First Nat. Bank of Rochester v. Pierson

• Decision Date: 21 September 1877
• Citation: 24 Minn. 140
• Parties: FIRST NATIONAL BANK OF ROCHESTER, <I>vs.</I> FREDERICK M. PIERSON.
• Court: Minnesota Supreme Court

Page 140

24 Minn. 140

FIRST NATIONAL BANK OF ROCHESTER, vs. FREDERICK M. PIERSON.

Supreme Court of Minnesota.

September 21, 1877.

Appeal by plaintiff from a judgment of the district court for Olmsted county, in an action tried by Mitchell, J., without a jury, upon a promissory note made by defendant, and indorsed by one John Butler.

Jones & Gove, for appellant.

Chas. C. Willson, for respondent.

CORNELL, J.

It is expressly found as a fact by the district court, before whom this cause was tried without a jury, "that the transaction under which the plaintiff claimed to have acquired the note in question was a purchase, and not a discount, or lending of money on the credit of it;" and we have no hesitation in saying that, upon the evidence, we fully concur with the court that such was undoubtedly the real nature of the transaction as intended by the parties thereto. As a conclusion of law from this finding the court held "that the plaintiff, a national bank corporation, had no authority to purchase or traffic in promissory notes as choses in action, and did not in law acquire, by the supposed purchase, any title to the note in question, and cannot recover upon it in this action."

Upon the fact, as thus found, it will be seen that the only question presented is whether a national bank, created and organized under the act of congress "to provide a national currency," etc., is authorized to deal or traffic in promissory notes as a species of personal property, or to acquire any title to such paper by a purchase made admittedly not in the way of discount, or by lending money on the credit of it.

In the case of the Farmers' & Mechanics' Bank v. Baldwin, 23 Minn. 198, it was expressly held that no power of this character is conferred by a law of this state, which authorizes state banks, organized under its provisions, "to carry on the business of banking by discounting bills, notes, and other evidences of debt, by receiving deposits, by buying and selling gold and silver bullion, foreign coin, and foreign and inland bills of exchange, by loaning money on real and personal securities, and by exercising such incidental powers as may be necessary to carry on such business," and that a purchase of such paper, made not in the way of discount, was ultra vires, as outside the legitimate scope and purposes of such institutions.

Under the congressional enactment the authority which is given is "to exercise all such incidental powers as shall be necessary to carry on the business of banking, by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt, by receiving deposits, by buying and selling exchange, coin and bullion, by loaning money on personal security, and by obtaining, issuing and circulating notes according to the provisions of said title." U. S. Rev....