Lane v. Harris

The Court not being unanimous, the opinions of the Judges were delivered seriatim.

By the Court.

Starnes, J.

delivering the opinion.

£1.] The ground of error first assigned in this case, was the *222ruling of the Court, in withholding from the Jury the exemplifications offered by the plaintiff, showing the suit against Robert B. Alexander,' assignee, a judgment and execution thereon, &c.

The reason given for this decision of the Court below was, that in the petition there was no allegation that the charier of the Planter’s and Mechanic’s Bank had been - forfeited, and 'that an assignee had been appointed. And it was insisted for the defendant in error, that though a recital or recognition of both these facts was to be found in the public laws of the State, yet that no party could have tho benefit of a public law, without proper pleading.

This latter remark may be very correct: but what is necessary to proper pleading is the question — -just the question, here.

It seems to be well settled, that setting forth a public statute, and the facts which it recites, is not necessary to proper pleading. “Public statutes, and the facts which they recite or state, must be noticed by the Courts, without their being stated in pleading.” (Bac. Abr. Stat. L. 2 Wils. 376. Willes, 210. See the reasons of Lord Ellenborough, 4 M. & S. 542. 1 Black Com. 86. 1 Ch. P. 246.)

This rule is not in conflict with what was decided by this Court, in Dougherty vs. Bethune, (7 Ga. R. 90.) There the -decision was, that the recital of a fact in a public statute, did not operate to estop a party defendant from denying it by plea, and putting the fact in issue. It was not held, that it was necessary for a plaintiff suing, to set forth such a fact, although it were recited by a public statute; but simply, that the defendant might deny it in his plea, and in this event the plaintiff must prove it. And this Court afterwards says in Beall vs. Beall (8 Ga. R. 210,) and in Thornton vs. Lane (11 Ga. R. 521) that although such facts may not be conclusive, Courts must “ treat them as true, until the contrary appear.” The inference from which is, that whilst they remain uncontroverted, as facts stated or recognized by a public statute, the rule of pleading which we have been considering, applies.

The forfeiture of the charter, and the appointment of the *223assignee referred to in this case, were facts which fall within this rule, and it was not necessary that they should have- been pleaded.

[2.] The question next presented is, whether or not it was necessary for the plaintiif to prove the execution of the bills on which the suit was based, they not having been denied on> oath?

It is our opinion, that this provision of our Statute, declaring that “ no person shall be permitted to deny any deed, bond, bill, single or penal note, draft, receipt or order, unless he shall make affidavit of the truth of his answer, at the time of his filing it,” (Cobb. Dig. 486) applies where the execution or factum is alleged to be the act of the party filing the answer,, or adopted by him. In the case before us, the liability of the stockholder is not placed upon any act of his, in connection with the execution of the bills. If he be liable, he is so, not because by the factum he has promised to pay these bills, but because of the fact, that by becoming a stockholder, and subjecting himself to the terms of the Statute in such case made and provided, he has, as it were, guaranteed the payment of' the bills. His guarantee is not like that by endorsement; for in that event, it might be said, that he had adopted the factum r but he has guaranteed them only, by becoming a stockholder under the provisions of the act of incorporation. Eor aught, that is known to him, or for any thing that he has done, the bills on which this suit was based, may have been all spurious.

Let us take a case which will readily serve as an illustration A contracts with B by letter, or otherwise in writing, for a sufficient consideration, to guarantee all bills which C may draw on D in favor of B within a specified time, and not exceeding a certain amount. 0 draws a bill which is accepted, but not paid by D; and B brings suit against A. Now, if the action had been instituted against C and D, the drawer and acceptor, it is”very plain that by our Statute they would not be permitted to deny the genuineness of the instrument, save upon oath. But it seems equally plain, that this rule should not apply to A, who knew nothing, and could be supposed to know nothing *224of the factum; 'find was responsible only by collateral guarantee.

For a similar reason, the execution of the bank bills sued on in this case should have been proven.

[3.] It was also insisted, that the Court below erred in overruling the demurrer of the plaintiff to so much of the ninth plea as alleges and sets forth, that the bank has real and personal estate in the City of Columbus, on which the execution of plaintiff could have been levied, and of sufficient value to satisfy the same.

This raises the question, whether or not the return of nulla bona made by the Sheriff on this execution, is conclusive against the stockholder. A question not without considerable difficulty.

