Leavitt v. . Blatchford

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 523 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 524 The chief difference between the transactions now in question and those involved in Curtis v. Leavitt (15 N.Y., 9) consists in the fact that while the obligations secured by the trust deeds in the latter case were issued for the purpose of raising money for the use of the company, the obligations secured by the trust deed in this case were *Page 525 issued as a substitute for, and in payment of, certain certificates of deposit held by the Philadelphia banks against the company. The form of the instruments in each case is identical. In Curtis v. Leavitt, it was insisted by the counsel for the receiver, as it is here, that the trust deeds and the assignment of the bonds and mortgages to the trustees were void, for the reason that the transaction was not authorized by a previous resolution of the board of directors, as required by the 8th section of the article of the Revised Statutes relating to moneyed corporations. But it was held in that case that, though it be assumed that the transaction had not been authorized by a previous resolution of the board of directors, and though the article of the Revised Statutes relating to the insolvency of moneyed corporations were applicable to a corporation organized under the general banking law of 1838, yet, as the holders of the obligations secured by the trust conveyances were to be regarded as purchasers for a valuable consideration and without notice, they were entitled to protection under the last clause of the 8th section. It was also insisted in Curtis v. Leavitt, as it is in this case, that the trust conveyances were void because made in violation of the 9th section of the article of the Revised Statutes before noticed, which prohibits conveyances by a corporation, when insolvent or in contemplation of insolvency, with intent to give a preference to any particular creditor over other creditors. But it was held that, whether the section relied upon was applicable to this company or not, the trust conveyances in question were not made with intent to give any preference among creditors, and therefore were not void upon that ground. Thus the question, whether the provisions of the Revised Statutes relating to the insolvency of moneyed corporations are applicable to associations formed under the act of 1838, was, inCurtis v. Leavitt, left undecided; and as the trust deed now in question was made to secure obligations issued in *Page 526 payment of preëxisting debts, and at a period when the affairs of the company were becoming more desperate, these provisions are again invoked, and the court is asked to pronounce against the validity of the transaction on the ground that they have been violated. It will be convenient, therefore, before noticing any other questions which the case may involve, to determine whether banking associations, organized under the general banking law of this state, are subject to the provisions of the Revised Statutes relating to moneyed corporations. Regarding this merely as a question of statutory interpretation, unaffected by anything that has been said or decided by the courts of this state, I should not hesitate to maintain the negative of this proposition. The legislature which enacted the general banking law undertook to initiate an entirely new system of banking. Under that system, banks were to be organized and conducted upon a theory entirely distinct and different from that which had hitherto prevailed. It was evidently intended that the act itself should contain within itself all the provisions necessary to carry this new scheme into effect. There is nothing in the act which justifies the inference that the legislature intended in any way to connect it with the banking system then in existence, or any provisions of law relating thereto. The radical difference between the two systems has been presented with admirable clearness and force by Judge COMSTOCK, in Curtis v. Leavitt (15 N.Y., 78-81). That the legislature did not intend thus to apply any of the provisions of the Revised Statutes in relation to moneyed corporations, has, I think been demonstrated, not only by Judge COMSTOCK, but in the very able opinion delivered by Judge PAIGE in the same case. (Id., 182-188.) Although it is conceded that, by the act of 1838, attributes were annexed to the associations authorized by that act which gave them the characteristics of corporations, yet it has never been asserted, I think, that such was the legislative intent. On the contrary, the act *Page 527 itself bears upon its face the clearest evidence that the legislature, in framing the act, studiously avoided this effect. Hitherto, the business of banking had been confined to chartered monopolies. Now, it was intended that all individuals and voluntary associations of individuals might, alike and upon equal terms, exercise this privilege. That these voluntary associations could be regarded as corporations, the legislature of 1838 never so much as dreamed. This discovery was left to be made by the courts. Of course, if they were not moneyed corporations, no provisions of law relating