Duncan (who, I understand, is a very honorable member of the profession of law) may shed some light on the subject, in addition to that furnished by General Jackson. You will discover that the embarrassments of the bank have split the stockholders and directors into two very acrimonious parties; both composed of men heretofore respectable, but on this occasion charging each other, reciprocally, with the most sordid views and the most ruinous policy.

The case, you will observe, was once before the chancellor of the Winchester district, on an injunction obtained by General Jackson's clients; but I have understood that the chancellor has since thrown the subject wholly out of court, on the ground taken in my opinion-that the association was when created, at first, in opposition to the laws of the land, and all their operations, therefore, illegal and void; to enforce which, or even to adjust their controversies among themselves, a court would not lend its aid.

As to the correctness or incorrectness of the opinion which accompanies. this letter, you will be yourself immediately able to judge; because I have given fully and explicitly both the reasons and authorities on which it is founded. I will merely observe, that the case was one of the first impression in Virginia, and it is, therefore, quite uncertain how the court of last resort in that State would settle it; the principles of law seeming to point to one conclusion of a very startling character, while every consideration of convenience in the particular case required another. I incline to think, however, that that court would consider the general convenience arising from an adherence to the settled principles of law, as an object of greater consequence than the particular inconveniences brought upon the parties by themselves, by an open violation of a public law of the land.

The second opinion, of which General Jackson speaks with his usual courtesy, was this: Judgments were represented as having been entered in the name of Webster as plaintiff, but for the benefit of the stockholders: thus it appeared upon the record that Webster was merely the nominal plaintiff, and that the real plaintiffs in interest were the stockholders. On this short statement of the case, I was asked who had the right to direct and control the issuing of the executions? and I answered, the real plaintiffs in interest. In the courts in which I have practised in Virginia, it is no unusual thing to see a man the holder and real owner of a bond or promissory note, which had been originally made payable to another, and which had been passed to him by simple transfer, without assignment. In such cases, the suits are necessarily brought in the name of the obligee. or payee, for the use and benefit of the real owner of the debt: so that the nominal plaintiff is one person, and the real plaintiff in interest is another. In such cases, it was never doubted that the real plaintiff in interest, and not the nominal plaintiff, had the whole and sole control and authority over the executions; and I consider the case of Webster and the stockholders of the Saline Bank to be essentially the same in principle.

As it may throw additional light on the affairs of this bank, I enclose you, also, a copy of the bill for injunction, and the answer, which were before the chancellor; and request that they, together with Mr. Duncan's letter, may be returned when you shall have satisfied yourself of their WM. WIRT.

contents.

To the SECRETARY OF THE TREASURY.

[The following is the opinion enclosed with the foregoing.]

RICHMOND, August 25, 1817.

DEAR SIR: My reply to yours of the 17th ultimo was suspended until the answer in chancery to the bill filed by Adams should arrive. The answer came to hand only a mail or two ago; since which time I have been so incessantly engaged, that it has not been till now that I could take up the case of the Saline Bank.

The case is a new one, and surrounded with considerable difficulty, which necessarily diminishes the confidence I feel in my own opinions. Such as they are, however, you shall have them without reserve.

Before I proceed to answer your questions specifically, it may clear the way to take a view of the several acts of Assembly, and the principles of law on which those answers must rest.

The operation of the act of the 24th of February, 1816, "more effectually to prevent the circulation of notes emitted by unchartered banks," having been suspended as to the Saline Bank by the act of the last session, I shall first consider the case as standing clear of these acts, and depending on pre-existing laws.

On the 25th January, 1805, was passed "An act to amend the act to prevent the circulation of private bank notes ;"" (2d vol. of the Rev. Code, page 79.) By this it is enacted that it "shall not be lawful for any person to offer in payment any note or bill, whether payable to bearer or not, which shall be emitted by any banking company not having a charter;" and by the 2d section, it is enacted "that offenders against the true intent and meaning of this act shall incur all the pains and penalties of the act entitled 'An act to prevent the circulation of private bank-notes."" The penalties prescribed by the law thus referred to, are, the forfeiture of ten times the value of the sum mentioned in the note; the liability to be bound to their good behavior; and the forfeiture of the recognizance by a second offence; (see 1st Rev. Code, page 16.) It is true, these acts contain no positive prohibition of unchartered banking companies; but their enactment is equivalent to a positive prohibition. For we are told by Lord Holt (Carthew, 252) " that every contract made for or about any mat ter or thing which is prohibited and made unlawful by any statute, is a void contract, though the statute itself does not mention that it shall be so, but only inflicts a penalty on the offender; because a penalty implies a prohibition, though there are no prohibiting words in a statute." So also, it is a settled principle of law, that all contracts, the consideration whereof, although not against the letter, is against the policy of the stat ute, are illegal; and that courts will not lend their aid to enforce such con tracts. It is on this principle that all the cases of stock-jobbing contracts against the 7th Geo. II, chap. 8, turn. (See particularly the cases of Steer vs. Lashley, 6, T. R. 61; and Brown vs. Turner, 7 T. R. 630; and 1 Esp N. P., 91, where the principle is expressly advanced and supported by authority.) By the statute 6 Geo. I, c. 18, § 12, it is enacted" that al policies of insurance on ships at sea, made by any corporation, (other tha the two corporations therein mentioned,) or by persons acting in partner ship, shall be void." Two men form a partnership to insure contrary this act one of them receives all the premiums, and the other sues fo his share. He cannot recover; and the reason given is, "because th plaintiff's claim arose out of a transaction which was illegal,' and there

