17 Ky. 171 | Ky. Ct. App. | 1824
Lead Opinion
Opinion.of the Court, by
THIS is an action brought by the Bank'against Cashier of one of the Branches and-his sureties in for official defalcation.
At the term next after process executed, and at-which the suit stood for trial; the defendants below, now appellants, applied for and obtained from the Judge, an order for a change of venue, and.-there were no pleadings filed at that term, on the part of the defendants.
At the first succeeding term of the court to which the cause was removed,'the defendants appeared, and after presenting a demurrer, which professed on its. face to crave oyer of the writ, declaration and bond. de. dared on, also filed sundry pleas in bar.
The court overruled the demurrer.
It is now insisted, that the demurrer ought to have., been sustained, because it appears that the writ was issued in the name of the President arid Directors of the . Bank of Kentucky, the declaration in the name of the. President, Directors and Company of the Bank, and the’ bond was.executed to the President and Directors of the Bank, of Kentucky only; and-it is insisted,.that-this, variance ought, to be held, fatal.
The oyer craved of the writ and bond is not by art en(ry 0f récord, as it properly ought to have been, but is a bare statement on the face of the defendants’ dc¿ murrer, that oyer was craved and given,
This, according to the loose practice prevalent in ihe country, is frequently taken and treated by the parties and the court, as oyer, and may answer, where the pa~ pers are on file and to be seen before,
But it is evidcnt,'that if any paper was not produced, un application by prayer of oyer to the court on record alone will do. ' With this prayer the opposite party may. comply, or counterplead the oyer, and have the decision of the court thereon, whether oyer is to be given or not,
As this statement in the plea was treated as re at over °f record, we shall so consider it, although no oyer is craved on the order of the court; and we shall view court as deciding the cause, and then determining that °ypr of the writ couId n°t be given*
We do not conceive that the decision refusing oyer-ofthe writ, is any way calculated to prejudice the defendants, or preclude them from taking advantage of the variance. ‘
i he capias, then, being a part of the record, it is en-iirely nugatory to crave oyer of it. It is futile, to ask that to be spread on record, which is already a part of it. It cannot, then, be wrong, fora court to refuse the idle ceremony of- oyer; nor does the decision of the court refusing oyer, make the writ less a paid of the record, than it was before. The decision on this point was correct.
However natural this conclusion may be, we are unwilling to go the whole extent to which it would lead us, and are tempted, liko the courts of England, to place some reasonable limitation on it, and lessen the conse-quencos of the doctrine which admits the writ to be part of the record, beiore or without oyen
Dilatory pleas and special demurrers to the declaration are limited, by the act of assembly, to the first day appointed for 4the trial of the cause, after the return of process executed. Although the letter of the act may not embrace a demurrer in abatement, for variance between the writ and declaration, yet its spirit will not permit such demurrers to escape.
The law permits the party either to plead the variance, in some cases, or demur in abatement. If he elects to plead, after the first day of t rial, he is precluded from doing so. If he takes another mode to reach thesame object, it must be equally within the mischiefs intended to be avoided; and, therefore, the practice of demurring in abatement must be limited to the same boqr as pleas are., which attempt the same thing.
t (8) It may be insisted, that no corporation can be established in this State, but by act of assembly, and that according- to our laws, the court is bound judicially to. notice and to know every act of assembly, whether public or private, and therefore must judicially know the. name of every corporation here,
■It has been insisted, that the company is the sub-stonee of the corporation, and the President and Directors only the agents. I he company may be entitled to the funds, or most of them, it is true; but the President and Directors are the efficient and active part of the corporation, known in law, and, therefore, naming them includes the most substantial part. And although the want of the company in the writ might have abated it, if taken in a proper time-and mode; yet, as that was omitted, the declaration has cured the matter, and the action cannot abate by demurren
. It is so repugnant to the principles of justice, to permit parties contracting with corporations, to avoid their contracts, and corporations to avoid their own grants, for small errors and omissions in stating the .cor-poratename, that we should be unwilling to adopt such a principle, unless compelled by the settled doctrines of hu.
It is true, many cases are"found where courts tolerated the rule; but it was reprobated and shaken by Lord Coke, 10 Rep. 123, and since then, the rule is adopted, that such grants and contracts are good, and that it is competent for the party to aver that they were executed to or fey the corporation, and if the fact shall
“ That the said James T. Pendleton shall well and faithfully discharge all and singular the duties of his said 0$ce of cashier, and abide by the rules and by-laws of said institution.”
anc* singular the duties of his said office of cashier; nor did he abide by the rules and by-lams of said institution, during his continuance in office, to wit, from the date when ^[58 bond was executed, until the. ■ — davof-; but the same to do, hath wholly failed. He hath, dur-The breaches assigned, are: “That the said James T. Pendleton did not well and faithfully discharge all ing.said time, used, and wasted, and misapplied the sa^ Bardslown Branch Bank, contrary to Bie rules and by-laws of said institution. Nor have the said defendants paid the plaintiffs the said sum of fifty thousand dollars,” (the penalty of the bond,”) “ or any Part thereof.'’
