1 Ga. 43 | Ga. | 1846
Lead Opinion
The judges not being unanimous in their decision affirming said judgment, delivered their opinions seriatim as follows :—
This case, as exhibited to tho court by the record, involves the question, as to the validity of the By-law regulating the transfer of stock, by the stockholders in the Augusta Insurance and Banking Company. By the third section of the act incorporating said Company it is declared, the stockholders in said institution “ may make, ordain and establish such bylaws, rules, a.nd regulations, as they may deem, expedient and necessary to carry into effect the objects of the institution; provided such by-laws,
Did the charter of Augusta Insurance and Banking Company confer the authority on the stockholders to make the by-law, and if so, is it a reasonable regulation, expedient and necessary to carry into effect the objects of the institution ? By the fourth section of the charter, it is provided the capital stock of the company shall not exceed $500,000, which shall be divided into shares of $100. By the sixth section of the charter, the company are authorized to insure property and effects, against loss by fire or water, and all other accidents. By the seventh section of the charter, the company are bound to pay all losses on property or other assurances made by them, within six months after the happening thereof. By the tenth section of the charter the company are authorized to issue bills or notes of credit, payable to bearer, and by the eleventh section of the charter, all bills or notes of credit issued as aforesaid, are to be paid on demand at the company’s office. I have referred to the several clauses in the charter for the purpose of showing what were the objects and duties imposed on the company, in order that the expediency or necessity of the by-law, to carry into effect those several objects, might be the more apparent. I am of the opinion, the charter clearly conferred the authority on the company to make the by-law, and that it is not only reasonable, but expedient and highly necessary, to enable them to carry into full effect the objects contemplated by the Legislature. This view of the subject is sustained by authority. Where a charter or statute empowers a corporation to pass such by-laws as are necessary, the by-law to be valid need not recite that it was necessary ; but the necessity will be implied from the act of passing it, being in fact, synonymous with expediency.” — Angell and Ames on Corporations, 299; Stuyvesant vs. the Mayor, &c. of New York; 7 Cowen's Rep. 606. The record in this case discloses the fact, there was a by-law made by the stockholders, which prohibited an individual stockholder who was indebted to the.Bank, from transferring his stock, and that such indebtedr ness should constitute a lien on his stock for the payment thereof. The record also exhibits William Glendenning as a stockholder in the company, — that on the 4th day of October, 1840, he became, the proprietor of twenty-five shares of its capital stock; and in the script, which was the evidence of his ownership, these words were inserted — “ Which stock is subject to the payment of all debts due, or to become due from said stockholder to the said company, either as principal, security, or otherwise, and is transferable only on the books of the company.” This By-law was obligatory,
“ By-laws of a corporation obligate its members, on the ground of their express or implied consent to them ; nor is it an objection to a corporator’s being bound by a by-law, that he had no notice of it, or that he was not a member of the corporation at the time the by-law was passed.” — Angell and Ames on Corporations, 301; Stetson vs. Kempton, et al. 13; Massachusetts Rep., 282. Was this by-law, so far as the rights of Glendenning and the company were concerned to the twenty-five shares of stock, repugnant to any law of the State ? If so, what law or principio of public policy does it violate ? Being the proprietor of the stock, had he not the right to sell it absolutely, and if so, had he not the right to pledge it, or create a lien upon it, by a bona fide contract, without contravening any public law of the State ?
