United States Bank v. Dandridge.

this otherwise, it was sanctioned by the concluding act under the corporate seal. The whole of this case, as of the two preceding cases, turns upon the idea, that a writing, in due form, on the part of the corporation, is indispensable to the validity of its contracts.

According to the decisions of the courts of England, then, and of this court, a corporation, unless it be in matters to which the maxim de minimis non curat lex applies, can act or speak, and, of course, contract, only by writing. This principle, which seems to be an essential ingredient of its very being, has been maintained by all the judges who have ever discussed the subject. Upon this principle, and the authority of these cases, I have supposed, that a corporation cannot receive and assent to a deed of any description, unless this assent be expressed regularly in writing. It ought to be entered on the books of the corporation.

The counsel for the plaintiffs in error insist, that the proof offered in the circuit court was sufficient to establish the full execution of the bond; and they support this proposition upon principle, upon convenience, upon usage, and upon the authority of cases decided in the different states of the Union. It is, we are told, a general rule, that the acceptance by a corporation is a fact which may be proved before a jury, and the acceptance of a new charter is mentioned to illustrate the rule. *Without question, accept

ance is a fact, and is to be proved before a jury; but the inquiry is, [*104

by what evidence may it be proved? I have supposed, that it must be proved by testimony which shows that the corporation has acted in the form in which alone it is capable of acting; that it has expressed its acceptance in the mode in which such a being is capable of expressing it. I receive readily the case put, of the acceptance of a new charter, as an apt illustration of the principle we are investigating, and should be surprised, indeed, if a new charter were to be accepted, without a vote of acceptance entered upon the record. The case cited from 1 T. R. 575, does not appear to me to sanction the doctrine it is adduced to support.

We are told, too, that there was never a time when a corporation might not take by a deed poll. But if this be admitted, I cannot perceive its influence on the case. A deed poll is in writing, and there is the same necessity that its acceptance should be evidenced by writing, as if it were an indenture. The general assertion which we find in all the books, that a corporation can take only by deed, that is, as I understand it, that the act of taking must be by deed, applies as well to conveyances by deed poll, as by indenture.

We have been also referred to a time anterior to writing, and are asked how corporations then acquired property? We have no knowledge of such a time. Since Europe was subdued and civilized by the arms and literature

1 In Gen. xiii. is related the purchase by Abraham, of the field of Machpelah, for a burial place; and in verse 20, it is said, the field was made sure to Abraham. But in the apocryphal Book of Jasher, ch. xiv. it is said, that the contract was reduced to writing and testified by four witnesses, who are named. The terms of the contract are given, and that Abraham placed it in his treasures. So, in ch. lvi., it is

stated, that the written contract was produced, on the occasion of the burial of the patriarch Jacob, which was opposed by Esau, who claimed the property. But the claim was insisted on, and it was shown, that the field of Machpelah was specially mentioned, in the sale by Esau to Jacob, of his birthright, which is also stated to have been reduced to writing (ch. xxvii. v. 14), and ratified by a subsequent written agreement

United States Bank v. Dandridge.

of Rome, the science of writing, though rare, has never been entirely lost. So much of it as remained, was found most generally in corporate bodies. If the corporation was not entirely ecclesiastical, which, in early times, was most frequent, yet there can be little reason to doubt their having, among themselves, or being able to command, a scribe. Be this as it may, the earliest information we have on the subject tells us that corporations aggregate could only take or grant by deed, under their corporate seal. Even when land passed from man to man by livery, a corporation could not so grant or take. Livery could not be made by, or to, a corporation aggregate, because they are personal acts, and it is an impersonal being. These acts were to be performed *through the agency of an individual, having a power to perform them, under the corporate seal.

*105]

We are also told, that the title of the bank to the ground purchased for a banking-house, and to all mortgages taken for the security of its debts, will be put in hazard by the principle which I have endeavored to maintain ; that it is probable, not a single conveyance will stand the test by which the defendant in error proposes to try its validity, and that the usage is, to receive and deposit them among the papers of the institution, without taking any notice of them on its records. I can scarcely suppose it possible, that so loose a practice can have prevailed. I can scarcely suppose it possible, that, on points of such vital importance, and of such rare occurrence, the plain requisites of law can have been so entirely disregarded. Deeds of mortgage, as well as of ground for necessary buildings, are conveyances of lands, and if any one legal proposition is laid down, without a single exception, it is this, that a corporation aggregate cannot take lands otherwise than by deed. To me it would appear very incautious, to take such conveyances otherwise than as is prescribed in the books, that is, by appointing an attorney under the corporate seal to receive them; but, however this may be, I can scarcely suppose it possible, that an act, so easily performed, as to enter their assent in their own books, should be habitually neglected. That the current business of the bank should sometimes want the requisite forms, might be excused, but that the same failure should take place in single transactions, which seldom take place, and are yet of great importance, seems to me to be scarcely possible. I should not be inclined to act judicially on the presumption that the fact exists. If it does, the mischief may be corrected by correcting the practice.

