Wyllys Lyman, George Marsh, John Peck, and John Peck, Plaintiffs In Error v. the President, Directors and Company of the Bank of the United States

• Decision Date: 01 December 1851
• Citation: 13 L.Ed. 965,53 U.S. 225,12 How. 225
• Parties: WYLLYS LYMAN, GEORGE P. MARSH, JOHN PECK, AND JOHN H. PECK, PLAINTIFFS IN ERROR, v. THE PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF THE UNITED STATES. 1
• Court: U.S. Supreme Court

53 U.S. 225

12 How. 225

13 L.Ed. 965

WYLLYS LYMAN, GEORGE P. MARSH, JOHN PECK, AND JOHN H.

PECK, PLAINTIFFS IN ERROR,

v. THE PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF

THE UNITED STATES.¹

December Term, 1851

THIS case was brought up, by writ of error, from the Circuit Court of the United States for the District of Vermont.

It was a suit brought by the Bank of the United States, under the following circumstances:

During the existence of the charter granted by Congress to the Bank of the United States, it had established a branch of that institution at Burlington, in the state of Vermont. The Bank, when chartered by Pennsylvania, became the owner of the property and effects of the former corporation, and of course of the property and effects of the branch at Burlington. Being about to close and withdraw that branch, the board in Philadelphia received the following offer:

To the President and Directors of the Bank of the United States.

John Peck and Lyman and Marsh and others, propose to purchase of the Bank of the United States the property of the office at Burlington, Vt., as it was upon the 2d day of March, 1836, upon the following terms, viz.:

Bills discounted, 2d March, 1836, $70,121 01

Bills receivable, same date 2,133 46

---------- $72,254.47

With average of interest.

McIntire & Burdick's debt, $24,128.12

McIntire & Blood's debt, 2,000.00

Blood & Burdick's debt, 1.600.00 At the face.

McIntire & Bean & Rolfe's debt, 3,000.00

Gates & Co.'s debts, 23,795.28

---------- 54,523.40

Suspended debt, 5,000.00

Banking-house and appurtenances, and house and

lot in Vergennes. 10,000.00

$141,777.87

To be paid in four or five annual instalments, with 5 per cent. interest, and such security given as shall be satisfactory.

JOHN PECK, for himself and others.

Philadelphia, 10th March, 1836.

The offer was accepted, and the plaintiffs in error signed four joint and several notes, dated on the 1st of April, 1836, payable to the order of Mr. Jaudon, cashier, at the Union Bank, in the city of New York. Each note was for $35,500 dollars, and they were payable one, two, three, and four years after date. Separate notes were given for the interest payable at intervals of six months, and the small balance remaining being paid in cash.

When the first note was becoming due, Peck & Co. were not prepared to pay it, and requested the bank to discount other paper for them to the amount of $15,000 to place them in funds;

and amongst this other paper was a note by Lyman & Cole for $5000, which was indorsed over to the bank by Peck & Co. The bank having acceded to this proposition, the first note was given up as paid, as was also the second and third when they became due. The note by Lyman & Cole, however, was not paid, and constituted one of the items of this suit.

By reference to the above list of assets, it will be perceived that the 'suspended debt' is valued at $5000. Two of these items were brought forward in the bill of exceptions, and are noticed in the opinion of the court. It is proper, therefore, to give the following explanation of the matter, copied from the brief of Mr. Phelps:

Among the items of the suspended debt sold to the defendants for the sum of $5000, the nominal amount being over $26,000, were two sums standing upon the books of the bank in the list of suspended debts, as due from one Burrows, and from the firm of Truesdell & Co. The debt of Tresdell & Co. had been compromised by the payment of fifty per cent., so that the balance of 50 per cent., which stood upon the books of the bank at the time of the sale to the defendants, was not due. The amount paid by Truesdell & Co. had been deducted from the original debt, so that the sum apparently due was only the remaining half.

The Burrows debt had also been cmpromised, and was in a similar condition, except that the sum to be paid by him under the compromise had not been paid.

The compromise of the debts against Truesdell & Co. was made by the directors of the branch, with the approbation and concurrence of the parent board. At the time when this was done two of the defendants were directors of the branch, and acted in the matter.

The directors of the branch were directed by the parent board to make semi-annual returns, showing the condition of the branch, the suspended debts, &c. Two of these returns, signed by two of the defendants as directors, show the precise condition of these debts. They being marked with the letter D, signifying desperate, and a note being appended, showing that the apparent balances were not due. These transactions took place long before the sale to the defendants. The defendants claim that they should be indemnified for the amount of these apparent debts not really due.