to such corporations would be applicable to these associations. Nor were the courts at all prompt to find that the legislature, contrary to their own purpose, had really provided for the creation of innumerable banking incorporations. The subject first came before the Court of Errors in 1840, in the case of Warner v. Beers (23 Wend., 103). It was elaborately discussed and views of great diversity were expressed by the distinguished members of the court who took part in the decision. That court, by a vote of twenty-two to three, declared that associations organized under the act of 1838 were not bodies politic or corporate, within the spirit and meaning of the constitution. Of course, there was as yet no ground for applying to these associations the provisions of law relating to moneyed corporations. The opinion of the same court was again invoked in the case ofThe Supervisors of Niagara v. The People (7 Hill, 504), in 1844. The circumstances under which that case came before the court were peculiar. The assessors of the town of Lockport had placed upon the assessment roll, for taxation, two banking associations formed under the act of 1838. The board of supervisors, upon the application of these banks, had stricken their names from the roll. Two taxable inhabitants of Lockport applied to the Supreme Court for a mandamus to compel the supervisors to restore these names. The application was granted. From this *Page 528 decision, singularly enough, the supervisors appealed. Senator PORTER delivered the only opinion in the Court of Errors in favor of sustaining the decision, but it was affirmed by the close vote of eleven to eight; thus holding that banking associations were so far to be regarded as moneyed or stock corporations, as to be taxable under the provisions of the Revised Statutes on that subject. Certainly thus far, there was nothing which could be regarded as judicial authority upon the question now under consideration. And so it stood until Gillet v. Moody (3 Comst., 489) was decided in 1850. In that case, Gillet was receiver of the St. Lawrence Bank. The defendant was a director. He had held $5,000 of its stock. The bank was hopelessly insolvent, and of course the stock was worthless. Under these circumstances, the board of directors, the defendant being himself present and acting as one of the board, agreed with the defendant to purchase his stock and pay him the amount in Arkansas bonds. This was done. The transaction amounted, in fact, to a gift of the bonds to Moody, a director bound, as a faithful trustee, to protect the property of the creditors of the bank. It needed no statute to enable the receiver to avoid such a transaction. This, Judge BRONSON, who delivered the opinion of the court, clearly shows. He concludes, upon this branch of the subject, by saying that "the defendant, as a director, was not at liberty to make such a bargain with himself as an individual, nor were the other directors at liberty to make such a bargain with one of their associates. The transaction, if allowed to stand, will operate as a fraud upon the creditors; or if by any possibility the fund should prove more than sufficient to satisfy them, then upon the other stockholders of the bank." And here, I think, the learned judge might well have stopped. He had said all that it was necessary to say, to satisfy every member of the court that the judgment must be against the defendant. But then he proceeded to say, what *Page 529 was certainly needless for him to say, that, in his opinion, the transaction was expressly forbidden by the statute "to prevent the insolvency of moneyed corporations." To sustain this opinion, he refers to the provisions in the first section of that act, which clearly show the transaction to be illegal, if the act itself is applicable to associations formed under the general banking law. To show that the act does apply to such associations — he states as the same distinguished judge had often stated before, and that, too, in the most impressive terms — that these associations were corporations, and moneyed corporations; not corporations in a qualified sense, but corporations to all intents and purposes. He adds, too, that "if anything can be settled by judicial decision, this is settled." "If," he further adds, "there was room for a doubt on this point, after the decision of the Court of Errors in Warner v. Beers (23Wend., 103), the decision of the same court, in TheSupervisors of Niagara v. The People (7 Hill, 504), removed all ground for such doubt." How far these decisions really went in this direction we have already seen; and yet I am not inclined to expose myself to the animadversion of those who would regard it as presumptuous to treat the question as now open for discussion. The question is no longer of any practical importance. The associations of which we speak have many, perhaps all the essential attributes of corporations. I am inclined to think they really are corporations, although the legislature never intended they should be. At any rate, it is well enough to assume that this question is settled by judicial authority. Having satisfied himself that banking associations were really corporations, and moneyed