Ordway v. Central National Bank

47 Md. 217 | Md. | 1877

Lead Opinion

Alvey, J.,

delivered the opinion of the Court.

If it be true, as suggested by the appellee, that the corporation was actually dissolved at the expiration of six months from the 15th of July, 1874, then, of course, this action must abate; for it is perfectly well settled that a suit can no more be prosecuted and judgment recovered against a dead corporation than against a dead man. Mumma vs. The Potomac Co., 8 Pet., 281 ; Nat. Bk. vs. Colby, 21 Wall., 615.

But has the corporation been dissolved ? We think not. It has suspended active operations as a banking association ; has resolved to go into a state of liquidation ; has deposited the money with the Treasurer of the United States, with which to redeem its outstanding circulation ; and has received, by re-assignment, its bonds deposited to secure the payment of its notes, and it thenceforth stands discharged from all liability on account of such circulating notes ; but the statute has not declared that these acts, of their own mere operation, shall effect an absolute and total dissolution of the corporation. And it would be strange if such were the case.. There are many other obligations to be provided for besides the circulating notes ; and there may be many rights to be protected, which would require the continued existence of the corporation. It is not reasonable to suppose that Congress intended that, upon simply resolving to go into liquidation, and providing for the redemption of its circulating notes, the banking association should be dissolved. If by such acts, it were dissolved, all actions by or against it would at once abate ; and parties might be left utterly without remedy for the enforcement of the plainest right, or recompense for the most grievous wrong.

As we read the sections 5221, 5222, 5223 and 5224, of the Revised Statutes, U. S., no such result was ever contemplated. On the contrary, those sections would seem plainly to contemplate the continued existence of the corporation after the re-assignment of the bonds, and the certificate of discharge from the liability for the circulating notes of the banking association ; and such would seem to be the construction of the Supreme Court of the United States, in the cases of Kennedy vs. Gibson, 8 Wall., 498, 506, and Bank of Bethel vs. Pahquioque Bank, 14 Wall., 383, 398. There has been no actual and formal surrenders of franchises, and no judicial declaration of dissolution ; and acts of a more decisive character than those relied on in the case, have been held to be insufficient to operate a final dissolution. State vs. Bank of Md., 6 Gill & John., 205 ; Brinkerhoff vs. Brown, 7 John. Ch., 217 ; Boston Glass Manf. Co. vs. Langdon, 24 Pick., 49 ; Ang. & Am. on Corp., sec. 773.

It would seem, therefore, that the learned Judge below was entirely correct in holding that there had been no abatement of the action by dissolution of the corporation.

The next question to be considered is that raised by the demurrer to the appellant’s amended declaration ; and that is, whether this action can be sustained in the Courts of this State, the action being founded on a statute of the United States ?

The action is one of debt, brought by the appellant against the appellee, under the 30th section of the National Banking Act, approved June the 3rd, 1864, to recover double the amount of interest unlawfully taken by the appellee. In the section referred to, it is provided that the knowingly taking, receiving, reserving or charging a rate of interest greater than the rate fixed by the previous part of the section, “shall be held and adjudged a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon. And in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in an action of debt, twice the amount of- the interest thus paid from the association taking or receiving the same ; provided that such action is commenced within two years from the time the usurious transaction occurred.” The recited provision constitutes section 5198 of the Revised Statutes, U. S., page 1012, which went into operation on the 22nd of June, 1874. The causes of action set forth in the declaration arose in the year 1873 ; and the suit was brought as of July 25th, 1874.

The 57th section of the Banking Act, under which the appellee was organized, and which was in force at the time of the transactions out of which- the causes of action arose, provided “ that suits, actions and proceedings, against any association under this Act, may he had in any Circuit, District or Territorial Court of the United States, held within the district in which such association may be established; or in any State, County, or Municipal Court, in the county or city in which said association is located, having jurisdiction in similar cases.” This provision of the Act of 1864 was omitted in the Revised Statutes ; but in that revision, by section 5597, it is provided, that “ The repeal of the several acts embraced in said revision, shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced ip any civil cause before said repeal, but all rights and liabilities under said Acts shall continue, and may be enforced in the same manner, as if said repeal had not been made.” And in the next succeeding section, 5598, it is further provided, that “ All offences committed, and all penalties or forfeitures incurred under any statute embraced in said revision prior to said repeal, may be presented and punished in the same manner and with the same effect, as if. said repeal had not been made.” This latter section, manifestly, has reference to public prosecutions alone.

