It is a general rule in the construction of public statutes that
the word
"'may' is to be construed 'must' in all cases where the
legislature meant to impose a positive and absolute duty and not
merely to give a discretionary power."
And in all cases, the construction should be such as carries
into effect the true intent and meaning of the legislature in the
enactment.
The provision in the act of Congress incorporating "The
Mechanics Bank of Alexandria" which requires that the capital stock
of the bank shall consist of 50,000 shares, of ten dollars each is
not a condition precedent, and the bank went legally into operation
with an actual capital less than that number of shares.
Even if fraud had existed in the original subscription of this
stock of the bank, it would he extremely difficult to maintain that
such a fraud, which was private, between the original subscribers
to the stock and the commissioners, could be set up to the injury
of subsequent purchasers of the stock, who became
bona
fide holders of the same without participation in, or notice
thereof.
The law requires every issue to be founded upon some certain
point, that the parties may come prepared with their evidence, and,
not be taken by surprise, and the jury may not be misled by the
introduction of various matters.
What defects in pleading are and are not cured by verdict.
The condition of an official bond that the officer who gives it
shall "well and truly" execute the duties of his office includes
not only honesty, but reasonable skill and diligence. If the duties
are performed negligently and unskillfully, if they are violated
from want of capacity or want of care, they can never be said to
have been "well and truly executed."
The officers of a bank are held out to the public as having
authority to act according to the general usage, practice, and
course of their business, and their acts within the scope of such
usage, practice, and course of business would in general bind the
bank in favor of third persons possessing no other knowledge.
No act or vote of the board of directors of a bank in violation
of their own duties and in fraud of the rights and interests of the
stockholders of the bank will justify the cashier of the bank in
acts which are in violation of the stipulation in his official bond
"well and truly" to execute the duties of his office. Acts done by
a cashier under the authority of such a vote or of a usage
permitted by the directors in violation of the trusts assumed by
them are on the responsibility of the cashier and of his
sureties.
The official bond of the cashier must be construed to, cover all
defaults in duty which are annexed to the office from time to time
by those who are authorized to control the affairs of the bank, and
the sureties in the bond are presumed to enter into a contract with
reference to the rights and authorities of the president and
directors under the charter and bylaws.
On a joint and several bond, the plaintiff may sue one or all of
the obligors,
Page 26 U. S. 47
but in strictness of law he cannot sue an intermediate number.
He must sue all or one. But if such error is not taken advantage of
by plea in abatement, it is waived by pleading to the merits.
According to modern decisions, a
nolle prosequi does
not amount to a
retraxit, but simply to an agreement not
to proceed further in that suit as to the particular person or
cause of action to which it was applied.
In an action on a joint and several bond, some of parties'
sureties severed in their pleadings from the principal, and a trial
and verdict were had against them; afterwards the principal was
called upon to plead, and he did so; judgment was then entered
against the sureties and a
nolle prosequi entered against
the principal. To this judgment or the proceedings no exception was
taken in the court below, nor was a new trial asked by the
sureties. The Court held that there is no decision exactly in point
to the case; that there is no distinction between the entry of a
nolle prosequi before, and the entry
after judgment, as applicable to this case. The decisions of the
courts of the United, States, upon this proceeding, have been. on
the ground that the question is matter. of practice and
convenience.
When the defendants sever in their pleadings, a
nolle
prosequi ought to be allowed against one defendant. It is a
practice which violates no rules of pleading, and will generally
subserve the public convenience. In the administration of justice,
matters of form not absolutely subjected to authority may well
yield to the substantial purposes of justice.
An act of Congress was passed on 16 May, 1812, entitled "An act
to incorporate a bank in the town of Alexandria, by the name and
style of the Mechanics Bank of Alexandria," which institution soon
afterwards went into operation, subscriptions for filling up the
capital stock of the corporation and bank having been opened in the
Town of Alexandria on the first Monday in June, 1812, under the
direction of fifteen commissioners appointed for that purpose. On 3
September, 1817, Philip H. Minor was elected cashier of the bank,
and on the same day, by a resolution of the Board of Directors, it
was ordered "that the present officers of the bank do the whole
duties of the bank."
In the office of cashier, Philip H. Minor was the successor of
William Patton Jr., who died in August, 1817, and before his
appointment as cashier, Philip H. Minor (who had several years
preceding served as an officer of the bank, for some time as
discount clerk, and afterwards as bookkeeper) had, in March, 1817,
been appointed teller for one year ending in March, 1818, from the
time of his appointment, and had given approved bond and security
conditioned that he would well and truly execute the duties of the
office of teller. After the appointment of Philip H. Minor in
September, 1817, to be cashier of the bank and the order of the
Board, on the same day relative to the whole duties of the bank
being performed by the then officers of the bank, no renewal of the
appointment
Page 26 U. S. 48
of teller was made, and he usually performed the duties of
cashier and teller.
On 19 March, 1818, Philip H. Minor and the plaintiffs in error
executed a joint and several bond in the sum of $20,000 which
contained the following condition:
"Whereas the above bound Philip H. Minor hath been duly elected
to the office of cashier of the Mechanics Bank of Alexandria, the
conditions of the above obligation are such that if the above bound
Philip H. Minor shall well and truly execute the duties of cashier
of the Mechanics Bank of Alexandria, then this obligation to be
void, but otherwise, shall remain in full force and virtue in
law."
"PHILIP H. MINOR [L.S.]"
"GEORGE MINOR [L.S.]"
"D. MINOR [L.S.]"
"WILLIAM MINOR [L.S.]"
"SMITH MINOR [L.S.]"
In the Circuit Court of the District of Columbia for the County
of Alexandria, the defendants in error instituted an action of debt
upon this bond against all the obligors, and the declaration filed
in the same was for the penalty, without taking notice of the
condition.
Oyer of the bond and condition having been prayed, &c., the
defendants being the sureties of Philip H. Minor, to-wit: George
Minor, Daniel Minor, William Minor, and Smith Minor, pleaded joint
pleas, separate from Philip H. Minor, the cashier of the bank. The
substance of these pleas was as follows:
1. The Mechanics Bank was not competent to sue, because the
commissioners, who, by the act of incorporation, were authorized to
open and take subscriptions to the capital stock of the company,
and who took the subscriptions, had colluded with the subscribers
to the stock, and that $180,000 of the stock had been frequently
subscribed, and that an election for directors of the bank was
fraudulently and illegally held by which the persons named as
commissioners were elected the directors of the bank, the votes of
the fraudulent holders of the stock, amounting to $180,000, having
been taken at the said election; that afterwards the sums paid by
the fraudulent or collusive holders of the $180,000 stock were, by
the president and directors, paid back to them, and thereby the
capital was diminished to $320,000, and, by the said proceedings
the capital stock of the bank was reduced below $500,000, as was
collusively held out
Page 26 U. S. 49
to the public, without this that the plaintiffs, the obligees in
the bond, or any other person whatsoever, at the time and times of
making the said bond and of commencing the suit thereon or at any
time whatsoever used, claimed, or exercised, or yet use, claim, or
exercise the name and style, privileges, and capacities of the said
supposed corporation or ever claimed to compose the same, otherwise
or by any other ways or means or in any other manner or form
whatsoever than in virtue of the said subscription, conducted and
concluded as aforesaid, and so the said defendants say the said
supposed writing, obligatory in manner and form aforesaid made is
utterly inoperative and void in law, and this, they are ready to
verify, &c.
The second plea states, that the defendants ought not to be
charged, &c., because the plaintiffs demand the said debt, and
bring this action, as pretending and claiming to be a corporation
aggregate in and by virtue of the act of Congress mentioned in the
first plea, by the name of the Mechanics Bank of Alexandria, to be
composed of the subscribers to the said Mechanics Bank of
Alexandria, which subscribers were not in being at the time of the
passing of the said act, but were to be composed of such persons
only as thereafter might subscribe thereto according to the
provisions of the act, whereas the subscriptions were not taken
according to the said provisions, so as to entitle the persons
pretending to be subscribers to the said Bank, and their successors
and assigns, to compose the said corporation, wherefore there was
not any person authorized, or lawfully competent to take the bond
which is the subject of this suit, nor was there any such person at
the commencement of this suit capable of instituting and
prosecuting the same, but that the said persons did unjustly and
illegally arrogate to themselves to compose the said corporation
without the capital stock having been filled by subscription or the
supposed corporation having been composed of actual subscribers to
the Bank pursuant to the directions of the said act of Congress or
other lawful warrant whatsoever, contrary to the purview and effect
of the said act of Congress, and so the defendants say that the
said writing obligatory, was at the time of making the same and is
utterly void in law, &c.
The third plea alleged that the cashier had well and truly
performed the condition of the bond according to the tenor and
effect and the true intent and meaning of it.
The fourth plea alleged that the cashier had performed the
condition of the bond "to the best of his ability, skill and
judgment," without any fraud, deceit, or willful default or breach
of duties whatever.
The fifth plea alleged that the cashier had performed his
duties
Page 26 U. S. 50
in obedience to and in pursuance of the rules, orders, usages,
and customs of trade and business ordained, established, and
practiced in the Bank by authority of the president and directors
thereof.
The sixth plea asserts that although the duties of the cashier
had not been performed by him, yet the nonperformance was by the
wrong, connivance, and permission of the president and directors of
the institution.
The seventh plea states that the bank had not been damnified by
the acts of the cashier.
The eighth plea was that although the bank was damnified by the
acts of the cashier, yet it was by the wrong and connivance of the
president and directors, &c.
The ninth plea states that the business and affairs of the
company and the conduct and duties of the cashier were performed
under the regulation and management of the president and directors,
who had been chosen according to the provisions of the act of
incorporation, and if at any time the corporation has sustained
damage since the making of the writing obligatory by reason of any
matter contained therein, it has been by the wrong, connivance. or
permission of the said president and directors.
To the first and second pleas the plaintiffs below put in
general demurrers, and on each of the seven remaining pleas issue
was taken by general replications, all precisely in the same terms,
as follows:
"And the said Mechanics Bank of Alexandria, by Thomas Swann,
their attorney, say they ought not to be precluded, &c.,
because they say that the said cause of action, in the declaration
mentioned, did accrue as in the said declaration and breaches are
set forth; without that, that the matters set forth in the said
plea, are true, and this they pray may be inquired of by the
country, and the defendants likewise."
