Smith v. Bank of the State

Perkins, J. The Bank of the State of Indiana, for the Lawrenceburgh Branch, sued Smith, Stevenson, and Bradley, on bills of exchange. The defendants answered: 1. Denying that the Board of Directors of the bank was legally constituted in this; that one of said directors, who was also president of the board, was ineligible to the office. 2. That the bank had not taken out brokers’ license. 3. Usury. 4. That the bills were not discounted by a quorum of the directors of the branch bank, pursuant to the requirements of the charter. The Court sustained demurrers to the 1st, 2d, and 4th defences, and issue of fact was taken upon the third. There was judgment for «the plaintiff on the issue of fact. The first defence was unavailing. The acting board, having come into office through the forms of law, was composed of officers de facto, and, if illegally elected, should have been ousted by quo warranto. 8 Blackf. 589; 3 Ind. 510; 5 id. 77, 165; 7 id. 505; Red. on R. 18. It is doubted in England whether such a proceeding lies against the officers of a private corporation; Grant on Corporation, p. 307; but it is settled that it does not in this country, on general principles; Angel and Ames, p. 614, et seq.; and it is expressly authorized by statute in Indiana. 2 G. & H. p. 323. The second defence was invalid. The charter is a license to the bank to discount paper, purchase bills of exchange, &c. The third defence was no bar to the action so far as it went to the principal sum loaned, or paid. Billingsley v. The State [329] Bank, 3 Ind. 375; The Evansville, &c., Co. v. The City, &c., 15 Ind. 395. D. S. Major, for the appellants. J. E. McDonald arid A. D. Boache, for the appellee. The fourth defence was insufficient. Ang. and Ames on Corp. sec. 264. The point is elaborately discussed, and the authorities collected in Bond v. The Central Bank of Georgia, 2 Kelley’s Geo. Rep. p. 92. The provision is held to be directory, and for the security of the stockholders of the bank, and the bill holders. The bank may expose its franchises to hazard by disregarding such provisions, but debtors can not avoid payment of their obligations on that account. Eurther: Somebody discounted the bills for the defendants below. They got the money on them, and they owe it to somebody. Now, if any one or more of the directors, as individuals, discounted the bill, did they not become their property ; and does not the answer go to the question of the real party plaintiff? But an answer, denying that thq plaintiff in the suit is the party in interest, should, to be sufficient, show who is the proper party. Per Curiam. The judgment below is affirmed, with 3 per cent damages and costs.