corporations, too, and that this had been finally settled by judicial decisions, Judge BRONSON, inGillet v. Moody, assumed that he had also shown that the statute relating to the insolvency of moneyed corporations was also applicable to such associations. "The case comes," he says, "within the express words of the prohibition. *Page 530 This is a moneyed corporation, it has directors, and they have applied the funds of the institution to a forbidden object. The case is not only within the letter, but it is, if possible, still more plainly within the policy of the statute." And there he leaves the question. The argument of the learned judge, fairly stated, comes to this: That though the legislature intended to throw open the business of banking, and to allow individuals and incorporated associations of individuals to engage in that business at their pleasure, and did not intend that the regulations and restrictions which had been imposed upon the chartered institutions which had before monopolized that business should be applicable to such private bankers or associations of bankers, yet, inasmuch as the legislature unwittingly went so far in declaring the powers with which these new associations should be invested as to make them, in the eye of the law, corporate bodies, therefore, the will of the legislature to the contrary notwithstanding, they are also subject to all the provisions of law which had previously been made for the government of chartered institutions. I do not understand that any such consequence follows from the premises assumed. I suppose it is enough to exempt these associations from the operation of the provisions of the Revised Statutes, if it can be made to appear that the legislature did not intend that such provisions should be applicable to such associations. The question whether associations formed under the act of 1838 are subject to the provisions of previous statutes relating to moneyed corporations was again brought to the notice of this court in Talmage v. Pell (3 Seld., 328); and yet the fact is indisputable that the question was not involved in the case presented for adjudication. The single point before the court for judgment was, whether this same company had transcended the authority conferred upon them, by the act under which they were organized, in the transactions which were then the subject of controversy. Judge GARDINER pronounced the opinion of the court. At the conclusion, *Page 531 he says: "Without, therefore, inquiring whether the assignment in question was made when the corporation was insolvent or in contemplation of insolvency, or whether it was made in the manner required by law, I am, for the reasons suggested, of the opinion that the bank had no authority to traffic in stocks as an article of merchandise, or to purchase them for the purpose of selling as a means of obtaining money to discharge existing liabilities." Thus, it will be seen, the only questions which required the court to determine whether the provisions of the Revised Statutes relating to moneyed corporations were applicable to a banking association organized under the act of 1838 were intentionally laid aside and left undetermined, and the decision made to depend upon the single question whether the company was authorized to traffic in stocks. The judgment of the court upon this point, in accordance with the opinion expressed by Judge GARDINER, is clearly expressed in the second resolution. And thus the case before the court was disposed of; and yet, having thus done all that the case demanded, the court did proceed, by another resolution, to declare that "every association, organized under the act to authorize the business of banking, and the acts amending the same, is a moneyed corporation, within the meaning of the statutes of the state relating to moneyed corporations, and is bound and affected by those statutes, excepting only so far as such statutes are inconsistent with the provisions either of the act to authorize the business of banking or of the acts amending the same." Of such a resolution, adopted on such an occasion, I think it may be said, as Lord BACON is reported to have said when speaking of Coke's reports, and commending their general excellence, that they had "some peremptory andextra-judicial resolutions, more than warranted." As a question of judicial authority, I cannot think the proposition now under consideration gains much support from the adjudication inTalmage v. Pell. *Page 532 One other case remains to be noticed. It is that of Gillet v.Phillips (3 Kern., 114). This case, like that of Gillet v.Moody, grew out of the failure of the St. Lawrence Bank. The defendant in this case, as in that, was a director, and had undertaken to speculate out of the assets of the bank. After the bank had stopped payment, the cashier sold and transferred to the defendant three notes, amounting to $2,000, for $1,200. The Supreme Court, very properly in my judgment, held the transaction void, and gave judgment against the defendant for the difference between the amount of the notes and the sum paid therefor by the defendant. From this judgment there was an appeal. The case, as I learn from one of my brethren who was then a member