Glenn v. Farmer's Bank of North Carolina

Rodmam, J. We will consider the exceptions of the defendant successively : 1. That the Judge refused to consolidate the several actions of the plaintiff against the defendant. We are inclined to *203 think that no appeal will lie from such a refusal, as apparently it does not affect any substantial right of the defendant, O. C. P.. sec. 299. Expressing no opinion on this, we think the refusal of the Judge was right. It did not appear that the bills sued on in the several actions were all of the same character, and issued under the same circumstances, so that the defences would be the same to all. Buie v. Kelly, 7 Jones 266 sustains this view. 2. Caldwell, an officer of the defendant bank, swore that he had informed the plaintiff before he bought the bills sued on, that there was a certain class of the hills which had been issued in aid of the rebellion, and informed him how he might possibly distinguish them from those issued before the war. The plaintiff swore that Caldwell had not giveu him such information. The defendant requested the Judge to instruct the jury that the characters of the two witnesses being equal, they should give more credit to the positive, than to the negative statement. The Judge refused. It has been said in some text books, or perhaps in some judicial dieta, that if one witness swears affirmatively that he saw or heard a certain thing, and another that lie did not see or hear it, although present and able to have seen or heard it, had it occurred, ceteris jyaribus, belief should be given more readily to the affirmative statement; for perhaps, the negative witnesses may not have had his attention excited at the time. But this, like the rule, ufal-sum in uno,falsum in omnibus,” is merely an aid to the judgment of the jury, and not a rule of law to be laid down by the Court. And whatever weight it may have in its proper place, it can have noue here. The conversation testified to was between the two witnesses, alone, and each had his attention called to it. The difference in their statements can arise only from a want of truth, or a want of memory, in one of them. Their respective credibility is not to be tested by any arbitrary rule, but by considerations which it is peculiarly fur the jury to weigh ; for example, the interests or feelings they respectively had in the result of the action ; and even from *204 their demeanor on testifying. We think, for this reason, that the Judge committed no error in refusing the instruction. There is another reason, viz : That it was immaterial whether the plaintiff had notice before his purchase, or not. That question will be considered under the next exception. 3. The refusal to instruct the jury, that if the bills in question were issued to the State, or to the county of Guilford, in exchange for State or county bonds, with the knowledge that the bills were to be used in aid of the rebellion, and they were actually so used they were void, and plaintiff could not recover. The Judge told the jury, that if the bills were issued in aid of the rebellion, yet if the plaintiff purchased them for value and without notice of the illegal purpose, he could recover. We understand the Judge as saying, that if the plaintiff had notice of the supposed illegality, before his purchase, he'could not recover. The jury do not distinctly find whether the plaintiff' had such notice or not. It would seem that they thought he had a certain sort of notice, but that they found for him, because the information which he received, did not enable him to ascertain what particular bills were affected with the supposed illegality. If this was the character of the notice, inasmuch as the burden of proof is on the party alleging the affirmation of notice, such an uncertain notice would be equivalent to none at all. Passing that by, however, and assuming that the notice to the plaintiff was full, then two questions are to be considered : 1. Whether the plaintiff (notwithstanding such notice) is to be regarded as an innocent holder. On this point. The bills were issued under illegal contracts with the rebel government of the State and of the county. As between the original parties they were void. But it does not certainly appear that all of them were issued directly to the State or county. Some of them (it is uncertain which) were issued to individuals innocent of any guilty knowledge, and in the ordinary course of business. They, or some of them, were *205 antedated (not with any fraudulent intent) so as to appear issued before secession. They bore on the face no indication by which the public could know that they were issued upon an illegal loan, or otherwise, than in the usual course of business. The officers of the bank could tell from its books that a large number of the bills lettered B, and all lettered 0, were issued upon the illegal contract, but the public had no means of knowing this. They were intended to circulate as money, and in the absence of all evidence to the contrary, it must be presumed that they did so circulate to the end of the war. It must also be presumed as a natural and necessary result, in the absence of all evidence to the contrary, that in the course of transmission from hand to hand in the ordinary course of business, they passed to and through at least one innocent holder. That being so, the plaintiff, although he himself had notice before purchase, succeeded to the rights of such innocent holder, and stands in his place. As respects lands, this doctrine is familiar. Rev. Code, ch. 50, see. 4; Bump. Fraud. Con. 481. And the same principle of equity extends to bills and notes. 