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Scott et al. v. Metcalf.

range of their jurisdiction, by the effective protection and assistance which they gave to the assignees, by allowing them to use the names of their assignors for the purpose of collecting the debts, &c. 2 Story, Eq. 305. And courts of law, in this respect, but to a more limited extent, adopted the rules of equity. They recognized the rights of these assignees, and gave them every aid not inconsistent with their settled modes of proceeding. Welch v. Mandeville, 1 Wheat. 233. But in all these cases the distinction between the legal title and the equitable right was rigidly observed. Hence in no case at law, was the mere equitable assignee permitted to sue in his own name, but was always compelled to use that of his assignor, in whom, according to settled doctrine, the legal title was held to remain. 1 Wheat. 232, note. And it was upon the ground of this settled distinction, and on that of the trust, which was held to exist on the part of the assignor, that in cases of assignments by deed of money securities, equity assumed jurisdiction ; especially in cases where there was no party in being in whom the legal title existed. Hence, independent of the restriction imposed by the general law, it is obvious, that the principles on which equity assumed jurisdiction in these cases of assignment, and the mode in which they were noticed at law, are in direct conflict with the assumption that an assignment of the money in these notes vested the legal title thereto in Chinowith & Co.

The statute above referred to, in Hutch. Dig. 640, directs that “All bonds, obligations, bills single, promissory notes, and all other writings for the payment of money, or any other things, shall and may be assigned by indorsement, whether the same be made payable to the order or assigns of the obligee or payee, or not.” An assignment under the provisions of this statute, vests the assignee with the legal title to the instrument assigned, as it expressly authorizes him to sue at law in his own name. It enlarged both the rights of holders and assignees, and placed the instruments enumerated in some respects on the same footing with commercial paper. The form in which the assignment should be made is not prescribed ; and perhaps no particular form would be deemed essential; but it cannot be doubted, that

Stone et al. v. Metcalf.

it was the intention of the legislature that the assignment should be made on the instrument, and purport a transfer of the same. The method prescribed by the statute for the transfer of these instruments, is the only mode by which the legal title can be conveyed. Bacon v. Cohea, 12 S. & M. 516. And as a transfer of the money due on a note cannot have a greater effect than an assignment, by deed, of the note itself, this point was settled in the case of the Grand Gulf Bank v. Wood et al., 12 S. & M. 483. In that case the note had been assigned by deed, and it was holden by this court that the assignees took only an equitable interest, as the assignment by deed was equivalent to a transfer by delivery.

Another objection is urged, admitting that the legal title to the notes was not transferred; it is contended, that the plea shows Metcalf to have no interest in, or right of any kind to, the subject matter of the suit; and that it does not appear in any way, that the suit is prosecuted by or for the use of the parties, shown by the record to have the beneficial interest therein, and hence it is insisted that the demurrer should have been overruled.

Perhaps a sufficient answer to this objection may be found in the peculiar circumstances of this case. The assignment was made pending the action, and in the absence of any averment, showing that it was not prosecuted by them or for their use by the assignor, the contrary would be the legal presumption. But the exception appears to arise from a misconception of the state of the pleading. The averment in the plea, that "plaintiff has not now any right, title, claim, or interest, in or to the money due on said notes,” is based on the preceding allegation, that "plaintiff had transferred and assigned away to Chinowith & Co., the money, &c.” The averment stated a conclusion drawn from the premise contained in the allegation, and as it did not allege any additional fact, could not extend the legal effect of the allegation. The record does not show that the makers of the notes ratified the transfer, or in any way, by direct or implied assumpsit, engaged to pay the money to the assignees. The assignees could not, therefore, sue at law by

The State of Mississippi v. The Commercial Bank of Manchester. virtue of the assignment. Tiernan v. Jackson, 5 Peters, 597 ; 5 Wheat. 286. But by the assignment, a trust relation was created between them and their assignor, who, subject to their equitable lien on the contents of the notes, retained the perfect legal right to sue for and collect the money. If Chinowith & Co. were doubtful of the faithful execution of the trust on the part of their assignor, their remedy was by bill in equity, to compel a direct payment by the makers of the notes to them.

Let the judgment be affirmed.

THE STATE OF MISSISSIPPI vs. THE COMMERCIAL BANK OF MAN

CHESTER.