In October, 1849, the bank brought suit against Peck & Co., in the Circuit Court of the United States for the District of Vermont. The declaration contained the usual money counts, an account stated, and also counts for the original consideration of the notes. The defendants pleaded the general issue and statute of

limitations. At the trial the jury found a verdict for the plaintiff at $21,621.47, and costs.

In the course of the trial several exceptions were taken to the admissibility of evidence, and upwards of one hundred pages of printed matter were incorporated into, and made part of, the bill. It is obvious, therefore, that the whole of it cannot be inserted.

To sustain the issue, on the part of the plaintiffs, the counsel for the plaintiffs offered in evidence the testimony of Lloyd Mifflin, John Ramsey, Samuel Jaudon, and Thomas B. Taylor, with the several papers and exhibits thereto attached, and referred to in their testimony, which testimony was taken under a commission issued from this court, and which testimony, papers, and exhibits, are on file in said suit, and are hereby referred to, and incorporated with, and made part of, this bill of exceptions, together with the promissory note, dated April 1, 1836, for thirty-five thousand five hundred dollars, payable to 'Samuel Jaudon, Esq., cashier,' or order, four years from date, at the Union Bank, in the city of New York, signed by the defendants; and the note for five thousand dollars, dated March 25, 1837, signed by Lyman & Cole, payable to defendants, or order, on the first day of June, 1837, at the Union Bank, city of New York, which promissory notes are also annexed to said testimony on file, as aforesaid, and are referred to, and made part of, this bill of exceptions.

To the reading of which testimony, exhibits, and notes, the counsel for the defendants made the following objections:

1. To the reading of the said thirty-five thousand five hundred dollar note, upon the ground that it was not payable to the plaintiffs but to Samuel Jaudon, and not indorsed by said Jaudon.

2. Objected to the 'explanatory memorandum' upon exhibit B, referred to in, and annexed to, the deposition aforesaid of said Mifflin, on the ground that the defendants were not, nor either of them, parties to, nor in any way connected therewith.

3. To the testimony of said Mifflin, under the fifth interrogatory, tending to prove that the consideration of said thirty-five thousand five hundred dollar note moved from the plaintiffs, and the practice of the plaintiffs, in taking notes payable to the cashier; and to the testimony of said Jaudon, under the 7th, 8th, and 9th interrogatories, tending to prove that the plaintiffs advanced the consideration of the said thirty-five thousand five hundred dollar note, shown to said witness Jaudon, and the other notes referred to by him, given by the defendants at the same time, and that it was the property of the plaintiffs, and tending to prove the practice of the plaintiffs in taking notes thus payable; and also to all the evidence tending to prove the same facts, on the ground that the legal effect of the note could not be varied or controlled by parol evidence.

4. To the testimony of said Mifflin, under the 7th interrogatory, on the ground that neither parol evidence nor a copy of the instructions was the best evidence, and that the original should be produced; and objected to the evidence of said Mifflin, under the 8th interrogatory, on the ground that the original paper, sent to the Branch Bank at Burlington, should be produced.

5. The defendants objected to the testimony of said Mifflin, under the 10th interrogatory, tending to prove the signature of Wyllys Lyman to paper or exhibit marked E, on the ground that neither the acts of Lyman, done by him in his official capacity as director of the Branch Bank at Burlington, nor any knowledge derived by him in the performance of his duties as such director, could affect the other defendants, or in any way affect the rights of the defendants in this action; and also claimed that, if admissible, it would be evidence only against Lyman. But the court overruled the objections, and admitted the evidence generally, so as to affect all the defendants.

6. The defendants objected to the evidence of said Ramsey, under the 6th interrogatory on the direct examination, relating to the ability of Silas E. Burrows, on the ground that the solvency or insolvency of said Burrows was immaterial, and also on the ground that the testimony of the witness, as given in his answer, is not legal evidence, tending to prove the inability or insolvency of said Burrows; the witness (as defendants insisted) stating no facts, but inferences merely.

7. The defendants objected to the testimony of Samuel Jaudon, under the third interrogatory, on the ground that the doings of the corporation, (parties to the sale,) could not be proved of parol.

8. The defendants objected to the evidence of said Samuel Jaudon, under the 10th, 11th, 12th, and 13th interrogatories, on the ground that the same is irrelevant and immaterial, and on the ground that the power to negotiate the note or transfer the legal...