fore the court would not give it effect." (Booth vs. Hodgson, 6. T. R., 405.) So, if one of such partners pay the whole of such losses, he cannot recover from his partner his share of the losses so paid. (Mitchell vs. Cockburne, 2 H. B., 379, and Aubert vs. Maze, 2 Bos. and Pul., 371.) So where one of such partners had been compelled to pay the whole of such loss, and the other partner had paid his share into the hands of a broker, it was holden that that moiety could not be recovered from the broker by the partner who had paid the whole loss. (Sullivan vs. Greaves, Park. Ins. 8.) The principles thus established are these:

1. That a court will never lend its aid to enforce a contract founded in a breach of the law, nor founded in a breach even of the policy of a law. 2. That an act of Assembly annexing a penalty to any transaction whatever, is equivalent to a positive prohibition of that transaction; renders it illegal; and invalidates every contract growing out of it, or, in the language of Lord Holt, "for or about it.".

On these principles, I consider the Saline Company as an illegal association under the act of 1805; and their banking transactions as so many illegal contracts, which a court cannot properly lend its aid to enforce.

In Pennsylvania this has been expressly decided as to the bank-notes of unchartered banks: that is, that no action can be maintained to recover the amount of such notes. The cases were those of Anthony's executors vs. Coulon, and Mitchell vs. Smith, cited by Chief Justice Tilghman in the case of Spangler vs. the Commonwealth. (3 Binney's Reports, 536.) I now proceed to answer your questions specifically, under the act of 1805; and I shall state them in your own words.

1. "Can the Saline Bank (being unchartered) sustain suits?"

Answer. I think not: certainly not as the Saline Bank; for that is a name unknown to the law. And, for the reasons above stated, I do not think that the individuals who compose the company could maintain a suit on their banking contracts, or on any assumpsit, express or implied, growing out of any banking transaction; all such contracts, promises, and undertakings, whether verbal or written, being (to use Lord Kenyon's language) "founded in a breach of the law."

2. "Can a stockholder be sued for a debt due to the bank before a dissolution of the partnership?"

Answer. For the reason just given, I think not; nor after the dissolu

tion neither.

3. "Is it not usurious to take $10 50 as interest for the forbearance of $1,000 for sixty days?"

Answer. Certainly it is, in all individuals and companies not expressly authorized so to do by law; which is clearly the case of all unchartered banks.

4. "The notes given to the bank by its debtors are mere single bills, payable to John Webster sixty days after date, not stating that the debt is to the use of the bank or his agency. Can the interest of the bank, the purposes for which it was given, or the relation between the debtor, (he being a stockholder,) be pleaded to an action brought on that note?""

Answer. All these circumstances may be pleaded. Illegality of consideration may be pleaded even to a bond which is fair upon its face. (1 Esp. N. P., 223.)

5. "The notes emitted by the Saline Bank are made payable to A, accepted by the cashier, and endorsed by A, or the person to whom they

are made payable. If the Saline Bank should become insolvent, or refuse to redeem its notes, will not the person so endorsing its notes become liable for the note so endorsed?"

Answer. I think not; for the whole transaction is illegal, notoriously so; because the notes were notoriously the notes of an unchartered bank; and every one being presumed to know the law, the person who receives such a note is legally apprized of the guilt and invalidity of the paper, and so

takes it with notice.

6. "Are the stockholders individually liable for the notes issued?" Answer. I think that they are not liable, either individually or collectively, for the reason so often repeated: that both the notes issued by the bank, and the discount notes given to it, are contracts founded in a breach of the law, and which, therefore, a court will not lend its aid to enforce. This is my opinion of the operation of the act of 1805. Do the late acts (those of the 24th February and 15th November, 1816) produce any change in the operation of the pre-existing laws? I think not; for the latter act merely suspends the operation of that of February; the suspension is expressly limited to that of February; so that it does not touch, by way either of suspension or repeal, any former law. Between the 15th November, 1816, and the 31st August, 1817, (the period of suspension,) the act of February is a dead letter as to the Saline Bank; but during this period the pre-existing laws remain in full operation, and six days hence the act of February also will be in full operation.

