United States Bank v. Dandridge.

from the malpractices of its officers. One of the means employed for this purpose is the bond required from the cashier. Are the directors at liberty to dispense with this requisition? I think they are not. Should a committee of congress, on inspecting the books of the corporation, find that cashiers were acting without bonds, would not such gross negligence, such utter disregard of the positive mandate of the law, furnish serious cause for a scire facias to vacate the charter?

It has been urged that the rule for which the defendants contend, would break in upon all the usages of the bank, invalidate all the notes they have discounted, and destroy their liability for deposits. I do not think so. I do not profess to understand banking operations; but I think the counsel for the defendants has plainly shown, that not a single note is discounted, without evidence, in writing, on the note itself, or on the books of the bank, or on both. It is admitted that the official acts of the officers of the bank are binding, and, of course, written memorandums, made by such officer, in pursuance of orders of the board, whether on the note itself, or in a book, is a corporate act-is written evidence of such order of the board of directors as the writing imports. The counsel for the defendant has, I think, shown from "the rules and regulations for conducting the business of the Bank of the United States," as well as from the practice under those rules, that all transactions of that character are, as they ought to be, in writing. He has shown also, conclusively, as I think, that full provision is made both for general and special deposits; and in my judgment, every difficulty of this description is removed by the 23d rule, which shows that a regular record is, as it ought to be, kept of all the proceedings of the board of directors. So much of that rule as applies to this subject is in these words:

"The proceedings of the board of directors, when conducting *their *112] business as a deliberative body, shall be governed by the following articles: 1st. When the president takes the chair, the members shall take their seats. 2d. The minutes of the preceding meeting shall be read, before the board proceeds to any other business; and no debate shall be admitted, nor question taken at such reading, except as to errors and inaccuracies. The state of the bank shall then be read, and the discounts settled."

The board, then, does act as a deliberative body, and does keep a minute of its proceedings, which are to be read over and corrected. On what subject does the board deliberate, if not on the measures which are to be taken for the security of its debts, and on the sufficiency of the sureties in the bonds given by the officers who have the management of its funds? Most especially, it is bound to deliberate on the bonds to be given by the cashiers of the bank. This is a subject on which the directors are particularly commanded to exercise their judgment, by one of the fundamental articles of the constitution of the corporation. That article requires, that "each cashier or treasurer, before he enters upon the duties of his office, shall be required to give bond, with two or more sureties, to the satisfaction of the directors, in the sum of $50,000, with a condition, &c. Is not the sufficiency of this bond, then, most especially a subject for deliberation? If it be, how is this deliberation to be conducted? The rules prescribe the mode with precision, and go so far as to direct, that "at the request of any two of the board, the names of the members who make and second a motion, shall be entered on the minutes." The bond must be offered, and the question ought to be put

United States Bank v. Dandridge.

and must be put, whether it shall be accepted. The acceptance is necessary to the completion of delivery, and is the only proof which can be given of that fact, unless it be delivered to an attorney, previously appointed by a board to receive it. Acceptance, undoubtedly, includes approbation, but is the deliberate act of the board, and must appear in their minutes. If it must, a copy of those minutes is, in a suit brought by the bank, the only admissible evidence of the fact.

*I think it worthy of remark, that among these rules and regula

tions not one is found, which ordains that a record shall be kept, in [*113

which the proceedings of the directors shall be inserted. They are framed upon the idea, that one must be kept. We find them speaking of the minutes, as if their existence was indispensable, and need not be prescribed. Imitating the charter, in this respect, it was deemed unnecessary to ordain, that a being should write, whose organization gave it not the means of transacting business otherwise than by writing.

The counsel for the plaintiffs has sought to escape the almost insuperable difficulties which must attend any attempt to maintain the proposition, that a corporation aggregate can act without writing, by insisting that the directors are not the corporation, but are to be considered merely as individuals who are its agents. If this proposition can be successfully maintained, it becomes a talisman, by whose magic power the whole fabric which the law has erected respecting corporations, is at once dissolved. examining it, we encounter a difficulty in the commencement. Agents are constituted for special purposes, and the extent of their power is prescribed, in writing, by the corporate body itself. The directors are elected by the stockholders, and manage all their affairs, in virtue of the power conferred by the election. The stockholders impart no authority to them, except by electing them as directors. But we are told, and are told truly, that the authority is given in the charter. The charter authorizes the directors to manage all the business of the corporation. But do they act as individuals, or in a corporate character? If they act as a corporate body, then the whole law applies to them as to other corporate bodies. If they act as individuals, then we have a corporation which never acts in its corporate character, except in the instances of electing its directors, or instructing them. The corporation possesses many important powers, and is, as a corporation, to perform many important acts, scarcely one of which is to be performed in a corporate character. They are all to be performed by agents, acting as individuals, under general powers conferred by the charter.

