People ex rel. Attorney-General v. President, Directors and Company of Bank of Pontiac

Citation12 Mich. 527
CourtSupreme Court of Michigan
Decision Date11 October 1864
PartiesThe People on the relation of the Attorney-General v. The President, Directors and Company of the Bank of Pontiac

Submitted July 14, 1864 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Information in the nature of a quo warranto.

The attorney-general filed his information against the defendants, charging them with usurping banking franchises. The defendants filed their plea thereto, claiming to be exercising such franchises by virtue of a charter granted by the territorial council of the territory of Michigan, on March 26th, 1835, under which they organized April 23d, 1835. To this plea the attorney-general interposed three replications, the second and third of which only were considered by the court. They are as follows:

"And the said attorney-general further saith, that the said people ought not to be barred, etc., because he says that after the passage of the said act of incorporation in the plea of the said the president, directors and company of the bank of Pontiac mentioned, and after the said the president, etc., had entered upon the business of banking, to wit: on the first day of May, 1840, large amounts of the bills, notes and evidences of debt of the said the president, etc., had been put into circulation by the said the president, etc., and then were in circulation; and that while the said bills, notes and evidences of debt were in circulation, to wit, on the day and year last aforesaid, the said the president, etc., by the fraud, neglect or mismanagement of them or of some or all of their officers or agents, became wholly insolvent and unable to redeem the said bills, notes and evidences of debt so in circulation, in specie or other lawful money of the United States; wherefore, the said the president, etc., to wit, on the day last aforesaid, discontinued, ceased and closed their banking operations, and from that time afterwards, to wit, until the first day of February, 1864, neglected to resume their banking operations; and this he, the said attorney-general, is ready to verify," etc.

"And the said attorney-general further says, that the said people ought not to be barred, etc., because he says, that after the passage of the said act of incorporation, in the said plea mentioned, and after the said the president, directors and company of the bank of Pontiac had entered upon the business of banking, to wit, on the first day of May, 1839, the said the president, etc., received from sundry persons large sums of money on deposit, and that afterwards, to wit, on the first day of May, 1840, and while the said sums of money still remained on deposit with them, they, the said the president, etc., by the fraud, neglect or mismanagement of them, or of some or all their officers or agents, became wholly insolvent and unable to pay the said sums of money so deposited, in lawful money of the United States, wherefore the said the president, etc., to wit, on the day last aforesaid, discontinued, ceased and closed their banking operations, and from that time afterwards, to wit, until the first day of February, 1864, remained wholly insolvent, and neglected to resume their banking operations; and this he, the said attorney-general, is ready to verify," etc.

The defendants rejoined as follows:

"And the said defendants, the said president, directors and company of the bank of Pontiac, as to the said plea of the said Albert Williams, attorney-general, secondly above pleaded in reply to the aforesaid plea of them the said defendants, protesting that the said replication and the matters therein contained are not sufficient in law to convict them the said defendants, of the premises in the said information above charged upon them, nor to remove them from the liberties, privileges and franchises aforesaid, and that they need not nor are they bound by the law of the land to answer thereto, yet for a rejoinder in this behalf, the said defendants say that they, the said president, directors and company of the bank of Pontiac, afterwards, to wit, on the second day of February, 1864, and before the filing of the information in this behalf, and at Pontiac aforesaid, became and were and ever since have been, and still are, wholly solvent and able to redeem in the lawful money of the United States, their bills, notes and evidences of debt, and that they did then and there resume, and have since continued their banking operations: and this they, the said defendants, are ready to verify," etc.

"And the said defendants, the said president, directors and company of the bank of Pontiac, as to the said plea of the said Albert Williams, attorney-general of the state of Michigan, by him thirdly above pleaded, in reply to the said plea of the said defendants, protesting that the said replication and the matters therein contained are not sufficient in law to convict them, the said defendants, of the premises in the said information above charged, nor to remove them from the liberties, privileges and franchises aforesaid, and that they need not nor are they bound by the law of the land to answer thereto, yet for a rejoinder in this behalf, the said defendants say that they, the said president, directors and company of the bank of Pontiac, afterwards, to wit, on the second day of February, 1864, at Pontiac aforesaid, and before the filing of the information in this behalf, became and were and still are wholly solvent, and able to pay all sums of money on deposit received by them and remaining with them, and that they did then and there resume their banking operations, and have ever since exercised and still do exercise them, and that they are able and ready to pay all their indebtedness on demand; and this they the said defendants, are ready to verify," etc.

The attorney-general demurred to these rejoinders.