I am now speaking of the validity of the by-law, as between Glendenning and the Company ; for if the by-law is repugnant to the constitution and law's of the State, it does not bind Glendenning, and he might treat it as a nullity, in a contest between himself and the Company; but it was not contended on the argument, this by-law was not binding and valid, as between Glendenning and the Company, and 1 do not doubt its validity —indeed the evidence of his title to the twenty-five shares of stock, recites it to be subject to the payment of all debts due, or to become due, by him to the Company. lie became the purchaser of the stock, on the terms and conditions expressed in the by-law, and no other; and as between him and the Company, it was binding and operative, according to its terms and stipulations. The record in this case discloses the further fact, that on the 31st of March, 1842, William Glendenning became indebted to the Company by note in the sum of $3,500, which was duly noted, and protested for non-payment; and is now, in the language of the by-law, “ laying over and dishonored.” The indebtedness of Glendenning to the Company is admitted to be a bona fide indebtedness ; but it is contended such indebtedness does not create a lien in favor of the Company under the by-law, so as to justify the defendant in refusing to make a transfer of the stock to the plaintiff in error, who is a purchaser at sheriff’s sale under a judgment obtained against Glendenning, subsequent to the date of the dishonor of the note mentioned in the record. Assuming the by-law to be valid, as between Glendenning and the Company, the fact of indebtedness on his part being admitted, could Glendenning himself have transferred the stock, and compelled the defendant, as the officer of the Company, to have made a transfer on their books, without first discharging his indebtedness to the Company ? Certainly not — and Why ? Because the by-law of the Company of which he was a member, declares “ No Stockholder, who may be indebted to the institution, as payer or endorser, on any note or notes, laying over and dishonored, shall be permitted to transfer his slock; the Company in that case shall be considered a creditor in possession, and such possession, and such dishonored note, or notes, shall constitute a lien on the stock, which shall be subject to the payment of such note or notes.” In the case of Waln’s Assignees vs. The Bank of North America, 8 Sergeant and Rawle 89, the court say, — “ By-law's bind, because the members of the corporation, either individually, or by those w'ho represent them, arc
far a bona fide purchaser from Glendenning of stock, notice of the lien created by the by-law, would be protected against such lien, it is not now necessary to decide, or how far the insertion of the terms, on which the stock is held by the stockholder, in the certificate of script (the evidence of his title) would go, by way of notice to the purchaser, it is unimportant to discuss at this time.' I have endeavored to establish, both on principle and authority, there was a valid lien created on the stock, in favor of the Company, as against Glendenning, which would prevent him from transferring it without discharging the same. At what time the plaintiff in error obtained his judgment against Glendenning, the record does not inform us, but it is stated to have been obtained subsequent to the dishonor of the note for $3,500. By the common law, the judgment did not create a lien on the stock of Glendenning so as to prevent a transfer of it. By the act of 21st December, 1822, bank stock is made subject to sale under execution, and I concur in the opinion of the presiding judge, in the court below, that the act of 1822 created only a qualified lien on bank stock. The 6th section of the act of 1822 declares, “ Any transfer made by the defendant of his bank or other stock, after judgment obtained against him or her, shall be void. Provided notice of the obtainment of such judgment be served bn the cashier .of s.uch principal bank, or any of its branches, or the proper officer of such other corporation within twenty days after said judgment is obtairied.” Unless the notice be given within the time prescribed by the act, it would seem the defendant would have the right to transfer his stock, notwithstanding the judgment, and that the lien created by the judgment would not become absolute so as to make the transfer void, without the notice .being given as required by the statute. The plaintiff in error insists his judgment lien is superior to that of the company created by the indebtedness of Glendenning under the by-law, although the lien in favor of the Company was created, and existing, prior to the date of his judgment, under which the sale of the stock to him was made. It is a principle of law applicable to liens of this description, that he who acquires priority in point of time, acquires priority of right.
