People ex rel. Attorney General v. River Raisin & Lake Erie Railroad

Campbell J. : The Attorney General filed an information, charging defendants with usurping the following liberties, privileges and franchises, viz: “That of becoming proprietors of a bank or fund, for the purpose of issuing notes, and transacting other business which incorporated banks may and do transact, by virtue of their respective acts of incorporation, and also that of actually issuing notes and carrying on banking operations, and other monied transactions, which are usually performed by incorporated banks, and which they alone have a right to do and inquiring by what warrant they claim to use those franchises, &c. The plea sets up the charter, and avers that under it the corporation was authorized, among other thing's, to “grant such evidences of debt which might be incurred by said company, as may be by the by-laws thereof directed, to such an amount as should be deemed necessary for the transacting of the business of the same” — “Provided such by-laws should not be contrary to the constitution or laws of the United States, nor of the State of Michigan.” The plea proceeds to set forth certain bylaws requiring the president to sign, and the treasurer, as cashier, to countersign, all evidences of debt; which, by the same by-laws, were required to be in the form of a promissory note, payable to bearer on demand, at the office of the company in the city of Monroe: That from time to time large liabilities were adjusted by such evidences — 394 — of debt, to tbe amount of $200,000: That one James Q. Adams became the owner of a large amount of these, and presented them for adjustment, and they were adjusted by issuing similar evidences for the principal and interest due him: And the plea then denies that the defendants have exercised any of the liberties, privileges or franchises, charged by the information, “except as aforesaid* / and this they claim a right to do. To this plea the Attorney General replied, that the evidences of debt granted to Adams were granted and issued to him “in the form, and having the appearance, of bank bills, in sums of one dollar, two dollars, and three dollars, [the same being printed from engraved plates of the size in which bank bills are commonly issued, and with vignettes and other devices thereon which are usually ■found upon bank bills;’’ that Adams was president, and signed the certificates of indebtedness as such, “ and that the same were so granted and issued to him, with intent that they should be put in circulation as money;” áse. To this the defendants demur; 1st, because they say the replication is a departure; the offense set up not being the same set forth in the information: 2nd, for duplicity, as charging, (1) that the evidences of debt were in the similitude of bank bills, ■ and (2) that they were intended to circulate as money: 3rd, that it does not aver an intent in the defendants that they should be put in circulation as money; 4th, that it does not admit, deny or traverse the plea; 5th, that the plea traversed the information, and the replication does not join issue upon it. It is very well settled that, in an information in the nature of a quo warranto, it is not necessary to set forth the franchises and privileges alleged to be usurped, except in general terms. It is always the right of the Government to call upon those who assume corporate powers, to require them to show by what warrant they do so; and when the defendants set forth their claims by plea, the — 395 — Attorney General may reply and show the special grounds he relies on: — 2 Kyd on Corp. 399, 403, 440 ; Ang. & A. on Corp. §§ 734, 756, 759, 760; People v. Bank of Niagara, 6 Cow. 196; People v. Bank of Hudson, 6 Cow. 217. The information in the case before us is precisely like that in People v. Bank of Niagara, and People v. Utica Insurance Co. 15 Johns. 358. The first question, therefore, which arises, is whether the matters set forth in the replication depart from the information, or, in other words, whether issuing notes payable to bearer on demand, intended to circulate as money, is business appropriate to incorporated banks, and not within the grants of defendants’ charter. The charter of the defendants authorized them to “ grant such evidences of debt which may be- incurred by said company, as may be by the by-laws thereof directed, to such an amount as shall be deemed necessary for transacting the business of the same.’ Sec. 11, p. 362, Laws of 1836. Their right to purchase, hold, sell, lease, and convey estate, either real or personal, or mixed, is expressly limited to “so far as the same may be necessary for purposes hereinafter mentioned, and no further.’’ Sec. 3, p. 359. Those purposes are strictly confined to the completion and maintaining of a railroad. Any banking business would be foreign to such a charter; and it is difficult to conceive how evidences of debt “necessary for transacting the business of the corporation ’’ could be made to embrace paper issued for general circulation, and payable on demand. In the absence of restriction, it 'is very possible that a corporation may use the same incidental means, to accomplish a given purpose, that might be used by an individual; but where it is confined to one kind of business, it can not lawfully engage in enterprises foreign to that business. By the general laws in force at the date of this charter, it was provided that no person unauthorized by — 396 — law, should “subscribe to, or become a member of any association, institution, or company, or proprietor of any bank or fund, for the purpose of issuing notes, receiving deposits, making discounts, or transacting any other business which incorporated banks may or do transact by virtue of their respective acts of incorporation”: Laws of 1833, p. 530. It was held in Bristol v. Barker, 14 Johns. 204, by somewhat nice verbal criticism, that an individual without partners was not liable to the penalty of this act, for doing a general banking bnsiness, of issue, discount and deposite. But in the case of The People v. The Utica Insurance Co. 15 Johns. 358, it was held that whatever might be the case as to individuals, no corporation or association could exercise these powers, without direct authority. In the case of The Utica Insurance Co. v. Scott, 8 Cow. 709, a note discounted by that company was held valid because the charter gave them express power to loan their funds. But the general doctrine can not, we think, be questioned; nor can a grant of a single power usually exercised by banks imply the right to any further and different banking powers. In re. Ohio Life Insurance & Trust Co. 9 Ohio, 291; Duncan & Maryland Savings Institution, 10 Gill & J. 299. We do not deem it necessary, for the purpose of testing the sufficiency of the pleadings in substance, to examine into our subsequent penal statutes, concerning unauthorized banking,- as, if the issue of this paper constituted an act of banking, it was not within the charter powers of defendants. We think the issue of paper designed to circulate in the form and similitude of bank notes is an act of banking, and is unlawful for the defendants. But it is objected that the replication is double, because it avers that the paper issued by defendants was not only in the similitude of bank notes, but \yas also issued with the intent that it should be put in circulation as money. Either of these allegations would be suf — 397 — ficient, under section 5899 of the Compiled Laws, to render the paper illegal, and subject the defendants to a forfeiture of their charter. It was held in People v. Bank of Hudson, 6 Cow. 217, that a replication may state a cause of forfeiture in very general terms, provided that they create but a single material issue. In the present case the facts all relate to a single alleged putting forth of illegal paper. But the only safe .test of duplicity is to see whether a single issue can be made to controvert the pleading, by denying any one material fact. If defendants were to deny the similitude to bank bills, the fact that the notes were intended to circulate as money would not be affected by the denial, and would form a complete cause of action. So if the intent were denied, there would be a good cause of action upon the similitude. No single rejoinder would dispose of the whole replication. We think the replication is open to the objection of duplicity. This renders it necessary for us to examine the plea. When called upon to show by what warrant they assume to exercise any franchises, the defendants were bound either to deny the exercise of the franchises, or to show what franchises they possess of the kind set forth in the information, and their title to them. In this case the defendants set up all their claim under their charter. This is declared to be a public law, and being so we are bound to take judicial notice of it, and to disregard all allegations in conflict with it. We are bound therefore to take notice that the charter of the defendants gives them no authority to issue any paper within the restraining acts. They have set forth in their plea that they have issued certain paper which they describe. But that paper as described may or may not be . within the restraining acts. They therefore neither confess nor deny the exercise of banking powers, and the issue tendered by the plea is immaterial. Had they denied their exercise, the Attor — 398 — Hey General might have replied by averring the issue of illegal paper in such forms as he deemed proper, filing as many replications as he saw fit to raise separate grounds of complaint. Had they admitted the exercise of banking powers and set uj> their charter as authorizing it, if it had been a private act, issue might have had to be joined upon it, but inasmuch as it is a public act, the plea would have • been bad on demurrer. Having done neither, the plea is¿not issuable, and must be set aside. An order must be entered setting aside the plea for insufficiency. Martin Ch. J. and Christianoy J. concurred. Manning J.^was absent when the case was decided.