The Bank of Augusta, Plaintiffs In Error v. Joseph Earle, Defendant In Error the Bank of the United States, Plaintiffs In Error v. William Primrose, Defendant In Error the New Orleans and Carrollton Railroad Company, Plaintiffs In Error v. Joseph Earle, Defendant In Error

Decision Date01 January 1839
PartiesTHE BANK OF AUGUSTA, PLAINTIFFS IN ERROR, v. JOSEPH B. EARLE, DEFENDANT IN ERROR. THE BANK OF THE UNITED STATES, PLAINTIFFS IN ERROR, v. WILLIAM D. PRIMROSE, DEFENDANT IN ERROR. THE NEW ORLEANS AND CARROLLTON RAILROAD COMPANY, PLAINTIFFS IN ERROR, v. JOSEPH B. EARLE, DEFENDANT IN ERROR
CourtU.S. Supreme Court

[Syllabus from pages 519-521 intentionally omitted] IN error to the Circuit Court of the United States for the southern district of Alabama.

These cases were brought from the Circuit Court of the southern district of Alabama, by the plaintiffs in each case, by writs of error. The cases of the Bank of Augusta vs. Joseph B. Earle, and of the Bank of the United States vs. William D. Primrose, were argued by counsel. The case of the New Orleans and Carrollton Railroad Company was submitted by Mr. Ogden, on the argument in the other causes.

In the case of the Bank of Augusta vs. Joseph B. Earle, the facts were the following:——

The Bank of Augusta, incorporated by the legislature of the state of Georgia, instituted in the Circuit Court for the southern district of Alabama, in March, 1837, an action against Joseph B. Earle, a citizen of the state of Alabama, on a bill of exchange, dated at Mobile, November 3, 1836, drawn at sixty days sight, by Fuller, Gardner, and Co., on C. B. Burland and Co., of New York, in favour of Joseph B. Earle, and by him endorsed, for six thousand dollars. The bill was accepted by the drawees, but was afterwards protested for non-payment; and was returned with protest to the plaintiffs.

The following facts were agreed upon by the counsel for the plaintiffs and the defendant; and were submitted to the Circuit Court:——

'The defendant defends this action upon the following facts that are admitted by the plaintiffs; that plaintiffs are a corporation, incorporated by an act of the legislature of the state of Georgia, and have power usually conferred upon banking institutions, such as to purchase bills of exchange, &c. That the bill sued on was made and endorsed for the purpose of being discounted, by Thomas McGran, the agent of said bank, who had funds of the plaintiffs in his hands, for the purpose of purchasing bills, which funds were derived from bills and notes, discounted in Georgia by said plaintiffs, and payable in Mobile, and the said McGran, agent as aforesaid, did so discount and purchase the said bill sued on, in the city of Mobile, state aforesaid, for the benefit of said bank, and with their funds; and to remit said funds to the said plaintiffs.

'If the Court shall say that the facts constitute a defence to this action, judgment will be given for the defendant, otherwise for plaintiffs, for the amount of the bill, damages, interest and costs; either party to have the right of appeal or writ of error to the Supreme Court, upon the statement of facts, and the judgment thereon.'

The Circuit Court gave judgment for the defendant.

The Bank of the United States, incorporated by the legislature of the State of Pennsylvania, as the holders of a bill of exchange protested for non-payment, for five thousand three hundred and fifty dollars, drawn by Charles Gascoine, at Mobile, on the 14th January, 1837, at four months, on J. and C. Gascoine, of New York, in favour of W. D. Primrose, and by him endorsed, instituted in October, 1837, an action against the endorser of the bill, in the Circuit Court for the southern district of Alabama. The agreed facts of the case, which were submitted to the Circuit Court, were as follow:

'The plaintiffs are a body corporate, existing under and by virtue of a law of the state of Pennsylvania, authorized by its charter to sue and be sued by the name of the President, Directors, and Company of the Bank of the United States, and to deal in bills of exchange, and is composed of citizens of Pennsylvania, and of states of the United States other than the state of Alabama. The defendant is a citizen of the state of Alabama. George Poe, Jr., was the agent of the plaintiffs, resident in Mobile, and in the possession of funds belonging to the plaintiffs, intrusted to him for the sold purpose of purchasing bills of exchange. The said George Poe, Jr., as such agent, on the 14th day of January, A. D. 1837, purchased at Mobile the bill declared upon, and paid for the same in notes of the branch of the Bank of the State of Alabama, at Mobile. The defendant is the payee of the bill, and endorsed it to plaintiffs, the present holders. The bill was presented at maturity to the acceptors, and duly protested for non-payment; and due and legal notice given to the defendant.

The question for the opinion of the Court on the foregoing statement of facts is, whether the purchase of the said bill of exchange by the plaintiffs, as aforesaid, was a valid contract under the laws of Alabama. If the Court be of opinion that the said contract was valid, and that the said plaintiffs, as holders of the said bill, acquired the legal title thereto by the said purchase, then judgment to be rendered for the plaintiffs for the sum of 5,350 dollars, with interest at eight per cent. since 30th May, 1837, and ten per cent. damages on it. But if the Court be of opinion that the said purchase was prohibited by the laws of Alabama, and the contract was therefore invalid and void, judgment to be rendered for the defendant.'

The Circuit Court gave judgment for the defendant.

The action of the New Orleans and Carrollton Railroad Company, incorporated by an act of the legislature of Louisiana, was upon a bill of exchange, drawn by Fuller, Gardner, and Co., of Mobile, in favour of Joseph B. Earle, upon Fuller and Yost, of New Orleans, for five thousand two hundred and ten dollars, protested for nonpayment. The action was against the endorser of the bill, which had been purchased at Mobile by an agent of the plaintiffs, who had funds in his hands belonging to the plaintiffs, for the purpose of purchasing bills exchange, as a means of remittance to New Orleans.

The Circuit Court gave judgment for the defendant.

The case of the Bank of Augusta was argued by Mr. D. B. Ogden, for the plaintiffs, and by Mr. C. J. Ingersoll, for the defendant. Mr. Ogden also submitted the case of the New Orleans and Carrollton Railroad Company to the Court, on the argument in the case of the Bank of Augusta, &c. The case of the Bank of the United Statew vs. Primrose, was argued by Mr. Sergeant and Mr. Webster for the plaintiff in error, and by Mr. C. J. Ingersoll, and Mr. Vande Gruff, for Joseph B. Earle. A printed argument for W. D. Primrose, was also submitted by Mr. Crawford.

Mr. Ogden, for the Bank of Augusta, contended that the bank had a right to become the purchaser of the bill of exchange on which the suit was brought; and they had a legal right to recover its amount against the defendant, as the endorser of the bill.

The plaintiffs were the owners of a bill or bills of exchange, which they had purchased at Augusta, in Georgia, drawn on persons in Mobile, which were remitted by them to Mobile, and were there paid. The funds thus obtained, were invested in the bill of exchange which is the subject of this suit, for the purpose of a remittance. The question for the determination of this Court is, whether the plaintiff's had authority to make the purchase. The Circuit Court of Alabama decided this to be contrary to the laws of Alabama.

If the decision of the Circuit Court shall be sustained by this Court, a deeper wound will be inflicted on the commercial business of the United States than it has ever sustained. The principal means by which the commercial dealing between the states of the United States and Alabama is conducted, will be at an end; and there will be no longer the facilities of intercourse for the purposes of traffic, by which alone it is prosperous and beneficial. Nor will the effect of such a decision be confined to the state of Alabama. The principles of law which forbid the dealing in exchange by a corporation established under the laws of another state, and by the terms of its charter expressly authorised to purchase bills of exchange, will prevail to the full extent of inhibiting the same purchases in other states; and thus exclude the principal operations of commerce between the states of the Union. In the state of Alabama, such a condition of things will operate most injuriously. The purchases of bills of exchange in that state, are extensively made by the agents of corporations of other states; and thus, by the competition which is produced; the rates of exchange are kept in a due proportion to those of other states. The large productions of cotton in that state, are thus enabled to realize to the planter a proper, and an equal price to that obtained by the planters in the neighbouring states. Should the banks of Alabama and the capitalists of that state have the exclusive right to deal in exchange, the effect of such a monopoly will be felt extensively.

Such operations in exchange as those out of which this controversy has arisen, have been transacted in every state of the Union. Until now, their legality has never been doubted; and in no Court of the United States, or in any state Court, has their validity been before questioned or denied. The Union has existed for more than half a century, the transactions between the states composing it, of the same character with that which is now before the Court, have, for a large portion of that period, been extensive and constant; and they have been universally found to be beneficial. No state, what ever the power of its legislature may be to act upon the matter; a power which it is not intended to admit or deny in this argument; has attempted to interpose a prohibition and forbid such dealing.

The proposition in the Circuit Court, and on which its decision is founded, is that a corporation of one state can do no commercial business, can make no contract, and can do nothing in any other state of...

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