was to the date of the plaintiff’s judgment. But suppose it w'hs not — under the state of facts presented by the record in this case, there being no evidence
It was said in argument, that the stock, standing in the name of Glen-donning on the books of the bank, and published to the world as his stock in the bank reports, and the lien created by the By-law being secret, it was contrary to public policy and a fraud upon creditors ; that it was the policy of our laws to have secret liens made public, as was apparent from our general Registry Acts. Perhaps it would be a sufficient answer to this argument, to say, the Legislature, in their wisdom, thought proper to confer upon the stockholders of the Augusta Insurance and Banking Company the power of qualified legislation ; they have enacted the Bylaw creating the lien ; that lien was not required by either .the common or statute law to be made public ; and our statutes requiring certain liens to be registered, are in derogation of the common law, and cannot be extended to other liens than those enumerated by implication. While, as a legislator, I might be disposed to give my hearty assent to that part of the argument for the plaintiff in error, which so forcibly pointed out the evils to the community by the exercise of the extraordinary powers of legislation by Corporations, in the enactment of By-laws ; yet as a judicial officer, I feel bound, by the highest considerations of public duty, scrupulously to protect the vested rights which have been legitimately acquired under them. Viewing the By-law in question as a contract, binding on the parties who enacted it, I feel bound to protect the lien on
Concurrence Opinion
concurring in the affirmance of the judgment below, gave the following opinion :
My opinion in this case is predicated exclusively upon the ground of notice ; and 1 should be content to concur silently in the judgment to bo rendered, did not the law make it obligatory on each of us to express his opinion in all cases where we have the misfortune to disagree. As it is, I shall be brief, as my learned brethren on my right and left, will assign their reasons at length for the different conclusions to which they have respectively come.
It seems to be admitted on all sides that, as between the corporators themselves, a by-law would be good which asserts a lion on the stock of the members for debts due the company. A provision to this effect is frequently contained in the statutes conferring charters, and is a standing bylaw in almost all corporations. Tuttle, the plaintiff in error, purchased at sheriff’s sale, with full and explicit knowledge of the existence of this lien. Does it lie in his mouth to contest its validity, or to claim exemption from its operation ? I think not. As the judgment creditor and plaintiff in execution, had he discontinued the sale when the notice was given by the bank, and gone into Equity, as it was clearly competent for him to have done, my impi’ession is that he would have been entitled to a decree for a sale unencumbered by the lien, unless notice could have been brought home to him of the by-law at the time he contracted with Glendenning ; or, had he, or any one else, bought this stock, publicly or privately, without such notice, theirs, I think, would have been the better Equity.
I am aware that caveat emptor is the settled rule applicable to all judicial sales. It cannot be otherwise, from the very nature of the transaction, because there is no one to whom recourse can be had for indemnity. No warranty, express or implied, can be raised upon the part of the owner as to whom the proceeding is compulsory, nor of the sheriff, who is the mere ministerial agent of the law, nor of the court, under whose authority the sale is made. Of necessity, therefore, the purchaser takes all risks ; and yet, notwithstanding this doctrine, as now advised, I would compel the bank, under the Act of 1822, to transfer the stock in favor of a bidder who was ignorant of their lien. It would be in vain to tell me that all who attend sheriff’s sales should take care and examine into the titles of the property offered in the market. 1 would, in opposition to any suggestion of this sort, plant myself immovably upon the publication of the corporation itself in the gazettes of the State, proclaiming, on oath, semiannually, to all the world, that Glendenning was the owner of the shares standing in bis name. — Prin. Dig., 49; Hotchkiss, 360, 361. Here would not only be the absence of notice, the fundamental and predominant feature in the whole of our legislation creating liens, as in the cases of mortgagees, mechanics, and the like, but direct and positive notice to the contrary, to wit, that the stockholder was the absolute proprietor of the property ; and with no simultaneous act of the company to put persons upon the look-out or inquiry. I repeat that, under such circumstances, I never could yield my consent to see innocent purchasers and creditors suffer.
Profiting as much as my time would permit, since the argument at bar, in searching for authorities, I have been enabled to lay my hands on two cases, bearing directly on the question. And while I cannot concur fully in'all the conclusions at which the court arrived in either ; still, as they both abundantly sustain my own position, I will advert to them. These adjudications, it is true, are not the law; but, like all others from our sister States, they are the evidence of what the law is. One is the case of the administrator of Spence vs. Whitaker and others, decided by the Supreme Court of Alabama. — 3 Port. Rep. 297. A number of individuals of that State associated themselves together, in 1818, by articles of agreement, under the name of the Courtland Company. The object was to lay off, and sell out, a town, on certain lands they purchased. They divided the stock into one hundred and sixty shares, for each of which a certificate issued.