of the court, was submitted without argument. It does not appear that the question, whether the provisions of the title of the Revised Statutes relating to moneyed corporations were applicable to associations under the act of 1838, was ever thought of by the counsel for the defence. The only ground of defence noticed in the opinion is, that the defendant was a purchaser of the notes for a valuable consideration and without notice. Judge GARDINER, in delivering the opinion of the court, assumed that the St. Lawrence Bank was subject to the statute relating to moneyed corporations, and proceeded to show that the transaction was a violation of the eighth section of that statute. The decision was undoubtedly sound, upon the premises assumed. It is worthy of notice, in connection with this decision, that the Supreme Court, inGillet v. Campbell (1 Denio, 520), Chief Justice BRONSON himself delivering the opinion of the court, had held that this same section of the statute to prevent the insolvency of moneyed corporations was not applicable to this same St. Lawrence Bank. It is but just to say, however, that Judge BRONSON, in Gillet v. Moody, says he does not feel entirely certain that the decision in Gillet v. Campbell stands upon a firm foundation. *Page 533 Having thus examined the three cases which are relied upon as establishing the position that associations formed under the banking law of 1838 are subject to the provisions of the act "to prevent the insolvency of moneyed corporations," I am prepared to consider the question whether this court is now at liberty to treat the subject as open for examination. I appreciate the value of the maxim, stare decisis. There are cases in which its authoritative application should shut out all discussion. The doctrine on this subject is nowhere better stated than by Judge SELDEN, in his dissenting opinion in Curtis v. Leavitt (15N.Y., 247), where he says: "It is indispensable to the due administration of justice, especially by a court of last resort, that a point once deliberately examined and decided be considered as settled and closed to further argument." To this I agree. When a question has been well considered and deliberately determined, whatever might have been the views of the court if permitted to treat it as res nova, the question should not again be disturbed or unsettled. On the other hand, I hold it to be the duty of this court, as well as every other, freely to examine its own decisions, and, when satisfied that it has fallen into a mistake, to correct the error by overruling its own decision. An acknowledged error must be more venerable and more inveterate than it can be made by any series of mere concessions or extra-judicial resolutions, or even by any single decision, before it can claim impunity upon the principle of staredecisis. I claim to have shown already that the decisions upon the question before us are not such as to exempt it from reconsideration. The question was only involved in the decision of Gillet v. Phillips, and, in that case, it cannot be said to have been deliberately examined. Indeed, I think I may say, without impropriety or disrespect, it was not examined at all. "It is going quite too far," said Mr. Justice BRONSON, inButler v. Van Wyck (1 Hill, 462), "to say that a single decision of any court is absolutely conclusive as a precedent. *Page 534 It is an elementary principle, that an erroneous decision is not bad law; it is no law at all. It may be final upon the parties before the court, but it does not conclude other parties having rights depending upon the same question." In respect to the question now under consideration, it is not too much to say that no rights will be unsettled, no rule of property will be changed, no man will be injured, by declaring that the provisions of the Revised Statutes in relation to moneyed corporations have no application to banking associations organized under the act of 1838. Indeed, I may go farther, and say that no case has ever been decided differently from what it would have been decided if this question had not been involved. No party to any litigation has ever suffered from any erroneous view which may ever have been entertained by any court upon this question. No party to any transaction can ever be prejudiced by the decision which may now be made. Under these circumstances, I feel myself at liberty to vote upon the decision of the question according to the convictions of my own judgment, untrammeled by any authoritative decision. I have already referred to the opinions of Judges COMSTOCK and PAIGE upon the principal question. The former has shown, by what has seemed to me an unanswerable argument, that the regulations which the legislature had seen fit to adopt for the purpose of preventing the insolvency of moneyed corporations are entirely unsuited to the free banking system. Under this system, the sole object of the legislature was to secure the currency which these institutions might put in circulation. This object was accomplished, not by regulations to prevent insolvency, which had been tried and found ineffectual, but by requiring adequate security, beforehand, for all the circulation which any individual or