The counsel for the plaintiff rely very much on the cases which have been decided in the states of Pennsylvania, New York and Massachusetts. In the case mentioned at the bar, from Pennsylvania, a demurrer was filed to a plea in bar of the action on a cashier's bond, which brought up the very question in consideration before this court. The argument was opened by

the counsel *for the plaintiff, but he stopped in the midst of it, and *106] withdrew his demurrer, without submitting the point to the court. The cases in New York have not, I think, gone further than the Bank of Columbia v. Patterson's Administrators. Those of Massachusetts have, I admit, gone the full length for which the plaintiffs contend, and the point is probably settled in that state. It would be presumptuous in me, to place my

between the parties, ch. xlvii. v. 27-29. The Book of Jasher is certainly a very ancient

work; it is quoted twice in the Old Testament, Joshua x. 13, and 2 Samuel i. 18.

United States Bank v. Dandridge.

understanding of those decisions in opposition to that of professional gentlemen from that state, but to me it seems, that even there the doctrine has not been uniformly maintained. Bigelow's Digest of Massachusetts cases contains this passage: "Aggregate corporations cannot make a parol contract, unless by the intervention of some agent or attorney duly authorized by a corporate vote to contract on their part, because there is no other way in which they can express their assent." He cites 7 Mass. 102, in which Chief Justice PARSONS said, we cannot admit, that a corporation can make a parol contract, unless by the intervention of some agent or attorney duly authorized to contract on their part." In the Essex Turnpike Company v. Collins, 18 Mass. 292, the court said, "aggregate corporations cannot contract without vote, because there is no other way in which they can express their assent.'

In the case of Hayden v. Middlesex Turnpike Corporation, 10 Mass. 397, the work for which the action was brought was performed on the road. The committee appointed to contract for, and superintend it, was frequently present, while it was going on, and directed the workmen. Other directors were also present, and one of them swore, that he supposed the work to be going on by order of the directors. But the contract was not in exact conformity with the written authority under which the committee acted. A verdict taken for the plaintiff, subject to the opinion of the court, was set aside, and the court said, "No individual member can represent the corporation in their aggregate capacity, but in consequence of their consent. The requisite evidence of this, at common law, was a deed under the seal of the corporation. Aggregate corporations, established by statute, are not restricted to that formality. They have power given them to order [*107

their affairs, and to appoint and employ agents, by votes, or in such other manner as the corporation may by their by-laws appoint." Again, "nor can a parol declaration, made to the corporators, at a corporate meeting, by any individual, amount to a contract between such individual and the corporation."

In the Proprietors of the Canal Bridge v. Gordon, 1 Pick. 297, the court decided, that a corporation could be bound, without a vote, by implication from corporate acts. This, however, was in a suit brought against a corporation, and attended with circumstances extremely well calculated to strengthen every presumption against them. The corporation might have passed the vote, though it was not in the power of the plaintiff to produce it, and their acts afforded the strongest probability in favor of the implication that they had passed it. I should not consider this case as conclusive evidence that the same court would have drawn the same inference, from the same circumstances, in a case in which the corporation was plaintiff. But in the case of the Inhabitants of the First Parish in Sutton v. Cole, the corporation was plaintiff, and the validity of an entry into land was one of the points made in the cause. The corporation had appointed two agents for the purpose, but the entry was made by one only. This entry was held to be made, not in pursuance of the authority, but it was also held, that the action brought. by the corporation was a ratification of the entry. This I admit to be a decision expressly in point. But, thinking it a case in opposition to the whole course of decisions in England, as well as in this court, and not supported by decisions in other states, or by a long course of decisions even in the state

United States Bank v. Dandridge.

of Massachusetts, I should not, perhaps, highly respectable as it undoubtedly is, and as I certainly think it, have felt myself warranted in yielding to it, had it even been known to me.

It has been contended, that the act of congress incorporating the bank, does not, in terms, require that it shall keep a record of its proceedings; and from this omission, it has been inferred, that a record is unnecessary. *108] I cannot assent to the correctness of this inference. When a being is created, without the organs of speech, and endowed only with the faculty of communicating its will by writing, we need not look in the laws given by its creator, for a prohibition to speak, or a mandate to write. These are organic laws which it is compelled to observe. If we find, in the act of its creation, an enumeration of duties and powers, which are to be performed and exercised by writing, it is evidence that the creator considered it as certain, that the creature would write, and that the evidence of its conformity to the will of the creator would be found in writing. It is equivalent to a declaration that it shall act by writing.