On the one hand, it. would seem that more should not he required of the bill-holder, than that he should pursue the due and ordinary course of law in exhausting the property of the bank; that this is a reasonable and practical test of his diligence ; that any diligence beyond this, should reasonably devolve upon the Sheriff, whom the law appoints to assume such responsibility and exercise such diligence, and who is in a position to do it with .advantage; or upon the stockholder who has an ultimate liability, was interested in the issuing of the bills, .and may have made gains and profits by them, and who being, as it were, in community of interest with those who issued the bills, and are holding the effects of the corporation, (if there be •any) thus possesses facilities which may enable him to discover effects, and have them subjected to the payment of the bills. Something like an analogous rule preyails in other cases, where there is an ultimate liability. The return of nulla bona, upon an execution issued on a judgment against an administrator for a devastavit, is conclusive, as against the sureties, in an action against them on the bond. A return of non est inventus, by the Sheriff, upon a ea. sa. issued in an action where bail had been taken, is conclusive against the bail, in a suit upon the recognizance.

To this may be added the consideration, that if the stockhól*225der be allowed to take issue on the Sheriff’s return, that issue may be determined in his favor, on the ground that the defendant has property which could have been subjected to levy; and when this property is levied on, it may be claimed by another person under our laws; and upon the trial of that issue, the claimant may succeed. The bill-holder is then remediless. Rut should the case not reach this fatal crisis for him, out of the first issue, (the trial of the question, whether or not the bank does own and possess property subject to the execution,) new and collaterial issues may arise, it may even become necessary for a Court of Equity to intervene, and thus this proceeding, to ascertain the bank’s insolvency, may become so exceedingly intricate and prolonged as to deprive it very much of practical advantage. And all these issues have to be met and tried by the bill-holder, with the disadvantage, perhaps, of being a stranger to all the parties, and without facilities for procuring information and testimony.

On the other hand, it must be admitted that the stockholder, in this case, was no party to the proceeding against the bank, if he were not cognizant of the suing out of the execution, and the efforts of the Sheriff to find property of that bank; (and if he had been so apprised, he could have pointed out property,) would have no inconsiderable cause of complaint, should he now be concluded by the Sheriff’s return. It would seem but reasonable, that he should not be held responsible, unless he had had some notice of the effort to find property; as such notice might have put him upon diligence, and have enabled him to protect himself.

If this stockholder, in reference to this transaction, that is to say the emitting of these bills by the bank, could certainly be regarded as a privy, I should doubt the legal necessity of such a notice; but from what I have said on another point, it is evident that I regard him, in his peculiar relation to these bills —a relation created by statute, as a sort of guarantor, by a contract separate from that on which this bill-holder obtained. *226his first judgment. As such, notwithstanding his community of interest with the corporation, with reference to these bills,. I doubt if he can be said to be in privity with it, in the accurate Common Law sense of that term; for which, see Vin. Abr, Tit. Privity, Co. Litt. 271, a. 8 Co. 42 b. And if he be not in the relation of either party or privy, it is not unreasonable to require that he should have such notice.

Even in the case of bail, though their relation to the principal is so intimate a one, I find, that according to the long-established practice in England, it was directed that the ca. sa. should lie four days in the office, in order to give the bail, notice, that the plaintiff had elected to take out execution against the person of the principal, so that they might have the opportunity of rendering his body before the capias issued. Merritt vs. Montfort, (Barnes, 54. 2 Salk. 599. Petersd, on Bail, 358.) And in the case of a return of nulla Iona, on an execution issued upon a judgment against an administrator for a devastavit, to which reference has just been made by me, may it not be, that in view of the close interest between the principal and his sureties, and the fact that that interest is created by the same instrument or contract, the return is considered conclusive, partly because the judgment is regarded as notice to the sureties, that a fi. fa. will be sued out, and the Sheriff put upon the search for property ?

In view of all these things, and especially in consideration of" the fact, that the peculiar statutory liability of this stockholder places him in a relation to the bank, which is not precisely analogous to that of either party or privy at Common Law, I am willing to unite with my brethren in holding, that the best and most reasonable rule which can be prescribed in such a case is, that the return of nulla Iona should not be considered conclusivo against him, unless due and proper notice be previously given to him, by which ho may, if he choose, be put upon diligence in the search for property.

[4.] Lastly : it is insisted, that the Court erred in holding,. shat the plaintiff was entitled to recover only “sucha proportion of his bills, as the stock of the defendant bears to the-*227whole capital stock of the bank,” and in ordering the amendment by which he sought to recover his whole claim, stricken out.

The effect' of this decision was equivalent to the declaration, that the plaintiff, in this case, who brought suit on nineteen hundred and twenty-five'dollars, of bills, against a stockholder owning one hundred shares, out of the ten 'thousand shares, of which the capital stock consisted, (or ten thousand dollars of the one million of capital stock,) was entitled to recover on the bills held by him and sued upon, only the proportion of of one hundred shares to ten thousand; that is to say, the one hundredth part of his claim, .or nineteen dollars and twenty-five cents.

The determination of this question turns mainly upon the construction which is to be placed upon the language used by the Legislature in the eleventh section of the Act incorporating this bank, viz: that the persons and property of the stockholders shall be bound for the ultimate redemption of the bills,, in proportion to the amount of shares, and the value thereof, that each' individual or company may hold in said bank.”