In this case, the cause of action is a forfeiture, a penalty of a civil nature, for the exacting and taking of usurious interest upon money loaned ; and the remedy given by the statute is by private civil action of debt to the party grieved. The government or the public is not concerned with it. It is, therefore, a private right, pursued hy a private civil action. And it has been decided that the section of the statute upon which the action is founded is remedial as well as penal, and 'is to be liberally construed to effect the object which Congress had in view in enacting it. Farmers’ Nat. Bank vs. Dearing, 91 U. S., 29, 35.

This is not unlike, in principle, the case of debt brought by a landlord against his tenantjfor double value for not quitting in pursuance of notice given, under statute 4 Geo. 2, ch. 28. In such case, because the penalty or forfeiture • prescribed by the Act is made to accrue to the party grieved, and to he recovered by private action of debt, the Courts have taken a distinction between such penalty and a penalty prescribed as criminal punishment, and hold the statute to be remedial. Wilkenson vs. Colley, 5 Barr., 2694 ; Lake vs. Smith, 4 Bos. & Pul., 174. In the last case referred to, being an action of debt on the statute, Heath, J., said: “The double value has been called a penalty, and it is so in some degree, but the law is also a remedial law.” And Rooke, J., observed: “The Act indeed does give a penalty, hut it is to the party grieved ; and this is a distinction which has often been taken between remedial and penal laws.”

The action of debt is an ordinary common law remedy ; and it lies in the Courts of this State, having general common law jurisdiction, as the Court in which this action was instituted, on statutes at the suit of the party grieved, either where it is expressly given to such party, as by the statute under consideration, or where a statute prohibits the doing an act under a penalty or forfeiture to he paid to the party grieved, and there is no specific mode of recovery prescribed. This is the well established doctrine in England; 1 Chitty Pl., 112, and authorities there cited; and it is the law here. There is, therefore, no question hut that the Court below has jurisdiction in similar cases to that provided for by the statute imder which this action was brought.

Rut it is contended, that, notwithstanding the comprehensive and explicit terms employed in section 57 of the Act of 1864, ch. 106, giving the right to sue in the State Courts, inasmuch as the cause of action is a penalty or forfeiture, the remedy can only be sought in the Federal tribunals. It is contended, 1st, that the language of the 57th section should he construed with reference and in subjection to the pre-existing law, and that, by the pre-existing law, the jurisdiction of the State tribunals, in such cases as the present, was excluded by express provision of the statute; 2nd, If such construction be not adopted, then, that the savings in the Revised Statutes do not embrace the right to sue in a State Court in a case like the present; and 3rd, That though the statute may confer the right, Congress has no constitutional power to give the State Courts cognizance of penal actions, and those Courts should refuse to take such cognizance.

The argument in reference to the'first proposition, that is, on the construction of the 57th section of the National Banking Act, is founded upon the 9th section of the Judiciary Act of 1789, 1 St. 76, wherein the jurisdiction of the District Courts of the United States is defined. In that section of the Judiciary Act, it was declared that the District Courts should have, exclusively of the Courts of the several States, cognizance of all crimes and offences that were cognizable under the laws of the United States, committed wdthin their respective districts, etc ; and, among other subjects of jurisdiction, it was declared that such District Courts should “have exclusive original cognizance of all seizures on land, or other waters than as aforesaid made, and of all suits for penalties and forfeitures incurred under the laws of the United States.” This latter provision, in regard to penalties and forfeitures, has been inserted in the Revised Statutes in section 711, in defining the jurisdiction of the United States Courts that is exclusive of the Courts of the several States.

Now, looking at the broad, unqualified language employed in section 57 of the Act of 1864, there would seem to be no doubt but that it was the design of Congress that the State Courts should take cognizance of actions like the present, as well as all other civil actions against banking associations ; and that, if it had been the design to exclude the State Courts in such cases, appropriate terms would have been employed to express the intention, as in other Acts of Congress when conferring jurisdiction. And though the particular provision has been omitted from the Revised Statutes, yet the saving, by section 5597, is ample to continue the jurisdiction in the State Courts, as to all transactions occurring before the Revised Statutes were adopted. It is expressly provided, that all rights and liabilities under said Act shall continue, and may be enforced in the same manner, as if said repeal had not been made.