On the first hearing of the bill, the Chancellor admitted the offset of the Company’s debt to go against the thirteen shares ; the decree was reversed by the Appellate Court. Chief Justice Saffold, in delivering its opinion, says: “ While it must be conceded that the company or trustees had no power to adopt rules which were repugnant to the laws of the land, yet they had the undoubted right to stipulate such terms, and prescribe such rights, forfeitures and conditions, as were not prohibited by law; consequently they had a right, while adopting the articles for their government, and issuing the certificate for the stock, to have provided a lien upon them, for debts due the company from the original, or any subsequent, stockholders.” And the rejection of their claim is put expressly upon the fact of their having declined the insertion of any such stipulation, in cither instmmen tto wit: the a ¡tides, or the certificate. Here it is incorporated in both. Again, “ the decision,” says the Judge, “ must materially depend on the terms of the articles of association under which the certificates issued, and the nature and objects thereof. That it was competent for the company, by their articles, to have retained a lien on the certificates, as well as on the lots sold, to secure the debt due them, cannot be questioned. Yet it may be doubted if they could have done so with good faith, without expressing the lien in the certificates, as they did in the title bonds, or giving it publicity in some other way.” In other words, the comparative rights and equities of the adverse claimants is made to depend, in. the opinion of the Chief Justice, upon the question of notice.
The other is the case of Fitzliugh vs. the Bank of Shepherdaville and others, decided by the Court of Appeals of Kentucky. — 3 Monroe’s Rep., 126. Fitzliugh endorsed a Bill of Exchange to the United Slates Bank for Thomas J. and Henry H. Roberts. It was protested for nonpayment, and on notice thereof taken up by Fitzhugh. Upon application to the drawers to be re-imbursed, they gave him forty-five shares of stock in the Bank of Shephordsville. The Messrs. Roberts held the scrip of the Bank for the shares, or a certificate of the number and amount, stating on its face, that the stock was transferable only at Bank personally, or by attorney. Letters of Attorney to the cashier were executed, authorizing him to make the transfer. He refused to do so, alleging as the only reason in behalf of the Bank, that the Messrs. Roberts were then indebted to the
I concur heartily in this opinion and the reasoning by which it is supported. Here it will be perceived that there was no evidence of a special pledge of stock. The point was, had the Bank a general lien by law on the stock held in the institution by their debtors, notwithstanding they had issued the scrip, the existence of the stock and its ?
I return then in conclusion, to the point from which I started, and that is, that the fact of the periodical publication of stock under the act of 1832 will likely, when the proper issue is made, over-ride the lien, secured by the by-law and incorporated in the scrip. But so far as Mr. Tuttle is concerned, we are precluded from any such inquiry by the notice given to him on the 6th day of June, 1843, when, as purchaser, he for the first time became connected with the transaction, and in which character he is now invoking the aid of the court, to perfect his title by compelling the Bank to transfer the stock.
Whereupon it was adjudged and determined that the judgment of the court below stand affirmed.
Dissenting Opinion
dissenting.
