The judges not being unanimous in their decision affirming said judgment, delivered their opinions seriatim as follows :—
Warsee, Judge.This case, as exhibited to tho court by the record, involves the question, as to the validity of the By-law regulating the transfer of stock, by the stockholders in the Augusta Insurance and Banking Company. By the third section of the act incorporating said Company it is declared, the stockholders in said institution “ may make, ordain and establish such bylaws, rules, a.nd regulations, as they may deem, expedient and necessary to carry into effect the objects of the institution; provided such by-laws, *48rules, ordinances, and regulations, be not repugnant to the laws or constitution of this State or the United States.” It is contended by the plaintiff in,error, the by-law mentioned in the record is repugnant to the laws of this State, particularly to the judiciary act of 1799, and the act of 21st December, 1822, making bank stock subject to execution. I have carefully examined both these acts, and have not been able to discover any repugnance which would make void the by-law in question. The bylaw declares, “ No stockholder who may be indebted to the institution, as payer or endorser on any note or notes laying over and dishonored, shall be permitted to transfer his stock. The company shall in that case be considered a creditor in possession, and such possession and such dishonored note or notes, shall constitute a lien on the stock, which shall be held subject to the payment of such note or notes.”
Did the charter of Augusta Insurance and Banking Company confer the authority on the stockholders to make the by-law, and if so, is it a reasonable regulation, expedient and necessary to carry into effect the objects of the institution ? By the fourth section of the charter, it is provided the capital stock of the company shall not exceed $500,000, which shall be divided into shares of $100. By the sixth section of the charter, the company are authorized to insure property and effects, against loss by fire or water, and all other accidents. By the seventh section of the charter, the company are bound to pay all losses on property or other assurances made by them, within six months after the happening thereof. By the tenth section of the charter the company are authorized to issue bills or notes of credit, payable to bearer, and by the eleventh section of the charter, all bills or notes of credit issued as aforesaid, are to be paid on demand at the company’s office. I have referred to the several clauses in the charter for the purpose of showing what were the objects and duties imposed on the company, in order that the expediency or necessity of the by-law, to carry into effect those several objects, might be the more apparent. I am of the opinion, the charter clearly conferred the authority on the company to make the by-law, and that it is not only reasonable, but expedient and highly necessary, to enable them to carry into full effect the objects contemplated by the Legislature. This view of the subject is sustained by authority. Where a charter or statute empowers a corporation to pass such by-laws as are necessary, the by-law to be valid need not recite that it was necessary ; but the necessity will be implied from the act of passing it, being in fact, synonymous with expediency.” — Angell and Ames on Corporations, 299; Stuyvesant vs. the Mayor, &c. of New York; 7 Cowen's Rep. 606. The record in this case discloses the fact, there was a by-law made by the stockholders, which prohibited an individual stockholder who was indebted to the.Bank, from transferring his stock, and that such indebtedr ness should constitute a lien on his stock for the payment thereof. The record also exhibits William Glendenning as a stockholder in the company, — that on the 4th day of October, 1840, he became, the proprietor of twenty-five shares of its capital stock; and in the script, which was the evidence of his ownership, these words were inserted — “ Which stock is subject to the payment of all debts due, or to become due from said stockholder to the said company, either as principal, security, or otherwise, and is transferable only on the books of the company.” This By-law was obligatory, *49and binding, as between Glendenning and tbe company — as between him and them it had all the force of a stipulated contract.
“ By-laws of a corporation obligate its members, on the ground of their express or implied consent to them ; nor is it an objection to a corporator’s being bound by a by-law, that he had no notice of it, or that he was not a member of the corporation at the time the by-law was passed.” — Angell and Ames on Corporations, 301; Stetson vs. Kempton, et al. 13; Massachusetts Rep., 282. Was this by-law, so far as the rights of Glendenning and the company were concerned to the twenty-five shares of stock, repugnant to any law of the State ? If so, what law or principio of public policy does it violate ? Being the proprietor of the stock, had he not the right to sell it absolutely, and if so, had he not the right to pledge it, or create a lien upon it, by a bona fide contract, without contravening any public law of the State ?