Let the charter be examined, with this principle in our minds. The 8th section empowers the stockholders to choose directors for the management of their affairs, but does not require that the election shall be evidenced by writing. Is it to be believed, that congress could have intended, that an act, on which all the operations of the corporation depended, which might be controverted in every action it should institute, might rest upon the uncertain, and, perhaps, contradictory recollection of the individuals who were present? The fairness ef an election may be contested; the mode of voting is prescribed by law. Can it be, that congress supposed no provision was made which secured written testimony, by which such contests might be tried? The directors are to elect one of their body as president; is no record to be kept of this election? Can we presume so much carelessness in congress, as to suppose it possible, that matters of such consequence should be left to the loose proof which the memory of individuals might furnish? The act prescribes the notice which shall be given of the time and place of holding the election; and adds, "it shall be lawful for such election to be then and there made." The legality of the election depends on time and place. Did congress mean that these facts should rest on memory? The J0th section empowers the directors for the time being, *to appoint *109] officers, and to allow them a compensation; and to exercise such other powers for the well-governing of the officers of the corporation, as shall be prescribed by its laws. May all these acts be found only in the frail memory of individuals? The 4th rule of the fundamental articles provides, that not less than seven directors, of whom the president, or some person deputed by him, shall be one, shall constitute a board for the transaction of business; but there is no clause in the charter requiring a board. Can it be pretended, that not less than seven directors may make a board, and yet, that the directors may act without being assembled as a board? Congress has not thought it necessary to forbid their acting otherwise than as a board, because the whole law of corporations forbids it. In the event of making unlawful loans, the directors are made personally responsible; but those are exempted who were absent, or who dissented from the resolution or act whereby the same was so contracted or created. No clause in the charter directs that loans shall be created only by writing.

United States Bank v. Dandridge.

The bond of the debtor may be said to be sufficient. Yet this clause is obviously drawn in the idea, that all the proceedings on the subject would necessarily be in writing. The absentees and dissentients are excused. How is this absence or dissent to be proved? Is it to depend on vague and uncertain memory y? The same observations apply to the limitations and restrictions which are found in the 9th and 10th rules of the fundamental articles. The 13th rule declares, that semi annual dividends shall be made, but does not direct that they shall be declared in writing. May the bank so manage its affairs, that no trace of these dividends shall be found on its books? The 16th rule declares, that no stockholder, unless he be a citizen of the United States, shall vote in the choice of directors, but does not direct that written lists shall be taken. May they be dispensed with? Is the question who has voted to depend on recollection solely? The 23d section subjects the books of the corporation to the inspection of a committee of either house of congress. But there is no clause in the charter which directs the [*110 corporation to keep any books. May this be set up as an excuse for not opening books containing their transactions, for the inspection of a committee of congress?

How are we to account for all these strange omissions? Strange and unaccountable they would certainly be, on any other hypothesis, than that the law of its being, required that it should speak and act by writing. Aware of this, congress did not deem it necessary to enjoin upon it, that it should act in the only mode in which its organs enabled it to act, and that it should abstain from what its organs did not enable it to do.

It may be said, that although certain things ought to appear in writing, it is not necessary that all the transactions of a bank should so appear; and the assent of the directors to the bonds given by their cashiers, need not appear. Such grave acts or omissions as may justify the suing out a scire facias, to vacate the charter, ought to be evidenced by their records; but such unimportant acts as taking bonds from their officers, need not appear; these may be inferred. I do not concur in this proposition. I neither admit the distinction which has been alleged, nor do I admit, that the bond of a cashier is to be classed with unimportant transactions. Congress has not prescribed the intrinsic importance which shall entitle any transaction of a bank to a place on its record, but has legislated on the idea that a record of its proceedings will be kept. And if such a distinction could be found, the bonds of officers, entrusted with all the money of the bank, are among the most interesting of its duties. Congress has manifested this opinion, by enacting, 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 for his good behavior, and the faithful performance of his duties to the corporation." Congress, then, considered the bonds to be given by the cashiers as a subject of real importance; and congress was right in this opinion. It requires very little knowledge of the interior of banks, to know that the interests of the stockholders *are committed, [*111 to a very great extent, to these and other officers. It was, and ought to have been, the intention of congress, to secure the government, which took a deep interest in this institution, and to secure individuals, who embarked their fortunes in it, on the faith of government, so far as possible