8 Ohio 257 (Ohio 1838), Bank of Chillicothe v. Swayne

Citation:8 Ohio 257
Opinion Judge:HITCHCOCK, Judge.
Party Name:PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF CHILLICOTHE v. NOAH H. SWAYNE AND WM. MINER, IMPLEADED WITH HIRAM PADDLEFORD AND LYNE STARLING
Attorney:P. B. WILCOX, for defendants, insisted: HENRY STANBERY, for the plaintiffs: T. EWING, for defendants:
Court:Supreme Court of Ohio
 
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8 Ohio 257 (Ohio 1838)

PRESIDENT, DIRECTORS, AND COMPANY OF THE BANK OF CHILLICOTHE

v.

NOAH H. SWAYNE AND WM. MINER, IMPLEADED WITH HIRAM PADDLEFORD AND LYNE STARLING

Supreme Court of Ohio

December, 1838

THIS is an action of assumpsit reserved in the county of Franklin. The declaration contains four counts.

The two first counts are upon a bill of exchange, drawn by the defendants on one Flewelling, residing in the city of New York, for $ 5,000, payable six months after date, at the National Bank in New York, dated March 14, 1837, and protested for non-payment.

The other two counts are the common counts for money had and received, etc.

To this declaration the defendants filed five special pleas in bar, the first of which is in substance as follows, to wit: It is alleged, "that the said Hiram Paddleford, on March 3, 1837, being in want of money, made application to the plaintiffs to borrow of them $ 5,000, upon a note proposed to be executed by the said Hiram Paddleford, Lyne Starling, Noah H. Swayne, and William Miner, which application was taken into

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consideration by the plaintiffs, and afterward, to wit, on the 6th day of March aforesaid, the said plaintiffs, in reply to the said application, gave the said Hiram Paddleford to understand and be informed, that the plaintiffs were not discounting notes, at the then present time, but that money might be obtained from the plaintiffs upon a bill on New York, Philadelphia, or Baltimore, payable six months after date, and drawn by the said Paddleford, Starling, Swayne, and Miner; that thereupon and in pursuance of said suggestion of the said plaintiffs, the said bill in the declaration was signed for the purpose of being presented to the said plaintiffs to be by them discounted, and thereupon afterward, to wit, on said March 14, 1837, the said Hiram Paddleford presented the said bill so signed as aforesaid to the said plaintiffs, to be by them discounted, and thereupon, to wit, on the day and year last aforesaid, at Chillicothe, to wit, at the county aforesaid, it was unlawfully, usuriously, and corruptly agreed by and between the said Hiram Paddleford and the said plaintiffs, that the said plaintiffs should then and there discount the said bill for more than six per cent. per annum, to wit, that the said plaintiffs should then and there discount the said bill and advance the said Hiram Paddleford thereupon the sum of $ 4,725.78 and no more; and the said Noah H. Swayne and William Miner aver, that in pursuance of said usurious, corrupt, and unlawful agreement, the said plaintiffs did, afterward, on the day and year last aforesaid, at Chillicothe, to wit, at the county aforesaid, discount the said bill for more than at the rate of six per cent. per annum, to wit, the said plaintiffs did then and there discount the said bill, and advance to the said Hiram Paddleford thereupon the sum of $ 4,725.78 and no more, and thereupon the said Hiram Paddleford did then and there deliver to the said plaintiffs, and the said plaintiffs did receive and now hold, the said bill for the full amount of the said $ 5,000 specified therein, they, the said plaintiffs, upon the discounting the same as aforesaid, having advanced therefor, as the whole and sole consideration therefor, the said sum of $ 4,725.78 and no more.

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And the said Noah H. Swayne and William Miner further aver, that all the said several sums of money in the said several counts of the said declaration mentioned, are the same sums of money contained and specified in said bill of exchange in the said declaration mentioned and declared upon, and not other or different; and the said bills of exchange in the said declaration mentioned, are one and the same bill of exchange and not other or different. And the said Noah H. Swayne and William Miner further aver, that the discounting of said bill of exchange in manner aforesaid, was and is in violation of the laws of the land and of the articles of the plaintiffs' corporation, and that the said bill in the hands of the said plaintiffs is fraudulent and void in law, and this they are ready to verify," etc.