I am now speaking of the validity of the by-law, as between Glendenning and the Company ; for if the by-law is repugnant to the constitution and law's of the State, it does not bind Glendenning, and he might treat it as a nullity, in a contest between himself and the Company; but it was not contended on the argument, this by-law was not binding and valid, as between Glendenning and the Company, and 1 do not doubt its validity —indeed the evidence of his title to the twenty-five shares of stock, recites it to be subject to the payment of all debts due, or to become due, by him to the Company. lie became the purchaser of the stock, on the terms and conditions expressed in the by-law, and no other; and as between him and the Company, it was binding and operative, according to its terms and stipulations. The record in this case discloses the further fact, that on the 31st of March, 1842, William Glendenning became indebted to the Company by note in the sum of $3,500, which was duly noted, and protested for non-payment; and is now, in the language of the by-law, “ laying over and dishonored.” The indebtedness of Glendenning to the Company is admitted to be a bona fide indebtedness ; but it is contended such indebtedness does not create a lien in favor of the Company under the by-law, so as to justify the defendant in refusing to make a transfer of the stock to the plaintiff in error, who is a purchaser at sheriff’s sale under a judgment obtained against Glendenning, subsequent to the date of the dishonor of the note mentioned in the record. Assuming the by-law to be valid, as between Glendenning and the Company, the fact of indebtedness on his part being admitted, could Glendenning himself have transferred the stock, and compelled the defendant, as the officer of the Company, to have made a transfer on their books, without first discharging his indebtedness to the Company ? Certainly not — and Why ? Because the by-law of the Company of which he was a member, declares “ No Stockholder, who may be indebted to the institution, as payer or endorser, on any note or notes, laying over and dishonored, shall be permitted to transfer his slock; the Company in that case shall be considered a creditor in possession, and such possession, and such dishonored note, or notes, shall constitute a lien on the stock, which shall be subject to the payment of such note or notes.” In the case of Waln’s Assignees vs. The Bank of North America, 8 Sergeant and Rawle 89, the court say, — “ By-law's bind, because the members of the corporation, either individually, or by those w'ho represent them, arc *50supposed to give their assent to them. A contract, express or implied, is the lien of the parties, and a law t,o them ; provided it is not repugnant •to the charter, or the laws of the land.” We have seen the by-law in question was not repugnant to the charter of the Augusta Insurance and Banking Company; and the following cases are authority to show it is not repugnant to the laws of the land. — Child vs. Hudson’s Bay Company, 2 Peere Williams, 207; Waln’s Assignees vs. The Bank of North America before cited, 8 Sergeant and Rawle 73; McDowell vs. Bank of Wilmington, 1 Harrington’s Rep. 27; Cunningham vs. The Alabama Life Insurance and Trust Company, 4 Alabama Rep. 652. The contract then, as between Glendenning and the Company, as manifested by the law is “ the lien of the parties, and a law to íhem.” His indebtedness to the Company as disclosed by the record, created a lien upon the twenty-five shares of stock, and the Company is a creditor in possession; the stock being subject to the payment of the dishonored note for $3,500.
far a bona fide purchaser from Glendenning of stock, notice of the lien created by the by-law, would be protected against such lien, it is not now necessary to decide, or how far the insertion of the terms, on which the stock is held by the stockholder, in the certificate of script (the evidence of his title) would go, by way of notice to the purchaser, it is unimportant to discuss at this time.' I have endeavored to establish, both on principle and authority, there was a valid lien created on the stock, in favor of the Company, as against Glendenning, which would prevent him from transferring it without discharging the same. At what time the plaintiff in error obtained his judgment against Glendenning, the record does not inform us, but it is stated to have been obtained subsequent to the dishonor of the note for $3,500. By the common law, the judgment did not create a lien on the stock of Glendenning so as to prevent a transfer of it. By the act of 21st December, 1822, bank stock is made subject to sale under execution, and I concur in the opinion of the presiding judge, in the court below, that the act of 1822 created only a qualified lien on bank stock. The 6th section of the act of 1822 declares, “ Any transfer made by the defendant of his bank or other stock, after judgment obtained against him or her, shall be void. Provided notice of the obtainment of such judgment be served bn the cashier .of s.uch principal bank, or any of its branches, or the proper officer of such other corporation within twenty days after said judgment is obtairied.” Unless the notice be given within the time prescribed by the act, it would seem the defendant would have the right to transfer his stock, notwithstanding the judgment, and that the lien created by the judgment would not become absolute so as to make the transfer void, without the notice .being given as required by the statute. The plaintiff in error insists his judgment lien is superior to that of the company created by the indebtedness of Glendenning under the by-law, although the lien in favor of the Company was created, and existing, prior to the date of his judgment, under which the sale of the stock to him was made. It is a principle of law applicable to liens of this description, that he who acquires priority in point of time, acquires priority of right.
was to the date of the plaintiff’s judgment. But suppose it w'hs not — under the state of facts presented by the record in this case, there being no evidence *51furnished that the plaintiff ever gave the proper officer of the Company notice of having obtained judgment against Glendenning, one of the stockholders, as required by the (3th section of the Act of 182.2 — would the rendition of the judgment, without the notice, prevent Glendenning from transferring his stock, either absolutely, or creating a valid lien upon it ? The Act of 1822, it will be recollected, is in derogation of a common law right, and must be strictly construed. It also appears from the record in this case, at the time of the sale of the stock by the sheriff, the bank gave public notice of their lien upon the same, by virtue of the by-law ; at which sale the plaintiff became the purchaser, and now contends he is entitled to have the stock transferred to him by defendant, discharged of the lien created by the indebtedness of Glendenning to the Company, through whom he claims title. A purchaser at sheriffs sale purchases such tille only as was in the defendant in execution, and no other. If the property purchased is encumbered by a lien, the purchaser takes it cum oncre ; and he has certainly much less equity in his favor, when he purchases the property, us in this case, with a full knowledge of the lien, now urged by the defendant. In the case of Wains, assignee, vs. The Bank of North America, the court say — “ A stockholder who borrows money of a bank, with full knowledge of an usage not to permit a transfer of stock while the holder is indebted to the bank, is bound by such usage, and neither he nor his assignees under a voluntary general assignment, can maintain an action against the bank for refusing to permit his stock to be transferred. The agreement of the stockholders would be equally binding on them, and all who stand in their shoes, as a By-law.” In this case there was a By-law, as we have seen, expressly prohibiting the stockholder from transferring his stock, while indebted to the bank, and creating a lien thereon: and the plaintiff being a purchaser at sheriff’s sale, with notice of the lien, stands in the shoes of Glendenning — acquired all his rights to the slock, and none other.
