McIntyre v. Ingraham

Handy, J., delivered the opinion of the court. The case presented by the record before us is this: On the 18th November, 1841, the plaintiffs in error executed their promissory note to the President and Director's of the Grand Gulf Railroad and Banking Company, a bank of this State, incorporated by the Legislature in the year 1888, by whom the note was assigned by deed of assignment on the 31st December, 1842, to the defendants in error, who brought this suit to recover the amount of it. The plaintiffs in error pleaded, in abatement to the suit, that the note was assigned by the bank, in violation of the statute of this State, passed on the 21st February, 1840, which enacts, that “ it shall not be lawful for any bank in this State, to transfer, by indorsement or otherwise, any note, bill receivable, or other evidence of debt; and if it shall appear in evidence, upon the trial of any action upon any such note, bill receivable, or other evidence of debt, that the same was transferred, the same shall abate on the plea of the defendant.” The title of the defendants in error to the note, is based upon the assignment to them; and the question is thus presented, whether the defendants in error acquired, by the assignment, such a title as — 51 — would enable them to maintain an action thereupon in their own names ? ^ On the one hand, it is insisted that the assignment was in violation of the Statute of 1840, and is illegal and void, and that no right of action passed by it. On the other hand, it is contended, that that Act was a violation of the right vested in the bank by its charter, to transfer and dispose of its property, including promissory notes; and that the statute, being an impairing of the contract between the State .and the bank under the charter, was unconstitutional and void. It is admitted that the Statute of 1840 is constitutional and valid, except so far as it impairs the right granted to the bank by its charter to transfer its evidences of debt. It is to be observed, that the note in question was made and delivered to the bank after the passage of the Act of 1840; and hence, no question arises as to the unconstitutionality of that Act on the ground that it impaired the right of assignment existing by the general law at the time of the execution of the note, and which entered into and became an incident to the contract. The case, therefore, turns upon the single question — whether, by the terms of the charter, the right to assign promissory notes is among the powers granted to the bank ; and this involves two points for consideration, — 1st: whether the power is expressly granted in the charter ; and, 2d: whether it is necessary to the exercise of any of the powers expressly granted, and therefore arises by implication. 1. The power is claimed as expressly granted by the 2d section of the charter, which provides that the corporation, “ shall be capable in law of purchasing and possessing lands, tenements, and hereditaments, and personal estate of any kind whatever, to an amount not exceeding the sum of one million of dollars, besides the cost of constructing the railroad and appurtenances thereto hereinafter mentioned, and the same may sell and dispose of at pleasure.” It is said that the power thus granted — to “ purchase and possess ;personal estate of any Mnd whatever,” and “ to sell and dispose of the same at pleasure” — gives the power to assign promissory notes, ■which are recognized as a part of its property ; and it is not pretended that any other part of the charter gives any sanction to the idea that this power was expressly conferred. The argument in favor of the power rests upon the force of the — 52 — Avordspersonal estate,” above quoted; and it is said that these words comprehend promissory notes. Conceding that these words are sufficiently comprehensive in the abstract, to embrace promissory notes ; yet the particular inquiry is, not what is the abstract force of the words, or what they may comprehend, but in what sense were they intended to be used as they are found in the charter. The sense in which they were intended to be used furnishes the rulo of interpretation, and this is to be collected from the context, and a narrower or more extended meaning be given, according as the intention is thus indicated. Michell v. Michell, 5 Madd. 72; Hotham v. Sutton, 15 Ves. 320; Stuart v. Earl of Bute, 3 Ib. 212. And the rule is, that the words “ estate” or “effects,” and the like, if used in a clause containing an enumeration of personal estate, will generally be confined to estate or effects, ejusdem generis, with those specified, as being the most natural, when unexplained by the context. Rawlings v. Jennings, 13 Ves. 46; Stuart v. Bute; Hotham v. Sutton, supra. We must look, then, to the connection in which the words are found, in order to ascertain what was in the legislative mind in enacting the provisions of the 2d section, and graduate the general words used accordingly. The section first prescribes upon what conditions the corporation shall go into operation — fixes its name and the term of its existence — and then follows the provision above quoted, authorizing it “ by that name to purchase and possess lands, tenements and here-ditaments, and personal estate of any kind whatever,” * * * “ and to sell and dispose of the same.” This is done before any provision is made touching the particular purpose for which the corporation was created, viz., to construct a railroad and to carry on the business of banking, discount promissory notes, deal in exchange, &e.; and it appears to bo wholly independent of the bush ness which was the especial object of the charter, so far as it had respect to promissory notes and evidences of debt. That most material part of the incorporation is afterwards regulated by several sections defining its duties and powers in that respect. By the well-settled rule of