Dec. Term, 1846. The Receivers of the Bank of Circleville v. Renick and others IN BANK. forfeited, if having done every thing on their part, and the Governor failing to do his duty, they should issue bills. This is not so clear; the statute does not say so in express terms. There is room for construction; and it is proper that the matter should be settled by a direct adjudication on the very point. If the charter, once brought into being, has been avoided or annulled, that fact should be made known to the people by a public judicial proceeding, the quo warranto provided by our law, that the violators of the law might not make that violation an instrument of further injustice, and that the innocent and unsuspecting might be put upon their guard. The question of compliance or noncompliance with the requirements of the charter, in putting such bank into operation, cannot be inquired into collaterally, but only on a scire facias or quo warranto, where the State is a party. This I hold to be clear on principle and authority. On principle, it is a matter of no moment to the individual who is the debtor of the bank, or who has taken its property as a trespasser, or has got possession of its funds by fraud, whether, in going into operation, the bank did or did not comply strictly with all the requirements of its charter; there is no natural justice or right in them to set up, as a defence against an action for the injury, any such defect, if it in fact exist. It is a question solely between the sovereign and the corporation, the creator and the creature; and, as the corporation must, if at all, take possession of its franchise and go into its exercise, in the presence of the sovereign who gave it all its faculties and prescribed the conditions of its being, it must be presumed, from his acquiescence in their exercise, without all conditions performed, that those omitted have been waived, and our laws have made most ample provisions for the trial and adjustment of questions such as this. The forty-fourth section of the act of the 23d February, 1816, provides, "that the Supreme Court shall have full power, on a quo warranto, to hear and < determine all questions touching the violation or forfeiture of charters;" which provision, that is, the section containing it, is The Receivers of the Bank of Circleville v. Renick and others. expressly adopted in the first section of the act incorporating IN BANK. this bank. The law, therefore, has made ample provision for this examination and adjudication, on the direct issue at the suit of the State. It would seem, therefore, that the Legislature intended that mode should be adopted; and public convenience and public justice require that it should; for the same law must apply to this as to all other banking institutions. The fact that it has been purchased and taken hold of, by men who chose to use it as an instrument of fraud, cannot change the law with respect to it, at least it cannot be allowed to change it to their advantage. We have had some thirty banks in operation at once in this State, and for a period extending through many years. To all these were certain requirements, certain acts in pais, necessary to be performed before they were allowed to go into operation; but they went into operation, and there is no existing evidence that in all, or in any of these cases, all the prerequisite acts. were performed. Those who organized the banks died, and the stock descended to their children. Persons who knew nothing of its organization, but merely knew that the bank was openly and publicly in operation, under a charter, bought and paid their money for the stock; men who wanted money, borrowed it, and gave their notes for its repayment; officers were chosen for these banks, and took charge of their funds. Now, in this state of things, where millions upon millions are involved in the legality of these institutions, it is ascertained that some requisite of the act incorporating them has not been complied with. The debtors who have borrowed their money determine not to pay; the presidents who have taken hold of the banks seize upon the funds in the vaults, and hand them over to their friends; and they all with one voice answer the promissor to an action on his note, the officers of the bank and their friends, to an action of trespass or assumpsit, for the cash, or to trover, or even to a bill in Chancery for the assets. They answer either to the bank itself, or its assignees, who sue in behalf of its creditors, Dec. Term, 1846. IN BANK. Dec. Term, 1846. The Receivers of the Bank of Circleville v. Renick and others. you cannot sustain your action, for you had not commissioners enough by one who took your subscriptions; you lacked ten dollars of having paid in fifteen per cent. in gold and silver on your capital stock, before you issued your notes; you thought you had enough, but I happen to know that you counted French. crowns at $1.10 when they were worth but $1.07. This is our plea in bar to your recovery, and for me, who am in Chancery, this is my equitable defence. The system of law must be very imperfect which would endure a defence like this; and ours is not chargeable with such imperfection. As I have already said, these questions are all between the sovereign and the corporation only, and that upon a direct issue. No one has a right