President of the Bank of Chenango v. Hyde

Curia, per Sutherland, J. There is no force in the objection, that the advance of the money, by Birdsall to Hyde, under the circumstances of this case, was a violation of the act-of April 1st, 1818, prohibiting attorneys and counsellors from purchasing dioses in action, or lending or advancing money upon them, for the purpose of having them placed in .their hands,- or the-hands of any other person for prosecution. It was a mere loan- of money, upon a security which had no legal existence or validity, before it was placed in .the' hands of Birdsall. In the hands of Hyde, it was not an available instrument. -He was one of the makers; and it .became a,promissory note, or chose inaction, only on.its delivery to Birdsall, or the bank for his use. If this was a purchase within the statute, then an attorney can in no case lend money, and take a note as security. That the instru- ; ment was drawn and signed by the makers, before the bank or Birdsall were applied to for the money, does not alter . the transaction. -It took its inception when it passed to them; and if there had been usury exacted upon the trans- . feiyit would have destroyed the note in the hands of any subsequent bona fide holder. (Powell v. Waters, 17 John [573] 176. Munn v. The Commission Company, 15 id. 55. Marvin v. M'Cullum, 20 id. 288.) The facts in the case conclusively repel the supposition, that the consideration or inducement on the part of Birdsan, for advancing the money, was the placing the note in the hands of the bank for collection. I apprehend the statute, in prohibiting the purchase of choses in action, means pre-existing securities, or demands. The term buying and purchasing can, in strictness, be applicable to such only. On this ground, therefore, without deciding whether the statute prohibits the purchase of choses in action by attorneys or counsellors, when they are not purchased for the purpose of collection, it is clear that it has no application to this case. Nor is the validity of the note affected by the circumstance, that it was drawn for the purpose of being discounted at the Bank of Chenango. It was made to raise, money on. It did not change the responsibility of any of the parties to it, that the money was advanced by Birdsall, instead of the bank. The case of Powell v. Waters, (17 John. 176,) is decisive upon this point. In Denniston v. Bacon, (10 John. 198,) which was cited by the defendant’s counsel, the contract was essentially changed; and on that ground, tne note was held invalid. The Bacons made their note to Gere and Elliot, the latter informing them by letter, that he had made an agreement at the bank, that they should discount it; and that 20 per cent, should be paid in 56 days, 20 per cent, in 112 days, and the residue in 168 days. When the note was offered, the bank refused to discount it, and Elliot then endorsed it to Denniston, who brought the suit for Elliot’s benefit, as it was expressly admitted. The Court held, that between those parties, the letter of Elliot, and the note, formed but one contract; and that the defendants were not responsible, because the note was not discounted on the terms stated in the letter, but the whole amount was exacted at the expiration of 60 days. Had it been discounted on the terms originally proposed, by another bank, or an individual, the transaction would not have been questioned. The case of Marvin v. M'Cullum, (20 John. 288,) which was also cited for the defendants, has no application to this point. [574] But it is said, the suit could not be maintained, in tod name 0f the bank; that they could not legally be trustees for Birdsall, this not being within the scope of the powers conferred by their act of incorporation. The general proposition, that a corporation can have no other capacities than ‘ such as are necessary to carry into effect the purposes for which it was established, is undoubtedly true. (1 Kyd on Corp. 70. N. Y. Firem. Ins. Co. v. Ely, 2 Cowell’s Rep, 699.) But I apprehend the bank, in this case, has not transcended its powers. Upon the face of the transaction there is nothing exceptionable. It appears to be a loan by a bank upon a promissory note; but the proof shows that it was in truth a loan by Birdsall; and the reason of the note being in the name of the bank, and left in their possession, is satisfactorily accounted for. It was intended to be discounted by the bank; but they refusing to discount it, Birdsall advanced the money, and now brings the suit in the name of the nominal payees. The question is, not whether the bank has a general authority to act in the capacity of a trustee; but whether the bona fide holder of a promissory note, in which the bank is nominally the payee, has a right to sue in the name of the bank. I apprehend, if the bank had refused the use of its name, a Court of Equity, would have compelled it to allow such use on proper terms. Nor was the judgment in the separate suit of Birdsall v. Hyde, for money lent, an extinguishment of his liability upon the note. If that suit had been upon the note, instead of the original advance, the doctrine contended for by the defendant’s counsel would have applied. The judgment, in that case, would have been a bar to any subsequent suit against Hyde upon the note; and of course against his co-defendants, who could be charged only jointly with him. The case of Robertson v. Smith, (18 John. 459,) would then have applied with decisive force in favor of the defendants. But in Drake v. Mitchell, (3 East, 251,) it was held that where one of three joint covenantors gives a bill of exchange for part of the debt secured by the covenant, on which bill judgment is recovered, such judgment is no bar to an action of covenant against the three. Grose, J. says, “ the [575] note or bill, not having been accepted as satisfaction for vhe debt, could only operate as a collateral security; and though judgment has been recovered on the bill, yet not lla ving produced satisfaction m fact, the plaintiff may still resort to his original remedy on the covenant.” In Chipman v. Martin, (13 John. 241.) this Court decided that a judgment on a covenant for the payment of rent, is not, without actual satisfaction, an extinguishment of the rent; and the lessor may, notwithstanding the judgment, distrain for the same rent, for which the judgment was obtained. It was held to be a case of concurrent remedies, where the party may pursue all, until satisfaction is produced. It was likened to the case of a bond and mortgage, in which a recovery upon the bond will not preclude the mortgagee from bringing his action of ejectment, and recovering possession of the land. The same principle is recognized and illustrated in Bantleon v. Smith, (2 Bin. 146.) In Day v. Leal, (14 John. 404,) it was held that a collateral security of a higher nature, (as a bond and warrant of attorney,) executed by one of the makers of a note, on which judgment has been entered, did not, as long as the judgment was unsatisfied, extinguish the original contract. If Hyde was individually liable to Birdsall, for money lent, then the note in question was a collateral security, and the judgment upon the original cause of action without satisfaction, is no bar to an action on the note. Nor is the fact of Birdsall’s prosecuting and obtaining judgment against Hyde, individually, for money lent, evidence that he advanced the money upon his credit, and not upon the note. Hyde was the individual with whom the transaction took place. It was natural for Birdsall to call upon him for payment in the first instance, if he supposed he had a right to resort to him individually. Upon the whole case, therefore, I am of opinion the plaintiffs are entitled to judgment. Judgment for the plaintiffs.