State v. New Orleans Gas Light & Banking Co.

2 Rob. 529 | La. | 1842

Garland, J.

The petition represents that, in the year 1835, the legislature incorporated the New Orleans Gas Light and Banking Company, with certain capital, rights, and privileges. That the charter was granted on the express and implied condition that the Company should at all times pay all its notes and liabilities in lawful money of the United States, and that if said Company should, at any time, suspend payment as aforesaid, for the space of ninety days, then the charter should be, ipso facto, forfeited. That said obligation not only results from the express ^provisions of the charter, but is implied by the nature of every bank charter granted by the legislature.

It is further alleged that the said corporation, in May, 1837, suspended the payment in specie of its notes and obligations, which was persisted in until the month of December, 1838. That in March, 1839, the legislature passed an act relieving the different Banks of the State from the forfeiture of their charters, incurred by that suspension. That in this law it was provided that all the Banks, the Gas Light Bank among others, should pay or settle every Monday morning in gold or silver, the balances that each might owe to the other Banks. That the Bank should publish, at least once a month, a statement of its condition, in some newspaper in the city of New Orleans, showing the amount of its circulation, deposites, specie in the vaults, and other assets and liabilities. That the remission of the forfeiture was granted, on the express condition, that the Bank should comply with these conditions, and should not in future suspend or refuse the payment in specie of any of its notes or obligations. The petition then alleges a violation of these obligations in not paying weekly the balances in gold or silver, in not publishing monthly statements, and in suspending payments on or about the 18th of October, 1839, whereby it is alleged that the charter is forfeited. A dissolution of the corporation is prayed for, and an order that the institution may be put in liquidation as required by law. The answer is a general denial.

By the twenty-fifth section of the charter, the Company is prohibited from suspending or refusing payment in lawful money of any of its notes, bills, obligations, or deposites ; and if it shall at any time suspend or refuse payment as aforesaid, the holder of the bill, &c. is entitled to recover interest on said note or bill, at the rate of ten per centum per annum ; and if said suspension or refusal shall continue for a period of ninety consecutive days, then the charter shall be, ipso facto, null and void. Session Acts of 1835, p. 104.

It is not denied that the Bank suspended specie payments in May, 1837, and resumed again in December, 1838. On the 14th of March, 1839, the legislature passed an act, the preamble to which recites that the Banks throughout the United States and this State‘had suspended specie payments in 1837, the result of a gen- ’ eral derangement in the monetary system of the country, and that as the Banks in this state had resumed specie payment, this act provided, that such of the Banks as had forfeited their charters by a refusal to pay their votes and obligations in specie at any time prior to the passage of the act, should, be reinstated in all the powers, rights, and privileges conferred upon them by their respective charters, notwithstanding any forfeiture already incurred, to the same extent as if no such forfeiture had ever existed, provided that this act shall not be so construed or understood as to authorize any future suspension by any of the Banks of the payment of their obligations in specie. Acts, 1839, p. 68, sec. 1. The third section of the same act makes it the duty of the Banks to pay their weekly balances in specie, and to publish monthly statements of their situation.

The evidence shows that the monthly statements have been regularly published. That since the 7th of January, 1840, no balances have been due to other Banks. Previous to that time, the balances were paid in currency satisfactory to the Bank or Banks, to which the balance was owing. Whenever the balances were demanded in specie, the Bank paid them in that medium. It did not refuse in any instance, but as often paid in specie paying notes as in specie. On the 19th of October, 1839, the Bank passed a resolution suspending payments in specie of its bills and obligations, which suspension continued until the 7th of January, 1840, when it again resumed, and has continued to pay in specie ever since. There is no evidence that, during this last suspension, any bill or note was presented for payment, and payment in specie refused.

