Prescott Nat. Bank of Lowell v. Butler
| Decision Date | 04 January 1893 |
| Citation | 32 N.E. 909,157 Mass. 548 |
| Parties | PRESCOTT NAT. BANK OF LOWELL v. BUTLER. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Samuel
Hoar, for plaintiff.
J.N Marshall, M.L. Hamblet, and John C. Burke, for defendant.
The defendant contends that the plaintiff cannot recover--First because it has no title to the note; and, secondly, because the note was made on the Lord's day, in violation of the statute. It is argued that under the statutes of the United States national banks cannot buy or sell promissory notes, and that, inasmuch as the plaintiff obtained the note by purchase, it has no right to hold or collect it. On the question whether a national bank can buy promissory notes in the market as a natural person can, there is a conflict of authority. Its power to do so, if it has any, is conferred by the United States statute of 1864, (chapter 106, § 8,) which authorizes national banks "to discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debt," etc. It has sometimes been held that the right to "discount and negotiate notes," etc goes no further than to authorize the taking of them in return for a loan of money made on the strength of the promises contained in them. Lazear v. Bank, 52 Md. 124; Bank v. Baldwin, 23 Minn. 198; Bank v. Pierson, 24 Minn. 140; Bank v. Baker, 15 Ohio St. 69. By other courts it has been held that the right to "discount and negotiate" includes the right to buy. Smith v. Bank, 26 Ohio St. 141; Pape v. Bank, 20 Kan. 440. See, also, Bank v. Harris, 108 Mass. 514, 516; Bank v. Porter, 125 Mass. 333; Bank v. Savery, 127 Mass. 75, 77. If we assume, in favor of the defendant, that national banks are not authorized, under the law, to go into the market and buy promissory notes from those who are selling them only as a commodity, there are several reasons why this defense cannot prevail.
In the first place, if such a purchase is ultra vires, it is an ordinary contract. It is not made penal, nor expressly forbidden, and the maker or indorser cannot defend on the ground that the bank has obtained no title. The violation of law can be availed of only in proceedings against a national bank, in the interest of the public, to deprive it of its charter. This has been decided by the supreme court of the United States. Bank v. Matthews, 98 U.S. 621, and cases cited; Bank v. Whitney, 103 U.S. 99; Bank v. Hanson, 33 Minn. 40, 21 N.W. 849; Woollen Co. v. Lamb, 143 Mass. 420, 9 N.E. 823.
Secondly, the evidence in this case would well warrant, if not require, a finding by the court that the transaction was a discounting of the note for the defendant, within the meaning of the statute. The note was in the hands of the indorser's agent, who consulted the indorser about the rate of interest before giving the note to the plaintiff. The plaintiff's money was paid to the indorser, less the agent's commission. The transaction would have been no different, in substance, if the defendant, who held the note as indorser, had carried it to the plaintiff's bank, and had there made in person the contract which he made through the agent. If he had done that, the transaction clearly would have been a negotiation of a loan, and a discounting of a promissory note. Lazear v. Bank, 52 Md. 124; Bank v. Baldwin, 23 Minn. 198; Bank v. Pierson, 24 Minn. 140.
Thirdly, it has been held in this commonwealth, in analogy with the above-cited decisions of the supreme court of the United States, but on somewhat different grounds, that, even if a national bank does not get the legal title to a promissory note bought in the market, it may maintain a suit as the holder, and the maker and indorsers cannot be relieved from their contracts to pay the holder the amount promised in the writing. Bank v. Savery, 127 Mass. 75, 77; Bank v. Porter, 125 Mass. 333.
Of the second ground of defense, it may be said that the contract relied on in this suit is the contract between the defendant as indorser, and the plaintiff. That was not made on the Lord's day. The contract between...
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