But at the next term, the plaintiffs withdrew these general
replications as to the 3d and 4th pleas, and to these two pleas put
in special replications, leaving the issues on the remaining five
to stand on the general replications and issues as above. The
replications thus put in to the 3d and 4th pleas, and rejoinders of
the defendants taking issue upon the same, being precisely in the
same terms,
mutatis mutandis, to each, were as
follows:
"And the said Mechanics Bank of Alexandria, by Thomas Swann,
their attorney, say that they ought not to be precluded from having
and maintaining their action aforesaid against the said defendants,
George Minor, Daniel Minor, William Minor, and Smith Minor, by
anything alleged by the said defendants in their third plea,
pleaded as aforesaid: because they say
Page 26 U. S. 51
that the board of directors of the said Mechanics Bank of
Alexandria, in pursuance of the authority granted to them by the
act of Congress incorporating the said bank, did duly make and
declare sundry bylaws for the government of the said bank, its
officers and affairs, and, among other laws so made and declared as
aforesaid, they did enact and declare, in substance, as follows,
to-wit: "
"Section 2d, article 5th. It shall be the duty of the cashier to
countersign, at the bank, all the bills or notes to be signed by
the president, by order of the directors; carefully to observe the
conduct of the persons employed under him; duly to examine into the
settlement of the cash account at the bank; count the money
deposited in the vaults every evening; compare the amount thereof
with the balance of the cash account of that day, and in case of
disagreement report the same to the next meeting of the directors;
to see that all deeds appertaining are duly recorded, and to do and
perform all other duties that may from time to time be required of
him by the president or board of directors relative to the affairs
of the institution."
"Article 6th. It shall be the duty of every other officer,
clerk, and servant of the bank to do and perform all other duties
that may from time to time be required of them respectively by the
president and cashier, and in no case to divulge the transactions
of the bank."
"Article 8th. That no officer of the bank, the president
excepted, shall leave the bank after it closes until the cashier's
account shall be found to agree, or if it does not agree, until a
strict examination be made to discover the error."
"Section 3d, Article 3d. That no discount shall be made without
the consent of a majority of the directors present, nor shall any
reason be required by the directors to each other, nor assigned to
the public, for refusing discounts."
"Which said bylaws, so made, enacted, and declared, as aforesaid
were, at the time of the sealing and delivery of the writing
obligatory, in the declaration mentioned, in full force and effect.
And the said plaintiffs say that the said Philip H. Minor, in the
said writing obligatory mentioned, was duly appointed cashier of
the said Mechanics Bank of Alexandria, and in virtue of his said
appointment did accept the office of said cashier, and on the day
of the date of the said writing obligatory in the declaration
mentioned, did thereupon enter upon the duties of the said cashier,
and the said plaintiffs further say that the said Philip H. Minor
did not well and truly execute the duties of the said Mechanics
Bank as cashier of the said bank according to the true intent and
meaning
Page 26 U. S. 52
of the condition of the said writing obligatory, but violated
his duty as cashier aforesaid and broke the condition of the said
writing obligatory in the following instances, that is to say,"
"1. That during the period that the said Philip H. Minor acted
as cashier of the said Mechanics Bank under the writing obligatory
as aforesaid, he, the said Philip, as cashier aforesaid, received
into his custody, and keeping the moneys of the said bank,
amounting to very large sums, that is to say amounting altogether
to $500,000 and upward, which said moneys, so received as
aforesaid, the said Philip, although often required, hath failed to
account for or to pay over to the said bank or to make a correct
report of the same from time to time to the board of directors of
the said bank."
"2d. And further that he, the said Philip, during the period
aforesaid, and in his capacity of cashier aforesaid, wrongfully and
contrary to the duty of his office of cashier aforesaid did waste
and suffer to be wasted of the moneys of the said bank in his care
and custody as cashier aforesaid, the sum of $30,000 and upwards,
whereby the same became entirely lost to the said bank."
"3d. And the said plaintiffs further say that the said Philip,
during the period aforesaid and in his capacity of cashier
aforesaid, wrongfully and contrary to the duty of his office of
cashier aforesaid and without the authority of the said bank, did
apply and appropriate, of the proper money of the said bank in his
care and custody as cashier aforesaid, to his own proper use, the
sum of $5,728, and to the use of Thomas J. Minor and himself, "
the said Philip H. Minor, the further sum of
$3,179.00
1,898.63
---------
$5,077.63
"so that the said sums were entirely lost to the said bank."
"4th. And the plaintiffs further say that the said P. H. Minor,
during the period aforesaid and in his capacity of cashier
aforesaid, wrongfully and contrary to the duty of his office of
cashier aforesaid, and without the authority of the said bank, did
pay away and did suffer and permit to be paid away, of the proper
moneys and funds of the said bank in his care and keeping as
cashier aforesaid, to Jabez B. Rooker divers sums of money,
amounting altogether to the sum of $4,967.30, and to one Francis
Adams, divers others sums amounting altogether to the sum of
$1,884.18, and to William F. Thornton divers other sums of money
amounting altogether to the sum of $7,407.25, and to Benjamin G.
Thornton divers other sums of money, amounting altogether to the
sum of $4,810.74, and to Lewis
Page 26 U. S. 53
Hipkins the sum of $2,375, and to Robert Young divers other sums
of money amounting altogether to the sum of $9,294.44, so that the
said several sums of money were entirely lost to the said
bank."
"5th. And the said plaintiffs further say that the said Philip
H. Minor, during the period aforesaid and in his capacity of
cashier aforesaid and without the authority of the said bank, did
endorse upon a certain check, drawn by Lewis Hipkins upon the said
Mechanics Bank, in favor of 'note in city or bearer' for $3,000,
that the same was 'good' when in fact and in truth the said Lewis
Hipkins had no money or funds in the said Mechanics Bank at the
time of the said endorsement to pay the said check, nor has he at
any time since had in the said bank any money or funds to pay the
said check so endorsed as aforesaid, and the said bank has actually
paid and taken upon itself the payment of the same."
"7th. And the said plaintiffs further say that Benjamin G.
Thornton, on 18 December, 1818, drew a certain bill or draft upon a
certain bank in the State of Ohio called the Bank of New Lancaster,
which bill or draft was in substance as follows: "
" ALEXANDRIA, December 18, 1818. Cashier bank of New Lancaster,
Ohio. Pay to the order of W. F. Thornton, ten days after sight,
$4750 and charge the same as per advice to yours, &c."
"B. G. THORNTON"
"And the said plaintiffs say that the said Philip H. Minor,
while he acted as cashier aforesaid, under the writing obligatory
aforesaid, wrongfully and contrary to the duty of his office of
cashier aforesaid, and without the authority of the said bank, did
advance and pay, upon the credit of the said draft or bill, to
William F. Thornton and Lewis Hipkins, the amount of the said draft
-- that is to say the sum of $4,750 by means of which said
advancement, so made as aforesaid, the said sum has been entirely
lost to the said bank."
"8th. And the said plaintiffs further say that said Philip H.
Minor, while he acted as cashier aforesaid under the writing
obligatory aforesaid, wrongfully and contrary to his duty as
cashier and with a view to deceive and mislead the board of
directors of the said bank, did make sundry false and erroneous
entries in the books of the said bank in his care and custody as
cashier aforesaid, and among others, the following, to-wit: a
charge against the Bank of Alexandria of the date 31 August, 1818,
for the sum of $1,791 and another against the Bank of Potomac of
the date
Page 26 U. S. 54
of 31 August, 1818, for the sum of $2,581.25, and another
against the Bank of Washington of the date of 2 March, 1818, for
$1,000 dollars when in fact and in truth at the periods aforesaid
there was nothing due from the said last mentioned banks to the
said Mechanics Bank, by means of which said false entries and
charges, the said Mechanics Bank has lost the said several sums of
money. All which said several matters and thing the said plaintiffs
are ready to verify. Wherefore, &c."
To these pleas, the plaintiffs in error put in the following
replication:
"And the said defendants, George Minor, Daniel Minor, William
Minor, and Smith Minor say that the said Mechanics Bank of
Alexandria ought not to have or maintain its aforesaid action
against the said defendants by reason of anything by the said
Mechanics Bank of Alexandria, in its said replication to the said
third plea of the defendants above in replying alleged, because
they say that the said Philip H. Minor, in the said plea and
replication named, did not violate his duty as cashier aforesaid
and break the said condition of the said writing obligatory in the
instances by the said Mechanics Bank of Alexandria, in their said
replication above pleaded and alleged, nor in any of them, with or
by means of any fraud, or deceit, or willful default whatsoever.
And this they pray may be inquired of by the country, and the said
Mechanics Bank of Alexandria in like manner."
At the same term, the demurrer to the first and second pleas and
the issues on the remaining seven between the plaintiffs and the
four
sureties were respectively argued and tried, the
first and second pleas were adjudged insufficient on general
demurrer; the issues were found for the plaintiffs, and damages, in
gross, upon all the issues and breaches, assessed against the four
sureties, at $8,607.30, and, upon the motion of the plaintiffs, a
rule was then laid on the principal obligor and co-defendant,
Philip H. Minor, to plead to issue on the morrow. In compliance
with which rule, he did, within the time prescribed, plead five
several matters in bar, the same,
mutatis mutandis as the
third, fourth, fifth, seventh and ninth, of the aforesaid pleas,
put in by the co-defendants, his sureties. A day was given at the
next ensuing term to the plaintiffs to reply, at which term the
plaintiffs took a judgment on the judgment against the four
defendants, with whom the several issues had been tried as
aforesaid, and then entered a
nolle prosequi as against
the co-defendant, Philip H. Minor, who thereupon recovered judgment
for costs against the plaintiffs.
On the trial of the cause in the circuit court, a bill of
exceptions was taken to the opinion of this Court upon certain
Page 26 U. S. 55
instructions which the court was requested to give to the jury.
The court instructed the jury according to the expressed desire of
the plaintiffs below except as hereafter stated, but refused to
charge the jury as requested by the counsel of the defendants.
The instructions given by the court on the motion of the
plaintiffs' counsel and on the evidence given in the cause
were:
"1st. If the jury, from the evidence aforesaid, should be of
opinion that the said Philip H. Minor, upon his leaving the
Mechanics Bank of Alexandria, that is to say, on 9 March, 1819,
failed to pay over or to account to the said bank for any portion
of the moneys of the said bank received by him as cashier of the
said bank while he acted as cashier of the said bank under the
writing obligatory in the declaration mentioned, then the jury may
and ought to infer that the said moneys so unaccounted for were
willfully wasted by the said Philip H. Minor or applied to his own
use, and that under such circumstances the defendants are liable to
the bank for the moneys which he so failed to pay over, or account
for to the said bank."
"2d. And the said plaintiffs requested the court further to
instruct the jury that if from the evidence aforesaid it should be
of opinion that the said Philip H. Minor, while he acted as cashier
aforesaid under the writing obligatory aforesaid, did willfully pay
or apply or did knowingly and willfully, suffer or permit to be
paid away or applied to the use of Thomas I. Minor and himself
jointly, or to himself individually, any portion of the funds or
moneys of the said bank, without the authority of the board of
directors of the said bank, so that the said sums or any part
thereof were lost to the said bank, that the said defendants are
liable for the said moneys or funds so paid away or applied and
lost."