But if it was conceded that such construction is erroneous, then the question would arise, what is the proper construction of that provision in the Revised Statutes, in reference to the exclusive jurisdiction of the Federal Courts of all suits for penalties and forfeitures, which was taken from the Judiciary Act of 1*789 ? And, in answer to this question, it would seem to require no strained construction to warrant the conclusion that that provision of the statute has no application to this case whatever; that it has reference to, and contemplates only, those penalties and forfeitures of a public nature, which may be sued for by the government, or some person in its behalf. And this construction is strongly enforced by several provisions to be found in the Revised Statutes ; such as that which requires the district attorneys to furnish statements of all suits instituted by them for the recovery of any fines, penalties or forfeitures. Sec. |7|72. There is great reason for confining suits of that character to the Federal jurisdiction, but none, it would seem, for excluding the State jurisdiction in a .case like the present, where the right is private, and is being pursued by a private civil action by the party grieved.

Having shown that there is nothing in the statutes of the United States to exclude the State jurisdiction in a case like the present, the question is, 1st, Whether, in the absence of express terms conferring jurisdiction on the State Courts, those Courts have jurisdiction to enforce a right under a statute of the United States, in a case of the character now under consideration ? and if not, 2nd, Whether Congress can, rightfully, by express terms, confer such jurisdiction ?

The position and argument of the appellee, if sustained, would result in both these questions being resolved in the negative. If, however, either be résolved in the affirmative the judgment appealed.from must be reversed.

The question of the concurrent jurisdiction of the State Courts with those of the United States, has been the subject of a good deal of discussion both by statesmen and the Courts of the country. It was one of the objections urged against the adoption of the Federal Constitution, that it would detract from and materially impair the existing jurisdictions of the State Courts. This objection was answered by Mr. Hamilton, in the 82nd number of the Federalist, in which he maintained that the Congress of the Union, in the course of legislation upon the objects entrusted to their direction, might or might not commit the decision of causes arising upon the regulation of any particular subject to the Federal Courts solely, but that, in every case in which the State Courts are not expressly excluded hy the statutes, they would of course take cognizance of the causes to. which those Acts might give origin. This he inferred from the nature of judiciary power, and from the general genius of the system. And Chancellor Kent, taking the same view of the subject, and after a full review of the course of decisions, State and Federal, down to the time he wrote, concludes that in judicial matters, the concurrent jurisdiction of the State tribunals depends altogether upon the pleasure of Congress, and may be revoked and extinguished whenever they think proper, in every case in which the subject-matter can constitutionally be made cognizable in the Federal Courts; and that, without an express provision to the contrary, the State Courts will retain a concurrent jurisdiction, in all cases, where they had jurisdiction originally over the subject-matter. 1 Kent’s Com., 396, 400.

The reasoning of the two distinguished writers just mentioned has remained without successful refutation; and without re-statement of their arguments, or an attempt to review the decisions upon the subject, it is sufficient to refer to the recent case in the Supreme Court of the United States, which would seem to conclude the very question now under consideration.

The case to which we refer is that of Claflin vs. Houseman, Assignee, 93 U. S., 130. In that case, the action was brought in a State Court by an assignee in bankruptcy, to recover against the defendant an amount of money which the latter had collected on a judgment recovered against the bankrupt within four months before the commencement of the proceeding in bankruptcy. The defence taken was, that inasmuch as the assignee was a creature of an Act of Congress, and derived all his rights and powers from the Bankrupt Act, and the right to recover was exclusively referable to that statute, the action could not be sustained in a State Court, but should have been brought in a Court of the United States. This was the only question considered by the Court ; and the opinion was unanimous that the State Court had complete cognizance of the action.

It was there held, that inasmuch as the Bankrupt Act gave no exclusive jurisdiction to the Courts of the United States, the assignee might well maintain a suit in the State Court to recover the assets of the bankrupt; and further, that the statutes of the United States, made in pursuance of the Constitution, are as much the law of the land in the States as the statutes of the States can be ; and although exclusive jurisdiction for their enforcement may be given to the Federal Courts, yet where it is not given, either expressly or by necessary implication, the State Courts, having competent jurisdiction in other respects, may be resorted to for the enforcement of rights under such statutes.

The whole subject is well reasoned in the opinion, and the decisions reviewed; and the Court very justly observe that when the structure and true relations of the Federal and State governments are considered, there is really no foundation for excluding the State Courts from the exercise of such jurisdiction. In discussing the relation of the two governments, and the operation of the laws of the Union, the Court say:

ci The laws of the United States are laws in the several States, and just as much binding on the citizens and Courts thereof as the State laws are. The United States is not a foreign sovereignty as regards the several States, but is a concurrent, and, within its jurisdiction, paramount sovereignty. Every citizen of a State is a subject of two distinct sovereignties, having concurrent jurisdiction in the State, — concurrent as to place and persons, though distinct as to subject-matter. Legal or equitable rights, acquired under either system of laws, may be enforced in any Court of either sovereignty, competent to hear and determine such kind of rights and not restrained by its constitution in the exercise of such jurisdiction. Thus, a legal or equitable right acquired under State laws, may be prosecuted in the State Courts, and also, if the parties reside in different States, in the Federal Courts. So rights, whether legal or equitable, acquired under the laws of the United States, may be prosecuted in the United States Courts, or in the State Courts, competent to decide rights of the like character and class; subject, however, to this qualification, that where a right arises under a law of the United States, Congress may, if it see fit, give to the Federal Courts exclusive jurisdiction.”