*It cannot escape notice, that this rule, if it be one, would apply to almost all corporations aggregate, and would abolish the distinction [*114 which has been taken between those which act by an individual, and those which act by an aggregate of persons. The first partakes of the qualities of a sole corporation, the last of a corporation aggregate. This rule would apply to almost every corporation aggregate which exists, or which ever has existed. The exceptions are the very few, in which all the members are active, or in which the corporation acts by a single individual who is its head. All others act by boards, usually described in the charter. If the president and directors of the Bank of the United States act as individuals, then it would seem, that the managers of every other corporations, being in like manner created by charter, and being in like manner empowered by

United States Bank v. Dandridge.

charter to transact all the affairs of the corporation, would likewise act as individuals, and the whole doctrines of the law upon the subject, would find nothing to which they are applicable.

But these doctrines grow out of adjudged cases, and courts have always considered those official agents, whose powers are described in the charter, and who act collectively, as acting in a corporate character. The idea has, I believe, never before been suggested, that their acts were to be treated as the acts of individuals. They do not appear as individual acts; they are not in the name of individuals, but of the corporate body. In all the cases which have come before this court, that of the Bank of Columbia v. Patterson's Administrators, as well as all others, directors are considered as acting in their corporate character. In the cases in England, where the Bank of England has been a party, and in all others, the same view has always been taken of the subject. The president and directors form, by the charter, a select body, in which the general powers of the corporation are placed. This body is, I think, the acting corporation; and, according to the 4th article of the fundamental rules, seven of them, including the president or the director deputed by the president, are necessary to constitute a board. The act of the major part of the board, is the act of the whole, and binds the corporation; but this act must, on general *principles, be done at one *115] and the same time, and at a regular meeting held for the purpose. (Kyd Corp. 309.) Its validity depends on the legal constitution of the board, and on its being the act of the body. These essential requisites must be shown; and to show them, the board must keep a record of its proceedings. Were the by-laws silent on the subject, this would be, as I think, rendered indispensable, by the fact, that it is the act of a corporation. aggregate.

If there must be a record of their proceedings, and even were this necessity not absolute, if the by-laws show that there is one, it follows, that this record, not the oral testimony of the members, or of bystanders, must prove their acts. Their acceptance of any deed, or their assent to any contract, if it be their own act, must appear on this record; if it be by agents, authorized for the purpose, the vote giving the authority must appear in like

manner.

The 6th article of the fundamental rules directs, that "each cashier or treasurer, before he enters upon the duties of his office, shall be required to give bond, with two or more sureties, to the satisfaction of the directors, in a sum not less than $50,000, with a condition," &c. As the bond is to be given, before the cashier enters upon the duties of his office, it must be given, before he can rightfully perform any official act; and it will be admitted, that the sureties to an official bond are responsible only for the official acts of the officer. This bond cannot be given till it is received, for they are different, and equally necessary parts of one and the same act; but if it could, the law specially requires that it shall be "to the satisfaction of the directors." The "satisfaction" must be as to the sufficiency of the sureties, for the amount of the penalty is fixed by law. This is a subject on which the judgment of the directors must be exercised, and it can be exercised only at a regular meeting of a board, legally constituted. This must appear by the record. Any opinion given otherwise, is the opinion of individual members, but is not the corporate opinion of the board-is not a corporate

United States Bank v. Dandridge.

act, binding on the corporation, or of which the corporation can avail itself.

It appears to me, that the bond must be received and approved by the board, before the cashier can regularly perform any official act. This reception and approbation are *required by the law which enables the [*116 corporation to act. They cannot be dispensed with. That they have been performed, must be proved or presumed. If they have been performed, they are upon record, for the very act of performance places them upon record. This record, or an authentic copy of it, must, according to the rules of evidence, be produced, that it may prove itself. May its existence be presumed in this case? The corporation, which claims this presumption, keeps the record, and is now in possession of it, if it exists. No rule of evidence, is more familiar to the profession, than that a paper cannot be presumed, under such circumstances.