A. Williams, Attorney-General, and T. M. Cooley, for the people:

The question involved in the case is whether, where a bank is chartered for a period of thirty years, and after being five years in operation, it then becomes insolvent, and unable to pay its circulating notes, and thereupon suspends its operations until but a single year of its chartered life remains, it may then, after having for nearly five-sixths of its corporate existence totally failed in the object of its creation, excuse its corporate non-feasances and misfeasances by simply showing that it has now, at the eleventh hour become able to pay its debts, and again commenced issuing its bills?

That the charter of a corporation implies and requires that it shall perform the business for which it was instituted, and that a substantial suspension of the same after the commencement is a violation of the charter, is too well settled for question: Matter of Jackson Marine & Fire Ins. Co., 4 Sandf. Ch., 559; Ward v. Sea Ins. Co., 7 Paige 294; State v. Bank of South Carolina, 1 Speers 433; State v. Commercial Bank, 10 Ohio 539. See also, Lumpkin v. Jones, 1 Kelly 27; State v. Real Estate Bank, 5 Pike 596; Commonwealth v. Commercial Bank, 28 Penn. 383; Attorney-General v. Bank of Michigan, Har. Ch., 315; Cases collected in A. & A. on Corp., § 774, notes.

Indeed the doctrine of these authorities is fully admitted by the pleadings, and the defense relied upon is, the resumption of business before information filed. Our position is, that where a misuser of their franchises has once been committed by a corporation, or a breach of the conditions enjoined upon them as conditions of their creation and continuance, sufficient to forfeit their charter, mere subsequent good behavior in such respects will not legally atone for such a cause of forfeiture: People v. Fishkill & Beekman Plank Road Co., 27 Barb. 458; People v. Hillsdale & Chatham Turnpike Co., 23 Wend. 254.

The case before the court is hardly a case of subsequent good conduct. There is here only an attempt to resume after twenty-four years' suspension. The state had good reason to suppose, from the long inaction, that the corporation had designed a surrender of their charter.

Near the time of its termination, however, the authorities hear of an intention to resume.

The putting out a large circulation as the charter is about to expire is hardly consistent with honest intentions. The state, therefore, takes proceedings to insist upon the forfeiture which has occurred. But, before these proceedings can be actually commenced, the corporators succeed in throwing the doors of their office open to the public. At the very most, this case only amounts to an offer to return to good conduct.

But the state, under the circumstances, declines to accept it. The state has not acquiesced in the corporation returning to its business, and consequently has waived no right to insist upon the forfeiture. It has taken action immediately on the corporation evincing a design to resume.

But we claim that, by a general provision of statute, the charter in question is shown to be forfeited, by a total suspension of business for one year, and continued insolvency during that period: Comp. Laws, § 4854.

The only question that can arise on this point is, whether this provision can apply to the corporation in question, which was chartered before the statute was passed. But applying it to prior charters takes away no vested rights, violates no contract, and inflicts no punishment. It simply fixes a period beyond which a continued misuser or non-user should be fatal to the corporate existence. A corporation has no right whatever to suspend the performance of its corporate duties. That it will do so is not usually within legislative contemplation when charters are granted. The right to suspend is certainly no part of the...

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9 cases
  • State Ex Inf. Jones v. Light And Development Company of St. Louis
    • United States
    • United States State Supreme Court of Missouri
    • 21 Diciembre 1912
    ...122 Ill. 376; State ex rel. v. Sharp, 27 Minn. 38; Abbott on Mun. Corp., Sec. 666; People v. Turnpike Co., 23 Wendell, 254; People v. Bank, 12 Mich. 527; People v. McClellan, 130 N.Y.S. 146; People v. Comrs., 123 Ill.App. 604. (8) Assuming that it was possible for the administrative officer......
  • Abercrombie v. United Light & Power Co.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • 27 Marzo 1934
    ...before amounting to dissolution, is dependent upon a judicial proceeding. See section 15333 of the Compiled Laws of 1929; People v. Bank of Pontiac, 12 Mich. 527; Heap v. Heap Manufacturing Co., 97 Mich. 147, 56 N. W. 329. See, also, Jacobs v. E. Bement's Sons, 161 Mich. 416, 126 N. W. Turn......
  • State v. Light & Development Co. of St. Louis
    • United States
    • United States State Supreme Court of Missouri
    • 10 Diciembre 1912
    ...depend upon a peculiar statute which deprives them of any force as precedents here. People v. Turnpike Co., 23 Wend. (N. Y.) 254; People v. Bank, 12 Mich. 527. Here the cause for forfeiture has not ceased. The nonuser has continued. This franchise was and is in complete disuse. It had been ......
  • State v. Dilbeck
    • United States
    • Court of Appeals of Texas
    • 20 Julio 1927
    ...commission or omission, if it be careful to stop before the Attorney General can be informed and institute a prosecution?'" People v. Bank of Pontiac, 12 Mich. 527. As to the second counter proposition, the state might estop itself from exacting forfeiture by permitting the corporation to f......
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