Lewis v. Jeffries
| Decision Date | 04 March 1878 |
| Parties | Lewis <I>versus</I> Jeffries, Assignee of Bank of Brandywine. Lewis's Appeal. |
| Court | Pennsylvania Supreme Court |
Before AGNEW, C. J., SHARSWOOD, MERCUR, GORDON, PAXSON and TRUNKEY, JJ. WOODWARD, J., absent
Appeal from the Court of Common Pleas, No. 3, of Philadelphia county: Of January Term 1876, No. 69. In equity.
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Edward S. Dixon and John G. Johnson, for appellants.—The debates of the constitutional convention show clearly that the increase of indebtedness contemplated was one that could not be made except by the allowance of the legislature; one not within the warrant of the charter. It was corporate indebtedness that was meant, such as involved a pledge of the franchises and required express legislative sanction. There is no intention disclosed to prevent corporations from incurring such obligations as are incidental to their existence and authorized by their charters. The section was not designed to prevent the creation of debts within the limit fixed by the charter, but forbid their expansion beyond the limit: Green's Brice's "Ultra Vires" 66; Philadelphia and Sunbury Railroad Co. v. Lewis, 9 Casey 37. The construction contended for would make it impossible for corporations to enter into any obligation by which a pecuniary obligation was incurred. The inevitable result would be that every corporation would stop business, for every act done by it incurs a pecuniary liability.
How are you to determine what is ordinary and extraordinary? The power to create this mortgage was a charter provision, and upon what theory can the exercise of the power be deemed extraordinary? Further, we contend that the section was not intended to apply to corporations in existence at the time of the adoption of the constitution: Hays v. Commonwealth, 1 Norris 518; Ahl v. Rhoads, 3 Id. 319.
George Tucker Bispham and Wayne Mac Veagh, for appellee.— If we assent to the argument of the appellant there is no power in the legislature to direct that the trustees of trust property when they deal with it shall consult with the owners. It certainly retains control over corporations so long as it does not interfere with charter rights, and in 1857 the power to alter and amend charter privileges was resumed in so far as it did not do injustice to the corporators. But our contention here is not for the change of any charter rights, but simply for the power to control and regulate, and to declare that the owners must be consulted before an increase of indebtedness can be incurred.
They would clearly be within the powers of the bank. Indebtedness within the meaning of the constitution is indebtedness of a permanent character, and not that incurred in the ordinary conduct of business. Receiving deposits is undoubtedly such ordinary business.
[MERCUR, J. — Suppose instead of a mortgage the bank should give a certificate of deposit.]
All that is necessary to conduct the current business can be done, but there can be no contraction of...
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