Joseph Mandeville and Others, Appellants v. Romulus Riggs, Appellee

• Decision Date: 01 January 1829
• Citation: 27 U.S. 482,2 Pet. 482,7 L.Ed. 493
• Parties: JOSEPH MANDEVILLE AND OTHERS, APPELLANTS v. ROMULUS RIGGS, APPELLEE
• Court: U.S. Supreme Court

27 U.S. 482

2 Pet. 482

7 L.Ed. 493

JOSEPH MANDEVILLE AND OTHERS, APPELLANTS v. ROMULUS RIGGS, APPELLEE.

January Term, 1829

THIS was an appeal from the decree of the circuit court of the United States for the county of Alexandria, in the district of Columbia.

In that court in July 1818, a bill was filed by the appellee against certain individuals named in the subpoena, charging them with having entered into a certain association or copartnership, called 'the Merchants' Bank of Alexandria.' That the partnership, for a considerable time, issued notes and bills, and in other respects prosecuted their trading or business as a bank, until about the month of May 1816, at which time they became so embarrassed as entirely to put a stop to their proceedings. The bill then alleges, that sundry notes or bills of various denominations and amounts, issued and sent into circulation by the bank during its operations, amounting in the whole to $20.000, regularly came into the possession of the complainant, and that no part of them has been paid. The bill proceeds to present other faets and proceedings upon which the complainant claimed relief, and concludes with a demand for general relief.

The process was served on twenty-two of the stockholders and defendants. the whole number being sixty-one. An alias subpoena having issued, the marshal returned, as to the others, 'not found; non-residents in the county of Alexandria.' On the 13th of August 1818, a pluries subpoena was issued, on which the marshal returned, 'executed on John M'Pherson; the other defendants not found.'

In November 1818, the bill was taken for confessed, as to those defendants on whom process had been served, and who had not answered; and continued as to the others.

At May rules, 1820, and at November term, 1820, the suit was abated as to such of the deceased defendants upon whom the process was executed; and no proceedings were instituted to bring in their legal representatives. The answers of some of the defendants who were served with process having been filed, depositions taken, reports of the auditor made, and the arguments of counsel heard, the court went on to decree the payment of certain sums to the complainant by the parties thus before the court; apportioning the same according to the time they became stockholders in the bank, and the periods of issuing the notes held by the complainant. The bill was dismissed as to the other defendants who did not answer; and also as to all those who were either not served with process to appear in the cause, or who were served with process, and not charged by any evidence on the part of the complainant.

The defendants against whom the decree was rendered, prayed an appeal to this Court, which was allowed on their giving bond and security, &c. Joseph Mandeville alone, of all the defendants, gave bond to prosecute the appeal.

It is not considered necessary to state in this report any of the points presented by counsel, upon which no opinion was expressed by the Court; and therefore those proceedings in the case, and matters set forth in the bill, answers, and evidence, which are not connected with, or required to exhibit the only question decided by the Court, and the arguments of the counsel upon them, are omitted.

The case was argued upon all the questions presented by the record, by Mr Jones and Mr E. J. Lee for the appellant; and by Mr Wirt and Mr Coxe for the appellee. The only points upon which the Court gave an opinion were, 1. The dismission of the bill as to the absent defendants who were not served with process. 2. The omission to make the legal representatives of those defendants who had died after they were served with process, parties to the proceedings. And 3. The regularity of the appeal to this Court, Mandeville only having given bond.

Mr Justice STORY delivered the opinion of the Court.

This is an appeal from a decree rendered in the circuit court of the district of Columbia, sitting in Alexandria, in a suit in chancery, in which the appellants were original defendants. The appellants are stockholders in an unincorporated association, which was formed in 1815, for the purpose of carrying on the business of banking, under the name of the Merchants' Bank of Alexandria; the nature and extent of which association is evidenced by certain articles of agreement, which were at the time published in the newspapers in the district, and are set forth in the case. The first article provides, that the capital stock may consist of one million of dollars, divided into shares of one hundred dollars each, which were to be payable by calls, provided for therein. In the other articles provision is made for the management of the business of the bank by directors, and for the issuing of bank notes, &c. to be signed by the president and countersigned by the cashier of the bank. The 15th article declares the object of the stockholders to be, that the joint stock of the company 'shall alone be responsible for the debts and engagements of this company; and that no person who may deal with the company, &c. shall on any pretence whatsoever, have recourse against the separate property of any present or future member of this company, or against their persons, farther than may be necessary to secure the faithful application of the funds thereof to the purposes to which, by these presents, they are liable. But all persons accepting any bond, bill or note, &c. of the company, &c. thereby give credit to the said joint stock or property of said company, and thereby respectively disavow having recourse, on any pretence whatever, to the persons, or separate property of any present or future member of this company, except as above mentioned.'

The whole stock of one million of dollars was subscribed, and calls to an amount of about one hundred and eighty three thousand dollars were paid in, with money or by stock notes discounted for that purpose. The bank went into operation, and circulated its notes to a large amount; and finally, after about a year, the bank failed, leaving its notes to an amount, as it is said, of about ninety thousand dollars in circulation and unpaid; and having assigned all its property to certain assignees, (who were not parties to the bill) for the payment of certain preferred debts, and then for the benefit of the creditors generally. These assignees have now no property in their hands for distribution. The original plaintiff is the holder of the bank notes of the bank to the amount of $20,000 and upwards, which remain unpaid. The form of the notes issued by the bank was as follows, 'Capital, one million of dollars. The Merchants' Bank of Alexandria promises to pay to C. M'Knight or order, on demand, _____ dollars.' These notes were signed by the president and countersigned by James S. Scott, who was cashier, and indorsed by C. M'Knight, in blank, without consideration; and solely to enable the notes to circulate as currency, as notes payable to the bearer.

The bill seeks payment out of the separate property of the stockholders, to the amount of $20,000, the notes so held by the plaintiff. It states the articles of copartnership, and charges that the notes were issued by the bank, and that it prosecuted business until May 1816, at which time its affairs, either by mismanagement or by a fraudulent issue of paper beyond its known means, became embarrassed and stopped payment. But it contains no direct charge of fraud or fraudulent misapplication of the funds, by the directors or stockholders in distinct terms. It states the assignment of the property of the bank after the failure; and charges the preferences therein provided for to be fraudulent; but if not fraudulent, then that the trust fund is insufficient to pay the creditors of the bank, without resort to the separate property of the...