And again, in pursuing the argument, it is said: “ This jurisdiction is sometimes exclusive by express enactment and sometimes by implication. If an Act of Congress gives a penalty to a party aggrieved, without specifying a remedy for its enforcement, there is no reason why it should not be enforced, if not provided otherwise by some Act of Congress, by a proper action in a State Court. The fact that a State Court derives its existence and functions from the State laws is no reason why it should not afford relief; because it is subject also to the laws of the United States, and is just as much bound to recognize these as operative within the State as it is to recognize, the State laws. The two together form one system of jurisprudence, which constitutes the law of the land for the State; and the Courts of the two jurisdictions are not foreign to each other, nor to be treated by each other as such, but as Courts of the same country, having jurisdiction partly different and partly concurrent.”

That case leaves nothing to be said as to either aspect of the question here involved; and therefore, whether the right to maintain this action be placed upon' the express terms of the statute giving cognizance to the State Courts, or simply upon the non-exclusion of State jurisdiction, in either case the action is maintainable. And that the cause of action is a penalty, to be recovered in a civil action of debt by the party grieved, constitutes no objection ta the State Courts taking cognizance of it, and enforcing the right.

The case of the First National Bank of Plymouth vs. Price, 33 Md., 487, has no similitude to the present, except in that case the action was to enforce a liability in the nature of a penalty. There the penalty was given hy a statute of Pennsylvania, and the decision proceeded upon the principle, that, as the law had no extra-territorial operation, the Courts of one State will not enforce penalties imposed by the laws of another. But, as has been clearly shown, no such reason or principle applies as to the laws of the United States, when sought to be enforced in the Courts of the several States. The Constitution and laws of the Union are the supreme law of the land, and are as much a part of the law of each State, and as binding upon its Courts and people, as its own local Constitution and laws.

Prom what has been said it follows that the demurrer, so far as it is grounded upon the want of right or power in the Court to take cognizance of the case, must be overruled.

There are certain other objections raised under the demurrer fo the amended declaration, of a purely technical character; but these objections appear to be without any substantial foundation, and therefore may be dismissed without comment.

(Decided June 19th, 1877.)

For the reasons assigned, the judgment of the Court below must be reversed, and the demurrer overruled, and cause remanded to be proceeded with in regular course.

Judgment reversed, and cause remanded.

Miller, J., dissented.

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Concurrence Opinion

Bowie, J.,

delivered the following concurring opinion.

This case was docketed by consent in Baltimore City Court as of July 25th, 1874 ; a general demurrer to the narr. filed, and joinder therein.

On the 11th of March, 1876, the defendants suggested in writing on the record, that they were a corporation, organized under an Act of Congress, passed the 3rd day of June, 1864, ch. 106, commonly known as “The National Banking Act:” that said Act contained provisions for the voluntary dissolution of such associations, and that in conformity with those provisions, the corporation was dissolved, and became extinct, and by virtue of such dissolution, all suits against them abated by operation of law.

The plaintiffs replied to this suggestion, denying the dissolution, so as to cause the action to abate, and averring notice of his claim before the pretended liquidation of the corporation.

The suggestion of dissolution being overruled, the plaintiff filed an amended narr., to which the defendants demurred, which being sustained, the plaintiff appealed.

The cause of action arises under the Act of Congress of 1864, ch.. 106, entitled “An Act to provide a national currency, secured hy a pledge of United States bonds,” &c.

The thirtieth section of the Act, authorized the party aggrieved by the taking of usurious interest, to recover double the amount of interest unlawfully taken in an action of debt.

The fifty-seventh section provided, that all suits, &c., against any association under this Act, may be had in any Circuit, District or Territorial Court of the United States, in which such association may be established, or in any State, County or Municipal Court, in the county or city in which said association is located, having jurisdiction in similar cases.

The main question presented by this appeal, is co-eval with the Constitution of the United States, having been mooted from the time of its submission to the conventions of the several States for their adoption.

It has been decided variously in different Courts, at different periods, according to the prevalence of a liberal or literal. theory of construction of that instrument in the Courts, to which it has been referred.

No decision of the Court of last resort in this State has been made, or cited on this point — the subject being the construction of the 3rd Article of the Constitution of the United States, and the laws made in pursuance thereof, the decisions of the Supreme Court of the United States should be conclusive, when ascertained.

In the Eighteenth Lecture of his Commentaries, (vol. 1, p. 426,) Chancellor Kent collates and condemns the decisions of the Courts as far as then known, and announces very lucidly their result.

The language of that distinguished jurist is as follows :

“In the 82nd number of the Federalist, it is laid down as a rule that the State Courts retained all pre-existing authorities, or the jurisdiction they had before the adoption of the Constitution, except where it was taken away, either by an exclusive authority granted in express terms to the Union, or in a case where a particular authority was granted to the Union, and the exercise of a like authority was prohibited to the States, or in the case where an authority was granted to the Union, with which a similar authority in the States would be utterly incompatible. A concurrent jurisdiction in the State Courts was admitted in all except those enumerated cases ; but this doctrine was only applicable to those descriptions of causes of which the State Courts had previous cognizance, and it was not equally evident in relation to cases which grew out of the Constitution.”

“ Congress, in the course of legislation, might commit the decision of causes arising upon their laws, to the Federal Courts exclusively ; but unless the State Courts were expressly excluded by the Acts of Congress, they would, of course, take concurrent cognizance of the causes to which those Acts might give birth, subject to the exceptions which have been stated.”

After analyzing and condensing the opinion of Judge Story, in the case of Martin vs. Hunter, (1 Wheat., 304,) in which that distinguished jurist leans toward the doctrine that Congress ought to vest exclusive jurisdiction in the Federal Courts, and declares No part of the criminal jurisdiction of the United States can, consistently with the Constitution, be delegated to State tribunals,” the commentator adds, State Courts may, in the exercise of their ordinary, original and rightful jurisdiction, incidentally take cognizance of cases arising under the Constitution, the laws and treaties of the United Slates ; yet to all these cases, the judicial power of the United States extends, by means.of its appellate jurisdiction.” 1 vol., p. 397, in mar., 11th Edition.

The case of Houston vs. Moore is examined next. Judge Washington, as the organ of the Supreme Court, in that case approved the doctrine of the Federalist, on the subject of the concurrent jurisdiction of the State Courts, so long as the power of Congress to withdraw the whole or any part of those cases from the jurisdiction of the State Courts be, as he thought it must be, admitted.”

He referred to the practice of the general government as having been conformable to this doctrine, “ and in' the Judiciary Act of 1789, the exclusive and concurrent jurisdiction conferred on the Courts by that Act, were clearly distinguished and marked.” “The Act shows that, in the opinion of Congress, a grant of jurisdiction generally was not of itself sufficient to vest an exclusive jurisdiction.”

The Judiciary Act grants exclusive jurisdiction to the Circuit Courts, of all crimes and offences, except where the laws of the United States should otherwise provide.

A number of Acts of Congress are then referred to, in which the State Courts are authorized to take cognizance: commenting on these, the author resumes, “ Without these provisos, the State Courts could not have exercised concurrent jurisdiction over these offences, consistently with the Judiciary Act of 1789.”

But these saving clauses restored the concurrent jurisdiction of the State Courts, so far as under State authority it could he exercised by them.

The Supreme Court, in the case referred to, held it to be perfectly clear that Congress cannot confer jurisdiction upon any Courts but such as exist under the Constitution and laws of the United States, although the State Courts may exercise jurisdiction in cases authorized by the laws of the State, and not prohibited by the exclusive jurisdiction of the Federal Courts. - •

Since the decision in the Court below, of the case now under review, the subject of the concurrent jurisdiction of State Courts, in cases arising under the Constitution and laws of the United States, has been thoroughly discussed in the case of Claflin vs. Houseman, by the Supreme Court of the United States, at October Term, 1876.

All the earlier cases have been reviewed, and the doctrine advanced by Hamilton, and sanctioned by the decision of the Supreme Court, in Houston vs. Moore, 5 Wheat., 1, is recognized and affirmed.

Having disposed of the particular case which arose under the Bankrupt Act, the Court declares, “ Other analogous cases have occurred, and the same result has been reached, the general principle being that where jurisdiction may be conferred on the United States Courts, it may be made exclusive, where not so by the Constitution itself; but if exclusive jurisdiction be neither expressed or implied, the State Courts have concurrent jurisdiction whenever by their own Constitution they are competent to take it.”