"3d. And the said plaintiffs prayed the court further to
instruct the jury that if from the evidence aforesaid it should be
of opinion that the said Philip H. Minor, while he acted as cashier
aforesaid under the writing obligatory aforesaid, willfully paid
away or appropriated or knowingly suffered or permitted to be paid
away, or appropriated to the use of Jabez B. Rooker, Wm. F.
Thornton, Benjamin G. Thornton, Lewis Hipkins, and Francis Adams,
or to either of them, the moneys and funds of the said bank,
without the authority of the board of directors of the said bank,
so that the said moneys or funds or any part thereof were entirely
lost to the said bank, then the said defendants are liable for the
said moneys so paid away or appropriated and lost."
Upon the first and second issues, being the issues under the
Page 26 U. S. 56
third and fourth pleas, and upon the third, being the issue
joined on the fifth plea, the court gave the instructions as prayed
for by the counsel for the bank. Upon the third issue, being the
issue joined in the fifth plea, the court gave the first
instruction, with the addition of the following words:
"unless such failure to pay over or account for the money so
received by the said Philip H. Minor was in obedience to and in
pursuance of the directions, rules, orders, usages, and customs of
trade and business ordained, established, and practiced in the said
bank, by the authority of the said president and directors."
Upon the fourth issue, being the issue joined under the sixth
plea, the court gave the instructions prayed for, adding in each
instruction after the words "directors of the said bank" the words
"and without the wrong, connivance, or permission, of the said
president and directors."
Upon the fifth issue, being the issue joined in the seventh
plea, the court gave the first instruction, adding the words
"if the jury should be also satisfied by the evidence that
moneys which the said Philip H. Minor so failed to pay over or
account for were thereby lost to the bank,"
and upon this issue also the court gave the second and third
instructions.
Upon the sixth and seventh issues, the court gave the second and
third instructions, adding the words to make them applicable to the
fourth issue, and upon the sixth issue the court also gave the
second and third instructions, adding in each instruction, after
the words "directors of the said bank," the words, "and without the
wrong, connivance, or permission, of the said president and
directors."
The counsel for the defendants, then moved the court to instruct
the jury:
"1. That if it were the established usage and practice of the
said bank that the cashier might, in his discretion, permit
customers to overdraw and to have checks and notes charged up
without present funds in bank, and for the cashier to receive and
pass, as cash, checks and drafts, upon other banks, and if the said
balances, so appearing against the several persons above charged on
the books of said bank, arose out of the exercise of such
discretion, by the said cashier, and in the course of the ordinary
transactions of said bank, and pursuant to established usage and
course of business there adopted, and personally known to the said
president and directors, and practiced and continued with their
knowledge for a series of years from the commencement of the bank
to the termination of the said Philip H. Minor's cashiership,
though the existence of such balances or the particular
circumstances attending them were not formally communicated to the
board of directors,
Page 26 U. S. 57
the jury may infer the approbation, assent, and acquiescence of
the said president and directors as to such usage and course of
business."
"2. That if the said balances appearing against the several
persons above charged on the books of said bank arose in the course
of the ordinary transactions of said bank pursuant to the
established usage and course of business there adopted and known to
the president and directors and expressly or tacitly acquiesced in
and approved by them, or if the said president and a majority of
the directors were personally acquainted with such usage and course
of business, purposely connived at the same, and declined
investigation, then the jury may infer that the same were approved
and permitted by the said president and directors, though no formal
communications of the same were made, by the said cashier to the
board of directors at their official meeting, and upon finding such
to be the fact, the jury, as to such balances, should find for the
defendants under the issues joined on the replications to the
sixth, eighth, and ninth pleas."
Which instructions the court altogether overruled, and refused
to give to the jury.
"3. If the jury finds from the evidence that the several
officers of the said bank, annually appointed by the said president
and directors as aforesaid, each gave separate bond and security
for the faithful performance of the duties of his office, that the
said William Patton, so being cashier, as aforesaid, died on or
about 28 August next ensuing his last appointment on 9 March, 1817,
and that on the third day of September following, the said Philip
H. Minor, having all along acted as teller under his said
appointment, as such, for one year, from March, 1817, was duly
appointed cashier in place of said Patton and gave bond and
security in the usual form for the faithful performance of his
duties as such cashier, being at the same time under bond and
security for the faithful performance of his duties as teller for
the year ending in March, 1818, as above stated; that he continued
to be such cashier under his said appointment till 9 March, 1818,
when he was again appointed cashier for one year, and on the 19th
of the same month gave the bond now in suit, that on the said 3
September, 1817, the said president and directors duly passed the
said orders of that date appointing the said Philip H. Minor
cashier, as aforesaid and directing the then officers of the bank
to do the whole duties of the bank, and did not then or any time
after the said 9 March, 1817, make any new appointment of teller,
that the said Philip H. Minor, from the time of his first
appointment as cashier, usually performed
Page 26 U. S. 58
the duties of teller, which duties, as well as those of cashier,
were occasionally, and frequently, during the continuance of said
Minor in the office of cashier, performed by the other officers of
the said bank whilst the said Minor was absent and otherwise
occupied with the business and affairs of said bank; that the
separate office of teller was established at the first institution
of said bank by the written laws and ordinances of the president
and directors as above given in evidence; that after the said
president and directors ceased to appoint a distinct person as
teller as aforesaid, all the distinct functions and duties of
teller and the forms of keeping the accounts and transacting the
business by the cashier, or some other officer of said bank in the
name and capacity of teller were pursued the same as when the
office of teller was filled by a distinct person, the practice
being still continued of placing the money of the bank, intended to
answer the current demands of each day, in the hands of the officer
as teller, of keeping separate accounts of such moneys and of all
deposits and of all payments upon checks or otherwise in the name
and capacity of teller, such accounts being distinct and separate,
and in distinct and separate books from those kept in the name and
capacity of cashier, and that the said board of directors, and the
proper committees of the same, in their quarterly and other
examinations and reports of the state and condition of said bank
and of the accounts of its officers, still kept up the distinction
between the teller's and the cashier's accounts, and the teller's
and cashier's money, then that the defendants are not chargeable in
this action for the conduct of said Philip H. Minor in the
execution of the duties distinctly appertaining to the office of
teller whilst he was cashier, as aforesaid."
Which instruction the court refused to give, the plaintiffs
having offered in evidence to the jury the following bylaw of the
said president and directors, to-wit:
"Article fifth, in section second of the bylaws, above given in
evidence, and having also offered in evidence to prove that, after
the appointment of the said Philip H. Minor to the office of
cashier on 9 March, 1818, he did in fact generally perform the
duties of teller with the knowledge of the president of the said
bank, from which it was competent for the jury to infer that he,
the said Philip H. Minor, as cashier, as aforesaid, was required by
the president of the said bank or by the board of directors of the
said bank to perform the duties appertaining to the office of
teller. "
Page 26 U. S. 62
MR. JUSTICE STORY delivered the opinion of the Court.
This is a writ of error to the Circuit Court of the District of
Columbia sitting at Alexandria. The plaintiffs in error were
original defendants in the cause, and the suit is now before this
Court upon the judgment of the court below upon certain pleas of
the defendants to which there was a demurrer, and also upon the
instructions given and refused by the court upon the trial of
certain issues of fact joined by the parties.
The action is debt upon an official bond given by Philip H.
Minor, cashier of the bank, and by four other persons as his
sureties, with condition that Minor "shall well and truly execute
the duties of cashier" of the bank, and was originally brought
against all the parties to the bond. The declaration proceeds for
the penalty of the bond without any notice of the condition, and
avers by way of breach the nonpayment of the penalty. The sureties,
after oyer of the bond and condition (which thereby became part of
the declaration), severed themselves from the principal and pleaded
nine several pleas. To the two first of these pleas demurrers were
put in, and the court below, upon consideration, gave judgment upon
the demurrers in favor of the bank, and the correctness of this
decision, constitutes the first subject of inquiry.
Exceptions have been taken both to the matter and the form of
these pleas and if the matter of them, or either of them, might
constitute a good bar to the action, it may then be necessary to
consider whether that matter is pleaded with due propriety and
certainty according to the established rules of pleading, so as to
escape objection upon general demurrer. Both of them are, in effect
though not in form, special pleas of
nul teil corporation.
The first plea in substance avers that by the charter granted by
the act of Congress of 16 May, 1812, ch. 87, the capital stock of
the bank was by the charter fixed and limited, to consist of
$500,000
bona fide; that the whole capital stock was not
bona fide filled up and subscribed for, but, on the
contrary, by a collusion between the commissioners, under whose
direction the subscriptions were taken and the subscribers, a large
portion of the capital stock, to-wit, 18,000 shares, amounting to
$180,000, were filled up by false and colorable subscriptions; the
ostensible subscribers, after payment of the first installments,
were fraudulently permitted to withdraw the same, and future
payments by them were dispensed with, while they were still rated
and held out, as stockholders for the purpose of
Page 26 U. S. 63
colorably filling up the subscription of the whole capital stock
and electing a board of directors, and that in this manner and by
these means, and by no other, the bank was put into operation.
This plea is meant to rest upon two grounds to sustain its legal
propriety. First that the subscription of the whole capital stock
of $$500,000 was a condition precedent to the putting of the bank
into operation as a corporation. Secondly, that the collusion
between the commissioners and the subscribers for the 18,000
shares, being fraudulent, made their subscriptions a mere
nullity.
Various answers have been given at the bar to the legal
sufficiency of the matters thus pleaded. In the first place, it is
said that the defendants are estopped by the bond to deny the legal
existence of the corporation. In the next place that the charter
does not make the subscription of the whole capital stock a
condition precedent to the establishment of the bank. In the next
place that the question whether the bank was regularly and
bona
fide put into operation is matter not inquirable into in a
suit of this nature, but only upon a
quo warranto
instituted by the government, and in the last place that the whole
stock being in fact subscribed, the fraudulent intention and acts
of the parties did not make the subscription of the 18,000 shares a
nullity. Let us, then, consider what is the true construction of
the charter itself upon the points raised at the argument,
supposing it to have been (which in terms it is not) incorporated
into the plea and therefore judicially before us. The first section
of the Act of 16 May, 1812, chap. 87, provides
"That the subscribers to the Mechanics Bank of Alexandria, their
successors and assigns, shall be and hereby are created and made a
body politic by the name and style of the Mechanics Bank of
Alexandria, and by such name and style shall be and are hereby made
able and capable in law to have, purchase, &c., lands, &c.,
and the same to sell &c, to sue and be sued &c., subject to
the rules, regulations, restrictions, limitations, and provisions
hereinafter prescribed and declared."
In this section there is no limitation as to the number of the
subscribers necessary to constitute the corporation. The
subscribers, whether many or few, are declared to be incorporated,
and unless there be some restriction or limitation elsewhere in the
act, it is most manifest that the court cannot intend that any
particular amount of subscriptions is indispensable.