The plaintiffs claimed and had oyer granted of the ordinance, and demurred, and the court overruled the plea.
The ordinance has a proviso annexed thereto, after directing the renewal of the bond, in the following words: “ Provided, however, that such renewal, or any thing contained in or growing out of this section, shall not impair the obligation of any previous or other bond, until actually given up to be Cancelled by the board of directors. The security required of each, shall he approved by the president and directors of the branch, and a copy of the bond and a certificate that the seen-rity has been approved as aforesaid, shall be transmitted to the president of the Bank of Kentucky.”
The question made and insisted on by the appellants on this demurrer, as well as on the evidence, is, that on giving the new bond, the old one was substituted and discharged as to future defalcations, and could only be detained to secure defalcations which had taken place "
And moreover, there is ftn express declaration, or w\la(- [a tantamount thereto, that the obligation first giv-eil) shall remain the same. It shall not be “ impaired f’’ that is, it shall not be weakened, lessened or rendered ¡n any degree worse than it was before.
It has been insisted} that good policy requires that the terms of the first bond should be shortened to the execution of the second; that a contrary doctrine enables banks to attach to each officer -a train of sureties, and thereby extend its circle of ififluene'e and obligation. It is true, (hat banks have it in their power, not only in this way, but by more extensive means, to extend their 0yj]j«iltjons on society. Still, this argument would be more suitably addressed to another department of government, when creating banks, than to us, when adjudicating on their contracts. Here, however, the contract sued on has no limitation in its terms. If no new bond had ever been executed, there could not have been any pretext for saying there would be any limit, and when the new one is executed, on terms which expressly secure the obligation of the first, it would be an arbitrary act to declare that the obligation of the first should cease at the date of the second,
In descending to the points made on the evidence, we do not deem it necessary to notice the questions presented on the part of the appellants, in their bills of exceptions, except the fifth and tenth, as all the rest have
But after the (acts which the evidence conduced to prove, are ascertained, their admissibility to charge the cashier and his sureties on his official,bond,, is very questionable. ^
^ They are to this effect: Pendleton,.the cashier, drew, in his individual character, a check or draft on the branch of which he was cashier, and then accepted it for the bank, as the cashier, and sold it to, and-received the amount therefor in money, from the branch bank of die United-States in Louisville.
The cashier of the latter bank, transmitted it to Pen-dleton, as cashier, with directions to carry it to Credit of the Bank of the United States.
If Pendleton ever received this draft, which disputed,fact, he never placed it on the books of his branch, to. the credit of the United States’ Bank, and nothing more was ever heard of it.
It was insisted that this created- a liability for so much, on the part of the Bank of Kentucky, by the act of Pendleton,‘its cashier, to the Bank of the United States, and, therefore, Pendletoii and his securities must account for it,
It will be readilyadmitted; (ha„t if Pendleton, by drawing and accepting the draft, did create a liability on the Bank of - Kentucky, which the Bank of the Unit.ed States could enforce, he and--his sureties ought to be made liable hcrc- ' ’
But we are.unable to..perceive any proof,.conducing to sh.ow apy liability on this bank, to pay,"the.amount of this draft. - ’
This check is different, in circumstances, from another sold to the same bank, which was taken up and crea-ited t.o the United States’ Bank, by the cashier of the Eank of Kentucky, mentioned in the same exception, and also a third of $400, bought by the Bank of Ken-tur.ky, mentioned in another exception.
These two latter drafts became the property of the Bank of Kentucky, and if they were placed in the hands oí Pendleton and secreted by him, or applied to his purposes, it was a violation of his official duty, for which this action will he. Bat not so of the first, m v. hic;< the Bank of Kentucky uever had an interest.
As the judgment must be reversed on one of these points, we are led to notice some questions which were made on the part of the plaintiffs below, and decided against them, as we conceive, improperly, and which may again occur on another trial.
The judgment must be reversed with costs, and verdict set aside, and the cause be, remanded, with directions for new proceedings not inconsistent with this opinion.
The counsel for the securities of Pendleton, discontent with the opinion of the court, on the question of the validity of the bond on which the action was founded, moved the court for a re-hearing on that point, and in support of the motion, presented the following
Rehearing
PETITION FOR A RE-HEARING, BY
The counsel for the appellants, most respectfully solicit the reconsideration of this case, upon one point decided by the court.
A bond made to “ the president and directors of the Bank of Kentucky,” omitting the “ company,” is declared a good and valid obligation to the corporation.