It must be observed, that the language here is not, that the persons and property of the stockholders shall bo bound in the ]proportion which his shares bear to the whole capital stock of the bank, but it is, in proportion to his shares. The proportion stated, is not a comparative relation of his shares to the capital stock, but such a relation of his liability to the number and value of his shares. He shall be liable, says the charter, in proportion to what he owns of the stock. Nor does the act of incorporation say, that the stockholder shall be bound for the ultimate redemption of the bills to each bill-holder “in the proportion his- shares bear to the whole stock,” which is the effect of the construction in the Court below, but it simply asserts a general liability for the redemption of the bills, (that is all the bills,) in proportion to the amount of his stock. It is very plain, therefore, that the proposition stated by the Court below, in the use of the words “ which his stock bears to the whole capital stock,” is an interpolation on the Statute.

*228But it is urged that it is necessary to give this construction to this provision of the charter, in order to avoid substituting an injustice for a difficulty. Let us see what is the true value of this assertion. If it be correct, then, of course, the method or mode of proceeding which this construction requires the bill-holder to adopt, in enforcing payment of his bills, is that which is equitable, practicable and just. We will put it to the test.

The Act incorporating the Georgia Rail-road & Banking •Company contains a provision similar to that under consideration, making the persons and property of the stock-holders liable for the ultimate redemption of the bills. And no one will question, that the Legislature intended that this provision .•should have the same signification and effect in both charters, and in all the charters of banks in our State, where it may be found. Now the capital stock of the institution I have just mentioned, is upwards of four millions of dollars; there are some seven hundred stockholders, at present, and it is possible there might be as many stockholders as shares; that is to say, more than forty thousand. For many years, this bank has had a circulation of near one million of dollars. If it were to become insolvent, what would be the consequence ? By the provisions of the charter, these numerous bill-holders have, or were intended to have, a remedy against the stockholder, for the payment of their bills, “ as in common actions of debt”; and according to the construction which prevailed in the Court below, (and which is insisted on as that only which is just,) in order to have the benefit of this provision secured by the Act, each of these bill-holders would be compelled to institute suit against at least seven hundred, possibly forty thousand stockholders. This would be hard enough — perhaps impracticable and out of the question, even if the bill-holder happened to possess some hundreds or thousands, in bills of the bank. But lot us suppose that he had only a small amount (he might have but five dollars, or even one dollar) of these bills. In reason, justice, and according to law, he would be as much entitled to have payment for that, as for thousands. It might, indeed, *229be the all of the widow or the orphan. In order, however, to have the benefit of the rights which the charter secures, that bill-holder not being able, according to law, to join these several promissors in one action, would be constrained to institute at least seven hundred suits for the recovery of that small amount of money. If he attempted to do this, it is altogether probable, that out of seven hundred defendants, some would be found bankrupt or out of the jurisdiction of the State, and not accessible by the ordinary process of law; and almost certain, that by some one or more of the many casualties and contingencies which cluster around every action at law, and against which the most astute and provident Counsel cannot always provide, he would lose one or more of these suits. And is it not absolutely certain, that the prospect of these results, and of the amount of Counsel’s fees, for cases lost and won, which he would have to pay, would operate as a prohibition to his bringing such suits or having the benefit which the charter intended to secure for him ?

Let it not be said, that he could part with his bills to some one having more of them, and who could afford to sue, for this is as much as to say, that he could sell them at a sacrifice. It should not be believed, for a moment, that in legislating so important a provision, for the benefit and protection of bill-holders, the General Assembly of our State intended to make such a sacrifice necessary to the poor man or the small bill-holder. That body certainly designed to put every citizen upon the same footing of reason and justice, and to supply a ready and efficacious remedy to each and all.

The illustration thus presented, serves strongly to show the hollowness of that boasted justice attributed to the construction contended for by the defendant in error, of that provision which we have been considering.

I cannot consent to impute such a scheme to the legislative mind, and turn from it, to some more just method of enforcing this provision of the charter.

So far as the rights of bill-holders are concerned, it would be better, if what the stockholder is liable to pay, could bo dis*230•tributed among all the bill-holders. And this would be the ^direction given to it, if it were paid into a Court of'Chancery, to be disposed of upon equitable principles. But this is rather •a matter of interest to the bill-holders than to the stockholders. It does not operate any greater hardship on the stockholder, if 'he pay to one bill-holder, than if he pay to all the bill-holders, provided he be protected in making such payment against any farther recovery. If he is liable, it is right that he should pay to some one; and the Legislature, in its sovereign discretion, has said that he shall be made to pay (if he will not without suit) by an action at Common Law, and not in Equity, unless the bill-holder desire it; that he shall be held liable, “ as in common actions of debt.” He cannot be so held liable, practically, and this provision of the Legislature is effectually defeated and set at naught, as I have shown, if payment can be enforced only in the way made necessary by the construction I have been opposing. There is no other method by which payment can be coerced, “as in common actions of debt,” except that which permits and authorizes a recovery for the whole)amount of the claim from any stockholder whose shares are sufficient to meet the payment. The bill-holder can thus recover his claim, and have the full benefit which this provision of the Statute was intended to secure to him.