I have not been able to bring my mind to concur with my associates in the judgment rendered in this cause. This is to me a source of sincere regret. I esteem it a personal misfortune. I have labored to see this question in the light in which they view it, but have been unable to attain to the same conviction. With profound respect for them, and sincere distrust of the justness of my own conclusions, I am constrained to dissent. On the 4th Oct., 1840, William Glendenning became the proprietor of twenty-five shares of the capital stock of the Augusta Insurance and Banking Company ; a corporation clothed with insurance and banking powers. He afterwards became endorser upon a note discounted by that Bank for $3,500, which about the 1st April, 1842, fell due and was protested for nonpayment. Subsequent to the dishonor of this note, Isaac S. Tuttle (the plaintiff in error) obtained judgment in Richmond Inferior Court against Glendenning, and in January, 1843, caused the execution issued thereon to be levied on the shares of stock owned by him in said
The court below sustained the plea, and the error is alleged to he in that decision. The decision of the court was excepted to on a number of grounds. It is not necessary to state here, much less to advert with any particularity to many of those grounds of error. The questions made by the record are—
1st. Whether the By-Law of the company be valid between Glendenning and the company ?
2dly. If valid as between G-lendenning and the company, is it valid as between his creditors and the company.
And 3dly. Whether it is valid as between the purchaser at Sheriff’s sale under the provisions of the act of 1822, with notice given at the time of sale, and the company.
There doubtless are various ways of stating the points at issue. I think the above form truly states them. It is obvious that the contest here is between tbe lien of the Bank by virtue of its By-law, and the title of the purchaser of the stock, claiming under a judgment against the owner, in favor of a creditor without notice of that lien. J know of no instance in our State, in which the sustainability of such a lien has been directly adjudicated, as between the Bank and strangers ; and no case in the course of the very able argument before this court, has been adduced on either side, wherein that question has been made and decided. In every view of this ease, the court is compelled to pass upon the validity of the By-law. The pleadings with marked distinctness present that question. The defendant comes into the court below with the by-law of the company in his hand, and having plead it in bar of the plaintiff’s action, demands the judgment of the court. He tenders the issue in behalf of the company. Through him tbe company sets up this lien, — upon that issue the judgment is awarded, upon which error is assigned, and the same issue
Before entering upon the discussion of the prime question thus before us, a few preliminary facts and principles may, with propriety, be stated. The objects contemplated in the charter of the Augusta Insurance and Banking Company are two-fold, to wit: Insurance and banking.— Prin. Dig. 81,6th and 10th section of the charter. The power of general insurance and banking conferred upon the same company, I will not say is extraordinary in our State, but certainly a very broad grant; the exercise of which should be held strictly within the authority of the charter. By the third section of the charter, the stockholders, among other things,
In relation to private corporations, I remark, they are limited strictly to the exercise of those powers which are specifically conferred. The exercise of corporate franchises, being restrictive of individual right, cannot be extended beyond the letter and spirit of the act of incorporation. — 4 Peters, 108. They can take nothing by implication. When they claim a power, they must show the authority, either in the letter or conclusively ascertained spirit of their charter. And when the exercise of a power and the right of a citizen come in conflict, and the power is doubtful, courts of justice will lean towards the citizen ; for sound and sufficient reason — because all corporate powers are in derogation of common right.
This rule is not too stringent; and its equity and policy will be seen at once, by reference to the vast monitary and commercial advantages, which combined capital, associated mind, and concentrated eflort, give to the corporation over the citizen.