“ Thus, the United States itself may sue in the State Courts, and often does so. If this may be done, surely on the principle that the greater includes the less, an officer or corporation elected by United States, authority, may be enabled to sue in such Courts. Nothing in the Constitution, fairly considered, forbids it.”

“ The general question whether State Courts can exercise concurrent jurisdiction with the Federal Courts, in cases arising under the Constitution, laws and treaties of the United States, has been elaborately discussed, both on the bench and in published treatises, sometimes with a leaning in one direction, and sometimes in another, but the result of these discussions has, in our judgment, been, as seen in the above cases, to affirm the jurisdiction where it is not excluded by express provision, or by incompatibility in its exercise, arising from the nature of the particular case.”

“ When we consider the structure and true relations of the Federal and State governments, there is really no just foundation for excluding the State governments from all such jurisdiction.” Albany Law Journal, December 2, 1876.

The authority and weight of this case is attempted to be impaired by the appellee, by the suggestion that the view there expressed as to the jurisdiction of State Courts in penal cases, is altogether obiter. The subject of inquiry was, whether State Courts could entertain jurisdiction in matters arising out of the Constitution of the United States, or laws made in pursuance thereof. The particular occasion, or cause, was a suit brought by an assignee of certain bankrupts against a creditor of theirs, who had fraudulently obtained judgment against them, to recover the proceeds of that judgment.

Proceedings in bankruptcy are “sui generis.” They constitute a peculiar jurisdiction, created hy and under the special control of Congress, entirely exclusive of State Courts. They have been held to be in some of their features of a quasi criminal proceeding.

In a question of this character raised by demurrer, the whole field of concurrent jurisdiction in civil or criminal cases was necessarily open, and the judicial mind must have been directed to all analogous cases, in which exclusive jurisdiction had been or might be claimed by the Federal Courts.

It is apparent from the elaborate character of the opinion in question, and the number and variety of the cases cited and examined, the question was considered in its broadest aspects, and decided upon a principle applicable to all classes of cases; viz., “that the Constitution and laws of the United States and the laws of the several States, constitute in their respective spheres one system of jurisprudence, and all rights arising under the former, may he enforced in the State Courts, where exclusive jurisdiction has not been expressly or impliedly conferred upon the Federal tribunals.”

If. the question was one of first impression, I should arrive at the same conclusion.

The cause of action set out in the appellant’s na-rr., is strictly the violation of a private civil right conferred by an Act of Congress.

It is alleged by the appellant, that in the course of certain loans made bjr the appellees, to the appellant, for the use of his partners, the appellees, exacted and received of him usurious interest, whereby the appellant became entitled to recover of the appellees, under the Act of Congress. by which they were incorporated, twice the amount of all the interest paid.

The appellees admitting the facts charged, deny the jurisdiction of the Court to enforce the remedy, because, they say, they constitute an offence against the government of the United States, for which they are liable to a forfeiture or penalty, exclusively cognizable in the Federal Courts.

If the loans had been made by an individual, or corporation erected or created by the laws of this State, there would be no question as to the right of the plaintiff to recover the excess of lawful interest under our State laws.

But the national banks being, it is said, creatures of Federal authority, although domiciled in our midst, and composed in a great proportion of our own citizens, are under the segis of the Federal Courts, and not amenable to State authority in actions of debt, for dues arising under an Act of Congress, although the right of action is expressly given by the law, under which the banks are organized.

It is thought to be incompatible with the dignity of a sovereign State, that its Courts should become the instruments of enforcing the laws of the Federal government; that Congress has no power to invest State Courts with jurisdiction in enforcing penalties, thus drawing to the Federal tribunals under the guise of concession, the right of supervision by appeal or writ of error.

It is insisted, that the right sought to be enforced in this case being penal in its character, is properly and exclusively cognizable in the Federal Courts.

The Act of Congress under which the claim of the plaintiff is made, was one for the establishment of fiscal agencies throughout the United States, passed in the exercise of undoubted constitutional power. Vide, 40 Md., 272.

Under this Act, citizens of various States associated' according to the provisions of the law, became incorporated as a national bank, with the privilege of issuing notes, discounting and loaning money on interest, at such rates as are allowed by the laws of the State, in which the bank is located.

It was held by the learned Judge who decided this case below, that inasmuch as the Act of Congress of 1864, ch. 106, in sections 80 and 57, imposed a penalty for its violation, and invested the State Courts- with jurisdiction for the recovery of the same, it was to that extent unconstitutional.