The second section provides
"That the capital stock of said corporation
may consist
of $500,000, divided into shares of $10 each, and
shall be
paid in the following manner,
Page 26 U. S. 64
that is to say, one dollar on each share, at the time of
subscribing, one dollar on each share at sixty days, and one dollar
on each share, ninety days after the time of subscribing,
the
remainder to be called for as the president and directors may deem
proper, provided they do not call for any payment in less than
thirty days nor for more than one dollar on each share at any one
time."
The argument of the defendants is that "may," in this section,
means "must," and reliance is placed upon a well known rule in the
construction of public statutes where the word "may" is often
construed as imperative. Without question such a construction is
proper in all cases where the legislature means to impose a
positive and absolute duty, and not merely to give a discretionary
power. But no general rule can be laid down upon this subject
further than that that exposition ought to be adopted in this as in
other cases which carries into effect the true intent and object of
the legislature in the enactment. The ordinary meaning of the
language must be presumed to be intended unless it would manifestly
defeat the object of the provisions. Now we cannot say that there
is any leading object in this charter which will be defeated by
construing the word "may" in its common sense as imparting a power
to extend the capital stock to $500,000, and not an obligation that
it shall be that sum and none other. It is by no means clear from
this section that the legislature contemplated that there should be
a capital of $500,000 on which the bank was to commence or carry on
its operations. On the contrary, three installments only are
required to be absolutely paid in, and the residue of the capital
stock is to be paid in only when the president and directors may
deem it proper. So that the capital stock, except at the discretion
of the Board, may never extend beyond the amount of $150,000, for
any practical purposes, either as security to the public or as the
basis of discounts. Now the plea itself does not attempt to deny
that all but 18,000 shares of the stock were
bona fide
subscribed for, so that for aught that appears, the capital stock,
on which the bank carried on its operation may have far exceeded
that sum. It has been urged that public policy requires such an
imperative construction of the clause for the public security. But
it is a sufficient answer to that suggestion that no such public
policy is avowed or can be inferred from the general terms of the
act. When the legislature intends to restrict the capital stock of
a bank or to require any portion of stock or stockholders to be
indispensable for its legal existence and operations, it is not
uncommon to incorporate such a restriction into the charter. The
omission to do so is quite as
Page 26 U. S. 65
significant that the legislature did not deem such a restriction
subservient to any manifest public policy.
The legislature might well presume, after prescribing the
maximum to which the capital stock should extend, that the actual
capital to be employed might safely be left to the discretion of
the stockholders or its agents. The 13th section of the charter
contains provisions for the security of the public against
overissues by the bank, and if any such restriction had been
intended, as the argument supposes, it would naturally have found a
place. It declares that no stockholder shall be answerable for any
losses, deficiencies, or failure of the capital stock for any
larger sum than the amount of the stock belonging to him, excepting
that if the total amount of the debt of the bank shall exceed twice
the amount of its capital stock over and above deposits, then the
directors shall in their private capacities be liable for the
excess, and if the directors shall not have property to pay the
amount of the excess, then every stockholder shall be liable for
their deficiencies in proportion to their shares in the bank.
Whether, therefore, the capital stock be great or small, if there
be debts due from the bank exceeding twice the amount of the
capital stock, which may fairly be construed to mean the capital
stock actually paid in, the stockholders become ultimately liable
for the excess, and this liability furnishes if not an ample, at
least a reasonable security against the public evils which the
argument supposes might result from not requiring the whole capital
to be subscribed for. At all events, we cannot perceive any clear
legislative intention to make the subscription of the whole capital
stock a condition precedent to the corporate existence of the bank,
and unless it is so made by the charter, the matter of the plea
falls and cannot sustain the defense.
If, however, this interpretation of the charter could not be
supported and the subscription of the whole capital stock were a
condition precedent, the result, so far as the first plea goes,
would not be varied. The fraud and collusion asserted in that plea,
if admitted in its fullest manner, does not lead to the conclusion
which it seeks to establish. If the subscription were fraudulently
made with a view to evade the provisions of the charter, the law
will hold the parties bound by their subscriptions and compellable
to comply with all the terms and responsibilities imposed upon them
in the same manner, as if they were
bona fide subscribers.
It will not make the subscription itself a nullity, but it will
deprive the subscribers of the power of availing themselves of the
same. The third section of the act manifestly contemplates cases of
fraudulent subscription, and provides
"That all the subscriptions and shares obtained in consequence
thereof shall be
Page 26 U. S. 66
deemed and held to be for the sole and exclusive use and benefit
of the persons subscribing or in whose behalf the subscriptions
respectively shall be declared to be made at the time of making the
same, and all bargains, contracts, promises, agreements, and
engagements in any wise contravening this provision shall be void,
and the person, &c., subscribing, &c., shall have, enjoy,
and receive the share or shares respectively, &c., and all the
interest and emoluments thence arising, as freely, fully, and
absolutely as if they had severally and respectively paid the
consideration therefor; any such bargain, &c., to the contrary
notwithstanding."
This section seems to us conclusive upon the point. It avoids
all bargains contravening the provisions in respect to
subscriptions, and gives to the subscriptions the same effect as if
they were
bona fide made for the real use and benefit of
the subscribers, and independently of this provision it would be
extremely difficult to maintain upon general principles of law that
a private fraud between the original subscribers and commissioners
could be permitted to be set up to the injury of subsequent
purchasers of the stock who became
bona fide holders
without any participation or notice of the fraud.
For these reasons, we are of opinion that the matter of the
first plea, even if it had been well pleaded, would constitute no
bar to the action.
The second plea is disposed of by the construction of the
charter already intimated, and is further open to fatal objections
from its deficiency of proper averments and want of legal
certainty. It makes no averment of the amount of the capital stock
or of the necessity of the whole being subscribed for before the
bank is to be put in operation.
It asserts no fraudulent combination or subscription, but in the
most general terms, without any certainty as to facts or
circumstances, alleges that the capital stock was not filled up by
any subscription opened and conducted in pursuance of the act so as
to entitle the subscribers to bring the action, and that the
subscribers did unjustly and unlawfully arrogate of themselves the
corporate name, style, and privileges without the capital stock's
having been filled up by subscription or the corporation having
been constituted and composed of actual subscribers pursuant to the
directions of the act. In point of substance as well as form it is
bad upon the established rules of pleading.
This view of the case renders it wholly unnecessary to consider
the point made as to the estoppel, and the necessity of a
quo
warranto, on which, therefore, we give no opinion.
The third and fourth pleas are intended to be pleas of general
performance; the third is so in fact, and pursues the
Page 26 U. S. 67
condition of the bond. The fourth is argumentative, and assumes
a particular legal interpretation of the condition -- that is to
say that the condition covers only willful defaults and breaches of
duty, and is no security for competent skill and reasonable
diligence in the discharge of duty, but only for honesty. To these
pleas special replications were filed, assigning special breaches
of duty upon which the parties were at issue, and upon this and all
the other issues in the cause the jury returned a verdict for the
plaintiffs. No exception has been taken to the sufficiency of these
replications.
The fifth plea states a general performance of duty in obedience
to and in pursuance of the
"directions, rules, orders, usages and customs of trade and
business, ordained, established and practiced in the said bank by
the authority of the said president and directors."
It is therefore argumentative, and supposes that compliance with
the rules, orders, usages &c., established and practiced by the
president and directors, whatever they may be, whether within the
scope of their power or not, would be a good and true discharge of
duty. To this plea a general replication was put in
"that the said cause of action, in the declaration mentioned,
did accrue, as in the said declaration and breaches are set forth,
without this that the matters set forth in the said plea are
true,"
and this the plaintiffs pray may be inquired of by the country,
and the defendants joined in the issue, upon which a verdict was
found in favor of the plaintiffs. An exception has been taken at
the argument to this replication upon the ground that it ought to
have assigned a special breach, and that the omission is not cured
by the verdict. There is no question that the replication is not
drawn with technical accuracy and correctness, and if the plea be a
good plea of general performance, it is clear both upon principle
and authority that a special breach ought to have been assigned in
the replication, and the objection, if insisted upon by way of
demurrer, for that cause would have been insuperable. The reason is
that the law requires every issue to be founded upon some certain
point, that the parties may come prepared with their evidence and
not be taken by surprise, and the jury may not be misled by the
introduction of various matters. A covenant or condition for
general performance is broken by any single omission of duty, and
no inconvenience can arise from stating the particular breach with
suitable certainty. But it does not follow that if not so stated,
the objection may be taken in any stage of the suit. The rule as to
certainty in pleadings is framed for the benefit of the parties,
and may be waived by them, and in many cases both at common law and
by the statute of
jeofails, defects in this particular are
cured by a verdict. It is true that in
Page 26 U. S. 68
a declaration upon a covenant for general performance of duty,
if no breach be assigned or a breach which is bad as not being in
point of law within the scope of the covenant, the defect is fatal
even after verdict. Com.Dig. Plead. 14. But that is not the present
case. Here, the declaration does assign a good breach by the
nonpayment of the penal sum stated in the bond. The defendants
disclose the condition of the bond upon oyer and set up a general
performance of it, and the replication, though inartificially
drawn, puts in issue the whole matter of the defense and denies the
performance of it. The verdict has found that the condition was not
performed, and consequently, upon the whole record, the nonpayment
of the penal sum is admitted and the excuse for it is negatived.
The replication, then, does assert a breach, though in too general
a form. It ought to have assigned a special breach, but the general
breach includes it, and the verdict having found the general
breach, there is, upon principles, no reason shown against the
plaintiff's right of recovery.
It is exactly like the case of a declaration upon a general
covenant of the like nature, where a particular breach ought to be
assigned, and yet if a general breach be assigned, the defect is
cured by a verdict for the plaintiff. Com.Dig. Plead. 48. The
objection, then, to the replication to the fifth plea cannot now be
sustained.
It is not necessary to notice the remaining pleas upon which
issues were joined, because a verdict has been found in all of them
in favor of the plaintiffs, however liable to objection some of
them may be, and particularly the seventh plea of
non
damnificatus, as an answer to the declaration. They set up
special defenses, and the plaintiffs were not bound to do more than
traverse them.
The instructions of the court given and refused at the trial
constitutes the next subject of inquiry. It is conceded that if the
instructions given on the prayer of the plaintiffs were correct as
to the issues on the third and fourth pleas, the qualifications
annexed to them by the court in their applications to the other
issues were perfectly proper.
The first instruction is in substance that if Minor, upon his
leaving the bank, failed to pay over or to account to the bank for
any portion of the moneys of the bank received by him as cashier,
then the jury may and ought to infer that the moneys so unaccounted
for were willfully wasted by Minor or applied to his own use, and
under such circumstances the defendants are liable for the same. We
can perceive no error in this instruction; the presumption of a
willful waste or misapplication of the funds of the bank by the
cashier was a natural conclusion from his failure to pay over
Page 26 U. S. 69
or account for the same. It was not put to the jury as a
presumption capable of being rebutted by evidence showing a loss by
negligence or accident. If such a loss actually occurred, it was
incumbent on the cashier to prove it, and his total omission to
offer any such proof, which, from the nature of the case, must be
more within his own power than that of the bank, ought to lead the
jury to the presumption of the nonexistence of any such negligence
or accidental loss.