It was said in argument, that the stock, standing in the name of Glen-donning on the books of the bank, and published to the world as his stock in the bank reports, and the lien created by the By-law being secret, it was contrary to public policy and a fraud upon creditors ; that it was the policy of our laws to have secret liens made public, as was apparent from our general Registry Acts. Perhaps it would be a sufficient answer to this argument, to say, the Legislature, in their wisdom, thought proper to confer upon the stockholders of the Augusta Insurance and Banking Company the power of qualified legislation ; they have enacted the Bylaw creating the lien ; that lien was not required by either .the common or statute law to be made public ; and our statutes requiring certain liens to be registered, are in derogation of the common law, and cannot be extended to other liens than those enumerated by implication. While, as a legislator, I might be disposed to give my hearty assent to that part of the argument for the plaintiff in error, which so forcibly pointed out the evils to the community by the exercise of the extraordinary powers of legislation by Corporations, in the enactment of By-laws ; yet as a judicial officer, I feel bound, by the highest considerations of public duty, scrupulously to protect the vested rights which have been legitimately acquired under them. Viewing the By-law in question as a contract, binding on the parties who enacted it, I feel bound to protect the lien on *52the stock created, by it. “ A lien may exist under agreement, in favor of the general body of proprietors of a bank upon the stock or shares of individual shareholders ; but this right is generally reserved, by the express terms of the deed of settlement under which the company or partnership is established. Nor will the bankruptcy of the shareholder prevent the operation qf the lien upon his shares; where, under such arrangements, the certificates of his ownership are permitted to remain in his possession.'” — Cross on Law of Lien, 318; Ex parte Plant A Deacon and Chitty, 160. The public interest, in my judgment, will best be promoted by sustaining this By-law of the Company, when we take into consideration the duties and obligations imposed by the charter. By giving the Company a lien on the stock, for debts due by the individual stockholders, it certainly enables them to be the better secured against loss by insolvency, and thereby the better enabled to pay the losses of those who may be insured by them; besides, the bill-holders, who are to be looked upon as favorite creditors, will be better protected than they otherwise would be, if the capital stock of the bank was to be appropriated to the payment of the debts of the individual stockholders, in preference to debts due the Company, which, in. all probability, were created on the footing of'this identical By-law. Suppose the bank unable to redeem its liabilities, (an event which I trust will never happen,) and a bill in equity filed against the Company by the bill-holders for the purpose of subjecting the twenty-five shares of stock standing in the name of Glendenning to the payment of their claims, by virtue of the lien acquired by the Company under this. By-law ; who would have the superior equitable claim to the stock, the bill-holders or the plaintiff in error, claiming as a judgment creditor of an individual stockholder, whose judgment is of younger date than the lien credited in favor of the Company under the By-law ? To the extent this By-law strengthens and protects the institution from loss, to just the same extent does it give the ability to discharge its duties to the public, as required by the charter, and prevent fraudulent stockholders from injuring the Company or the public creditors of the institution. I am therefore of the opinion, the Act incorporating the Augusta Insurance and Banking Company conferred the authority on the stockholders to make the By-law in question, that the same is not repugnant to the charter, nor the laws of the land, nor is it against public policy, or in restraint of trade ; but on the contrary, it' is a valid Bylaw, calculated to promote the interest and objects of the institution, as contemplated by the Legislature. I am also of the opinion, the By-law was binding and operative, as between the stockholders themselves, and the indebtedness of Glendenning, as exhibited by the record in this case, created a valid lien upon his twenty-five shares of stock in favor of the Company. That the lien of the Company created by the indebtedness of Glendenning under the By-law, being prior in point of time to the lien acquired by the plaintiff under his judgment, the Company acquired a priority of right. That the plaintiff, who was a purchaser at sheriffs sale, with notice of the lien of the Company upon the stock, under the By-law, purchased only such title as was in Glendenning to the twenty-five shares of stock, and no other ; consequently, is not entitled to a transfer of the stock at the hands of the defendant, without first discharging the lien created by the indebtedness of Glendenning to the Company, through *53whom ho derivos his title. Let the judgment of the court below be affirmed.