to raise them collaterally. A corporation, when it brings suit, must, it is true, show that it is a corporation; and in England and New York, and perhaps some of the other States, it must show it upon the general issue pleaded, and where that is the rule, nul tiel corporation is a bad plea, as amounting to the general isstie. But the act of incorporation and user under it, is all the proof necessary to sustain either issue. Bank of St. Charles v. Barnales, 1 Car & Payne, 569; Utica Insurance Company v. Tillman, 1 Wend. 555; Utica Insurance Company v. Badger and others, 3 Wend. 296; see same volume, 301; Bank of Michigan v. Williams, 5 Wend. 478, V. P. 490; Williams v. Bank of Michigan, 7 Wend. 549. scire facias or quo warranto Chester Glass Company v. And proof on the other side of a defect or omission in the steps necessary to carry the charter into effect, does not avail. It must be avoided, if at all, on a issued by order of the sovereign. Dewey, 16 Mass. Rep. 101; Commonwealth v. Union Insurance Company, 5 Mass. Rep. 230; Centre Road Company v. Mc Conoly, 16 Serg. and Rawle, 144; Hughs v. Bank of Somerset, 5 Lit. 45. If it be contended, as I presume it will not, that this charter was void for nonuser, I would answer, that no such defence is set up in the answer, and if it were, it could not prevail. The The Receivers of the Bank of Circleville v. Renick and others. Dec. Term 1846. act of incorporation contemplates a judgment to declare such IN BANK. forfeiture before it is effectual. Section 5, "shall not be adjudged to be forfeited for nonuser, &c." See, also, the mode of adjudication provided by the act of February 23, 1816, section 44, adopted in this charter; and see, to this point, 1 Bl. Com. 485; 2 Kent Com. sec. 33, p. 51; Trevitt v. Taylor, 9 Cr. 51; Dartmouth College v. Woodward, 4 Wheat. 663; Society, &c. v. New Haven, 8 Wheat. 483; Rex v. Armory, 2 Tenn. Rep. 515, 528; 1 Gill and Johns. 1; 2 Blackf. 367; 8 Ohio Rep. 552; Shee v. Bloon, 5 Johns. Ch. Rep. 377. And we contend on our part, that if these principles of law do not enable us to sustain our action, as against third persons wholly unconnected with the corporation, the defendant, Seymour G. Renick, is estopped from denying that it was a corporation. In other words, a court of equity will not suffer him to make such defence against his own solemn and public acts, as President of such bank, and that Felix W. Renick, holding through and under him, in privity with him, is also estopped. And we claim also, that the proceedings in chancery under which the receivers derived title, and the verdict of the jury, in the case involving the very question of corporation or not, is equivalent to a judgment in rem, and concludes the question. S. Brush and N. H. Swayne, for Felix W. Renick, one of the Defendants. The defendant, Felix W. Renick, relies upon two grounds of defence First: That there never was such a corporation in existence as is assumed by the complainants' bill. Second: If there were such a corporation, that it had no right, legal or equitable, to the fund in controversy. First: As to the first proposition The answer makes the issue of nul tiel corporation. The burden of proof rests upon the complainants. IN BANK. Dec. Term, 1846. The Receivers of The Bank of Circleville v. Renick and others. The legal provisions and the facts upon which this question arises, are as follows: On the 14th of January, 1818, the Legislature passed "An act to incorporate the stockholders of the Bank of Circleville ;" 16 Ohio Laws, 70. It provides: "Sec. 2. Be it further enacted, that the capital stock of said bank shall consist of three hundred thousand dollars, (money ' of the United States,) to be divided into six thousand shares, ' of fifty dollars each, and the subscriptions towards constitu'ting said bank shall be opened at Circleville, and at such other 6 places, and at such other time or times as the commissioners may direct, under the superintendence of Henry Nevill, John Ely, John Black, Daniel Ludwig, David Kinnear, Peter Ap'ple, John Burr, Daniel Turney, Jacob Shoemaker, Samuel 'Lybrand, Jonathan Renick and Joseph Hedges, who are hereby constituted and appointed commissioners, and they or a 'majority of them, are hereby authorized and empowered to keep open the said subscriptions until three thousand shares of the aforesaid bank are subscribed for, and until directors ' are duly elected and qualified. "Sec. 3. Be it further enacted, that so soon as three thousand 'shares of said bank are subscribed for and fifteen per centum paid on each share, said commissioners shall immediately give 'four weeks' notice of the time and place of electing directors, in the manner provided for giving notice of the payment of installments by the eighth section of the act to incorporate 'certain banks therein named, and to extend the charters of existing incorporated banks—and the persons who shall then be chosen, shall forthwith commence the operation of said 'bank, so far as may be necessary in the appointment of the other officers of the bank, and to direct such further install'ment or installments to be paid, as the interest and advance'ment of the bank may require; and all payments on shares, previous to said bank going into full operation, shall be made the one-half in gold or silver and the other half in bills of the |