The common law is jealous of corporate powers. In England, these bodies are held to their charters with unswerving rigidity and ceaseless vigilance. In this country the rule had better be narrowed than enlarged. Whilst 1 would in no case interfere with the vested rights or conceded franchises of a corporation, no matter how numerous those rights, or how unequal and unjust those franchises, because I believe that all the interests of society would be involved in inextricable embarrassment by such interference ; yet, at the same time, I am satisfied that the safety of those interests demands that courts of justice see to it that the rights and franchises claimed are in fact within the grant from the Legislature. The claim of power here is to make a by-law, which creates a lien in derogation, as 1 believe, of common right. Now, how iar has the Legislature conferred upon the Augusta Insurance and Banking Company such a power ? It is not contended that the power to create such a lien is expressly given in the charter; if it were so given, the question would be at rest. It is contended that the power is conferred in the grant of power to make bylaws. Now, 1 hold that this company has under its chai'ter no more power to make by-laws than it would have had without the provision in the charter in relation to them ; and farther, that this company has under its charier no more powers to make by-laws than any association of individuals, for commercial or other objects, would have at common law. A power to make by-laws is incident to corporations without any grant.— Bacon's Abridgment, Title Corporation, D. Now, what is the restriction imposed at common law upon the powerthus incident to corporations ? They may make such by-laws as are consistent with their charter, and not repugnant to the laws of the land, and none other. — Bacon's Abridgment, Title By-Laws, E. Lord Bacon asserts that it is of the nature and essence of a by-law not to be in contradiction to the laws of the land, “ which,” says he, “ though it may be prater the general law of the realm, it cannot bo contra." By adverting to the restrictions upon the power of
Section 6 makes all transfers of stock, by the owner, after judgment
The lien, then, by the agreement, is that of a creditor in possession for abalance of accounts.^ Again then, our inquiry returns, Have these parties the right at common law, to create such a lien, through the agency of a By-law, thereby excluding creditors, without notice, and purchasers who claim under the lien of their judgments? Is the By-law good or bad, at common law ? If it is bad, then there is no agreement, and no lien.. I now return, I trust, with a clearer view of the whole ground, to my primary threefold division of the question made by the record ; and first, is the By-law valid as between Glendenning and the company, the original parties ? It may be conceded that it is. I can see no good reason, why this company may not prescribe terms to the tenure of their stock, so long as the terms prescribed affect no rights but those of the company and the stockholder. Viewed in the light of
To make this by-law, and the lien created by it good, notice of the law to the world, and in this case notice to Tuttle, at the time he gave
Chancellor Kent, commenting upon this decision, uses this strong language — “ As the registry of deeds is the policy and practice in this country, I think the decision in Wheaton is correct, and that this latent equitable lien ought not to prevail over bona fide purchasers from the vendee, and for valuable consideration, and that they are not bound to take any notice of this dormant lien, resting, for its validity, on the state of the accounts between the vendor and his vendee.” — 4 Kent, 154. n. The opinion is strongly intimated, in this quotation, that the purchaser’s title would be good against the vender’s lien, even with notice. With what force does not this reasoning apply to the case before this court ? Is the lien claimed by the defendant in error within the policy of the rule which recognizes particular liens at Common Law, or the equity of that which allows the vendor’s lien ? I hope to be able to show that it is not. I say this is a secret lien. How stand the facts ? This corporation declare, by a bylaw, that they are creditors in possession of Glendenning’s stock, and that possession, with a future indebtedness, if perchance he may become indebted, shall constitute a lien in their favor. The law is recorded on the books of the company, which books are not open to the inspection of the world, but are carefully hid away in its vaults. There is no publication of it, nor is there any notice of Glendenning’s indebtedness. That too is, until long after Tuttle has given him credit, a profound secret. Having legislated themselves into a right adverse to all the world, it is not until Tuttle has become the creditor of Glendenning, and reduced his debt to a judgment, and brought the stock to sale, that they make a revelation of that right. They occupy a position wholly anomalous. They are, in a land of laws, the legislators and administrators of justice. Their by-law and their possession is their lien; and at the same time a judgment to which the general administration must yield obedience. Not only is this true, but whilst it is true, they do give notice, semi-annually, that Glendenning is, in fact, the owner of the very stock upon which they claim a lien. Not the holder of the legal estate encumbered with their equity
But this by-law, in its terms, creates the lien of a creditor in possession, to secure a contingent indebtedness ; by which is meant, I suppose, a general balance, which at any time may be found due by the stockholder to the company. Creditors in possession at common law have a lien, under certain circumstances. The facts of this case do not give the company the position of creditors in possession. The lien of creditors in possession arises in cases where property is placed in possession of an individual, or company, upon which labor or expense is to be bestowed by agreement made between the parties, or implied in law. The depository has a lien upon it for his labor and expense. Also, in other cases, when a contract is made or implied, that the property is to be retained to secure a present or continuously recurring indebtedness. Now in this case, at the time of making the by-law, there is no labor to be bestowed on, or expense to be incurred about, the stock. The lien is not claimed on account of either. Nor is there any present indebtedness, or running account between the parties. It is admitted, that at the lime the by-law is made, and at the time Glendenning became a stockholder he owed the company nothing, nor did he become its debtor until about eighteen months afterwards. So that the declaration in the by-law, that the company shall be a creditor in possession, does not in fact make them so. They cannot be, by their own act, remitted to the rights of a creditor in possession. On the contrary, the facts in the case show the bylaw to be repugnant to those principles of the common law which recognize the lien of creditors in possession, and is on that account void. — . See Montague on Liens, Titles — Factor, Common Carrier, Banker, Bailee, Attorneys, Ship-builders, &c. Nor can this be looked upon as a pledge of the stock, which creates a lien upon it. Pledges may create a lien to secure precedent or contemporary debts, or existing debts and future advances. But I believe no case can be found of a lien created by pledge without any existing debt, to secure payment of a future debt, which may or may not exist. — See 2 Kent, 576-7, 583. The same doctrine holds, as to mortgages, only with greater strictness. There can bo no mortgage without a present indebtedness, or liability on the part of the mortgagee for the mortgagor. And although a mortgage may be
If this lien is sustained, then the law invites to collusion between the company and stockholder, and patronizes immorality. I need not linger to point out how easily this collusion may be effected, how easy it would be for a dishonest debtor, by the aid of such a By-law, with the co-operation of the company, to cheat his creditors. He is not only an individual, but he is also a corporator — he is, if such a thing can be, part of both parties. Interested, as he is, in the corporation, the arrangement inures as well to his benefit as to the benefit of other stockholders. It increases the strength and resources of the company of which he is a member. It has been decided that the By-law of a corporation, whose charter makes the stockholders individually liable for its debts, permitting the stockholder to forfeit his stock to the company, is void, because a fraud upon his creditors. In the case now referred to,the creditors were creditors of the company, and, at the same time, in the event of its insolvency, creditors of the stockholder. The principles involved are like those involved in the case at bar. The contest was between the creditor of the stockholder, (for it was admitted that the company were insolvent,) and the company, as to the validity of a By-law which forfeited to the use of the company his stock. In this case the court declared the By-law void and inoperative, upon the ground that it was against the fundamental principles of law and equity, and legally fraudulent. — 19 Johns. Rep. 477, 478.
By the judiciary act of 1799, all the property of a defendant against
It has been already stated that no case has been found, directly adjudicating the validity of such a by-law as this, as between the corporation and creditors of the stockholder, or as between the corporation and a purchaser claiming under the judgment of such a creditor. In the absence of direct authority, a doubt expressed by learned jurists as to the validity of such a by-law, ought to be received as influential in settling the question. Such a doubt is stated to exist, by Angell and Ames. — Angell and Ames, 297.
The Washington Bank was incorporated by the Legislature of Massachusetts. This corporation made a by-law pledging the stock of every member for any and all sums of money which said member might at any time owe the bank — the same, in substance, with the by-law of the Augusta Insurance and Banking Company. A stockholder having assigned his shares brought suit against the bank for the use of the assignees for dividends due upon the stock. In delivering the opinion of the court, Chief Justice Parker holds this language: “We need not, in order to decide this case, go into the consideration of the validity of this by-law against any creditor of a stockholder, though it may be worth inquiry to the corporation whether such a by-law can be of any avail, except between them and the debtor. We suspect it is a first attempt by a general declaration of this kind to give themselves a preference over other creditors, without taking the usual means of pledge or transfer of the particular stock they intend to hold.” This, to my mind, amounts to a solemn affirmation of what is put in the form of a query. Can it be doubted what