It has been argued that this instruction is the more material
and injurious to the defendants because it proceeds in the latter
part upon a misconstruction of the true import of the condition of
the bond. The condition that Minor shall "well and truly execute
the duties of cashier" of the bank is said to be merely a
stipulation for honesty in the discharge of the duties, and not for
skill, capacity, or diligence. We are of a different opinion. "Well
and truly to execute the duties of the office" includes not only
honesty but reasonable skill and diligence. If the duties are
performed negligently and unskillfully -- if they are violated from
want of capacity or want of care, they can never be said to be
"well and truly executed." The operations of a bank require
diligence, with fitness and capacity as well as honesty in its
cashier, and the security for the faithful discharge of his duties
would be utterly illusory if we were to narrow down its import to a
guarantee against personal fraud only.
The remarks already made dispose of the second and third
instructions prayed for by the plaintiffs. These instructions, in
substance, declare that the sureties are liable upon the bond, for
any willful or permissive misapplication of the moneys of the bank
which the cashier knowingly made or suffered without authority
whereby the same moneys have been lost to the bank. There seems no
ground upon which to rest any reasonable objection to such a
direction to the jury.
We may now proceed to the consideration of the three
instructions prayed for in behalf of the defendants. The first is
in substance that if it were the established usage and practice of
the bank that the cashier might, in his discretion, permit
customers to overdraw and to have checks and notes charged up
without present funds in the bank, and for the cashier to receive
and pass as cash checks and drafts upon other banks, and if the
balances appearing against such persons charged in the books of the
bank arose out of the exercise of such discretion by the cashier in
the course of the ordinary transactions of the bank and pursuant to
the established usage and course of business there adopted, and
generally known to the president and directors, practiced and
continued with their knowledge for a series of years from the
commencement of the bank to the termination
Page 26 U. S. 70
of Minor's cashiership, though the existence of such balances or
the particular circumstances attending them were not formally
communicated to the board of directors, the jury may infer the
approbation, assent, and acquiescence of the president and
directors as to such usage and course of business.
The refusal of this instruction, is matter of no small
embarrassment and difficulty to this Court from the terms in which
it is couched and the issues on the sixth, eighth, and ninth pleas,
to which alone it can be properly applied. Those issues put to the
jury the question whether the acts of the cashier, whatever might
be their character or kind, were or were not done by the
wrong,
connivance and permission of the president and directors of the
bank. The point of the instruction is that the established
usage and practice of the bank for a long period, known to the
president and directors, does afford a presumption of the
approbation, assent, and acquiescence of the president and
directors as to such usage and practice, though the balances
resulting therefrom were not formally communicated to the
directors. From the shape of the prayer, it is undoubtedly meant
that such usage and practice was known to the president and
directors as a board and in their official character, and received
their approbation as such. In a general view, with reference to the
principles of the law of evidence, we are not prepared to admit
that such a presumption could not ordinarily arise. The ordinary
usage and practice of a bank, in the absence of counter proof, must
be supposed to result from the regulations prescribed by the board
of directors, to whom the charter and bylaws submit the general
management of the bank and the control and direction of its
officers. It would be not only inconvenient but perilous for the
customers, or any other persons dealing with the bank, to transact
their business with the officers upon any other presumption. The
officers of the bank are held out to the public as having authority
to act according to the general usage, practice, and course of
their business, and their acts within the scope of such usage,
practice, and course of business would in general bind the bank in
favor of third persons possessing no other knowledge. In the case
of
Bank of the United States v.
Dandridge, 12 Wheat. 64, the subject was under the
consideration of this Court; and circumstances far less cogent than
the present to found a presumption of the official acts of the
board were yet deemed sufficient to justify their being laid before
the jury to raise such a presumption. If, therefore, the usage and
practice alluded to in the instruction were within the legitimate
authority of the board, and such as its written vote might justify,
there would be no question in this Court that it ought to have been
given.
Page 26 U. S. 71
The pertinency of such a presumption to these issues cannot
admit of dispute. But the real difficulty remains to be stated.
Assuming that the court, upon these issues, ought to have given the
instruction prayed for, the question is whether upon the whole
record, that is such an error as now justifies this Court in a
reversal of the judgment. If the instruction had been given and
thereupon a verdict upon these issues had been found for the
defendants, could any judgment have been given upon these issues in
favor of the defendants, or ought the judgment
non obstante
veredicto to have been for the plaintiffs? If it ought, then
the error becomes wholly immaterial, since in no event could the
instruction in point of law have benefited the defendants. Upon
deliberate consideration, we are of opinion that the pleas on which
these issues are founded are substantially bad. They set up a
defense for the cashier that his omission "well and truly to
perform" the duties of cashier was, by the wrong, connivance, and
permission of the board of directors. The question then comes to
this -- whether any act or vote of the board of directors, in
violation of their own duties and in fraud of the rights and
interest of the stockholders of the bank, could amount to a
justification of the cashier, who was a
particeps
criminis.
We are of opinion that it could not. However broad and general
the powers of the direction may be for the government and
management of the concerns of the bank by the general language of
the charter and bylaws, those powers are not unlimited, but must
receive a rational exposition. It cannot be pretended that the
board could by a vote authorize the cashier to plunder the funds of
the bank or to cheat the stockholders of their interest therein. No
vote could authorize the directors to divide among themselves the
capital stock or justify the officers of the bank in an avowed
embezzlement of its funds. The cases put are strong, but they
demonstrate the principle only in a more forcible manner. Every act
of fraud -- every known departure from duty by the board in
connivance with the cashier for the plain purpose of sacrificing
the interest of the stockholders, though less reprehensible in
morals, or less pernicious in its effects than the cases supposed,
would still be an excess of power, from its illegality -- and as
such void as an authority to protect the cashier in his wrongful
compliance. Now the very form of these pleas sets up the wrong and
connivance of the board as a justification, and such wrong and
connivance cannot for a moment be admitted as an excuse for the
misapplication of the funds of the bank by the cashier.
The instruction prayed for proceeds upon the same principles as
the pleas. It supposes that the usage and practice of
Page 26 U. S. 72
the cashier under the sanction of the board would justify a
known misapplication of the funds of the bank. What is that usage
and practice as put in the case? It is a usage to allow customers
to overdraw -- and to have their checks and notes charged up
without present funds in the bank, stripped of all technical
disguise -- the usage and practice thus attempted to be sanctioned
is a usage and practice to misapply the funds of the bank and to
connive at the withdrawal of the same without any security in favor
of certain privileged persons. Such a usage and practice is surely
a manifest departure from the duty both of the directors and the
cashier as cannot receive any countenance in a court of justice. It
could not be supported by any vote of the directors, however
formal, and therefore whenever done by the cashier is at his own
peril, and upon the responsibility of himself and his sureties. It
is anything but "well and truly executing his duties, as cashier."
This view of the matter disposes of this embarrassing point, and
also of the second instruction prayed for by the defendants which
substantially turns upon the like considerations.
The third instruction prayed for in effect was that the court
would instruct the jury that the defendants are not chargeable in
this action for the conduct of Minor in the duties distinctly
appertaining to the office of teller whilst he was cashier in the
bank, although those duties were duly assigned to him, because it
constituted a distinct office, and the accounts and proceedings of
the teller were at all times kept distinct and in separate books
from those of the cashier. In our judgment this instruction was
properly refused. By the fifth article of the second section of the
bylaws of the bank, the duties of the cashier are generally pointed
out, and among other things it is provided that he shall "do and
perform all other duties that may from time be required of him by
the president or board of directors, relative to the affairs of the
institution." On the appointment of Minor as cashier, who had
previously acted as teller, the directors passed a vote "that the
present officers of the bank do the whole duties of the bank." From
the other circumstances of the case, the inference is irresistible
that the duties of teller were, under this vote, assigned to the
cashier. If so, then the performance of these duties constituted
thenceforth a part of the duties of the cashier as such, and as
much so as if they had been originally affixed to the office of
cashier. There is nothing in the nature of the duties of teller
incompatible with those of cashier; on the contrary, as is well
known, cashiers often perform the functions of both. The
circumstance that the office of teller and distinct accounts and
books were still kept up does
Page 26 U. S. 73
not vary the legal result. It was a matter of mere convenience
and regularity for the government of the bank in its own business,
and probably had no higher or other origin than to preserve the
same forms and series of accounts which the bank had adopted at its
first institution. The office of teller had a nominal but not a
real existence, and from the time of the union of the duties in the
cashier as such, there was a legal extinguishment of the separate
official character. If the cashier had originally had the duties of
bookkeeper and accountant assigned to him, and in consequence
thereof had kept distinct account books in the bank, no one would
have imagined, because he kept separate account books as cashier
for his own convenience or according to the ordinary usage of
banks, that he would not, under his bond, have been responsible for
malconduct in keeping the general account books of the bank to its
loss or injury. The bond of the cashier must be construed to cover
all defaults in duty which are annexed to the office from time to
time by those who are authorized to control the affairs of the
bank, and sureties are presumed to enter into the contract with
reference to the rights and authorities of the president and
directors under the charter and bylaws.
The remaining inquiry is as to the effect of the
nolle
prosequi which the plaintiffs entered against Minor after he
had pleaded and after judgment was given against the sureties in
favor of the plaintiffs upon all the pleadings interposed by the
sureties. The pleas of Minor were,
mutatis mutandis, the
same as the third, fourth, fifth, seventh, and ninth pleas, put in
by the sureties, and the question arises whether under such
circumstances (no objection to the judgment appearing to have been
made by the sureties) this proceeding is an error for which that
judgment ought to be reversed. It is material to state that the
bond on which the suit is brought is a joint and several bond.
Under such circumstances, the plaintiff might have commenced suit
against each of the obligors severally or a joint suit against them
all. But in strictness of law, he has no right to commence a suit
against any intermediate number. He must sue all or one. The
objection, however, is not fatal to the merits, but is pleadable in
abatement only, and if not so pleaded, it is waived by pleading to
the merits. The reason is that the obligation is still the deed of
all the obligors who are sued, though not solely their deed, and
therefore there is no variance in point of law between the deed
declared on and that proved. It is still the joint deed of the
parties sued, although others have joined in it. This doctrine is
laid down and very clearly illustrated in Mr. Serjeant Williams'
note to the case of
Cabell v. Vaughan, 1 Saund.
Page 26 U. S. 74
291, Note 2, where all the leading authorities are collected.
If, therefore, the present suit had been brought against the four
sureties only, and they had omitted to take the exception by a plea
in abatement, the judgment in this case would have been
unimpeachable. Is the legal predicament of the plaintiffs changed
by having sued all the parties and subsequently entered a
nolle
prosequi against one of the obligors? If not in general, then
is there any legal difference where the party in whose favor the
nolle prosequi is entered is not a surety, but a principal
in the bond?, not indeed so named in the bond, but the suretyship
resulting as a necessary inference from the nature and terms of the
condition.
These questions must be decided by authority, if any such exist;
if none can be found, then they must be decided by analogy and
principle. It may be proper in this view again to notice the fact
that this suit is on a joint and several bond; that the defendants
severed in their pleas from the principal; that the trial of the
issues (which undoubtedly ought to have been, by the regular course
of practice, deferred until the cause was at issue, as to all the
parties, or the steps of the law taken to bring them into default)
does not appear upon the record to have been opposed, and that no
motion was made in arrest of judgment or for a postponement until a
trial of the issues upon the pleas of the principal might have been
had. What would have been the proper proceedings under such
circumstances, whether to try all the issues by the same jury and
have damages assessed at the same time against all the defendants,
or whether there might have been several trials and several
assessments of damages, and whether if such several assessments had
been made and differed in amount, any and what judgment ought to
have been entered, are points upon which the Court does not think
it necessary to give any opinion.
The nature and effect of a
nolle prosequi was not well
defined or understood in early times, and the older authorities
involve contradictory conclusions. In some cases it was considered
in the nature of a
retraxit, operating as a full release
and discharge of the action, and of course as a bar to any future
suit. In other cases it was held not to amount to a
retraxit, but simply to an agreement not to proceed
further in that suit as to the particular person or cause of action
to which it was applied. And this latter doctrine has been
constantly adhered to in modern times, and constitutes the received
law. In cases of tort against several defendants, though they
all join in the same plea and are found jointly guilty,
yet the plaintiff may, after verdict, enter a
nolle
prosequi as to some of them and take judgment against the
rest. The reason is said to be that the
Page 26 U. S. 75
action is in its nature
joint and
several,
and, as the plaintiff might originally have commenced his suit
against one only, and proceeded to judgment and execution against
him alone, so he might, after verdict against several, elect to
take his damages against either of them.
A fortiori, the
same doctrine applies where the defendants sever in their pleas.
Indeed, in
tort, as we shall hereafter see, it does not
seem to have been denied that cases might exist in which, if the
defendants severed in their pleas, the plaintiff might,
after judgment against one, have entered a
nolle
prosequi as to the others. The doubt was whether he could do
so
before judgment, which was finally settled in favor of
the right, and in such cases, where several damages were assessed
against the different defendants, the difficulty was afterwards
cured, by entering a
nolle prosequi as to all but one
defendant. And in the same manner, a misjoinder of improper parties
is sometimes aided. The authorities on this subject will be found
summed up with great accuracy in a note of Mr. Serjeant Williams to
the case of
Salmons v. Smith, 1 Saund. 207, note 2. In the
same note, the learned editor adds,
"If an action is brought upon any contract against several
defendants
who join in their pleas, any contract is found
against them, it is apprehended the plaintiff cannot enter a
nolle prosequi against any of them, because the contract
being joint, the plaintiff is compellable to bring his action
against all the parties thereto, and he shall not, by entering a
nolle prosequi, prevent the defendants against whom the
recovery has been had from calling upon the other defendants for a
ratable contribution."
So far as this reason goes, it is inapplicable to the present
case, for the defendants are entitled not only to a ratable but a
full contribution over for the entire sum against the party in
whose favor the
nolle prosequi has been entered, and
consequently the
nolle prosequi does not touch their
rights. It is observable also that the language is qualified by the
words
"who join in their pleas," which are printed in
italics, and may therefore fairly be presumed to have been inserted
by the learned editor
ex industria, with a view to point
out an implied distinction between cases where there is a
severance, and where there is a joinder in the pleas. If there be
any such distinction, it is favorable to the present case for the
plaintiffs severed in their pleas from their principal. The learned
editor proceeds to state that
"if in such actions the defendants
sever in their
pleas, as where one pleads some plea which goes to his
personal discharge, such as bankruptcy
ne unques executor
and the like,
not to the action of the writ, the plaintiff
may enter a
nolle prosequi, as to him and proceed against
the others, for, with respect to the bankruptcy, the statute of
10th Ann, chap. 5, makes the
Page 26 U. S. 76
other defendant, who is not a bankrupt, liable for the
whole debt, and therefore in that particular instance the
case is exactly the same as where an action is joint and several.
So the plea of
ne unques executor does not deny the cause
of action, but only that he is one of the representatives of the
testator. When the
defendants sever in their pleas, with
this limitation as to the extent of the pleas in action upon
contracts, it is immaterial what is the form of the action, for the
plaintiff may enter a
nolle prosequi against any of them
before verdict and proceed against the rest."
The learned editor is fully borne out in the general position
here stated, by the case of
Noke v. Ingraham, Wilson 89,
to which he refers. The only question is whether there is any such
qualification upon it, as that the plea should be one going
exclusively in personal discharge, and not to the merits. That is
the point of real difficulty. The case in 1 Wilson 89 was upon
several promises made by the defendant as partners. One of them
pleaded a former judgment, and issue being taken upon the
replication of
nul teil record, judgment was given against
him and a writ of inquiry of damages awarded, and final judgment.
The other defendant pleaded his bankruptcy, and upon this issue was
joined, and afterwards the plaintiff entered a
nolle
prosequi as to him. Upon error brought, the principal
objection was that the
nolle prosequi, upon a joint
contract of two, was a discharge of both. Mr. Chief Justice Lee
said
"It is agreed on all hands that in trespass against several, the
plaintiff may enter a
nolle prosequi, as to one, and that
will not discharge the other; and therefore I cannot see why it may
not be done in this case, and I do not see how so proper an
advantage can be taken upon the statute of Ann as to the bankrupt
as is now taken by the entry of this
nolle prosequi."
Wright, Justice, was of the same opinion, and so was Dennison,
Justice, and the latter added that
"The plea of the bankrupt is not a plea to the action, but only
a personal discharge, but that if one defendant was to plead a plea
that was to go to the action of the writ, he thought it might then
have a different consideration, but that this is not the case here.
This case is exactly the same
as when an action is joint and
several, for the statute 10th Ann, ch. 15, has made the
partner not a bankrupt, liable for the whole debt. This case is the
very same, as to this matter of entering a
nolle prosequi,
as if it had been trespass against several defendants."
It is apparent from this summary of the reasoning of the court
that the case turned upon the consideration that the contract, by
the operation of the statute of Ann, was several as well as joint,
and all the court concurred that under such circumstances, the
nolle prosequi would be good, being governed,
Page 26 U. S. 77
in the analogy, to trespass, where the cause of action was
several as well as joint. What was stated by Dennison, Justice, was
not the exclusive ground of his particular opinion, but only a
suggestion that the case
might be (not would be) different
upon a plea to the merits. Now the general reasoning comes very
close to the case at bar, for here the bond is
several as
well as
joint, and an action might have been maintained
severally against the defendants, and what is not immaterial to be
considered, all the parties were retained who had joined in their
pleas and between whom there existed a right of mutual
contribution. Even in the case of bankruptcy, the practice is in
England to require all the joint contractors to be sued, as is
proved by the case of
Bevil v. Wood, 2 Maul & Selw.
23, which makes it really less strong than a joint and several
contract.
The case of
Moravia v. Hunter & Glass, 2 Maul &
Selw. 444, which has been relied on at the bar, was assumpsit
against four defendants, two of whom were not served; D., one of
the other defendants, pleaded -- 1.
non assumpsit; 2. a
special plea of bankruptcy; 3. a general plea of bankruptcy, as to
whom the plaintiff entered a
nolle prosequi. The other
defendant pleaded
nonassumpsit, and a verdict was found
against him. The form of the
nolle prosequi was that the
plaintiffs, inasmuch as they "cannot deny the
several matters
above pleaded by the said D., freely here in court confess
that they will not further prosecute their suit against him." It
was moved in arrest of judgment that the
nolle prosequi so
entered had confessed the
nonassumpsit, as well as the
other pleas, and therefore the other defendant was also discharged,
and the distinction of Dennison, J., in
Noke v. Ingraham,
1 Wils. 89, was relied on. But the court held that the
nolle
prosequi was in effect only a confession; that as far as
regards D., he had a defense in the matters pleaded by him. This
case does not in terms overrule the distinction, but it does
establish that the court upheld the
nolle prosequi
notwithstanding the pleadings did set up a plea to the merits, and
not merely a personal discharge. The contract does not appear to
have been joint and several, and to have arrived at its conclusion,
the court must have considered that the confession of the
plaintiffs that they could not deny the
several matters
above pleaded ought not to be deemed an admission of the truth of
the pleas except so far as to waive further proceedings in the suit
against the party who sets them up as a defense. This conforms to
the definition given in the book, of a
nolle prosequi. "It
is," as Serjeant Williams states, 1 Saund. 207, note 2,
"a partial forbearance by the plaintiff to proceed
Page 26 U. S. 78
any further, as to some of the defendants, or to part of the
suit, but still he is at liberty to go on as to the rest."
These are the only cases in England which the researches of
counsel have brought to our notice bearing directly on the point
before the Court, and upon looking into the elementary treatises
and books of practice, we have not been able to find any more
general doctrine. Indeed, the latter confine themselves exclusively
to the enunciation of the principles above stated, with the
qualifications annexed to them in these authorities, as
see 1 Chitty's Plead. 32, 33, 546. Com.Dig. Pleader, X 2.
3. 5; 2 Tidd's Practice 630; 2 Arch. Practice 219-220; 2 Lilly's
Practical Register 280. In America, the cases have gone a step
further. In
Hartness v. Thompson, 5 John. 160, where an
action was brought against three upon a joint and several
promissory note and there was a joint plea of
nonassumpsit, and the infancy of the defendants, that was
set up at the trial, it was held no ground for a nonsuit, but the
plaintiff upon a verdict found in his favor against the other two
defendants, might enter a
nolle prosequi as to the infant
and take judgment upon the verdict against the others. In
Woodward v. Marshall, 1 Pickering 500, in the Supreme
Court of Massachusetts, upon a joint contract and suit against two
persons, one of whom pleaded infancy, it was held that a
nolle
prosequi might be entered as to the infant and the suit
prosecuted against the other defendant. These decisions were
admitted to be against the cases of
Chandler v. Parker, 3
Esp. 76, and
Jaffray v. Frebain, 5 Esp. 47, but the court
thought the practice adopted by themselves was most convenient, and
therefore gave it a judicial sanction. These cases were
distinguishable from that in 1 Wilson 89 in the fact that the plea
went not only in personal discharge, but proceeded upon a matter
which established an original defect in the joint contract, whereas
the plea of bankruptcy was for matter arising afterwards. The
distinction was not thought to be sound. Indeed the court seem to
have considered the question rather as a matter of practice, to be
decided upon convenience and policy than as matter of
principle.
Hitherto the question has been discussed as if the
nolle
prosequi had been entered before, when in fact it was entered
after judgment against the defendants. The next inquiry is whether
this creates any substantial difference in the case. In
Lever
v. Salkeld, 2 Salk. 455, in trespass against two defendants
and verdict for the plaintiff, one being an infant, the plaintiff
took judgment against the other and entered a
non pros.
after the judgment against the infants, and took out execution upon
the judgment; upon error brought, it was objected that
Page 26 U. S. 79
a
non pros. could not be entered after judgment, for
the judgment could not very from the demand of the writ. It was
argued on the other side that torts were several, and that a
non pros. might be entered after as well as before
judgment, and cases to this effect were cited. Lord Holt is
reported to have said that he supposed there were interlocutory
judgments wherein it might well be, but a final judgment differed,
for that being once wrong, a subsequent entry would not set it
right. The case was however adjourned and nothing more appears of
it. This case is not very accurately reported, and it may have been
that the judgment was joint, and the
nolle prosequi
afterwards, which would remove the objection to its authority. The
circumstance of its being adjourned shows that the doctrine thrown
out by Lord Holt was not deliberately considered by him, and was
deemed not clear. In truth it is directly against the case of
Parker v. Lawrence, decided in the Exchequer chamber and
reported in Hobart 70. That was trespass against three; one pleaded
not guilty, and the other two a justification, to which the
plaintiff replied, and there was a demurrer to the replication.
Pending the demurrer, the issue was tried and damages and judgment
given against him. After judgment, the plaintiff entered a
nolle prosequi against the other two, and a writ of error
was afterwards brought by all three, and it was alleged for error
that the
nolle prosequi discharged all three. It was
agreed by the court (in conformity with the doctrine then
prevailing) that if the
nolle prosequi had been before
judgment, it would have discharged the whole action, and so it
would if the judgment had been against them all, and then the
plaintiff had entered a
nolle prosequi against the other
two, for a nonsuit, or release, or other discharge of one
discharges the rest. But here the action was at an end as to the
one by the judgment against him, and no judgment was had against
the others, so that they were divided from him, and are not subject
to the damages found against him. It was adjudged that he was not
discharged, and there was no error. This case is of great
authority, having been deliberately decided by a very high court.
It is cited as authority by Chief Baron Comyns in his digest
(Pleader, X. 5), who also cites (Pleader, X. 3) the case in Salkeld
as one in which there was a final judgment against all the
defendants. The reason of the thing would seem entirely in favor of
the judgment in Hobart, and it stands supported by a much earlier
case in the Year Books, 14 Edw. 4; Brooks abridg. Trespass, pl.
331. If the plaintiff may in any case recover a judgment against
one on a joint action against two who sever in their pleadings, it
is wholly immaterial to the regularity and effect of that judgment
in what stage of the cause the suit has ceased to be
Page 26 U. S. 80
prosecuted against the other. It is sufficient that in the event
the judgment is consistent with the general principles of the
action. If a
nolle prosequi may be entered after verdict
and before judgment without discharging the other party, there is
no good reason why it may not be done after judgment, when there
has been no proceeding which binds the plaintiff to consummate a
judgment against the party whom he wishes to dismiss. In each case,
the judgment upon the whole record is consistent with the writ.
The result of this examination into authorities is that there is
no decision exactly in point to the present case; that there is no
distinction between entry of a
nolle prosequi before and
the entry after judgment applicable to the present facts. That the
authorities, and particularly the American, proceed upon the ground
that the question is matter of practice, to be decided upon
considerations of policy and convenience, rather than matter of
absolute principle; and that therefore this Court is left at full
liberty to entertain such a decision as its own notions of general
convenience, and legal analogies would lead it to adopt. We are of
opinion that where the defendants sever in their pleadings, a
nolle prosequi ought to be allowed. It is a practice which
violates no rules of pleading, and will generally subserve the
public convenience. In the administration of justice, matter of
form, not absolutely subjected to authority, may well yield to the
substantial purposes of justice.
MR. JUSTICE JOHNSON, dissenting.
The facts appearing upon the records, from the count, pleas, and
replications, are these. This action was on a bond given for the
faithful discharge of the office of the cashier by Philip H. Minor.
It was joint and several. The defendants craved over jointly and
pleaded performance, to which plaintiff replied.
They afterwards had leave to withdraw the joint pleas, and the
four securities jointly filed various pleas, to which plaintiff
replied, and issue being taken, proceeded to trial and obtained
this verdict.
After the verdict, the principal to the bond was ruled to plead,
and he then files a variety of pleas similar in effect to those
pleaded by the securities. The court then gave judgment upon the
verdict, and the plaintiff's attorney enters this
nolle
prosequi, and judgment is given for the principal on the bond.
That the plaintiffs take nothing
by their bill, but for
their false clamor, be in mercy, and that the defendant go thereof
without day and receive his costs.
It was insisted by the defendants that in this state of the
pleadings and record the plaintiffs ought not to have had
Page 26 U. S. 81
judgment below -- that there is error and the judgment should be
reversed. What further order this Court would be bound to render
upon a reversal it is not material to inquire. I readily assent to
the doctrine that in adjudicating upon questions of practice, a
court should have regard to public convenience, but it would be
extending this principle to the violation of its own spirit and
intent if carried to the extent of overturning known established
rules both of law and practice.
To this extent it appears to me the present decision goes, and
that this judgment cannot be affirmed without shaking as well
established principles as adjudged cases and opening a door to
inconveniences which must soon compel this Court to retrace its
steps.
The judgment, as it stands below, is against four out of five
joint and several co-obligors, and the obligor omitted, or rather
who has judgment in his favor is the cashier, for whose good
conduct in office the other three became bound. Now this judgment
is either a bar to a future suit against the principal or it is
not. If a bar, then the record exhibits the inconsistent case of
four being made liable for one who was not liable himself. And if
it is not a bar, then by possibility it may be established by the
verdict of a future jury that the co-obligor, for whose misfeasance
alone these defendants have had judgment against them had in fact
committed no misfeasance. A rule of practice that may lead to such
consequences cannot rest upon public convenience.
Nor is it more easy to reconcile it to principle. No authority
need be cited to establish that wherever judgment ought to have
been arrested below, this Court is bound to reverse for error. Now
this judgment is against one of the canons of the law of contracts.
It was at the option of the plaintiff whether to treat the bond as
a joint or several contract. He has elected to treat it as joint,
and must therefore abide by the law of joint contracts as to both
right and remedy, and upon these when under seal it is an
invariable rule that all must be sued if all have sealed the
instrument and are in life.
It is true that in general the nonjoinder of co-obligors must be
pleaded in abatement, but it would be oppressive and inconsistent
to apply this rule to a case in which it was impossible to plead in
abatement, and that was precisely this case, since the discharge of
the principal from the action was produced by the act of the
plaintiff
after judgment, at a time when it was
impossible, by any form of pleadings, for the defendants to avail
themselves of this right. But this case comes within an exception
to the general rule on the subject of pleas in abatement, since, by
the plaintiff's own showing in his declaration
Page 26 U. S. 82
and replication, all the co-obligors named in the instrument
sealed it and were in life at the commencement and close of the
suit.
This distinction, if it be necessary to cite authority for it,
clearly appears from comparing the case of
Rice v. Shultz,
5 Bur. 2611, with the case of
Hermer v. Moore noticed in
the report of that case. In the one, it was necessary to plead in
abatement, because the facts did not appear on record which were
necessary to maintain the defense. In the other, the judgment was
arrested because the facts of the plaintiff's own showing made out
that he ought not be have judgment, which were, all had sealed the
instrument -- and all were alive. It cannot be questioned that in a
joint contract by five, where all remain equally bound -- all in
life, and all within reach of the process; more especially where
they have been all actually arrested, the plaintiff must recover
against all or none. This is that case, and yet the plaintiff is
allowed here to take judgment against four, and discharge the
fifth, the principal, by
nolle prosequi, after
judgment.
It cannot be doubted that had this
nolle prosequi been
entered before trial, the defendants must have been permitted to
plead it
puis darien continuance, and that the plea must
have been sustained. And what reason is there for placing them in a
worse situation by suffering the
nolle prosequi to be
entered after judgment? It is said they severed in pleading and
suffered the cause to go to trial without objection. But was it in
the power of these defendants to compel their co-obligors to join
them in pleading?, or if the plaintiff choose to proceed
erroneously to trial, were the defendants under any obligation to
arrest him and set him right? It was his own folly if he ruled them
to trial or consented to go to trial or committed any other error
in proceeding to judgment. I have stated it to be not
indispensable, in my view of the subject, that the
nolle
prosequi should be a bar in this case to a new suit against
the principal. The derangement of the rights and liabilities of the
parties produced by it appears a sufficient objection both to the
principle and practice. For certainly it goes to enable a plaintiff
to recover by this device against parties who otherwise could have
defeated his action by suitably pleading. By a novel practice, as
it relates to joint contracts, he is here permitted to evade an
important legal principle. But if this
nolle prosequi can
be shown to be a bar to his action against the principal
co-obligor, it would seem to be incontestable that this judgment
ought to be reversed. And I am yet to learn that in a joint action
in contract against several, a
nolle prosequi as to the
whole action against one is not a bar as to him.
Page 26 U. S. 83
The cases are very few in the books in which the effects of a
nolle prosequi in such a case have been tried by the only
sufficient test -- a plea in bar to a suit upon the same contract.
But as far as they have gone, they maintain the bar.
If a bar in cases in which the suit is against a single
defendant, there can be no reason assigned why it should not be a
bar as against one of the several defendants. And to this point,
Beecher's Case, reported in 8 Coke 58, Croke James 211, is
direct and positive.
That was a suit upon a bond, and the judgment there is nearly in
the words of the judgment in this case. On a second action upon the
same contract, this was held to be a bar, and it became necessary
to remove the judgments by a writ of error for some technical
informalities before this obligee could recover in the original
contract.
It is true that Serjeant Williams has said in his note to 1
Saunders, 207a,
"that a
nolle prosequi is now held to be no bar to a
future action for the same cause except in those cases where, from
the nature of the action, judgment and execution against one is a
satisfaction of all the damages sustained by the plaintiff."
And by reference to the next page of his note, it appears that
the exception here introduced is intended to embrace actions for
torts, and therefore his rule is intended to apply to actions on
contracts.
But the authorities he cites are far from bearing him out in his
doctrine. The case of
Cooper v. Tiffin, 3 T.R. 511, upon
which he relies, decides nothing but a question of costs, and the
position that a
nolle prosequi is no more than a
discontinuance, and the party may sue again, is only an
obiter
dictum in case where the point was not presented.
So also of his other case in 1 Will. 89. The facts did not raise
the question on the effect of the
nolle prosequi as to the
defendant who was discharged by it, and the judges, in considering
whether the plaintiff could have judgment against some of the joint
contractors where the other was discharged by bankruptcy, expressly
decide upon the ground that he being discharged by law, leaving the
other bound for the debt, produced an analogy between that case and
the case of a suit in trespass, where one only might be sued
separately. But it is said, and so Serjeant Williams asserts, "that
the true nature and extent of a
nolle prosequi in civil
cases was not accurately defined and ascertained, until modern
times."
My own opinion is, from all the investigation I have been able
to make, that it was much better understood in former times than it
is at this day. That if it were now better understood, we should
perceive fewer of those inconsistencies which
Page 26 U. S. 84
are supposed to exist in the decisions on this subject. Thus
Serjeant Williams has mixed up the cases on torts, with those on
contracts, in such a manner as could only produce confusion. To
sustain the doctrine that a
nolle prosequi, in an action
of debt, is a bar to another suit on the same bond, he quotes Green
v. Charnock, (Croke Eliz., 762,) which was trespass quare clausam
fregit. And for other cases which he says establishes the principle
"that a nolle prosequi is not of the nature of a
retraxit,
or a release; but an agreement only, not to proceed as to some of
the defendants, on a part of the suit." Without restricting the
doctrine to any class of cases, he cites a string of authorities,
in everyone of which the decisions were in actions of trespass, or
tort.
Yet it cannot be contended that the use of the
nolle
prosequi in cases of tort, in which the defendants may be
joined and disjoined at the pleasure of the plaintiff, can afford
precedent or authority for the use of it in cases of joint contract
in which the law, regarding the nature of the contract and the
rights of the parties imposes on the plaintiff the obligation to
sue them jointly.
To me it appears that there is abundant authority to prove that
the
nolle prosequi, though entered by attorney, with the
judgment that defendant
"eat sine die," has the effect of
a
retraxit. Lord Coke certainly places them on the same
foot, both in his Institutes, 1 Inst. 139, and his comment
upon
Beecher's Case, 8 Rep., and in both instances he
describes the
nolle prosequi as one of two kinds of
retraxit, appropriate to different cases but both
producing a bar. And yet in one only is the term
retraxit
introduced into the entry of judgment.
See also 2 Rolls
Abridg.,
nolle prosequi.
In
Green v. Charnock, Cro.Eliz. 762, they are certainly
treated as synonymous and equivalent. That was trespass
quare
clausam fregit against C. & S. S. made default and
judgment of
nil dicit was then taken against him. C.
pleaded in bar, plaintiff replied, &c., and judgment in
demurrers for plaintiff. A
nolle prosequi was then entered
against S. & R. writ of inquiry and judgment against C. And the
case proceeds:
"Thereupon they brought error, and the error assigned was
because this
nolle prosequi is against one, when judgment
is taken against both, being that a
retraxit against one
is as strong as a release against the one, the which being to one
defendant, is a good discharge to both."
So again in the case of
Dennis v. Payne, Cro., ch. 551,
P. & P. gave their joint and several bond to D. who sued the
one severally, and after plea, entered a
retraxit. He
afterwards brought suit upon the bond, against the other, P., who
plead the
retraxit to the first in bar. There was no
question made upon its being a bar, either direct
Page 26 U. S. 85
or by estoppel; as to the obligor first sued, it is, in terms,
admitted. But the benefit of that discharge was claimed by the
second P. and on this the judges divided, one maintaining that its
effect was that of a release, and the other, that of an estoppel,
only to be taken advantage of by him in whose favor it was entered,
and Croke, who held it to be an estoppel, identifies it with a
nolle prosequi by observing that it is "
quasi an
agreement that he will no further prosecute" --
"non vult,
ulterius prosequi." So that both admit it to be a bar against
the one discharged. So in Hobart 70 and in 3 Kebble 332, p. 31, in
the year 1674;
nolle prosequi and
retraxit are
considered as synonymous. So in Silley's Practical Register, in
1719, a
nolle prosequi is defined thus:
"This is that the plaintiff will proceed no further in his
action, and may be as well before as after verdict, and is stronger
against the plaintiff than a nonsuit, for a nonsuit is a default
for nonappearance, but this is a voluntary acknowledgment that he
hath no cause of action."
Title
Nolle Pros.
So Serjeant Salkeld, who comes down to the time of Queen Ann,
refers to
Beecher's Case for the law of
retraxit,
and gives the definition of
retraxit in the words of the
entry of a
nolle prosequi, Title
Retraxit, 3
Salk. So in 4 Wood, 87, in the year 1691, it is distinctly asserted
that an entry of a "
venit hic in curia, et fatitur hic in
curia," with a judgment that defendant
"eat unde sine
die" is equivalent to a
retraxit. At what period a
different idea begun to prevail I have not been able to discover
certainly I can find no adjudged case to support it.
In the case of
Walsh v. Bishop in Cro.Char. 239, 243,
referred to by Serjeant Williams as introducing a different
doctrine, is directly against him. That was an action of trespass
and battery against two; they severed in pleading, and after
verdict against both, a
nolle prosequi was entered against
one, and the other moved it in arrest of judgment. In that case it
is admitted in terms by the court that as to the one, the
nolle
prosequi was an absolute bar. And by reference to the same
case in page 239 it will be seen that the argument rested upon the
right of a plaintiff to proceed against one of several defendants
in trespass.
If this plaintiff ever had a right to proceed against these four
defendants in originating this suit I should have felt no doubt.
That is the case in trespass, that is the case where one defendant
is bankrupt, or an infant, or pleads
ne unques executor. 1
Will. 89; 3 Espin. 76. There is a modern book of practice of great
respectability (I mean Sellon, title
Nolle Prosequi) in
which this doctrine is summed up to my entire satisfaction. The
form of the entry is there given in words, and conforms entirely to
the entry in this case except that the words are here added that
"the plaintiffs take nothing by their
Page 26 U. S. 86
bill, but for their
false clamors be in mercy,'" which can
at least detract nothing from the effects of the judgment. Yet it
is there laid down as the law of his day that such a judgment, when
it goes to the whole cause of action, operates in effect as a
retraxit. The judgment in this case goes to the whole
cause of action, and as between the plaintiff and the cashier, is
of the same effect as if there had been no other defendant to the
action. In a subsequent part of the article, the same author
(Sellon) recognizes the distinction between cases of trespass or
tort and cases of contract, and lays down the rights of the parties
in each in accordance with the views I entertain on the subject,
to-wit, that if the nolle prosequi be entered so as to
produce any derangement in the rights of the defendant to deprive
them of a legal defense or subject them to increased difficulties
or liabilities, it is error.
The case in Maul & Selwyn which was supposed to have
overruled the previous decisions is in perfect accordance with
them, for although the defendant had pleaded
nonassumpsit,
he had also pleaded his discharge as a bankrupt. On the contrary,
if the language of the court in that case be considered as
affording the true rationale of the entry of the
nolle
prosequi, it would be fatal to the plaintiffs in this cause.
The court said it amounts to an acknowledgment that the one
defendant had a defense. But what defense did this co-obligor set
up that the other defendants ought to have the benefit of? His
pleas were, in terms, those which had been pleaded by these
co-obligors. If this confession of plaintiffs went to those pleas,
then were these defendants discharged, since they could not be
liable if he was not guilty.
It is a question of no importance -- one of no influence upon
the law of the case -- whether a
nolle prosequi may be
entered before or after judgment, or when it may be entered,
otherwise than as it affects the legal relations of the parties and
the rules which govern suits at law.
And here I think I may very confidently maintain that in no case
can a
nolle prosequi be legally entered as to one of the
defendants unless the suit might originally have been maintained
against those who remain, or unless the remaining defendants might
have availed themselves of pleading the nonjoinder of their
co-obligor if their rights were affected by his exclusion from the
action.
In the first class are comprised all actions of tort in which no
prejudice is done to the defendants, since their co-defendant need
not originally have been made a party. And I may add also the case
of bankrupts and infants, both of whom, when joint contractors, may
be admitted as defendants, upon declaring against their
co-obligors, according to the truth of the
Page 26 U. S. 87
case. They may also, without prejudice to their co-defendants,
be discharged by
nolle prosequi, but even as to them it
seems the precedents imposed a restriction, for it is not permitted
if they have blended their fate with that of their co-defendants by
joining in their pleas. They have then waived their privilege. If
their pleas impart no waiver of their privilege, the right of the
plaintiff to his
nolle prosequi, as to them, is conceded,
because the relations of the parties are not altered, nor their
rights in any way prejudiced. But I conceive the
nolle
prosequi cannot be entered at any point of time when it would
place the defendants in a worse situation or deprive them of any
advantage of making their defense.
Surely the precedents for entering the
nolle prosequi
after judgment in actions of trespass against some defendants and
going on to levy satisfaction from the rest can afford no precedent
here, since it is in the one case what the law enjoins; in the
other what it forbids.
Nor are the precedents of cases in which the one defendant never
was bound or is discharged by operation of law without discharging
the other any better authority. In all these cases, the relative
rights and liabilities of the parties remain the same. No legal
absurdities can ensue, and no more is given against them by the
judgment than what could have been legally claimed of them by the
action.
There is one curious result produced by this decision which is
not among the least of the objections to rendering a judgment for
the defendant in error. It cannot be contested, and the whole
argument is admitted, that if the discharge of the principal
produce a bar in his favor, this judgment should be reversed for
error. But the conclusion that it is no bar is now to be deduced
from a string of decisions in every one of which Serjeant Williams
himself admits that no recovery could be had against the defendant
who has been discharged by the
nolle prosequi. It is true
he attributes this bar to the nature of the action, but this is at
least acknowledging that the material question in the trespass
cases never could arise in the present case. In the only case,
however, even in trespass, in which the question in this case came
distinctly before the court, I mean the case of
Green v.
Charnock, 1 Croke 762, in which there was an interlocutory
judgment against S. and judgment pronounced against C. and a
nolle prosequi as to S., it was adjudged that the
nolle prosequi as to S. was a release to him, and
therefore to C.; and the judgment against C. was reversed in error
brought, and yet there they did not join in pleading. If in the
present case the defendants had all pleaded, whether jointly or
severally, and verdict had been for the one defendant on any plea
to the merits, it is clear that
Page 26 U. S. 88
notwithstanding a verdict had passed for the plaintiff against
the remaining four, he could not have had judgment, 1 Saund. 217.
And the distinction between the actions of debt and trespass on
this point has been, until now, considered as known and
established, 1 Plow. 66, ; 8 Rep. 120, 133; 2 Lilly Ab. 210, 107.
Upon the whole, I am very clear that this judgment ought to be
reversed and judgment below entered for defendants.
Judgment affirmed with costs.
