Columbus Insurance & Banking Co. v. First National Bank

Cooper, J., delivered the opinion of the court. The appeals in these cases might have been prosecuted upon one record, and we dispose of them in one opinion. 1. The court rightly held that the account of the Columbus Insurance & Banking Company should be purged of all usurious interest, and that any interest charged by that company in excess of ten per cent, per annum was usurious. It may be conceded that, by its charter, authority was conferred upon that company to stipulate for any rate of interest not exceeding ten per cent. ‘‘discount, ’ ’ and that it did not reserve any greater rate than such discount, for that rate would be usurious, and the right to receive it does not now exist, notwithstanding the provisions of its charter. By an act approved March 13, 1886 (Acts, p. 35), it was, among other things, provided “that every provision of any act heretofore passed creating any corporation, or amending any act creating any corporation, which authorizes any such corporation to take or receive more than ten per centum interest per annum, or which is in conflict with section 1141 of the code of 1880, is hereby repealed.” The charter of. the company was granted by an act approved February 16, 1867. At that time the code of 1857 was in force in this state, and, by the last clause of article 5 of section 2 of chapter 35 (page 292), it was expressly provided that “all charters granted under this act, or by act of the legislature, [106] unless otherwise provided in the act, may be repealed by the legislature. ’ ’ There is no provision in the act of incorporation of the company withdrawing it from the operation of this law, and its corporate existence is held at the will of the legislature. Shotwell v. Railway Co., 69 Miss., 541. 2. The court did not err in holding that the claim of the First National Bank was a valid charge against the firm of N. Gross & Co. The acceptance propounded was the renewal of one of the previous year, which was in turn given in renewal of the original, which was acquired by the bank in December, 1889. If N. Gross & Co. were bound by the original acceptance, they were, of course, bound by those given in renewal and extension. The question is whether, by the original, a liability was fixed upon both Hirshman, by whom the acceptance was made, and upon Mrs. Gross, his partner, or whether Hirshman alone was bound. The acceptance was for accommodation, and, as between Leigh & Co., or one taking from them with notice of its character, was binding only on Hirshman; but, if the bank was a purchaser of the instrument in good faith — i. e., for value and without notice — both partners were bound, for it is not denied that it was within the scope of the business of N. Gross & Co. to issue negotiable paper. The facts disclosed by the evidence are that the bank had discounted, for Leigh & Co., a note executed by one Motley for the sum of five thousand dollars, upon which Leigh & Co. were bound to the bank as indorsers. Motley had died before the maturity of the note,, and the president of the bank had notified Mr. Leigh, of the firm of Leigh & Co., that the note must be paid or satisfactory security given for an extension, to which Mr. Leigh replied that the matter should have attention when the note should fall due. Leigh, for the purpose of arranging to discharge the Motley note, drew the bill of exchange in question upon N. Gross & Co., by which the firm of Leigh & Co. directed N. Gross & Co., twelve months after date, to pay to their (Leigh & Co. ’s) own order the [107] sum of three thousand four hundred dollars, which was accepted by N. Gross & Co. in the usual form. This instrument Leigh & Co. indorsed, and delivered to the bank, and Mr. Leigh gave the check of Leigh & Dashiel, the successors in business of Leigh & Co., for the difference between its value and the amount of the Motley note, in payment of the Motley note, to the bank, which note was then delivered to Leigh for Leigh & Co., as indorsers who had paid the same. We are unable to discover anything, either on the face of the paper, the circumstances attending its negotiation or otherwise, from which to infer that the bank had notice of the character of the acceptance, or of facts which devolved on it the duty of making further inquiry. In Bloom v. Helm, 53 Miss., 21, the circumstances of the transaction were held to have charged the purchaser of the bill with notice that the acceptance was for .accommodation, and, therefore, not binding upon a nonassenting member of the accepting firm. It was then said that possession of the bill by the drawer, after acceptance, was sufficient to charge the purchaser with notice that the acceptance was for accommodation; and this was also held in Bank of Vergennes v. Cameron, 7 Barb., 143. And, if the maker of a note indorsed by a firm is in possession of the note, this imports that the indorsement is for accommodation, otherwise the note would not be in the maker’s hands, and the nonassenting members of the indorsing firm are not bound. Stall v. Catskill Bank, 18 Wend., 466; Austin v. Vandermark, 4 Hill, 259; Gansevoort v. Williams, 14 Wend., 133; 1 Parsons