This construction gives effect to the Statute, and carries the obvious intention of the Legislature into effect, by supplying every bill-holder with a speedy and efficacious remedy. In order, therefore, to give complete effect to this provision of the charter, creating a statutory liability, if there were nb analogy at Common Law, it would be necessary to adopt a construction which holds, that the stockholder became liable to pay every, or any of the bills to the extent of his stock; that he guaranteed each so far as the extent of his stock, and not a portion of each bill, sufficient, in the aggregate, to make up the amount of his stock; ■and that this liability ceases when an amount has been recovered from him, equal to the value of his stock; and such recovery he can plead in bar of any other action against him by a bill-holder. This construction interpolates nothing on the *231Statute, and does no violence to its terms; but on the contrary, is in harmony with the simple and ordinary signification of' the words employed.

I can conceive that another construction might be placed upon the words, “shall be pledged and bound, in proportion to-the amount of shares and the value thereof, that each individual or company may hold,” &c., if the question were presented, as to the extent of the stockholder’s total liability, with reference to the whole circulation of the bank. If, at the time of the dissolution, or perhaps at the time of the suit’s commencement, (should the assignee have redeemed some of the bills after the dissolution,) the whole amount of bills was greater or less than the whole amount of the stock, the liability of the stockholder would be on all of them; and it would seem not unreasonable, that in such case, it should be in proportion to his stock. If' the circulation exceeded the capital. stock, then his liability would transcend his stock, in the proportion which that stock bore to the whole capital stock of the bank. If the circulation, was less than the capital stock, then his liability would be less,, in a similar proportion. Eor example: if the circulation had been one million one hundred thousand, at the time specified, this stockholder’s liability being one per cent, or as one hundred shares is to ten thousand, he would be liable to pay eleven thousand dollars of the bills. Rut if the circulation was only nine hundred-thousand, then he would be liable to pay only nine thousand dollars of the bills. The recovery, however, in a particular case, would not be of a certain-per cent, on each bill sued upon by a bill holder, .according to the construction-which I have been opposing, but would be for the whole amount of the bill-holder’s claim, provided it did not exceed the proportion of the stockholder’s liability.

It is possible that the terms of the charter, which we are considering, may have been emplpyed, in part, at least, in the-sense which I have just expressed. Rut it is unnecessary to decide this question, as it is not presented by this record. There is before us no evidence, as to the amount of bills in circulation at any time, and no evidence that there is, now, any *232other bill-holder of this bank, besides him who is now before the Court. Eor anything that appears in this record, all the other bills may have been paid by the effects of the bank. On such a record, I cannot, for a moment, doubt that the plaintiff is entitled to recover the whole of his claim against the defendant in error.

The construction which I place upon this statutory liability of the stockholder, has its analogies in other liabilities at law. An example may be found in the liability of sureties upon a Sheriff’s bond. Although many persons be injured by the misconduct of the Sheriff, if one vigilant suitor exhaust the penalty of the- bond, no further recovery can be had thereon, against the sureties, by any other person. But I will put a case still more to the point. We will suppose, that on the same da.yj for a similar consideration, and payable at the same time, A gives his promissory notes, payable to bearer in different sums, amounting, in all, to twenty thousand dollars, to twenty payees. Desirous of using these notes in some common transaction, these persons, by a separate instrument, in writing, agree to guarantee the notes, each severally binding himself for the payment of the whole, in proportion to the amount of the note received by him from A provided A should, himself, be unable to pay. The notes are then transferred and assigned to other persons, upon the faith of this .guarantee. Sometime after they have become due and payable, C a holder of one amounting to one hundred dollars, brings his action thereon, and upon the guarantee against B a guarantor, and one of the original payees of a note, amounting to one thousand dollars, proves the insolvency of A in the proper way, and demands a judgment against B. Now, if he had sued in Equity, or if the holders of the other nineteen notes had filed their bill and •taken him there, and had shown that their notes were unpaid, then, perhaps, he could have recovered from B, only such proportion of his claim as B’s note bore to the whole amount; that is to say, the one-twentieth part thereof. But C is not taken into Equity, we will suppose, and no objection is made by the other note-holders, to his recovery — they may have been *233all paid by A’s property, for anything that appears in the proceeding. Can there be any doubt, for a moment, of C’s right to recover his whole claim from B ?

It would not be difficult to find other analogies; but the length to which this opinion has already reached, admonishes me to forbear.

Let the judgment be reversed.