association might be allowed to issue. This being done, I agree with Judge COMSTOCK that there was no more reason for applying to these new associations the provisions of the statute to prevent insolvency in moneyed corporations, *Page 535 than the provisions of the safety fund act. The latter are not more inconsistent with the theory of the free banking system than the former. It has also been shown by Judge PAIGE, very satisfactorily, I think, from the very structure of the general banking act, that the legislature could not have intended that associations formed under that law should be subject to the statutes then in force relating to a very different class of moneyed institutions. I may add that, even after the question, whether associations formed under the act of 1838 were moneyed corporations or not had, begun to be agitated, and the decision in Warner v. Beers had actually been made, the legislature of 1841 furnished the clearest evidence that it did not understand the provisions of the Revised Statutes relating to moneyed corporations to be applicable to associations under the general banking law, by passing a law requiring such associations to make and transmit to the bank commissioners statements of their affairs, precisely similar in all respects to those which they were already bound to make, if the act to prevent the insolvency of moneyed corporations was applicable to such associations. Upon the whole, I am satisfied that the legislature of 1838 intended to introduce a new and independent system of banking, and to establish, for the government of institutions organized under such new system, new and independent regulations, and to leave all previous statutes relating to moneyed corporations to be applied to the chartered banks then in existence. It only remains to consider such other grounds, relied upon by the counsel for the receiver to establish the invalidity of the transaction, as do not depend upon the application of the provisions of the Revised Statutes relating to moneyed corporations to associations organized under the general banking law. These grounds I propose to notice in the order in which they have been presented. *Page 536 The first is, that "the conveyance is void upon its face as against creditors, because made in trust for the use of the company." This point has been directly adjudged against the receiver, in Curtis v. Leavitt. The third proposition adopted by the court in that case declares that "the trusts are not void under the statute (2 R.S., 135, § 1), on the ground that they were made for the use of the North American Trust and Banking Company; it being the opinion of the court that the statute applies only to conveyances, c., primarily for the use of the grantor, and not to instruments for other and active purposes where the reservations to the grantor are incidental and partial." So far as this point is concerned, this case is not distinguishable from that then before the court. In both cases the conveyances were made for the purpose of securing the payment of obligations to be issued by the company executing the conveyance. In each case, the transaction was, in effect, a mortgage of the securities assigned; in this case for the purpose of securing creditors, in the other for the purpose of securing the repayment of money to be borrowed for the use of the company. Nor was the transaction any the less a mortgage because it took the form of a trust. Until the obligations, to secure which the trust was created, were executed and delivered, the transaction was inchoate and incomplete. There was no trust for the use of the company. But when the transaction was completed, the conveyance became an active trust, devoting the property conveyed, in the one case to the payment of creditors, and in the other to the payment of borrowed money. There was no other trust for the benefit of the company than is necessarily incident to every other mortgage. The next point upon which the counsel for the receiver relies is, that the conveyance is void because made with intent to hinder, delay and defraud creditors. At the time of the execution of the trust deed in question, the company was indebted to the Philadelphia banks to the amount of *Page 537 nearly half a million of dollars. A large proportion of this indebtedness was then due, and all would become due within a year. The company was greatly embarrassed. Indeed, it could only continue its own existence by procuring an extension of the time for paying its debts. This extension was obtained by means of the trust deed and the assignments which formed a part of the transaction. The Philadelphia banks, being thus secured, were induced to extend the time of payment for five years. The effect of the transaction was to give these creditors a preference over other creditors, and to prolong the existence of the company. In all this there was nothing illegal. The company had a right, so long as it devoted its property to pay its debts, to give any creditor a preference over others. This purpose may be effected by way of a pledge or mortgage, as well as in any other way. I know of no rule of law which prohibits a debtor, even when in failing circumstances, from securing any debt he may choose to prefer by a mortgage on his property. It is but a lawful exercise of that arbitrary favoritism among creditors which, when unmixed with fraud, is always tolerated. Before the transaction can be impeached, the debtor executing the conveyance must be convicted of a design to withdraw his property from the reach of creditors. It is the intent to hinder, delay or defraud other creditors, and not the mere preference, which vitiates and destroys. The practical effect of the transaction in question, as I understand it, was to devote so much of the bonds and mortgages transferred to the trustees, as might be necessary for that purpose, to the ultimate payment of the obligations executed and delivered by the company to the creditors upon the extension of their debts, and to retain whatever excess there might be for the use of the company. "In all cases of a mortgage," says Judge PAIGE, in Curtis v. Leavitt (p. 205), "whether created in the form of a trust or otherwise, the mortgagee acquires only a specific lien on the property transferred, and the whole residuary interest therein remains in *Page 538 or results by implication of law to the grantor; and an express reservation of such residuary interest, being nothing more than what results to the party making the assignment by operation of law, will not vitiate the assignment. Such an express reservation has not the effect of hindering or delaying creditors. The residuary interest of the assignor may be immediately reached by his creditors by means of an execution, if the property assigned is a chattel, or by a complaint in the nature of a bill in equity, or by proceedings supplementary to execution, if the property consists of choses in action." (Leitch v. Hollister, 4 Comst., 211.) It is not pretended that the case furnishes proof of any actual fraud; and as the trust deed itself does not contain any provision which necessarily has the effect to hinder, delay or defraud creditors, this ground of objection to the validity of the transaction cannot prevail. The next point upon which the counsel for the receiver rely is, that "the conveyance is void for the reason that it was given to secure the payment of instruments called bonds, which were illegal contracts, because the company had no power to issue them." It is also insisted that the conveyance is void because it was made to secure obligations prohibited by the act of the 14th of May, 1840. The first of these propositions has been disposed of inCurtis v. Leavitt. It was there held that, prior to the act of May 14, 1840, a corporation might lawfully borrow money and thus contract debts, and that it might also execute and issue any appropriate assurances for the payment of such debts. The only limit upon this power was that imposed by the restraining act, which prohibited the issuing of any evidences of debt, to be loaned or put in circulation as money, except when specially authorized by law. (1 R.S., 712, § 6.) "It cannot fail to be noticed," says Judge COMSTOCK, "that this statute does not forbid either natural or artificial persons from entering into written engagements of any description, provided they are not issued to be loaned *Page 539 or put in circulation as money." It needed express legislative authority to enable a banking association to issue a paper currency to be put in circulation as money; but it needed no such authority to enable such association to execute any contract or assurance for the payment of its debts not expressly forbidden by law. The power is incident to the power to contract the debt itself. But it had been provided by the last section of the safety fund act (Sess. Laws, 1829, 173) that no moneyed corporation, subject to the provisions of that act, should issue any bill or note of such corporation, unless the same should be made payable on demand and without interest; and by the fourth section of the act of the 14th of May, 1840, this provision was extended to banking associations organized under the general banking law. As the obligations, to secure the payment of which the trust deed now in question was executed, were made after this law went into operation, it becomes necessary to inquire what was their character, and whether they were within the prohibition of this statute; in other words, whether the "bonds," as they are called, issued and delivered to the Philadelphia banks, are, in fact, "notes or bills payable on time, with interest." It is well settled that the prohibition in the act of 1840 extends to all negotiable promissory notes and bills of exchange, whether intended to be put in circulation as money or not. Thus, in Leavitt v. Palmer (3 Comst., 19), the notes in question were made by the North American Trust and Banking Company, payable twelve months after date to the order of William R. Cooke, at a banking-house in London, with interest at the rate of seven per cent. They were, in all respects, negotiable promissory notes. These notes were held to be void, because issued in violation of the statute of 1840. In Swift v. Beers (3Denio, 70), the action was upon a negotiable promissory note made by the same company. In The Ontario Bank v. Schermerhorn (10 Paige, 109), the question arose upon a draft at forty-five days, issued *Page 540 by a safety fund bank. The Chancellor, referring to the provision in the safety fund act prohibiting banks from issuing time paper, said: "The object of the legislature, in the adoption of this provision, undoubtedly was to prevent banks from issuingpost-notes or post-bills of exchange, which might pass from hand to hand as a part of the circulating medium of the country. Experience has often shown that the negotiable securities of banking institutions, in whatever form and for whatever purposes they may have been issued, will pass from hand to hand as a substitute for money so long as the banks which issued them continue to be in good credit. The only safe course, therefore, in construing this restrictive clause of the safety fund act, so as to guard against the mischief intended to be remedied thereby, and thus carry into effect the intention of the legislature, is to give it a literal construction so far as it relates tonegotiable bills and notes of every kind and description; and the corresponding provision in the act of 1840 should receive the same literal construction. But," he adds, "notes and drafts notnegotiable, and which for that reason cannot be used or circulated as a substitute for money, when issued by banks in the course of their business, either as evidences of indebtedness to particular individuals or for other legitimate purposes, are clearly not within the mischiefs which the legislature intended to guard against by these prohibitory provisions, although the language used by the legislature is broad enough to cover that kind of securities also, where they assume the character of promissory notes or bills of exchange." It was accordingly held that, inasmuch as it did not appear that the draft on time, issued by the bank, was negotiable, the objection to its validity could not prevail. The securities now before the court were not negotiable. Indeed, it is a misnomer to call them bills or notes at all; they are special contracts, four hundred and fifty in number. By each of these the company declared itself to be held and firmly bound to pay to Walter Mead or his assigns, on the *Page 541 1st day of February, 1845, the sum of £ 250 sterling, with interest at the rate of six per cent per annum, payable semiannually, at a banking-house in London, on the presentation and delivery of certain warrants therefor, which were annexed to the obligation. And it was further declared that the holder of that obligation, upon complying with certain conditions therein specified, should become entitled in lieu thereof to $1,200 of the capital stock of the company. Each of these instruments purports to be sealed with the corporate seal of the company. It is so declared in the attestation. The seal is in fact impressed upon the paper, but not upon wafer or wax. Upon the back of the instrument is a formal assignment, executed under the hand and seal of Walter Mead. In this assignment a blank is left to be filled up with the name of the assignee. Such an instrument, whether sealed or not, is not, in any legal sense of the term, negotiable; nor is it a bill or a note. The transaction cannot, therefore, be invalidated upon this ground. Another point made by the counsel for the receiver is, that assuming the trust conveyance to be valid and that the bonds were such instruments as the company was authorized to issue, still the conveyance cannot be enforced as a security for the bonds, because they were not negotiated in pursuance of the trust. I do not think this point is well taken in fact. The trust deed, in its recitals, declares that it is the intention of the company to negotiate the four hundred and fifty bonds to be issued in England, but it is not made a condition of the trust that the bonds shall be so negotiated; on the contrary, it is provided that, after default shall have been made on the payment of the bonds, the trustees shall stand possessed of the securities conveyed to them in trust for the holders of the bonds. It is enough to give effect to the trust deed that the bonds are negotiated by the company in a lawful manner, and that they are held by persons who, as against the company, are entitled to enforce payment. The Philadelphia banks and their assignees are such holders. *Page 542 The only other ground upon which it is sought to impeach the validity of the transaction is, that the bonds were negotiated by the company at a usurious rate of interest. Whether this is so in fact, I have not thought it necessary to inquire. By the act of April, 1850, the usury laws of this state, so far as they had before authorized corporations to avoid their contracts upon that ground, were in effect repealed. I concur entirely in the views expressed by Judges COMSTOCK, BROWN and SELDEN, in Curtis v.Leavitt, upon this question. However usurious the transaction may have been, the receiver is not in a position to avoid it upon that ground. Having thus considered all the objections which have been presented by the counsel for the receiver, the result of my examination is, that the transaction involved in this litigation is legal and valid. The judgment of the Supreme Court should therefore be affirmed.