on Notes and Bills, 141; Fannor v. Hall, 1 Barr, 417. And, where a nonresident partner drew a bill in the firm name upon himself, and accepted and discounted the bill, it was held that the duty of the taker to ascertain the authenticity of the signatures, if performed, would have discovered the facts, and that he was not a tona fide holder of the bill. Cooper v. McClurkan, 22 Penn. St., 82. So, a memo [108] ranclum written on the back of a note has been held to be notice of the facts it recites. Bank v. McDonald, 127 Mass., 82. Houston cé Reynolds, for appellants, filed the following suggestion of error: It is a mistake to say that there is nothing in the charter of the Columbus Insurance & Banking Co. to withdraw it from the operation of article 5 of section 2 of chapter 35 (page 292) of the code of 1857. On the contrary, the charter contains the following provision: “That all acts and parts of acts inconsistent with this act be, and the same are hereby, repealed, and that this act shall take effect and be in force from and after its passage, and this act shall be in force fifty years from its passage. ” Acts 1867, p. 286. This provision, taken in connection with other parts of the act, withdraws it from the operation of the code of 1857. That code being a legislative act, and not a part of the constitution, in determining whether the charter is withdrawn from its operation, the inquiry is limited to the intent of the legislature in granting the charter. New Jersey v. Yard, 95 U. S., 111; Louisville Gas Co. v. Citizens' Gas Co., 115 U. S., 684. [108] Bat none of these decisions are applicable to the facts of this case, for they all proceed upon the postulate that notice is given of the facts from which the accommodation character of the acceptance or indorsement should be inferred. If Leigh & Co. had. been the drawers of a bill payable to another person, the fact that they held the bill after its acceptance would show that it was for accommodation. But they were payees as well as drawees of the bill, and as payees it was in the course of business that they should be in possession of the paper. Bills of this sort are irregular in form, and may be treated either as bills or promissory notes (1 Dan. on Neg. Insts., 128), but are of common use both in England and this country. Id., § 130. An instrument payable to the order of the maker is in legal effect payable to bearer, and is not subject to the provisions of our statutes allowing defenses existing between original parties to be interposed against a bona fide holder. Bank of Winona v. Wofford, 71 Miss., 711. 3. We concur in the conclusion reached by the chancellor that the evidence fails to support the right asserted by Sweetzer, Pembroke & Co., The Tennent-Stribbling Shoe Co., and Weinman, Hirskman & Co. to rescind the sales made by them to Gross & Co., and recover the goods sold by them because of the fraud of Hirskman' in making false representations as to the financial condition of his firm. The decree is affirmed. In determining this intent the act should not receive a strained construction, but should receive a fair and reasonable one. While it is a contract, and the state a party to it, it ought to be construed according to those well-established principles which regulate contracts generally, regard being had to the nature and object of the grant. United States v. Gurney, 4 Cranch, 333; Huidekoper's Lessee v. Douglas, 3 Cranch, 1. The coi'poration having been created and endowed with perpetual succession, the subsequent provision in the act that the charter should be in force for fifty years, cannot have been designed to limit the corporate existence, since such a provision would have been inconsistent with perpetual life. What was meant was that the charter should be irrepealable for fifty years. It will be seen, by reference to the other acts of incorporation passed at the same session of the legislature, That whenever that body wished to create either a corporation of unlimited duration or one of limited duration subject to repeal, it never put in force an act creating a corporation of unlimited duration and then limited it afterwards. In Shotwell v. L. N. O. T. Ry. Co., 69 Miss., 541, it was held that these sections, which by the act containing them were declared irrepealable (the others, not being so declared, by inference were repealable), could not be repealed by subsequent legislation. This declaration can be expressed as well by the words ‘ ‘ shall be in force for fifty years, ’ when, as in this instance, they are not words of limitation upon the existence of the corporation. 2. The court has apparently overlooked the fact that when the first draft was drawn by F. M. Leigh & Co. on N. Gross & Co., the first named firm had been dissolved by the death of E. Gross, and was no longer a mercantile firm. This fact was known to the First National Bank, which is chargeable too with knowledge of the law that rendered F. M. Leigh unable to transfer to it, for the purpose of taking up the Motley note, any title to the paper in question, of which paper the First National Bank, on taking the same, became merely the trustee for the real owner. Suggestion overruled.