construction, therefore, it is plain that these general words in the’ 2d section have no reference to the espe — 53 — cial business for which the company was chartered. What, then, was the legislative intent in authorizing the acquisition and disposition of “ lands, tenements and hereditaments, and personal estate ?” It was manifestly to make provision for the purchase and sale of such property, whether real or personal, of a. specific nature, as might become necessary in constructing the railroad, and in carrying on the business of banking in its usual course-^ — to make provision for something not forming a part of the very business intended to be carried on, and which was, in subsequent parts of the charter, the subject of special attention and regulation. It is evident that the Legislature had not the subject of the purchase or assignment of clloses in action in view, in this section, from various considerations. It is a question of at least much doubt, whether the words, “ personal estate of any kind' whatever,” taken alone, would embrace promissory notes; and the contrary opinion would seem to be the result of the authorities in which the question has been involved. Popham v. Lady Aylesbury, Ámbl. 68; Moore v. Moore, 1 Ero. C. C. 127; Fleming v. Brook, 1 Sch. and Lef. 318; Stuart v. Farl of Bute, supra; 2 Wms. Exors. 749, 1st edit. But apart from this, the words as here used cannot be held to embrace promissory notes, for the following reasons:— 1. The context shows that no such thing was in contemplation in the section. The reception and disposition of promissory notes was one of the primary objects of the charter, and they are the subject of special regulation in other and appropriate parts of it. These sections are the proper places for provisions in relation to the use and benefit to be derived to the corporation from the reception and disposition of promissory notes, which were there the subject of consideration, if any such special provisions had been intended to be made. But this section has relation to another and a distinct matter, and promissory notes are not ejusdem generis with the subject-matter treated of in it. It is one of the best-settled rules of construction, that words in different parts of a statute must be referred to their appropriate connection ; giving to each in its place its proper force, reddendo singula singulis, and if possible rendering none of them useless or superfluous. This rule is wholly disregarded in the construction contended for; for if the power to purchase and dispose of personal estate means the power — 54 — to take and assign promissory notes, it renders the subsequent provisions, in relation to dealing in exchange and in bank and other stocks, useless. 2. The words employed negative the assumption that promissory notes were in contemplation. The language is, “ purchase and possess lands, tenements and hereditaments, and personal estate of any kind whatever.” The word “ possess” is appropriate to specific property, but not to dioses in action ; and while all the language used is appropriate to the 'purchase., possession, and sale of specific property, none of it has any necessary or clear application to dioses in action. It is in the last degree improbable that, if the Legislature had intended in this section to grant the power to transfer evidences of debt, language would not have been used clearly and directly applicable to so important a subject in the business of the corporation. It could not have been left to doubtful and inappropriate language. 3. If the construction contended for be correct, the porver granted is altogether indefinite. The mode of its exercise is in nowise provided for or indicated ; and the important question ai’ises, how is it to be exercised ? Shall the transfer be by deed or by assignment in writing on the paper, or by a separate instrument, by indorsement, or by mere delivery ? Does the legal title or a mere equitable interest pass to the transferee ? Is the power confined to written evidences of debt, and does it not extend to open accounts, which are as much personal estate as promissory notes ? All these important matters are wholly without regulation in the charter ; and if there was no other statute regulating them, it might be asserted as beyond all question, that the charter does not authorize or prescribe an assignment in any particular mode, nor ascertain the nature of the title which should pass by the transfer; nor could any court, having respect for established principles of law,'determine what mode of assignment was intended, or what kind of title passed, or what kind of property should be transferred. It cannot be supposed that if the power of assignment had been intended to be granted, it would have been left to depend upon language so vague as to render its exercise doubtful and impracticable. 4. The provision is wholly unnecessary and superfluous as to promissory notes. The right to take such paper, was the very foun55 elation upon which the franchises were granted; which, therefore, required no distinct and express grant of power in order to its exercise. It is merely recognized in the subsequent sections. And the right to transfer such paper also existed by the general law of the land, which was applicable to all corporations entitled to take promissory notes, as well as to private individuals. Commercial Bank v. Nolan, 7 How. 508. And this right was universally understood and recognized. Thus, when the right' of the corporation to assign notes existed by the general law, it is not to be supposed that the Legislature would perform the idle act of re-enacting that power in this charter; and, if that had been deemed necessary, that it would have been granted in terms so indefinite as to render the right useless. For these reasons, we think that the conclusion is not to be avoided, that the right to assign promissory notes is not expressly granted in the charter. II. Is the right, then, necessary to the exercise of any of the powers expressly granted, and therefore to be considered as part of the contract? The doctrine is too well settled in this country, to admit of controversy at this day, that a corporation, created by statute, “possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence.” Dartmouth College v. Woodward, 4 Wheat. 