If it should be said that the act of November is an implied agreement on the part of the Legislature that the operations of the bank should go on to the 31st of this month, I answer:-1. That, if the argument be correct, it gives legitimacy to the operations of the bank only between the 16th November, 1816, and the 31st August, 1817; for the previous contracts (I mean those previous to the 16th November) being illegal by virtue of the laws then in force, could not be rendered legal even by the subsequent actual repeal of all the former laws. (1 Comyn on Contracts, pp. 38, 39, on the authority of 1 H Blackstone's Reports, p. 65.)

7. You ask the best and most speedy mode of divesting John Webster of his agency over the affairs of the bank.

Answer. Before this answer reaches you, neither John Webster nor the stockholders can have any further legal agency with the affairs of the bank, for, six days hence, the act of February, 1816, will resume its operation; and any act performed by any member, officer, or agent of the association, after the 31st instant, will be a misdmeanor punishable by fine, and produce a forfeiture of the bank capital.

Blended with this inquiry as to Mr. Webster, I perceive there is another question by you.

8. "No dividends have been declared for the last twelve or eighteen months; yet the business is thought to be productive. Where a judgment has been obtained by the bank against a stockholder, for a debt due by such stockholder, can he not enjoin such judgment until an account is rendered, and apply the amount of his dividends and stock, or both, as credits to the extinguishment of the said debt?"

Answer. If the principle which reigns throughout this opinion be correct, the case put can never occur; because no judgment can ever be obtained against a stockholder, the contract on which he is sued being founded in a breach of the law. If there has been such a judgment, and

the true nature of this case appears upon the record, I think the judgment may be reversed by appeal; if not, I think the injunction will be until the whole affairs of the bank are wound up.

9. "How are the affairs of the bank to be concluded?" that is, as I understand you, on what principles are they to be settled?

Ansier. We have seen that after the 31st day of this month the operations of the bank cannot be continued without misdemeanor and forfeiture: there will then remain for adjustment its floating paper, the notes due to it, and the capital of the bank. I will consider them separately.

1. As to the floating paper, it will fall dead in the hands which may chance to hold it on the 31st of August, without the legal right either to circulate or to recover it. An exception may, perhaps, be made in favor of the notes emitted since the 16th November last, under countenance of the law of that date.

2. The notes due to the bank will share the same fate, perhaps with the same exception.

3. As to the banking capital, I believe, on the authority of the cases cited on the first page, that it could not before the court of King's Bench be recovered out of the hands of John Webster; but, from the side-wind authority given to this bank by the act of November last, and from the interference of the chancellor with the directorship of the bank, I presume that a court of equity would interfere so far as to distribute the capital among the subscribers; but, in taking the account, it surely could not, without the most palpable violation of the principle last above cited from Comyn and H. Blackstone, look to any engagements anterior to the 16th November last: if it should, the controversy would become a scramble beyond the pale of the law, as to the issue of which any other man is just as well qualified to guess as a lawyer. A debtor to the bank, for example, whose own illegal note was about to be enforced against him, would probably (in violation of the acts of 1805 and February, 1816) collect as much of the dead and illegal paper of the bank as he could, and claim the right of setting it off against his own illegal note; and certainly one would be just as legal as the other. There is only one hypothesis on which it is possible to conceive that this course can be tolerated; and that is, by considering the act of the 16th November, 1816, as operating retrospectively, and giving an implied sanction to all the past transactions of the bank. I do not believe that the Legislature intended this; it was an awkward plaster, awkwardly applied to a desperate case, without taking time to weigh very nicely the legal consequences of the act. I have already assigned my reasons for the opinion that this retrospective effect cannot be given to the act of November; but if it can, then all the answers which I have given to your inquiries are wrong: the bank becomes a legal bank from its first inception, and all its acts perfectly legitimate and obligatory down to the 31st of this month; at which time it must stop, and wind up its affairs, like any other bank at the expiration of its charter. It is even possible that our courts, in their lenity, and to avoid the very serious and extensive inconveniences of my opinion, (however correct it may be in point of law,) may be disposed to give this retroactive operation to the act of last November. Indeed, there are but two courses which can clear the case of inextricable confusion: either to regard the bank as an illegal association, and all its acts void; or as a legal association, and all its acts valid. The former, however unpalatable it may be, is: