The State vs. The Bank of South Carolina

Harper, Chancellor.

Certainly I cannot suppose it necessary seriously to argue that a charter of incorporation may be forfeited, if the corporation fails to accomplish the purposes for which it was created; a principle recognized and affirmed by every one of the numerous decisions and authorities in which the subject has been treated; which has not been questioned for more than a century; and which is asserted by the judgment which is now under consideration ; that, according to the authorities quoted in argument, “franchises may be forfeited by breach of the trusts upon which they were granted, and perversion of the end of their grant or institution;” “that a corporation may be forfeited, if the trust upon which it was created be broken, and the institution perverted;” “that a corporation may be dissolved by misuser or abuser; for, as all franchises flow from the bounty of the crown, so there is a tacit or implied condition annexed to such grants, which, if broken, forfeits the whole franchise;” “ that a corporation may be dissolved by forfeiture of its charter, through negligence, or abuse of its franchises; in which case, the law judges that the body politic has broken the condition upon which it was incorporated, and that the incorporation is void ;” “ and that suffering one act to be done, which destroys the end and object for which the corporation was instituted, must be regarded as equivalent to a direct surrender.”

Then what are the purposes for which banks are created ! There is no doubt but that, according to the authority quoted — “ the power to issue notes, make discounts, and receive deposits, would follow from the mere grant of a charter of incorporation as a bank. These constitute the ordinary banking powers, and are incidental to every grant of a bank charter, unless expressly excluded.” 2 Cowen, 711 ; 15 Johns. 393. That the - corporation is to exercise these functions, is included in the meaning of the word bank, as universally understood in this country. Such charter would equally import that, at least generally, the bank should pay its notes and deposits in gold or silver when demanded; and all this would be as perfectly understood by every individual of ordinary intelligence, as if the law had declared in the most explicit terms, “ that it shall be the duty of such bank to lend money ; redeem its notes, when demanded, in gold and silver; receive deposits, and in like manner repay them when demanded.” No one has conceived of a bank which was not to make discounts; ■which was not to issue its notes — or if we suppose this left to its discretion and sense of interest, as being the main source of its profits — which, if issued, was not to redeem them when demanded; which was not to receive deposits, or receiving them, not to repay them on demand.

But, indeed, the charter of 1832, under which the defendants claim, after granting them the franchise of being a corporation for twenty-one years, does, by reference to the former charter, and the charters of other banks, and in connexion with the Act of 1816, in fact, confer upon the Bank of South-Carolina, as alleged in the sciere facias, the powers, “for and during the said term, to issue promissory notes and bills of credit in the nature of a circulating medium, not being of a lower denomination than five dollars, and payable on demand, when due, in gold and silver, legal current coin of the said State; to receive and hold moneys on deposit; to make loans of money, and discount promissory notes at a rate of interest not exceeding six per centum per annum; to deal and trade in bills of exchange, <fec.” Certainly it can make no difference that the form of the Act is that of a grant of powers. The grant expresses the purposes for which they were created, and it is by the exercise of these powers, that they must fulfil the purposes of their creation. It is no less binding on them, than if such were declared to be their duties. Then, if they are bound to exercise these functions, according to the authorities, these are implied to be the conditions of their continu ed existence. If there were such express conditions in the charter, no one would doubt but that by accepting the charter, they entered into a contract for the performance of those conditions. It can make no difference, that, according to unquestioned authority, they are implied by law. There is no hardship in this, for they are as perfectly understood as if they were expressed.

I agree with the Attorney General, that until the cases of Terrett vs. Taylor, and Dartmouth College vs. Woodward, the distinction of public and private corporations, as understood for the purposes of these decisions, had not been generally recognized by the English cases. The general distinction of every corporation, by the English law, is that of civil, and eleemosynary. 1 Bl. Com. 270. And when Lord Holt, in Philips vs. Bury, says that there are two sorts of corporations, one for public government, the other for the administration of private charity — that public corporations are not subject to a founder, but to the general law; but that those for private charity are subject to the exclusive control of the founder, or visitor, who represents him — he indirectly refers to the same distinction that Biackstone has done. Yet in the Attorney General vs. Pierce, 2 Atk. 87, it is said that it is the extensiveness of the objects which constitutes a public charity; and that when the objects are to be selected by trustees, this makes it a public charity. The distinction laid down in Terrett vs. Taylor, and Dartmouth College vs. Woodward, has been recognized and followed, probably, in every State of the Union; no part of the law is more familiar, and perhaps those decisions are not now to be questioned.

But when the question is, whether the Legislature has power to modify or repeal a charter, undoubtedly we are to inquire whether it is, or is not, a contract. And as, undoubtedly, this depends on the result of an inquiry whether it is or is not founded on a consideration, it is hardly necessary to say, that without á consideration, there can be no contract. The decisions in the cases I have referred to, determine that in the instance of the civil corporations enumerated, cities, villages, (fee., the mere exercise of the functions or privileges conferred, can be no consideration for the grant of those functions Ur privileges. These charters, therefore, are not contracts.

Undoubtedly there may be civil corporations without contract. Take the instance of the President and Directors of the Bank of the State, the capital of which is exclusively owned by the State. They, certainly, are merely the agents of the State for the management of its funds, and the State may dispose of its funds and discharge its agents whenever it thinks proper. So of the Trustees of the South-Carolina College, exclusively endowed and supported by the State. The Commissioners of the Roads and the Commissioners of the Poor, in the several districts, are corporations. Yet, evidently; they are the mere agents of the Legislature for the purposes of government. Their creation is not the grant of a franchise, but the imposition of a public duty. Many similar instances might be enumerated.

But when on the faith of a charter an individual endows a college, a church, or a hospital, he pays- a money consideration for the franchises conferred, and it would be against faith that these should be resumed at pleasure. It is immaterial whether a consideration be of benefit to one party, or of detriment or expense to the other. So in the instances of charters to a turnpike, rail-road, or bridge company, the members pay their money on the faith that they shall have the benefit of the exclusive privileges conferred during the stipulated time. So of a manufacturing company. When the charter of a ferry is granted, there is an implied undertaking on the part of the grantee, perfectly well understood, that he will provide the means of transportation, will transport passengers with their goods, and will be, to a certain extent, an insurer of the goods transported. These stipulations for the public service and benefit, on his part, form the consideration which renders the grant of the franchise a contract on the other part. It is a continuing contract, and if he should fail to any material extent in performing his part of it, this would authorize the other party to put an end to it, by a proceeding similar to the present.

Now, the present defendants claim to be.exempted from the ordinary control of the Legislature, to modify or revoke their charter at its pleasure, ou no other ground than that their charter is a contract. But if they are not bound to-the performance of the functions and duties, for the public benefit, before specified, there is absolutely no consideration whatever for the grant to them, and their franchises may be resumed at pleasure. So the defendants set up a contract by which only one party is bound. But if there is any thing to which they are bound, I suppose it will be conceded that it is to redeem their notes and pay their deposits, when demanded, in gold and silver, at least, as I have said, in general. If there is any thing which would defeat the purposes of their institution, and prove injurious to the public, it would be the unnecessary, general, and habitual refusal so to redeem. It is agreed on all hands, that a charter may be forfeited, by non-user. But can we conceive a forfeiture for failing to do that which the corporation was under no obligation to do ? Certainly, there must be some refusal to redeem in specie, which would be cause of forfeiture. If, for no cause assigned, a bank should suspend specie payments for years, until its notes had depreciated fifty per cent, or more, (which has often occurred in the United States,) or if, after putting a large quantity of its notes into circulation, it should declare its intention to redeem none of them during its corporate term; and should act accordingly, could any one doubt, but that this was a defeating of the purpose of its creation?

I have said that in general ahank is bound to pay in specie, and that a general refusal to do so, is a cause of forfeiture. This implies that there may be particular refusals, which are not so; and I have no doubt but that such is the case. If one of its debtors should present a large amount of its notes, it might refuse to pay them, and claim to set off its own demand against them. So if it should refuse to pay a note suspected of being counterfeit, or should capriciously refuse to pay several of its notes. This would need no justification, but under the general issue pleaded, it would appear that this was no general refusal to redeem, defeating the purposes of its institution, and within the meaning of the law.

A bank is not said to refuse payment because it does not pay at five o’clock in the afternoon, or on Sundays, or holi days. So, if in a Catholic country it were usual to suspend business during Lent, a banker would not be said to refuse payment, who should shut up his banking-house during that season. The thing must be judged of according to the habits of the country and the exigency of circumstances. Thus, in the instances supposed in argument, of a hostile invasion compelling the officers to remove with the funds and effects of the bank, or of the sickness of officers, or the burning of the banking-house, compelling them to suspend business for a time; nay, even, perhaps, in a case of a sudden run, if they should close their doors, for a short time, or of necessity refuse to pay, till they could collect their resources, it might be said that these were not refusals to pay within the meaning of the law; there was no general or wilful refusal.

But in the instances last referred to, there is supposed a total suspension of all the business of the bank, which indicates an important difference from the case before us. If after the retirement of the enemy, or the recovery of the officers, after a reasonable time for procuring another house, or of collecting their resources, had elapsed, the banks still continued the suspension of their business, they might be proceeded against for non user; although, perhaps, aresumption before proceedings instituted, might be held to cure the default. But when refusing to pay specie they continue to transact all other business, it cannot be said that they are guilty of non-user; though they enjoy all, and more than all, the legitimate advantages of their contract, without being subject to its burdens or performing its duties. In such case, there is no refusal to pay on demand, for no demand can be made. The ferryman may forfeit his charter by non-user, if he fails to perform his part of the contract. If he should refuse to transport one or several passengers, on account of high water, or capriciously, that could not be termed a non-user, though he might be liable to the individual injured. But if he should give public notice of his intention to suspend the transportation of any passengers, and should accordingly refuse to do so for nine months, he could hardly defend himself in a court, by showing that there was an excessive emigration, injurious to the State, and that he acted from the nraise worthy motive of checking it. In this case, the defendants, according to the pleadings, did refuse to pay any of their notes or deposits in gold or silver for the space of nine months. They did this in pursuance of a resolution, deliberately adopted and published to the world; and apart from the pleadings, their notes must have of course depreciated in some degree, as compared with gold and silver, which the laws have made the measure of value. If this be not at least a, prima facie refusal to pay on demand, within the meaning of the law, defeating the purposes of the bank’s institution, and requiring to be justified or excused, it is plain there can be no such thing. It is general, and toilful. No other assignable limit can be fixed, which would not equally include the cases before supposed, of a suspension for years, until notes should have depreciated half their value, or a general refusal to pay during the corporate existence.

But it might be said that such extremity of abuse would be evidence of fraud. Indeed -it has been the principal argument throughout, that to induce a forfeiture there must be a fraudulent abuse, or such gross negligence as shall be evidence of fraud ; that there must be some malfeasance, or corrupt motive. Actions are either lawful, or unlawful. Of unlawful acts, some are fraudulent, and there are others which are not so regarded. I know of no intermediate class of actions, of equivocal generation, which are characterized as acts of malfeasance, or (if that be regarded as any thing else than fraudulent,) mala fide, or marked by a corrupt purpose. f course, I do not allude to acts of violence or crime, which may be called acts of malfeasance.

I would, in the first place, observe, that there might be instances of the extreme abuses which I have supposed, in which it would be impossible to establish the actual or moral fraud — and the law knows no other — nay, in which it would not exist. There is not, in reference to this subject, any artificial rule — as in the case of a person indebted, who afterwards proves insolvent, making a conveyance of his property — by which the fraudulent motive is to be inferred from certain appearances. You must establish the actual fraudulent motive. But I can well conceive, that without the gross neglect which would be evidence of such motive, there might be a very long and unnecessary suspension and great depreciation; the directors thinking all the time that they were rendering their country good service. A gentleman of the greatest probity and intelligence was formerly at the head of one of our banking institutions, who is known to have inclined to the opinion that an irredeemable paper currency formed the very best circulating medium. If he had induced his directors, in accordance with his views, to declare their notes perpetually irredeemable, it would have been impossible to establish the actual fraudulent motive; and mere especially as, in the particular circumstances, no personal advantage could have been gained, and there would have been no corrupt motive of private gain.