I have stated the view which was taken by the circuit court of this case. I have only to add, that the law is now settled otherwise, perhaps, to the advancement of public convenience. I acquiesce, as I ought, in the decision which has been made, though I could not concur in it.

JUDGMENT. This cause came on, &c.: On consideration whereof, it is ordered and adjudged, that there was error in the circuit court in rejecting the evidence offered by the plaintiffs in the first bill of exceptions stated, and not suffering the same to go to the jury in support of the issues joined in the case; and also, that there was error in the said court, in rejecting the evidence offered by the plaintiffs in the second bill of exceptions, and not suffering the same to go to the jury in support of the same issues; this court being of opinion, that the evidence was admissible in favor of the plaintiffs, notwithstanding there was no record of any approval of the bond stated in said bill of exceptions, by the board of directors of the bank aforesaid, and that the plaintiffs were at liberty to prove the fact of such approval by the said board, by presumptive evidence, in the same way and manner as such fact might be proved in the case of private persons not acting as a corporation, or as the agents of a corporation. And it is further ordered and adjudged, that for the error aforesaid, the judgment of the said circuit court be, and hereby is, reversed and annulled, and that the same be remanded to the said circuit court, with directions to award a venire facias de novo.

78

*WILLIAMS V. NORRIS.

Jurisdiction.-Error to state court.

Under the 25th section of the judiciary act of 1789, c. 20, where the construction of any clause in the constitution, or any statute of the United States, is drawn in question, in any suit in a state court, the decision must be against the title or right set up by the party under such clause of the constitution or statute, or this court has no appellate jurisdiction in the case. It is not sufficient, that the construction of the statute was drawn in question, and that the decision was against the title of the party; it must appear that his title depended upon the statute. Where, in such a case, the validity of a statute of any state is drawn in question, upon the ground of its being repugnant to the constitution of the United States, and the decision has been in favor of its validity, it is necessary to the exercise of the appellate jurisdiction of this court, that it should distinctly appear, that the title or right of the party depended upon the statute. The opinion of the court, or the reasons given for its judgment (unless in the case of instruction, to the jury, spread upon the record by a bill of exceptions), form no part of the record within the meaning of the above 25th section. Nor are they made a part of the record, in Tennessee, by the local law of that state, requiring the judges to file their opinions in writing among the papers in the cause.

No orders in the state court, after the removal of the record into this court (not made by way of amendment, but introducing new matter), can be brought into the record here. The cause must be heard and determined upon the record, as it stood when removed.

ERROR to the Supreme Court of Errors and Appeals of the State of Tennessee.

January 11th, 1827. This cause was argued by White and Eaton, for the plaintiff ;(a) and by Benton and Polk, for the defendant. (b)

January 19th. MARSHALL, Ch. J., delivered the opinion of the court.— This is a writ of error to a judgment rendered in the *highest court *118] for the state of Tennessee; consequently, this court can exercise no other jurisdiction in the case than is given by the 25th section of the judiciary act. The counsel for the plaintiff in error contend, 1st. That an act of congress has been drawn into question in the state court, and that the decision has been against that act. 2d. That an act of the legislature of Tennessee, which impairs the obligation of a contract, has been drawn into question, and that the decision has been in favor of the party claiming under that act.

As preliminary to a consideration of these points, it is necessary to inquire, whether some additional papers, which have been brought up by a certiorari, constitute a part of the record. These papers are, the opinion of one of the judges, which is supposed to have been delivered and filed as the opinion of the court that decided the cause; and some proceedings which took place in the same court, after the record had been removed into this court by writ of error.

(a) Miller v. Nicholls, 4 Wheat. 311.

(b) Martin v. Hunter, 1 Wheat. 304; Inglee v. Coolidge, 2 Id. 363; Lanusse v. Barker, 3 Id. 147.

1 Davis v. Packard, 6 Pet. 41; Medbury v. Ohio, 24 How. 413; Rector v. Ashley, 6 Wall. 142. But under the act of 1867, the certified opinion of the court below may be looked into, to determine the question of jurisdiction. Murdock v. Memphis, 20 Wall. 591. If, however, the record show upon its face, that a federal

question was not necessarily involved, and do not show that one was raised, the court will not go outside of it, to the opinion or elsewhere, to ascertain whether one was in fact decided. Moore v. Mississippi, 21 Id. 638; Citizens' Bank v. Board of Liquidation, 98 U. S. 140.