636; and “that it derives all its powers from that Act, and is capable of exerting its faculties only in the manner which that Act authorizes.” Head & Amory v. Providence Insurance Company, 2 Cranch, 127. In order to derive the power to assign promissory notes by implication, it must be shown that it would be necessary to the enjoyment of some specially granted right; so that, without it, that right would fail. But no such case is presented in this charter. The special powers of the corporation, in addition to that already considered, appear to be: 1st. A grant of “ all the rights, privileges, and powers that may be necessary to enable them to construct, continue, and keep in repair the railroad.” Section 4. 2d. A recognition of the right to make loans upon promissory notes. Section 13. 3d. A grant of power to “ deal in exchange, and in bank and other public stocks;” and “to issue notes, signed by the — 56 — President, and countersigned by the Cashier, &c., which shall be obligatory on the company,” &c. Section 15. All these powers could be exercised, and the rights granted be enjoyed, without the assignment of its promissory notes. The right to mate contracts for the consti’uction of the road, as well as the right to deal in exchange and public stocks, might he fully exercised without the assignment of its debts; and the use and benefit of its promissory notes, taken for loans, or otherwise, might he fully realized without their assignment. It was no more necessary that the right of assignment should arise from the power to take notes, in the case of this bank, than in the case of a promissory note taken by an individual ; for the individual would have as perfect a right of private property in his promissory note, with its incidents, as the corporation could derive from the mere fact of being authorized to take such a note. No right, granted in the charter, fails by reason of the incapacity of the corporation to assign its promissory notes; and, therefore, the right of assignment cannot be claimed as granted by implication in the charter. We are, therefore, of opinion that no right was secured to the bank by the charter, either expressly or by implication, to assign its promissory notes; and, consequently, that no right or privilege in that respect was violated by the Statute of 1840. But, it is urged, that that statute has been declared unconstitutional by the Supreme Court of the United States, in the case of the Planters’ Bank v. Sharp et al., 6 How. 301, and that that decision is conclusive of the judgment in this case. That decision has been yielded to by this court in the cases in which it was made, and might be considered as conclusive of the question of the constitutionality of the statute in question, as it affected the charters of the particular banks there brought under consideration. But it only declares the statute unconstitutional as to those charters, and we cannot admit its obligatory force as applicable to the present case, and will briefly state the reasons why we do not consider it conclusive of this case. In the first place, it is only the principle declared in that case that can be considered as applicable to timecharter presented for our construction in this case; and we do not recognize the right of any other judicial tribunal, either to expound the statutes of this — 57 — State, and to determine their legal construction or effect, or to prescribe rules by which we are to be bound in their construction, with the single exception of a statute alleged to be in conflict with the Constitution of the United States. The Supreme Court of the United States is authorized by the 25th section of the Judiciary Act of 1789, to decide the question of the “ validity of the statute of any State, on the ground of its Toeing repugnant to the Constitution of the United States and, of course, the judgment of that court, pronouncing a State statute unconstitutional, as impairing the obligation of a particular contract, will be conclusive upon the State court, upon the sole question of the effect and character of the statute presented for consideration. But we deny the power of that court to expound another statute not alleged to be unconstitutional, and to fix its construction and legal effect in opposition to the adjudications of the State court having jurisdiction of the question, because a particular construction may be attempted to be given to the original statute by the party complaining, and in order to render the second statute unconstitutional. Whenever a statute is alleged to be unconstitutional, on the ground that it violates rights granted by a previous statute, the first question which arises is, what is the force and effect of the original statute? what are the rights secured by the contract? The solution of that question belongs to the proper judicial tribunals of the State by which the statute wras enacted ; and no principle of law is of more universal acceptation, or stands upon sounder reason, than that the construction put by the proper courts upon the statutes of their own jurisdiction, is conclusive of their force and effect, and will be so regarded by all foreign judicatures, when they may become the subjects of consideration. Story’s Confl. Laws, §§ 272, 277. “This course,” says Chief Justice Marshall, “is founded on the principle, supposed to be universally recognized, that the judicial department of every government, when such department exists, .is the appropriate organ for construing the legislative acts of that government. Thus, no court in the universe, which professed to be governed by principle, would, we presume, undertake to say that the courts of any other nation had misunderstood their own statutes, and therefore erect itself into a tribunal which should correct such misunderstanding. We receive the construction given by the courts — 58 — of the nation as the true sense of the law, and feel ourselves no more at liberty to depart from that construction, than to depart from the words of the statute.” Elmendorf v. Taylor, 10 Wheat. 