With great deference, I dissent from these views. The Act does not, in my judgment, impose on the appellees, speaking technically, a penalty. It is declared, that the knowingly taking a greater rate of interest than was allowed should be held and adjudged a forfeiture of the entire interest; and that, if the greater rate should have been paid, the person paying it, might recover back in an action of debt twice the amount thus paid. The first clause of the 30th section creates a forfeiture, without prescribing the mode of its recovery, or declaring to whom it shall enure. The second authorizes the person paying, to recover twice the amount thus paid. The amount of the forfeiture is entirely different from the sum to be recovered by the party aggrieved.

It is nowhere said in the statute, that the State Courts should have jurisdiction over the forfeiture.

The forfeiture enures by implication of law to the benefit of the United States, and is recoverable by action of debt, in the nature of a “ qui tarn ’ ’ action or indictment in the Courts of the United States; the action of debt is for the benefit of the party injured, and the double interest is made recoverable as any other debt, in the State Court.

This interpretation is sanctioned by tbe most respectable and well recognized authorities upon the construction of statutes.

“Penal statutes are such Acts of Parliament, whereby a forfeiture is inflicted for transgressing the provisions therein contained. A penal statute may also be a remedial law; and a statute may be penal in one part, and remedial in another part.” Dwarris on Statutes, (642 in mar.); 1 Wits., 126; Dougl., 702.

There is no impropriety in putting a strict construction on a penal clause, and a liberal construction on a remedial clause in the same Act of Parliament. Ibid. 174.

Penalties, in a legal sense, are the suffering in person or property annexed by law, to the commission of crimes or offences against the government imposing them, as a punishment of the criminal or offender.

If pecuniary, they are generally payable to the government whose laws are violated, or to the informer.

Where the act prohibited inflicts an injury, and a remedy is given by the statute to the party aggrieved, the amount to be recovered becomes a debt.

In the case of Cresswell vs. Houghton, 6 T. R., 355, it was said “ where an Act of Parliament imposes a duty, and any person is prejudiced by its non-performance, the party injured may recover damages and costs. In the case of penalties a distinction was taken between those cases where the penalty is given to the party grieved, and those where it is given to a common informer. The Court said the instant the thing was done which occasioned the penalty, it was a debt at common law, and the action upon the statute for the penalty is similar to that upon a bond to recover a debt already due.”

The person to be restrained by the Act of Congress was a corporation, a legal entity, created by itself. The act prohibited was the violation of State laws regulating interest. It is very questionable whether the person, or the act, were subjects for penal legislation by Congress. The corporation, as the creature of Federal legislation, might be subject to the laws of its being, as conditions of its existence and operation; but the violation of a State law, could not he made an offence against the United States, yet there was great propriety in making corporations created by the United States subject to actions of debt, by all persons dealing with them, who were aggrieved by the violation of the laws of the State in which they were domiciled.

The injury or act prohibited was a private wrong ; the remedy was a private personal right, recoverable in an action of debt for the benefit of the party injured.

The United States had no interest in the amount to be recovered, no power to enforce or release it.

Where forfeitures and penalties are payable to the State or to an informer in a “ qui tam” action, they áre properly subjects for the jurisdiction of the State, whose laws are violated.

The process for their recovery, is a quasi criminal procedure. The defendant in such actions is not exempt from liability to imprisonment, by the Acts abolishing imprisonment for debt in civil cases, nor can a new trial be granted after a verdict for the defendant, in case of a wrong conclusion of the jury upon the facts. State vs. Mace, 5 Md., 337; Wilson vs. Rastall, 4 T. Rep., 753; Brook vs. Middleton, 10 East, 268 ; Green vs. Hall, 9 Exch., 247, cited in Alexander’s British Statutes, 261.

Tried by these tests, in my opinion, the sums sued for in this action are not penalties, but debts, created' by statute, recoverable by action of debt in the State Courts.

The appellee argues that this action is not only not sanctioned, but was clearly prohibited by the laws of the United States.

In addition to the repeal of the National Banking Act of 1864, by the Revised Statutes, which went into operation in 1874, it is insisted several sections of the Revised Statutes expressly invested tlie District Courts of the United States with jurisdiction, in all suits for penalties, and forfeitures, incurred under any law of the United States, and invested the Circuit Courts of the United States with original jurisdiction of all suits brought by or against any banking association, established in the district for which the Court is held under any law providing for national banking associations; and a similar jurisdiction was given to the District Courts ; vide Rev. Stat., sec. 563, p. 94, sec. 629, p. 111 and p. 95, besides which, on^. 134, sec. 711, in treating of the jurisdiction of the judiciary of the United States generally, it is declared the jurisdiction vested in the Courts of the United States shall be exclusive of the Courts of the several States in cases of suits for penalties and forfeitures incurred under the laws of the United States.

