than was required by the purposes of the trust.

In modern times the courts have been induced to limit the duration of.estates vested in trustees by the desire to prevent actions from being defeated by technical objections of outstanding legal estates. Jones v. Cole, 2 Bayley, R. 330; 1 Kelly, Rep. 381.

A reason equally strong exists why courts should discounter nance recoveries, sought to be obtained upon mere naked legal title in the trustee, where the objects of his trust have been fully accomplished. Why permit the owner of a satisfied trust to recover upon his naked legal title, when, so soon as he has succeeded, he may be compelled to surrender his title as well as his possession ? In the case at bar, the reason applies with very great force. Why permit the trustee to recover upon his legal title, when if the trust has been satisfied, he may be enjoined by the debtors? Again, the trustee holds the property of the bank by legal assignment, which has been construed to vest him with the legal estate, for the purpose of executing the trust. The trust being ended by the payment of the debts, there would be no necessity for transferring the legal title. To whom could the legal title be transferred, if it still existed? But it ceased to exist in any one when the trust was performed. It became extinct in the same manner it was created, by operation of law.

It is said that if the demurrer be overruled, issue will be joined upon the plea in the court below; and it is strongly urged as an objection, that the court will not be competent to try it. We do not perceive the force of the objection. The question which, upon the issue, will be submitted to the jury, is one purely of fact; that is, whether the debts of the bank have not been paid off and discharged. This is certainly a question which a jury could readily comprehend and satisfactorily decide. The evidence might be complicated, but not necessarily so. We cannot doubt the ample jurisdiction of the circuit court to settle the account of the trustee. If that court has not the jurisdiction for that purpose, no other court has. A court of equity might incidentally, in a suit by a creditor of the bank against the trustee, compel the trustee to settle his accounts, but it has no direct supervisory jurisdiction over the subject.

Many of the questions presented by the record in this case are difficult, and of great importance. We have given to them the careful examination which their importance and the magnitude of the sum involved required, and our conclusion is, that the judgment should be reversed, the cause remanded, and the demurrer to the second plea be overruled in the court below.

Another question is presented by the demurrer to the third plea of the defendants, but upon that we pronounce no opinion.