152. This proceeds upon the reason, that the courts of a country are presumed to have a more intimate knowledge of the reason and object of its statutes, than any foreign tribunal; and, consequently, to be more competent to give a just exposition of them with reference to the purposes for which they were passed. Accordingly it is said by the Supreme Court of the United States, in the Commercial Bank v. Buckingham, 5 How. 343, “it is the peculiar province and privilege of the State courts to construe their own statutes ; and it is no part of the functions of this court to review their decisions or assume jurisdiction over them, on the pretence that their judgments have impaired the obligation of contracts.” This rule has been often recognized and acted upon by that court, insomuch that they have abandoned their own decisions made in accordance with the rule as settled by the State courts, and conformed to a new and different rule, established by subsequent decisions of those courts. Is this rule altered by the 25th section of the Judiciary Act, which gives jurisdiction to the Supreme Court, to revise a judgment of a State court declaring that a State statute does not impair the obligation of a contract arising upon a previous statute? We think not. The question for the Supreme Court in such a case is, whether the second statute is unconstitutional; and its power is confined to determining the force and effect of that statute. That court has authority to declare whether that statute impairs the rights secured by the previous statute or contract. But how.are these rights to be ascertained and determined ? No question of the constitutionality of the first statute is presented, but the question as to that simply is, what is its force and effect, and what was granted by it ? The right to determine that, stands upon the general principle applicable to the construction of statutes above stated, and must belong to the State court. If this were not true, any matter of State policy, depending upon its statutes and the expositions of its courts, would be subject to revision by the Supreme Court, whenever any statute subsequently passed might be alleged to affect — 59 — rights acquired or claimed under previous statutes or contracts; and, under color of the power to pronounce the statute complained of unconstitutional, that court might proceed to reverse all the decisions of the State courts determining the force and effect of the contract, whether founded on a statute or general rules of law, alleged to be violated by the obnoxious statute, and thus subvert the entire policy of the State upon the subject-matter of the controversy. And it would follow that the construction of all contracts made under State laws, would be brought within the overruling power of the Federal government, whenever a State might think fit to pass any statute in relation to such contracts. The fallacy and danger of such a doctrine appear to be obvious. Suppose that there had been no general statute in this State, authorizing the assignment pf promissory notes, and that this bank had transferred a note, claiming the right to do so under the provisions of its charter; and that a question of title in the assignee had arisen, and this court had decided that it had no power by the charter to'inake the assignment, there can he no doubt but that that decision would have been conclusive of the right of assignment, and that no court could have disregarded it without a violation of established doctrine. But suppose in addition to this, that afterwards the Legislature, in order to prevent the practice of unauthoi’ized assignments by banks, passed a statute prohibiting such assignments, or repealing the general law authorizing assignments of evidences of debt; and that, notwithstanding-this, a suit had been brought b-y an assignee of such paper, and that the judgment of this court thereupon had been that the assignment passed no title, — could that court, in such a case, reverse the settled law of this State, as held in the case first supposed? We say decidedly not. If this was a case of an ordinary contract between two individuals, the force and effect of which had been settled by our courts, it could scarcely be pretended that, upon any question arising upon the validity of a statute subsequently passed affecting that contract, the Supreme Court would be authorized to reverse the construction of the contract settled by this court, and to give it a different force and effect; and the case is equally strong against the power, with regard to the established construction of our own statutes, so that no aid is .derived to the argument in favor of the power in the Supreme — 60 — Court, from the fact that the charter of the bank is a contract. For whether contract or statute, or both, it is equally subject to the lex loci contractus, which this court has the power absolutely to determine. But, if the power of revision exists in the Supreme Court of the United States, it gives to that court authority to reverse the settled law of this State as declared by its constituted tribunal, in relation to the rights vested under its own laws, whenever that court can take jurisdiction by means of another statute which may be passed touching the subject, and the constitutionalty of which may be questioned, when that court would have no power to reverse the decision, as directly made, which settled the