Savage v. Walshe

1. Where a statute affects a community, and requires as a condition to its validity that something should be done before it goes into operation, the act has no force or effect until the thing required to be done is performed; but where a statute affects only one or more designated persons, either natural or artificial, those interested in its object may dispense with a preliminary ol' this character, and claim the benefit of its provisions, without requiring the performance of the condition. 2. The object of the act of February 12, 1813,‘1 for the final settlement of-the affairs of the Planters and Merchants’ Bank of Mobile”, was to obtain a dissolution of the Bank’s charter agreeably to law ; and although it provides for the institution of judicial proceedings against the Bank to obtain a judgment of forfeiture of its charter, and declares “ that if no cause of forfeiture shall be found, this act shall have no force or validity,” yet the Bank might dispense .with the judicial proceeding by surrendering its charter and accepting the provisions of. the act, and it was competent for the State, with the assent of the Bank, to resume its franchises at any time. 3. In a suit brought by a purchaser of negotiable paper at a sale of the Bank’s assets, made by its trustees under the act of 1850, an allegation in the declaration that the charter was surrendered, but was continued by virtue of the provisions of the several acts for the settlement of the Bank’s affairs, is not repugnant or contradictory, when construed with reference to those acts. 4. The fact that a note, taken by the trustees after the surrender of the Bank’s charter, was made “ negotiable and payable at said Bank”, does not raise a legal presumption that it was discounted, instead of being taken in settlement of a debt due. 6. The power of sale conferred upon the trustees by the act of 1850 gave them, by necessary implication, the authority to transfer negotiable securities so as to pass the legal title to the purchaser by their assignment, and enable him to sue in his own name. G. The e-lause in the second section of the act of 1850, which requires the trustees to sell the remaining property and assets of the Bank “within thirty days from the first Monday in November next”, is not mandatory, but directory merely; and therefore, a sale made after the expiration of the time specified is sufficient to pass a good title to the purchaser. 7. A plea, averring “that the charter of the Bank was not forfeited, and its corporate existence was not dissolved”, is fatally defective on demurrer: the first allegation is no answer to the declaration, which alleges that “ the charter was surrendered to the State,” and the second is an allegation of matter of law. 8. So, a plea, averring that the trustees “ were not invested with the legal ownership and control of said note, and did not make a legal transfer and endorsement of the same to the plaintiffs”, is but the allegation of a legal conclusion instead of facts, and therefore demurrable. 9. The same objection applies to a plea which avers “ that said Bank, at the date of said note, had no power or authority to make a contract, and that said note is null and void.” 10. The genuineness of an endorsement of the note sued on can only be denied by a sworn plea. 11. The objection that an endorsement of the note sued on was read in evidence, “ when it was not shown to have been made at the lime alleged in the declaration”, is not a reversible error, when the record shows that such proof was subsequently made. 12. Where defendant by his plea puts himself upon one issue, ho thereby admits all the rest. 13. The rendition of judgment against a defendant who was not served with process, and who did not appear, is a mere clerical mistake, which may be amended on motion in the court below, and the judgment must be regarded as affecting those defendants only who were before the court; and if no motion to amend is made, the mistake furnishes no ground of reversal.