It seems that an assignment by a bank of its choses in action and other prop

erty, to trustees, for the benefit of its creditors, made pending a writ of quo warranto against it, for the purpose of preserving its assets from extinguish

ment, is not a dissolution of a corporation, or a surrender of its franchises. It is the settled doctrine of this court, that a bank may make a general assign

ment of its property and effects, and such assignment, if in other respects

fair, will be sustained. It is a part of the common law of the land, annexed as a tacit condition to the

creation of every private corporation, that it may lose its franchises by a

misuser or nonuser of them. While an assignment by a bank of its property and effects, to trustees for its

creditors is not a misuser of its franchises, yet it may place it out of the power of the bank to comply with the terms and fulfil the purposes,

and perform the conditions upon which its charter was granted, and thus prove a

ground of forfeiture for nonuser. The furnishing of a sound and convertible medium of currency, is the primary

object in the incorporation of banks; the accommodation of those who deal with them, and the benefit of the stockholders are the secondary objects; in regulating, therefore, the management of its monied affairs, a reasonable discretion must, of necessity, be allowed the corporation; and it is therefore difficult to define the boundary between legitimate acts of prudence and those which would be an abuse of its franchises ; each case must rest somewhat on its own circumstances.

The State of Mississippi v. The Commercial Bank of Manchester. While a continued suspension of the principal corporate franchises, and a fail

ure to perform the implied conditions on which the charter of a bank was granted, will amount to a nonuser, and so be ground of forfeiture; yet a mere assignment of the property and effects of a bank nearly out of debt to trustees to pay the debts due, and the residue to divide among the stockholders, made pending a quo warranto with the view of saving the assets, the bank in the meanwhile keeping up its corporate existence by the election of its officers, is not a misuser nor a nonuser of its franchises; yet it seems if, after the decision in its favor of the quo warranto, the trustees make no rea

reassignment to the bank, and the latter omit the exercise of its usual corporate franchises for a continued period, it would amount to a nonuser, and be cause of forfeiture.

On appeal from the circuit court of Yazoo county; Hon. Robert C. Perry, judge.

The state of Mississippi, on the relation of E. A. M. Gray, district attorney, instituted proceedings under the act of 1843, against the Commercial Bank of Manchester. The pleadings are stated in the opinion. The decision in the court below was in favor of the bank, and the state appealed.

R. S. Holt, for appellant.

1. Banking corporations are not to be regarded as created by the state for the advantage or emolument of the corporators, but for the accomplishment, through their instrumentality, of some public object; the advancement of some supposed public interest. 23 Wend. R. 580, 581.

2. The charter of every such institution is a contract between the corporators and the state, by which are granted to them certain peculiar privileges, to be held and enjoyed during a speci. fied term, upon condition that they shall, during that term, as far as practicable, accomplish the purpose, design, or intention of the state, by the use of certain specified means, and the exercise of their corporate powers and functions in the manner prescribed; and the corporators, by a non-compliance in any of these respects, with the terms of their contract, forfeit to the state their franchises as for a condition broken. Ang. & Ames on Corp. 660; 23 Wend. R. 193, 235.

3. The object proposed to be accomplished by the incorporaThe State of Mississippi v. The Commercial Bank of Manchester. tion of this institution, was obviously the advancement, during the prescribed term of its existence, of a supposed public interest, by means of its loans, its discounts, and its notes for circulation. Mr. Holt entered into an elaborate argument, to show that by its assignment it had destroyed the object of its creation, and put it out of its power to accomplish its undertakings; and was, therefore, a virtual surrender of its franchises, and cause of forfeiture of its charter.

4. But it is said that, if the assignment was valid, it must have been lawful, and if lawful, it cannot cause a forfeiture of the franchises.

The fallacy of this argument consists in the assumption, that a forfeiture of corporate franchises must, in every case, result from a violation of some general provision of law, and cannot follow upon a simple violation of the contract between the state and the corporators.

The corporators, in accepting the charter, contracted to observe its provisions, and contracted, in the event of their failure, to give up their franchises. It is the latter part of the contract which the state seeks to enforce, and the legality or illegality of the act complained of, cannot affect the contract or the rights claimed under it.

5. Many authorities are adduced on behalf of the defendant, showing that assignments made by corporations for the benefit of creditors are valid. This is admitted ; but it is nothing to the point. Such an assignment may be valid, and yet, if it left the corporation incapable of accomplishing the object for which it was created, would work a forfeiture in favor of the state.

6. Other authorities are referred to, to prove that a corporation is not dissolved either by a voluntary or involuntary loss of all its property. This is also true. No violation of the charter, however flagrant itself, dissolves a corporation. The corporation can only be dissolved by a judgment of forfeiture, and until such judgment, the corporation is still in existence, though every condition on which it held its franchises may have been broken. No authority, however, can be found to sustain the position, that such a loss of property is not a good cause or ground of forfeit

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