The alleged ground of forfeiture, that the defendants have not published monthly statements of the condition of the institution, is not sustained by the testimony, the Cashier having proved that they were published as required. '

The obligation to pay the weekly balances to other Banks in specie, is declaratory only. The act imposes no other duty than was previously required by law; and if the party in whose favor it was stipulated, choose to waive it, the State cannot complain, without showing that some injuryhas resulted therefrom to the community, whose guardian it is. This obligation will, however, be considered more appropriately under the third ground of alleged forfeiture.

Before proceeding to the consideration of the last ground of forfeiture, it may be proper to state that, it is now well settled, that an act of incorporation may be forfeited for a misuse or abuse of the powers entrusted to it. It is a tacit condition of a grant of incorporation, that the grantees shall act up to the end or design-for which they were incorporated. If they do not, the rights and privileges granted may be withdrawn. Angel & Ames on Corporations, 510. 2 Term Rep. 515. 9 Cranch, 51. 4 Wheaton, 658, 659. 1 Blackstone, 485. 2 Kyd on Corp. 474. But this misuser or non-user of its franchises, must be judicially ascertained. Chancellor Kent, in his Commentaries, vol. 2, p. 251, says, it is an old and well established principle of law, that a corporation is not deemed dissolved by reason of a mis-user or non-user of its franchises, until the default has been judicially ascertained and declared. In the case of The King v. Amory, 2 Term Rep. 515, the Court of King’s Bench held the same doctrine. A Bank whose stock is owned by private individuals is essentially a private corporation, though its objects, uses and operations partake of a public nature; and the same may be said of insurance, canal, bridge and turnpike companies. A right of property is, therefore, vested, of whieh these corporations should not be divested for light causes.

We also take it to be undeniable that, in every act of incorporation, the existing law of the State forms as much a part of the contract, so far as applicable to the corporation, as it does of a contract between individuals; and we hold that the tenth title of the first book of the Civil Code in relation to .corporations, is applicable to every charter made since its adoption, unless there be something in the latter showing a repeal or a suspension of its provisions. Article 438 of the Civil Code is in accordance with the established principles of both the Civil and Common Law, and shows that the legislature in some cases, and the judiciary in all others, have as mucli authority over corporations as over individuals, and can take from them their chartered rights if they abuse their privileges, or refuse to comply with the conditions on which such privileges were granted.

In this case the abuse complained of is, that the Company, for about eighty days, suspended or refused to-pay its notes and liabilities in specie. We know of no greater abuse of privileges or neglect of duty than this, on the part of a banking corporation ; and if there was no sufficient justification for it, in the circumstances of the case, we should not hesitate to pronounce it a sufficient ground of forfeiture. But it is earnestly contended in this case, that the Bank may suspend, at any time it pleases, for the space of ninety days, without incurring a forfeiture. We do not think so. Previous to the act of March 14th, 1839, there might have been much force in such an argument ; but since the enactment of that law, none of the Banks in this State have a right to suspend specie payments for one day longer than the acts of the last legislature now authorize. The act of 1839 reinstated the Banks in all their rights and privileges, but, in doing so, the legislature,said that it was not tobe considered as authorizing any future suspension ; and it is a great mistake to suppose that this Bank can, at any time it pleases, suspend the payment of its notes and obligations in specie, dor a period not exceeding ninety days, upon the payment of ten per cent interest only.

Upon looking into the testimony in this case, we find, although it is stated that the Board of Directors passed a resolution on the 19th of October, 1839, to suspend specie payments, that there is no evidence of an actual refusal on the presentment of any of its notes or obligations for payment. An effort was made to prove that two or more notes or bonds given to the Bank of the United States were not paid at maturity. This appears to have been the case ; but the Cashier of the Bank testifies that they never were presented for payment. It is not shown that any public inconvenience or injury has resulted from the passing of this resolution ; and it may be, had the supposed inquiry been gone into, that the defendants could have shown some cause sufficient to excuse the adoption of such a resolution, or even a temporary suspension of specie payment, and that the penalty would be too great for the offence.

The judgment of the District Court is therefore annulled, and the case remanded to the District Court for a new trial. The costs of the appeal to be paid by the defendants.