It was insisted in behalf of the appellee, that the saving sections of the Revised Statutes, Nos. 5597 and 5598, on which the appellant relied as reserving their rights, under the Act of 1864, ch. 106, had no such effect: that the right and not the remedy was reserved. The language of the saving clauses is the most conclusive answer to the argument of the appellee.

Section 5597 declares “the repeal of the several Acts embraced in the revision, shall not affect any act done, or any right accruing or accrued, or any suit or proceeding had or commenced in any civil cause before said repeal, etc., but all rights and liabilities under said Acts shall continue and may be enforced in the same manner as if said repeal had not been made.”

Section 5598 is equally emphatic.

“ All offences committed and all penalties or forfeitures incurred under any statute embraced in said repeal, may be prosecuted and punished in the same manner and with the same effect as if said repeal had not been made.” Revised Statutes, U. S., p. 1091.

There is no distinction made in these sections between rights and remedies in civil causes, or prosecutions for penalties: both are expressly reserved.

The appellee further insisted, that before the adoption of the Revised Statutes, at the time of the enactment of the National Banking Association Act, the exclusive jurisdiction in cases of penalties and forfeitures, was vested in the Courts of the United States by the 9th section of the Judiciary Act of 1789, notwithstanding the 57th section of the Act of 1864, ch. 106, authorizing suits against any corporation, under said Act in the Circuit, District or Territorial Courts of the United States or in any State, County or Municipal Court in the county or city, having jurisdiction in similar cases. •

It is said “arguendo ” that this clause of the section conferred no jurisdiction on State Courts in cases of forfeitures and penalties, because at the time the law was enacted, State Courts had no jurisdiction in cases of penalties, etc., incurred under the laws of the United States.

The words “similar cases” were not used in the 57th section above quoted, in the confined sense suggested by the ingenious and learned counsel for the appellee. “ Nullum simile est idem.”

The act being remedial as well as penal, is to be construed in a sense consistent with its object, which clearly was to make the banking associations not only liable to State laws in the matter of interest upon loans, but subject to State Courts, in the execution of remedies given by the laws of Congress, enforcing State regulations.

Besides the unconstitutionality of the Act of Congress, the appellee, in support of his demurrer, relied on certain specific ohjections to the amended narr., which were not considered by the Court below, because the action was regarded as untenable on the former ground. Among these special grounds the first is “the averment necessary to make good the action, that the alleged taking of interest was contrary to the laws of Maryland, is not true in law. There is no statute in this State regulating the taking of interest by National Banks. If any such existed it would be unconstitutional.”

There is no averment in the amended narr. that the rate of interest taken by the defendants was greater than that allowed to be taken by the laws of Maryland “by National Banks;” but the averment is, that the sum was greater than that allowed to be taken by the laws of Maryland.

The averments in the narr. are substantially in the language of the Act of Congress, the breach of which constitutes the cause of action.

The conclusion is not “contra formam statuti,” but against the law of the State of Maryland, and against the form and provisions of the Act of Congress.

The action of debt arising under the latter, the reference to the law of Maryland in the conclusion of the narr. except as a description of the amount of interest to be recovered, was wholly unnecessary.

The amount of interest allowed by the State of Maryland was a matter of evidence, not necessary to be pleaded.

The pleadings in this case are not to be regulated by the rigid rules governing penal actions, but by the more liberal principles prescribed by the Code in civil suits.

Among other minor objections to the amended narr. it is urged that it is not averred that the bank was located in the State of Maryland, a fact essential under the statute. In the first and third counts of the amended narr. it is expressly charged that the defendants were authorized to conduct the business of a National Bank in the City of Baltimore, and while so conducting its business, in Baltimore City, the defendants did, etc. In the second count, the “locus in quo” is stated by reference to the first count.’

The demurrer being to the narr. generally, not to the counts specifically, if there is one good count, it is sufficient to overrule the demurrer. '

The question of abatement is not before this Court on this appeal, but as it might influence the action of this Court, if the action was not maintainable on that plea, we do not hesitate to express our concurrence with the ruling of the-Court below on that point.

Dissenting from its opinion on the general ground above expressed, we think the judgment below should’be reversed.

Case Details

Case Name: Ordway v. Central National Bank

Court Name: Court of Appeals of Maryland

Date Published: Jun 19, 1877

Citation: 47 Md. 217

Court Abbreviation: Md.