The second plea is like the first with only this difference, the sum alleged to have been received by Paddleford on the discount of the bill is stated at $ 4,796.67, instead of $ 4,725.78, as in the first plea.

The defense set up in the third, fourth, and fifth pleas is substantially the same as in the first and second, although the facts are somewhat differently set forth.

In reply, the plaintiffs say, they ought not to be barred because they say "that the said bill of exchange in the said declaration mentioned was drawn by the said Hiram Paddleford, etc., for a good and legal consideration, and not in pursuance of, or upon the said unlawful, corrupt, and usurious agreement, or for the purpose in the said plea of the said Noah H. Swayne and William Miner, mentioned in manner and form as the said Noah H. Swayne and William Miner have in their said first plea alleged, and the said president, directors, and company in fact say, that they purchased the said bill of exchange from the said drawers for a good and valuable consideration, to wit, for the sum of $ 4,725.78, and this the said president, directors, and company pray may be inquired of by the country," etc.

A similar replication was filed to the second, third, fourth, and fifth pleas, and an additional replication to the five several pleas, precisely the same in form and substance as the replication to each plea separately.

To these replications the defendants demur specially, assigning the following causes, to wit:

To the first five replications.

1. "Each of said replications attempts to put in issue several and distinct matters, thereby tending to produce a multiplicity of suits upon the record."

2. "Each of said replications tenders an immaterial issue."

3. "Each of said replications is multifarious, and presents a variety of points, but not one single point on which issue can be joined."

4. "Each of said replications introduces new matter, and, therefore, ought to conclude with a verification."

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5. "Neither of said replications set forth the time or place of the purchase of said bill, and for aught that appears, the purchase may have been made since the filing of the plea."

6. "Neither of said replications deny, or confess and avoid the plea which it assumes to answer."

7. "Each of said replications contains contradictory matter."

To the sixth replication:

1. "It tenders an immaterial issue."

2. "It ought to conclude with a verification."

To all the replications:

1. "The plaintiffs have put in two replications to each plea containing distinct matters."

2. "Other causes."

SYLLABUS

Plea, that a bill of exchange was drawn and discounted for a loan made at a greater rate of interest than six per cent., and, for that reason, void. Replication does not traverse the plea, nor allege matters in avoidance, but asserts that the bill was drawn upon a good and valid consideration, and not upon a usurious agreement; and also that the plaintiffs purchased the bill for a good and valuable consideration, with a conclusion to the country. Replication bad, as multifarious, and as concluding to the country.

Where a bank charter declares that it shall not take more than six per cent upon its loans, a contract for a greater rate of interest is totally void.

P. B. WILCOX, for defendants, insisted:

I. The principle which lies at the foundation of the defense is this:

That a contract made by a corporation about any matter prohibited, and made unlawful, by its own charter, is a void contract.

The modern doctrine is, to consider corporations as having such powers as are specifically granted by the act of incorporation, or as are necessary for the purpose of carrying into effect the powers expressly granted, and as not having any other. The Supreme Court of the United States declared this obvious doctrine in 1804, and it has been repeated in the decisions of the state court. No rule of law comes with a more seasonable application, considering how lavishly charter privileges have been granted. As corporations are the mere creatures of the law, established for special purposes, and derive all their powers from the acts creating them, it is perfectly just and proper that they should be obliged strictly to show their authority for the business they assume, and be confined in their operations to the mode and manner, and subject matter prescribed. 2 Kent's Com. 239.

To prevent monopolies, and to confine the action of these powerful bodies strictly within their proper sphere, the acts incorporating companies, passed in this country, almost invariably limit the amount of property they shall hold, or their capital stock, and frequently prescribe in what it shall consist, the purposes for which it shall alone be purchased and held, and the mode in which it shall be applied to effect those purposes. There can be no doubt, that if a corporation be forbidden by its charter to purchase or take lands, a deed made to it would be void, as its capacity

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must be determined from the instrument which gives it existence. Ang. & Ames, 80; 7 Serg. & Rawle, 319.

All privileged associations should be watched with argus eyes. They should be regarded with distrust. It is the duty of courts to keep them within the obunds prescribed by the legislature. They are opposed to the genius of our government, and, if tolerated, should not be permitted to abuse the privileges with which they are intrusted. These considerations apply with peculiar force to incorporated banks. Drawing around them, as they...

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