THIS case came before the circuit court on a certificate of division from the judges of the circuit court, for the district of Maryland.
The facts, including those stated in the opinion of the court, were the following.
In the circuit court, at January term 1828, the United States instituted an action of debt on a bond executed on the 15th of July 1820, by Thomas Robertson, Levin Ballard, Arnold E. Jones, Mathias Deshiell, Charles Jones, Marcey Maddux, William Done, George W. Jackson, and John H. Bell, of Somerset county, in the state of Maryland, in the penal sum of one hundred thousand dollars. The bond and the condition are stated in the opinion of the court.
The plaintiffs gave in evidence a statement of the condition of the Bank of Somerset, on the 11th of May 1820; by which it appeared that the assets of the bank consisted of notes discounted, one hundred and six thousand nine hundred and ninety-five dollars; real estate, five thousand dollars; debts due by the Bank of Columbia, and the Merchants' Bank of Alexandria, one thousand six hundred and seven dollars: and that its debts were, capital unredeemed, four thousand two hundred and fifty dollars; notes in circulation, fifteen thousand dollars; deposits, including the United States, without interest, one hundred and fifteen thousand four hundred and twenty-six dollars; making a deficit of twenty thousand and seventy-four dollars. The plaintiffs also proved, that from the 15th of July 1820 to the 15th of July 1825, the president and directors of the Bank of Somerset received in good current money from the debtors of the bank, and from sales of their real estate, a large sum of money. That they received in payment of debts due to the bank, and as the proceeds of the real estate of their debtors, a large sum of money in the bank notes of the corporation, and in certificates of deposits of bank notes of the same. A certificate of those receipts was exhibited and admitted in evidence; by which it appeared that the receipts, in the period stated, were eleven thousand dollars in good money, in payment of debts due the bank, and for the proceeds of real estate; fifteen thousand five hundred dollars in bank notes of the corporation, in payment of debts due to the bank, or the proceeds of the real estate of the debtors to the bank; fifteen thousand dollars in certificates of deposits of such notes: that the payments were, ten thousand dollars for extinguishing prior lines on an estate conveyed to the bank by L. D. Teackle, a debtor to the bank; one thousand dollars, for clerk and sheriff's fees, in suits brought by the bank; one thousand dollars, attorney's fees and commissions; one thousand dollars paid to William Done, as agent for the bank; five hundred dollars for taxes on real estate and small charges. This statement contains an allegation by the corporation, that the losses, by insolvencies of its debtors, amount to sixty thousand dollars.
It was further given in evidence by the plaintiffs, that Charles Jones, one of the obligors in the bond, was sheriff of Somerset county from October 1821 to October 1824; and as such, received, under executions placed in his hands, in favour of the bank, eight thousand two hundred and fifty-five dollars and seventy-seven cents, in notes and certificates of the bank, and in good money; no part of which was proved to have been paid by him to the bank.
It was admitted that before the 15th of July 1820 the notes of the Somerset Bank had largely depreciated, and were not current as paper, as a circulating medium; that they have continued to depreciate, and are now worth nothing. No part of the debt due to the United States has been paid.
The defendants gave evidence of the payments made by the bank for the extinguishment of the liens on the estate of L. D. Teackle; for clerks and sheriff's fees on suits brought by the bank against the debtors to the bank; for attorney's fees and commissions, which were asserted to have been actually due and lawfully chargeable; for the lawful and reasonable commissions to William Done, as the agent of the bank; and for taxes on real estate; and for small charges. All these payments were in good money, and were paid between the 15th of July 1820 and the 15th of July 1825.
The evidence given by the defendants, as to the taxes on the real estate of the debtors to the bank, and the lawfulness of the fees, cost and commissions, was opposed by evidence on the part of the United States. Evidence was also given which was intended to deny that the taxes, fees, &c. were due, or that they were reasonable.
The plaintiffs also gave in evidence, that attachment suits were issued against the same debtors of the Bank of Somerset in the district court of the United States, in the years 1818 and 1819, against whom suits were instituted and prosecuted by the president and directors, in the county court of Somerset; some of which suits were instituted prior, and some subsequent to the instituting of the attachment suits, in the district court of the United States; and all of which suits were actually proceeded in after the attachment suits, and in the prosecution of which Somerset county suits, the principal fees, commissions and costs were incurred.
The defendant further offered evidence, that some time after the execution of the bond, upon which this suit was instituted, a contest arose between the bank of Somerset and several of its debtors, in consequence of the bank having refused to receive its certificates of deposit, which the debtors tendered in payment of debts due by them to the bank; and that the right of a debtor to use such certificates in payment of a debt due by him to the bank was judicially brought before the Somerset county court in an action instituted therein by the bank for the recovery of a claim which the debtor had refused to pay, except in said certificates; that the county court at its November term, in the year 1821, decided that the tender of the certificates of deposit by the said debtors to the bank, in payment of the debt due by them to the bank, was a satisfaction of the claim; and that the bank notes and certificates of the Bank of Somerset were a legal tender to the bank, and should be received in payments of judgments obtained in that court in favour of the bank, from the date of the act of assembly of the session of 1818, chap. 177; and that in conformity with the opinion a verdict was entered for the debtor with a judgment for his costs. And the defendant also proved that the bank notes and certificates, received by the president and directors of the said bank as stated, were received by them subsequent to the said decision.
The defendant also gave in evidence that among the judgments in favour of the bank were several against Littleton D. Teackle, upon whose property there were prior liens; and that all the money paid away by the corporation for liens was in discharge of such liens; and that the bank, under their own executions, bought the property of said Teackle subject to such liens, and that the property so taken was and is worth more than such liens; and that the property was delivered by the bank to the United States, and has been and is now in the hands and possession of the United States or its authorized agents.
