Fleckner v. Bank of the United States, 21 U.S. 338 (1823)
U.S. Supreme CourtFleckner v. Bank of the United States, 21 U.S. 8 Wheat. 338 338 (1823)
Fleckner v. Bank of the United States
21 U.S. (8 Wheat.) 338
The Act of 10 April 1816, c. 44, incorporating the Bank of the United States, does not, by the ninth rule of the fundamental articles, prohibit the bank from discounting promissory notes or receiving a transfer of notes in payment of a debt due the bank.
The Bank of the United States and every other bank not restrained by its charter, and also private bankers, on discounting notes and bills, have a right to deduct the legal interest from the amount of the note or bill at the time it is discounted.
The Bank of the United States is not restrained by the ninth rule of the fundamental articles of its charter from thus deducting interest at the rate of six percent on notes or bills discounted by it.
Banks and other commercial corporations may bind themselves by the acts of their authorized officers and agents without the corporate seal.
The negotiability of a promissory note payable to order is not restrained by the circumstance of its being given for the purchase of read property in Louisiana, and the notary before whom the contract of sale is executed, writing upon it the words "ne varietur," according to the laws and, usages of that state and other countries governed by the civil law.
The statutes of usury of England and of the states of the union expressly provide that usurious contracts shall be utterly void, but without such a provision they are not void as against parties who are strangers to the usury.
The statute incorporating the Bank of the United States does not avoid securities on which usurious interest may have been taken, and the usury under the act of the Legislature of Georgia cannot be set up as a defense to a note on which it is taken. It is merely a violation of the charter, for which a remedy may be applied by the government.
This was a suit brought by the
defendants in error against the plaintiff in error in the court below upon a promissory note drawn by him, dated 26 March, 1818, for the sum of $10,000, payable to the order of one John Nelder on 1 March, 1820. The plaintiffs below, in their petition, made title to the note through several mesne endorsements, the last of which was that of the President, &c., of the Planters' Bank of New Orleans, through their cashier, as agent. The answer of the defendant below set up several grounds of defense: (1) that the Bank of the United States purchased the note in question from the Planters' Bank, which was a trading within the prohibitions of the charter of the Bank of the United States; (2) that the transfer was usurious, it having been made in consideration of a loan or discount to the Planters' Bank, upon which more than at the rate of six percentum per annum was taken by the Bank of the United States; (3) that the cashier of the Planters' Bank had no authority to make the transfer; (4) that the making the promissory note by the defendant below was not a mercantile transaction or governed by mercantile usages or laws, because it was given as the part consideration of the purchase by him of a plantation and slaves from the said Nelder, and that the notary before whom the contract of sale was executed and recorded wrote on the note the words "ne varietur," by which every holder of the note might know it was not a mercantile transaction, and could obtain knowledge of the circumstances under which it was given. And the answer proceeded
to state that Nelder had no title to a part of the plantation and slaves and that the note ought not to be paid until the title was made good, and prayed that the matters thus alleged and put in issue might be inquired of by a jury.
The issue was joined, and it appeared in evidence on the trial that the note in question was discounted for the Planters' Bank by the Bank of the United States, and, after deducting for the time the note was to run a sum equal to the rate of six percent per annum, the residue was carried to the credit of the Planters' Bank, which was at that time indebted to the Bank of the United States in a large sum of money. The counsel for the defendant below moved the court to instruct the jury upon this evidence
"that the receiving the transfer of the said promissory note, and the payment of the amount in account, as stated in the evidence, was a dealing in notes, and such dealing was contrary to the provisions of the act incorporating the said bank."
The court refused to give the instruction prayed for, but did instruct the jury "that the acceptance of an endorsed note in payment of a debt due is not a trading in things prohibited by the act."
The court also instructed the jury that the discount taken by the Bank of the United States was not usurious and would not defeat their right to recover the amount of the note.
It also appeared in evidence that the board of directors of the Planters' Bank, on 21 of October, 1818, passed a resolution
"That the president and cashier be authorized to adopt the
most effectual measures to liquidate, the soonest possible, the balance due to the office of discount and deposit in this city [New Orleans], as well as all others presently due and which may in the future become due to any banks of the city."
The endorsement of the note was made to the Bank of the United States on 5 September, 1819, and before the commencement of the present suit, to-wit, on 27 June, 1820, the board of directors of the Planters' Bank passed another resolution, to which the corporate seal was annexed, declaring that the two notes of the defendant below (of which the note now in question was one)
"were endorsed by the late cashier of the Planters' Bank, by authority of the president and directors, and delivered to the office of discount and deposit of the Bank of the United States, and the amount passed to the credit of the Planters' Bank,"
"the said board of directors do hereby ratify and confirm the said act of their said cashier as the act of the president, directors, and company of the Planters' Bank."
Upon this evidence, the court instructed the jury that the cashier had authority to endorse the note and that his endorsement operated a valid transfer.
It further appeared in evidence that the said note was originally given as a part consideration for the purchase money of a plantation and slaves purchased by the defendant below of Nelder, with a covenant to warrant and defend. The contract of sale was drawn up, executed, and recorded before a notary according to the laws
and usages of the State of Louisiana. The notary, upon the giving of this note and other notes for the purchase money by the defendant below, wrote on each note the words "ne varietur." The court instructed the jury that the writing of these words did not affect the negotiability of the note.
The defendant below excepted to these several instructions, and the jury found a verdict for the plaintiffs, on which judgment was rendered by the court below, and the cause was brought by writ of error to this Court.