It will be seen at once, by looking at the act of the Legislature of Kentucky, creating this corporation, that the bond is not to the corporation by its corporate name; that the omission of the word “ company,” is the omission of a material part, the company being the most numerous of the natural persons composing the body politic' — the word “ company,” including the great body of the stockholders.
The opinion proceeds in affirming this as a good obligation to the corporation, and suable in the name of the corporation, upon two postulates:
1st. That the variance from the corporate name, by omitting the word “ company,” is not fatal.
2d. That by a delivery to the president and directors, the corporation, by the style and name .of “ the President, Directors and Company of the Bank of Kentucky,” can take and sue by an obligation to “ the President and Directors vf the Bank of Kentucky.”
As to the first point, that the omission of the word “ company,” is fatal, the counsel beg leave, most respectfully, to ask the court to examine critically, these cases: Eaton’s College case, 2 Dyer 150, a; Croft vs. Howell, Plow. 536-7; Mayor and Burgesses of Lynne, 10 Co. 124; Rex vs. Croke, Cowper 26; Head and Amory vs. Providence Insurance Company, 2 Cranch 168-9.
In Eaton’s College case,.above cited, the true name of the corporation was, “Provost and Royal College, of the College of the blessed Mary of Eaton,” &c. The lease was, by the name of the “ Proyost and Fellows of
In Croft vs. Howell, the true name of the corporation was, “ two Masters or Governors and Commonalty of the mystery of the Cooks of London,” and the deed was by the name of “ Master and Wardens and Commonalty of the craft or mystery of the Cooks of London.”
The omission of Masters, and putting therefor but one Master, and the omission of the word Governors, and putting Wardens in place thereof, was, by the unanimous .Opinion of the whole court, declared fatal, and the deed of said corporation was declared void.
In the report of the Mayor and Burgesses of Lynne, two cases are there cited and acknowledged to be variances m substance, viz. In one case, the corporate name was, u the King’s free Chapel,” &c. the variance was “ the King and Queen’s free Chapel,” and the lease was avoided by the whole court. In another case,, the the name ofa corporation was, “ the College of Scholars of Merton,” and they made alease by the name of “ the College of Merton,” omitting the word “ Scholars.” This omission was held by the court a variance in substance, and the lease was avoided.
In the case of Reos vs. Crake, before cited, the true authority was to “ the Mayor, Aldermen and Commons, in common council assembled;” the act done, was by “ the Mayor, Commonalty and Citizens,” and the act was held void by Lord Mansfield and the whole court.
Thus it appears, that from the' time of the case in Dyer, in 1557, down to the year 1774, the Judges have uniformly decided, that a variation in substance from the ■corporate name, was fatal, and avoided the deed.
And in all the cases decided between those years, whether the variances did or did not avoid the act or deed, the question was, whether the variance was in substance, or merely in words and syllables.
The cases cited and relied on by the counsel for the hank, are found in the case in 10 Coks 124, before cited, are all variances, not in substance, as will be seen by an attention to those cases. In the eases so cited and relied on, the distinction between variances in substance, and variance in • letters and syllables, merely, is acknowledged, and that variance in the substance of the corporate name, avoids acts from or to the corporation; but variances in letters and syllables merely, not affect-.
The counsel fee 1 confident, from a diligent examination of very many cases reported and referred to in the before mentioned cases, and in 6 Vintir, title Corporation, letter G. that no case can be found where an omission of part of a corporate name, which omission is of ■a word or words, descriptive of part of the natural persons belonging to the corporation, has not been held fatal.
The cases before quoted are from 1557-8 down to 1774, and very many case's are referred to in those cases, in which the principle now contended for by the counsel for Pendleton’s securities was acknowledged. The question was always, is the variance substantial or not?
Is not the omission of the word “ Company,” in this obligation, a substantial variance and departure from the corporate name? Does not the “ Company” designate, and is it not used in the act of incorporation to include and describe the great body of the natural persons, the stockholders of the Bank? “The President and Directors” do not include the “Company;” neither does the Company include the President and Direc* tors; for half of the Directors, at the time this obligation bears date, were not necessarily stockholders.
II. The opinion supposes, in substance, that by the delivery, the corporation, that is, the “ Company,” also can take. •
To this the counsel most respectfully urge, in objection to this part of the opinion of the court, that it assumes premises which cannot be granted or proved as true.
1st. The opinion supposes, that a delivery of a bond or deed can be made to a corporation. This cannot be. A corporation is incorporeal, invisible, intangible, existing only in abstracto; it exists merely in idea and in contemplation of law; its powers and capacities are not natural, but derived from mere act of law. 10 Coke 32 b, Sutton’s Hospital; Head, &c. vs. Providence Insurance Company, 2 Crunch 169.
It cannot be seen, to make or receive a delivery; it can act only by natural persons. If natural persons receive a paper to the use of the corporation, the effect of that paper must be determined from the paper itself,
2dly. The opinion supposes, that by the delivery to the President and Directors, the corporation can take, although their true name and corporate style is notex--pressed in the obligation-; that is, that the “ coinpa-'■¿ny” (or stockholders, who are meant by the word company,) can take, although not named in the dee'd. This position is not warranted by law, as the counsel -most respectfully suggest.-
“■He that is no party to the deed, can neither give nor 'take any-thing by it, &c. except it be byway of re•mainder.” 1'3 Viner, fa’its or deeds, letter C‘a, page ' S3, pla. 15.
“ One that-is not party toa deed made between yw•ties, cannot-take by the deed,‘unless by way of remain-der.” Viner, supra, pla. 15. •
“ A-man cannot take immediately, where he is not party.” Viner, supra, pla. IS-; Co. LUt. fol-. 231 a, 'note Í.
The counsel then Urge, ih conclusion, that a corpora-, tion can only act in the manner prescribed to it by its charter. That is to them the enabling act; it gives them all the .power they possess; it prescribes to them 'a mode of contracting; they must observe that mode, or the instrument no more creates a-contract with them than if the body had never been incorporated.
“ The President, Directors and Company of the ’-Bank of Kentucky,” cannot take by a bond to “ the President .and Directors” aloné.
Upon the principle that corporations can only contract-in the mode pointed out to them by law, this court determined m favor of the Madison Hemp Mill Company vs. Lovett* an«S in favor of the Frankfort Bank vs, Anderson.
Corporations have great privileges and advantages; they ought to take them subject to their inconveniences -also. Jf they can gain by avoiding acts not done in their corporate name, although done by their agents, so they ought to lose by acts to them not taken in their corporate name, although taken by their agents.
A re-hearing upon this point is most respectfully re-’ quested* BIBB,,for Appellants-*
ADDITIONAL OEINION OP THE COURT, BV JUDGE MILLS.
Notwithstanding the confidence shown by the counsel for tiie appellants; on the question touching the validity qf this bond, because it was executed, to the President and Directors, omitting the words “ and company,” we are still disposed to adhere to.our first opinion on this point.
None of the-cases cited1 are analogous to the present. In all of them, a false name- or: description of the corporation was used. Here, the description and name are accurate, so fur as they go, and there is an omission only.
This court has decided, that a transfer of a bill’to tlie cashier,of a bank, officially, vested the legal estate in the bank, where the intention was to pass it to the hank itself. Farmers and Mechanics’ Bank vs. Turner, 2 Litt. Rep. 17.
All the cases cited are instances- of deeds made by corporations, and avoided.’by them, because not made by the body entitled'to grant.} and„ as observed in a note in Flow.den, 536, were*cases which might have been aided by a court- of. equity. In ajl of them, the grantors not-being those who were authorised to. ae.t, the grants must have been avoided for want of authority in the grantors; and on this principle alone can they be sustained..
In 2 Dyer 150 a, and Plowdcn 536, parts of the corporation were named as granting, who were not au-thorised to grant.
In 10 Coke-124,.the instrument was executed to the corporation, not falsely describing or naming the coi^ poration, but omitting part.of the corporafe-nome, and the bond was held good..
And in all the cases cited by Coke ip the opinion, the grants were made by a misdescribed or false named corporation, who had no authority to grant, and not one is shown, avoiding a grant to a corporation, the name of which was correct so far as it went, and then making a, bare omission of part.
The ground taken by the court in the former opin* ion, 's’ suc^ °missi°n may be supplied by aver-ment, and this is well supported by the reasoning of Coke, page 124, where the special verdict found the deed executed to the true corporation, by words, omit-RnS Part the ^rlle nfime*
The case in Cowper 26, is not in point. That was a direct proceeding to reverse an order made in favor of a corporation falsely described, and therefore cannot apply»’ Bacon’s Ábr. tille Corporation, letter C.
But, however strong these cases may appear, we jjnow their rigid and technical doctrines have been much mitigated by modern authorities, and that the principles now adopted bolter comport with sound rea-son and the maxims of common sense, and that ailow-the parties to place the stress of the controversy or, the intention to whom the deed was executed and de-livered, better answers the ends of justice, and does not entangle R fo a “ net of forms.,!
We are, however, toid that no delivery ran be, made by or to a corporation. The cases oited in 13 Vine»' 21, do not support this assumption. A corporation can glve uvery, according to these authorities, i o say that; no delivery can be made to a corporation, or soma thing equivalent thereto, would be going far indeed, anc* wodcl entitle it, by the bare act of scaling, to. every deed or grant vyhich purported on its face to be made it by its true name, although (he grantor might re-*ain ^ deed in his possession, and never do any act placing the instrument in the hands of any of the officers of the corporation.
The petition for a rc-hearing is, therefore, oveiy ruled.