Appeal from the Circuit Court of Clarke. Tried before the Hon. Lyman Gibbons. Assumpsit by Jonathan Emanuel and Charles Walshe, as assignees of Sidney Smith and David Stodder, trustees of the Planters and Merchants’ Bank of Mobile, against John B. Savage, John Darrington and James Savage, on a promissory note, of which, with the endorsement thereon, the following is a copy ; “ Macon, May 10, 1847. “ $3468 23. Twelve months after date, we, John B. Savage, John Darrington and James Savage, jointly and severally promise to pay the Planters and Merchants’ Bank of Mobile, or order, three thousand, four hundred and sixty-eight 23-100 dollars, value received; negotiable and payable at said Bank.” (Signed by tlic defendants.) “ For value received, we, David Stodder and Sidney Smith, trustees of the Planters and Merchants’ Bank of Mobile, assign, transfer, and deliver this note (without recourse) to Charles Walsho and Jonathan Emanuel.” . (Signed by said trustees.) The suit was commenced on the 2d October, 1851. The declaration, after alleging the execution of the note, proceeds — ■“ And plaintiffs aver, that before and at the time of the execution of said note, said Bank, as a corporation, was dissolved, and its charter surrendered to said State, and its franchise of banking so surrendered; but by virtue of the provisions of the acts of said State, approved the 13th February, 1843, for the final settlement of the affairs of said Bank, and the acts amendatory thereto, said charter was continued, and (by virtue of the provisions of said acts) said trustees were elected and appointed trustees of said Bank, and the said note (by virtue of the provisions of said acts) was transferred to the said trustees, who thereby became the holders and legal owners of said note, for the objects contemplated by said acts ; and being such holders and owners, the said trustees on the 21st September, 1851, sold and assigned said note to said plaintiffs, for ready money, in pursuance of the provisions of said acts and said trustees’ power under them, by means of which plaintiffs became and are the holders and owners of said note; by means of which defendants became liable to pay plaintiffs said money on request,” &c. The writ was returned “not found” as to John B. Savage. The other two defendants demurred to the declaration, but their demurrer was overruled; and they then pleaded, 1st, that the charter of said Bank was not forfeited, and its corporate existence was not dissolved, as alleged in the declaration”; 2d, “ that said Stodder and Smith were not, at the time and in the manner set forth in the declaration, trustees of the said Bank” ; 3d, “ that the said Stodder and Smith were not, on the 21st day of September, 1851, or at any other time, invested with the legal ownership and control of said note, and they did not make a legal transfer and endorsement of the same to the plaintiffs” ; 4th, “ that the endorsement of the said trustees is null and void” ; 5th, “ that the said Bank, at the date of the said note, had no power or authority to make a contract, and that the said note is null and void.” The plaintiffs demurred to the first, third', and fifth pleas, and their demurrer was sustained; and issue was joined on the second and fourth pleas. The jury returned a verdict for the plaintiffs, and judgment was thereon rendered against all the defendants. On the trial, as appears from the defendants’ bill of exceptions, the plaintiffs read in evidence to the jury the note sued on, with the endorsement thereon ; “ and the defendants objected to this endorsement, because it was not shown that it was made at the time alleged in the declaration, and because no proof was made of the genuineness of the signatures of Smith and Stodder; but the objection was overruled, and the transfer was read in evidence, to which the defendants excepted.” “ The plaintiffs thou introduced evidence, tending to show that Sidney Smith and David Stodder were legally elected and appointed trustees of said Bank, according to the terms of the act of 1845 ; that they accepted the trust, gave bond, and were qualified, as the act directed ; that the note sued on was sold by said trustees, for cash, to Charles Walsho, on or about the 21st September, 1851, according to the provisions of the act of February 12,1850 ; that said Smith and Stodder then executed the transfer endorsed on the back of the note, on the 21st September, 1851, or about that time; that for some time previous to said transfer and sale, at that time, and subsequently, said Smith and Stodder were the acting trustees of said Bank. It was further shown, that a settlement was made with the defendants to this suit on the day the note bears date, and they .gave the note on which suit is brought, and, on the same day they gave the note, a credit for §380 was endorsed on the note. The plaintiffs offered no further evidence, and the defendants introduced no evidence whatever. ‘‘The defendants asked the following charges : “1. That proof must be adduced that the charter of the Bank was declared forfeited by judgment of the Circuit Court of Mobile county, according to the provisions of the act Of 1848. “ 2. That the trustees bad no power to assign and transfer the note sued on, so as to enable the assignees to sue in their own name. “ 3. That if the note sued on was made payable to the Bank after the forfeiture of its charter, it is void for want of power on the part of the Bank-to make a contract, unless the plaintiffs show that the note was made in compounding a bad or doubtful debt. “ 4, That if the note sued on was made payable to the Planters and Merchants' Bank after the forfeiture of its charter, it must be shown by the plaintiffs that the note was given in liquidation or extension of a previous existing debt due the Bank, before they can recover in this suit.” The court refused each one of these charges, and the defendants excepted to each refusal; and they now assign for error-— “1. The rendition of judgment against John B. Savage, upon whom process had not been served, and who was not before the court by attorney or otherwise. “2. The overruling of the demurrer to the declaration. “ 3. The sustaining of the demurrer to the first, third, and fifth pleas. “ 4. The several rulings of the court set forth in the bill of exceptions.” I. The process was returned “ not found” as to John B. Savage, and no appearance was ever entered against him ; yet the plaintiffs did not discontinue as to him, butdeclared against him, and entered up' judgment against him. This was error. Williams v. Lewis, 2 Stew. 41 ; Gilbert v. Lane, 3 Port. 267; Graham & Christian v. Roberds, 7 Ala. 719. II. The demurrer to the declaration should have been sustained— 1. Because it did not allege that a judgment of forfeiture had been rendered against the Bank. The acts of 1843 and 1845 are public statutes, and may be considered a part of the declaration. The first act provides for a forfeiture of the Bank’s charter, and a renunciation of its banking privileges, _provided, upon a judicial inquiry, certain alleged facts shall be found to exist; “ and after rendition of judgment by the court upon said information, in favor of'the State, all the provisions of this act shall have full force and effect” ; but, “ if no cause of forfeiture shall be found, this act shall have no forco or validity.” Now the action of the court upon the information directed by this act to be filed, is a matter of which the courts cannot take judicial notice : and as the act did not go into operation until the issue so directed to be made had been found in favor of the State, it was necessary that the action of the court should bo alleged in the declaration. 2. Because it described the Bank's charter as forfeited prior to the execution of the note, and alleged the note to have been made payable and negotiable at the Bank; and from this it may be fairly inferred that it was discounted at the Bank for profit, which would be contrary to the acts cited, and would render the contract void. — Saltmarsh v. Planters and Merchants’ Bank, 14 Ala. 668 ; same case, 11 ib. 161.. 3. Because it was too uncertain and contradictory to present a fair issue. It alleged that the charter was forfeited and surrendered to the State by the acts of 1843 and 1845, and at the same time that the charter was continued by force of the same acts ; thus presenting to the defendants two issues —that the charter was forfeited by those acts, and that it -was not forfeited. 4. Because the endorsement gave the plaintiffs no right to sue in their own names as assignees of the trustees. The acts cited declare that the corporate name of the Bank may be continued and used in the collection of its debts. The case of Jemison v. Planters and Merchants’ Bank, 11 Ala., clearly shows that, previous to the sale, the suit should be brought in the name of the Bank by its trustees, and that the declaration should show the character in which they sue. The act of 1850, by virtue of which the trustees sold the assets of the Bank, is entirely silent as to the manner in which the purchasers might sue on the notes sold. As the trustees could not sue in their own names, they could not by their endorsement convey to the purchasers a right (which they themselves did not possess) to sue in their own names. If the trustees’ endorsement only conveyed the right which they had, it was the right to use the name of the Bank, and the suit should have been brought in its name. On this point, see Camack v. Ridg-way, 18 Ala. 286, and Crawford v. P. & M. Bank, 6i&. 29®^ 5. Because it alleges that the trustees sold the note, by virtue of the act of February 12, 1850, on the 21st day of September, 1851; while the act referred to declares, that the trustees shall sell “ within thirty days after the first Monday of September, 1850.” The object of the act was, to provide for the speedy settlement of all the outstanding business of the Bank, and to make a final close of the whole concern. If the trustees, in defiance or disregard of the statute, might (as they did in this instance) delay the sale for ten months after the expiration of the limited time, they had an equal right to delay for ten years. What then becomes of the act ? It is of no effect: it is a mere recommendation, which the trustees may regard or not as suits their pleasure. That the act is, mandatory in this respect, see Commercial Bank of Natchez v. Chambers, 8 S. & M. 9 ; 2 Sup. U. S. Digest, p. 808, §§ 29 to 31. III. The first plea was good, and the demurrer to it should have been overruled. It traverses a material allegation of the declaration. The plaintiffs claim through the acts of forfeiture, and may well be held to prove what they hafe alleged. IV. Tho.tliird plea is good. The plaintiffs claim through the endorsement and transfer of Stodder and Smith as trustees. If Stodder and Smith never were such trustees, or never made a valid transfer or endorsement, then plaintiffs’ title fails. This allegation, therefore, defendants might properly traverse, and their plea is good. V. The fifth plea, which alleges that the note is null and void, is good. The defendants had a right to show that the note was purchased or discounted by the Bank in the way of business, and with a view to profit, and was therefore void, as the Bank had no authority to do such acts. — Cases of Salt-marsh and Jemison, supra. VI. The charges asked raise the same questions which are presented by the demurrer to the declaration. 1. The judgment rendered affects only the parties who have been served with process. If erroneous, it will be amended in this court at the costs of the appellants. — Clay’s Digest, p. 332, §54 ; ib. 361, §62 ; Graham & Christian v. Roberds, 7 Ala. 719 ; Del Barco v. Br. Bank at Mobile, 12$. 238. 2. The declaration presents a substantial cause of action, and the demurrer thereto was properly overruled. 3. The first, third, and fifth pleas, to which demurrers were sustained, tendered immaterial issues. The plaintiffs were not required to reply to them, as the declaration would have been good, if all the matters questioned by them had been stricken out. 4. The objection to the endorsement, that it was not made at the time alleged in the declaration, is not tenable. It was an unnecessary allegation, and might be treated as surplusage. It was sufficient, if put in issue, to show that the endorsement was made before suit brought. The evidence shows that it was made on or about the 21st September, 1851, the day alleged in the declaration. 5. The genuineness of the endorsement could only be put in issue by the plea of non est factum, or other plea setting out' the special matter, verified by affidavit; otherwise, it is demurrable. — Cummings v. Mason, 9 Port. 309. The proof set out shows that Stodder and Smith executed the transfer. 6. The charges asked were properly refused. If the Bank surrendered its charter, and went into liquidation, it was sufficient to invest the trustees with the right to assign and transfer the assets. The possession of the note by the trustees was evidence of their acceptance of the trust, and of the surrender of the charter. These charges are based on the idea, that the acts cited declared all contracts made by the Bank after the forfeiture of its charter absolutely void. But this, as appellants concede, was only consequent upon the forfeiture of the charter, and its charter never has been forfeited : the judgment of forfeiture rendered on the 24th February, 1843, by the Circuit Court of Mobile, was reversed by the Supreme Court, at its June term, 1847, and the cause was not remanded. — The State v. P. k M. Bank, 12 Ala. 547. No other proceedings were had under the act of 1843, and no forfeiture of the charter has been judicially declared. By non-user, and the acceptance of the terms of the act for the settlement of its affairs, the surrender of the charter may he presumed ; yet the appellants in this suit cannot enforce or take advantage of a cause of forfeiture : the government alone, which created the corporation, can institute such a proceeding, since it may waive a breach of the contract.— Angelí & Arnes on Corporations, p. 664. The fact is, however, that this note was taken “on a settlement made with the defendants on the day the note bears date, and they gave the note on which snit is brought.” 7. The suit is properly brought, and the declaration shows how the title was derived. The act of 1850, in authorizing the trustees to sell the assets of the Bank, invested the purchasers of its negotiable paper with the same title, and legal rights flowing therefrom, that would have attached to the purchase of negotiable paper from any other party the power to endorse, transfer, or assign, was a necessary incident to the power to sell. The cases of Saltmarsh and Jem-ison, (17 Ala. 754, 761,) cited by appellants, were decided before the passage of the act of 1850. The plaintiffs do not sue for the use of the Bank, but in their own right as endor-sees for valuable consideration, and it is only necessary for them to show a legal right derived from the Bank. This can ouly be done through the trustees, acting as such in behalf of the Bank. The endorsement on the note shows the character in which it was done, and is a literal compliance with the eighth section of the act of 1845. 8. The declaration nowhere alleges that the charter was “ forfeited:” “ surrendered” is the only word used ; and consequently it presents no issue as to the forfeiture of the charter.