1 Parson’s Bills and Notes 216 ; Masters v. Ibber son, 8 Man. Gran. & L. 100 (65 E. C. L. R.) If it were otherwise, an innocent holder of land or bills, who received notice of the fraud or illegality after his purcha.se, could never sell the property,, for having notice, he would be bound in honesty to communicate it. He would thus be tied up to an inalienable estate. The rule is, that he can sell his own estate, such as he holds it. On proof by plaintiff of a purchase by him, for value, the burden of proof of notice, not only fo him but to all antecedent holders, is on the defendant. Masters v. Ibberson, ante. Our conclusion, that the plaintiff is, or represents an innocent holder, brings ns to the second question: 2. Whether or not the bills were void in the hands of such holder, by reason of the illegality of their original issue. It is contended that they are like notes vitiated by an usurious, or a gaming consideration, which can not be enforced *206 in the most innocent hands, but are always and under all circumstances void. That is the admitted law with respect to such contracts. But the cases which so hold, do it expressly on the ground, that a statute declares such contracts void, and unless full force be given to the mandate, the statutes would be constantly evaded. In the present case there is no statute making these bills void. By the common law they were void between the parties to the illegal contrae*, viz: the State and the bank. But the taint does not follow them into innocent hands. The interests of commerce require the rule, that' in such a case a party may transfer a better title than lie possesses. The question as to the validity of illegal notes in the hands of innocent holders was so fully considered in Weith v. the City of Wilmington, 68 N. C., 24, that we deem any further discussion unnecessary now. In that case it was held that the plaintiff was not entitled to recover; but the decision was expressly put upon the ground that the ordinance of 1868 had forbidden municipalities to pay debts incurred in aid of the rebellion. These acts were construed as if they had declared all contracts to pay such debts, void, thus bringing them within the rule which it is settled applies to usurious and gaming contracts. The rule to be extracted from the' decisions we consider to" be this: If a statute declares a security void, it is void in who-soevers hands it may come. If however a negotiable security be founded on an illegal consideration, (and it is immaterial, whether it be illegal at common law or by statute,) and no statute says it shall be void, the security is good in the hands of an innocent holder, or of any one claiming through such a holder. The case of Hay v. Ayling, 16 Ad. & Ellis, 423, (71 E. C. L. R.) is a notable illustration of the difference. Gaming securities were declared void by 9 Ann. chap. 14, sec. 1, and it was held that they were void in the hands of a bona fide innocent endorsee. The act of 5 and 6 W. 4, chapter 41, sec. 1, *207 modified the act of Ann,, and declared they should be illegal. The Court held, that after that act they could be recovered on by an innocent holder. See Masters v. Ibberson, ante. 6. The refusal of the Judge to instruct the jury that by reason of the ordinance and acts oí Assembly cited in the answer, the bank was exonerated from the payment of these bills. Whatever may have been wisely and justly done by governments of unlimited powers, it cannot be an authority to ns. This State, during the rebellion, was not the less subject to the Constitution of the United States, than it was before. Though the Constitution was practically powerless during the war, yet upon its termination it is deemed by a sort of jus post limine to have been continuously in force, and must be so held to have been by our Courts. Whatever the intention of the acts cited may have been, the only effect which can be constitutionally allowed them, is to exonerate the banks from the forfeiture of their charters, and other penalties, under the laws of the State. They cannot haye the effect to discharge the banks from their liabilities to innocent holders of their bills. That clause of the Constitution which forbids a State to impair the obligation of contracts is too familiar to need a more special reference. Neither can we consider it a defence to this action that Congress practically deprived the bank of its most valuable franchise, the issue of bills. We are not called on to say whether the act of Congress was either just or constitutional. Our opinion on such a question would be entitled to but little weight. But supposing it to be neither one or the other, it furnishes no defence to this action. If one is lawlessly plundered of all his property by a robber, he is still bound for his debts, at least to those who had no part in the robbery. Our opinion on these exceptions renders it unnecessary to consider the fourth exception. Pee- Cubiam. Judgment affirmed.