The plaintiffs then gave in evidence that the property last referred to was never otherwise in the hands or possession of the United States, than as taken in execution under a writ of fieri facias, issued against the property of the bank, since the 15th July 1825; and further, that the property is not worth so much as the amount of the said prior liens.
The defendant offered, at the trial, to deliver to the plaintiffs the notes and certificates of the bank received in payment of debts due to the bank and for real estate, but the plaintiffs declined to receive them.
The defendant further offered in evidence, that the president and directors of the Bank of Somerset, during the five years from the 15th of July 1820, to the 15th July 1825, used due and reasonable diligence in recovering and securing the property and estate of the said bank, for the benefit of the United States; and that they, on the 15th July 1825, offered to deliver over to the United States all the property and estate which had been received by them (except what had been paid for liens, commissions, fees, costs and taxes, as herein before set forth); which the United States refused to accept: and that the president and directors have continued to hold, and now hold the same for the benefit of the United States, and always have been, and are now ready to deliver the same to the United States.
The plaintiffs then offered in evidence, that the president and directors did not, during the five years, from the 15th July 1820, to the 15th July 1825, use due and reasonable diligence in recovering and securing the property and estate of the bank, for the benefit of the United States; and that they did not on the 15th July 1825, or at any time since, offer to deliver up any property or estate whatsoever; and that they do not now hold any part of such property or estate, by them received, for the benefit of the United States; and that they have heretofore neglected and refused to deliver up any property or proceeds of property of the bank to the United States.
The defendant further offered evidence, that the bank, from the 15th July 1820, to the 15th July 1825, sustained losses to the amount of sixty thousand dollars by insolvencies of its debtors, for which the said corporation was not responsible. And thereupon the plaintiffs offered evidence, that the said supposed insolvencies, or the principal part thereof, happened by the negligence and misconduct of the said president and directors.
Certain proceedings of the corporation relative to the management and transactions of its business were given in evidence.
At a meeting of the board of directors of the bank on the 16th June 1818,
Ordered, That all persons indebted to this bank may discharge the same by transfers of its stock, at the rate of ninety per centum, for the amount of capital actually paid in.
By a resolution of the president and directors of the bank, passed June 13, 1820, William Done, one of the directors, 'is hereby appointed agent for the Bank of Somerset, to adjust and settle the claim of the United States, and he is requested immediately to repair to the seat of government, and there submit to the proper officer the propositions made by the former committee on the United States claim; and endeavour to procure the acceptance of either of them by the government, in substance as the same now stands. And whereas, this board has been informed that it has been represented at the seat of the general government, that the last election for directors was illegally conducted, and would be contested; the cashier is requested to furnish the said William Done with such extracts and statements from the proceedings of the board of directors of April 12th last, as he may think necessary and sufficient to satisfy the officers of government, that the said election was conducted and closed according to all antecedent usage in this bank; and, as far as we know, in every other similar institution.'At a meeting of the president and directors of the bank, on the 15th of July 1820, the agent, appointed at the former meeting of the board to proceed to the seat of government for the purpose of effecting a compromise with the treasury department relative to the claim of the United States against the bank, reported, that he had waited accordingly on the secretary and comptroller of the treasury; and that he had entered into a compromise upon the basis of the second proposition made by the committee on the United States claim, with a modification made by the treasury, as follows, viz: The directors will pledge to the government the whole estate of the corporaton as a security for the payment of the original principal of the claim, on or before the expiration of the term of five years from the date of the compromise; and for the fulfilment of this engagement, they will bind themselves individually to the United States in a sum equal to the amount of the debt.
The board then resolved, that the board accept the said proposition as thus modified, provided the United States will agree to assign to those individuals who shall enter into the bond the whole claim as it now stands, and all interest which have or shall accrue on the same. And for the better security of those who shall enter into said bond, and as an indemnification for any loss they might sustain, and a compensation for their extraordinary trouble and responsibility, it is hereby distinctly declared and understood by this board, that all advantages and privileges now held by the United States, shall be transferred to said individuals; and that they shall be entitled to all interest, profit and costs, which have or shall accumulate on the said claim, until the same shall be finally settled.
On the 26th of June 1821, the board of directors ordered, 'That William Done proceed, as soon as convenient, to the seat of government, for the purpose of finally settling the arrangement entered into with the treasury department; and he is also requested to ascertain the state of the suit or suits brought by the United States against the bank and its garnishees, in the district court of Maryland.'
'That Charles Jones shall attend all sales of property under execution, shall receive all moneys offered to him in payment of any execution or judgment, and shall pay over the same, at the expiration of each month, to the chairman.'Evidence was given that Charles Jones was solvent during the whole period of his shrievalty, and that he has since died, leaving his estate insolvent.
And further testimony was given, that the stockholders, generally, availed themselves of the provision of the resolution of the 16th June 1818; that where the stockholders were debtors, the transfer of their stock was made to cancel their debts pro tanto: and other debtors purchased from other stockholders stock for the like purpose; that some of the persons who were directors on the 16th June 1818, and who acted under the said resolution, were obligors on the bond in question; and that other obligors thereon, subsequently availed themselves of the same resolution.
Upon the statements, admissions and evidence, the plaintiffs by their counsel prayed the court for their opinion and direction, as is stated in the opinion of this court.
The defendant also submitted certain prayers to the court, which are also stated in the opinion of this court.
The case was argued by Mr Berrien, attorney general, for the United States; and by Mr Martin for the defendant.
Mr Chief Justice MARSHALL delivered the opinion of the Court.
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This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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