construction of the original statute, — thus enabling that court to do indirectly what it has no power to do directly, — to reverse the settled law of this State in relation to our own statutes, by extending the power given by the Judiciary Act to determine the validity of a particular statute alleged to be unconstitutional, so as to authorize that court to give a construction to another statute or contract in opposition to the decisions of our own courts. And the power is thus denied to this court, to determine the rights which pass to a corporation by a charter granted by our own Legislature, and affecting our own people. It may be safely asserted, that no such dangerous and anomalous power was ever intended to be conferred upon that court by the Judiciary Act, which was passed by men who so well understood the rights and powers of the States. In all cases taken to the Supreme Court, under the Judiciary Act, upon the ground that a State statute impairs the obligation of a contract, the question directly presented for consideration, and which is the ground of the jurisdiction, is, whether that statute is constitutional or not. It is true that the question is also involved —what is the right secured by the contract ? But that is not the ground of the jurisdiction, and is merely incidentally involved. The nature and extent of the right under the contract depend upon the law of the State, and must be determined by its own tribunals, which furnish the rule of decision upon that point, in cases of this kind, as in all other cases depending upon the construction of the laws of any State. That is a distinct question from the question whether the right secured is impaired by the statute alleged to impair it, and is to be determined by reference to the settled law — 61 — of the State, and not by the views of the Supreme Court upon the subject. And any other dectrine would be in opposition to established principle, subversive of the rightful authority of the State tribunals to interpret their own laws, and to determine the effect of contracts made under them, and productive of conflict between the rules declared by the Supreme Court, and by this court, upon a subject most clearly within our exclusive jurisdiction. But we do not consider the case relied on as authority in this case, for other reasons. The terms of this charter are different from that involved in the case cited, in several respects. 1. In that case the language of the grant was, that the bank “ shall be capable in law, to have, possess, receive, retain, and enjoy, &c., lands, &c., goods, chattels, and effects, of what kind, nature, and quality soever, and the same to grant, demise, alien, or dispose of, &c.” It was by force of the words “to receive, retain, and enjoy effects of whatever kind, and to dispose of the same” that the court held the power to assign promissory notes to be granted. But the language of this charter is much less comprehensive. It is merely to purchase and possess and to sell and dispose of, personal estate of any kind whatever. By the context and the force of this language, promissory notes cannot be embraced, as is above shown. 2. No provision is made in this charter that notes should be taken, negotiable in their form — a circumstance in that charter which appears to have had weight with the court in aid of the position that the power to assign promissory notes was intended to be conferred. 3. The promissory note, in this case, was made after the passage of the Statute of 1840, prohibiting assignments of paper by banks; and that, being a general law, not impairing any right specifically granted in the charter, was valid as a partial repeal of the statute authorizing the assignment of promissory notes, and binding upon the bank as to all paper taken subsequent to its passage. Payne et al. v. Baldwin et al., 3 S. & M. 661. These considerations, which appear to have had weight in producing the decision in the case of Planters’ Bank v. Sharp et al., lead to a different conclusion in the case before us; and, upon con — 62 — sideration of that case, we are satisfied that it is not conclusive of the judgment to be rendered in this case. It is, however, insisted that the case of Planters’ Bank v. Sharp et al., has been recognized as binding authority on this court with reference to this charter, and must, therefore, be the rule of decision in this case; and, in support of this view, the case of the Grand Gulf Bank v. The State, 10 S. & M., is referred to. It will be seen by reference to that case, that the question of the power of the bank to assign its evidences of debt, was not presented for consideration. That question was not made by the pleadings, nor argued by counsel. The rights of the assignees of the bank were not before the court; nor was it necessary for the decision of the case, as presented, that such a question should have been decided. The question for decision was, whether the judgment of forfeiture against the bank for violation of its charter, was correct, and the court decided that it was. Whether other parties had rights by assignment from the bank, or what effects passed under the judgment of ouster, was not presented for consideration,- and the judgment cannot conclude such rights. Of course the observations made in relation to the validity of the assignment made by the bank, and the unconstitutionality of the Statute of 1840, cannot be considered as overruling the principles stated in Payne et al. v. Baldwin et al., 3 S. & M., especially with reference to a charter materially different in its provisions from that involved in the decision of that case. Nor did the question arise or receive any consideration by the court in the cases of Grand Gulf Bank v. Wood, 12 S. &. M. 482; Same v. Jeffers, Ib. 486; Ingraham v. Grigg, 13 Ib. 29. It follows from these views of the case, that the decree is erroneous, and must be reversed, and the bill dismissed.