But for the argument which we have heard, I should hardly have thought is necessary to say that fraud is not predicable of a corporation at all. It may, however, be capable of acting loilfully. The law supposes, at least prima facie, every person capable of acting at all, to intend what he does, and the obvious and necessary consequences of his act. Without this there could be no execution of any law. As in the instance quoted in argument, of a public officer exacting more than his lawful fees, under color of his office; undoubtedly this would be prima facie extortion. If there were any thing, however, equivocal in the terms of the law fixing his fees, which might have misled him ; or if, upon the error’s being pointed out, it were promptly corrected, this might serve to show that it was the effect of mistake or inadvertence, and not wilful. If a corporation be incapable of willing, it is incapable of making any contract, for every contract depends on the assent of the will. Then, if ■ an action is charged to be done, it is charged to be wilfully done, and if the act be in itself unlawful, it is charged to be unlawfully done. If this be a contract at all — and on this the defendants must rely, to entitle themselves to any protection of the court — it must, as I have said, be mutually binding. In every case of a continuing contract, the failure of one party to perform any material stipulation on his part, authorizes the other party to put an end to it. The object of the scire facias is to allege such breach, and require the party to show cause why the contract should not be declared at an end; as the quo warranto, on the supposition that, by the breach, it is cle facto at an end, seeks to restrain the party froth going on with it. Such breach is charged by the declaration in the present case, and I know of no authority or reason to require an addition to the phraseology of any expletives, such as “ wilfully” and “ unlawfully.” And I may observe, that if judgment should be against the defendants, there would be no forfeiture, in any other sense than as an agent or overseer might be said to forfeit his contract, by failing to perform his part of it.

But you cannot attribute to a corporation any act to which motive is requisite to give character. It is a legal person — an abstraction of the law — to which you cannot attribute any moral disposition whatever. It can commit neither crime nor tort — though its agents or members, as individuals, may. A corporation answers without oath, and the reason assigned is, that it cannot be prosecuted for perjury. In the case of the city of London, it was asked, how would you prosecute a corporation for high treason— would you hang up the common seal ¶ And it might have been added — if, upon conviction, you wrnuld punish it in the persons of its members, would you hang up the guilty and the innocent corporators together 1 — those who had resisted the treason, as well as those who had concurred in it 1 If the corporation, by vote of a majority, should command treason or murder, under the common seal, certainly this would be no corporate act; it would be the act of the individuals who concurred in it, and as individuals they would be punishable. If a majch’ity should command a trespass, would you charge this abstraction with having-committed the act with force and arms? If by the vote of such majority, a libel should be published under the common seal, would you charge the corporation with having published it maliciously, exempting the guilty individuals who directed it from their personal responsibility 1 So, if the majority should command an act of deceit, to the injury of individuals, would you, by an action against the corporation, anda recovery out of the corporate funds, inflict penal damages, not only on the guilty individuals of the majority, who commanded it, but the innocent minority, who may have done every thing in their power to resist and prevent it; the former being exempted from all personal responsibility? It is charged in the present case, that the president and directors of the bank resolved to suspend, and did suspend, specie payments. But the president and directors are the agents and servants of the stockholders, and it is the notorious rule of law, that the principal is not responsible for the tortious acts of his servant, committed in the course of his employment. But it cannot be necessary to pursue this subject further. Notwithstanding the extensive research which has taken place, no authority or dictum has been found, in any elementary book, or decided case; from Bracton to the latest of the reporters of our States, in which the proposition contended for has been affirmed or suggested. In .the case cited from Indiana, though abundant and gross fraud was established, it is no where said that this is necessary to work a forfeiture. Yet I have no doubt but that acts fraudulent in themselves, may be a cause of forfeiture; not that fraud is attributable to the corporation, but that the act in itself is a violation of the terms of their charter, a breach of their contract. The fraud, if any, is to be visited upon the individuals who committed it.

If the suspension of specie payments in question be,prima facie, a breach of the terms of defendants’ charter, it remains to inquire if it has been justified or excused. This has been attempted by the fifth plea. That plea I understand to be, in substance, that at the time in question, there was an extraordinary and embarrassed condition of the commercial affairs of the country; other banks having suspended, there was created an extraordinary, and irregular, demand for specie, for foreign exportation, and otherwise, so that it became impracticable to continue the payment of it without great injury to the State and suffering to individuals; that the safety of the State required the suspension; that they were solvent, but suspended payments with a view to the public safety and advantage.

And is this the sort of investigation on which a Court is called upon to enter ? On both sides of the argument, there was urged in the strongest terms, the danger of entering into theories of trade or political economy; their uncertainty, and the contradictory views of those who advance them. On one side, it is thought the best course, in cases of such commercial embarrassment, to leave the evil to work out its own remedy ; that by this course, if the present suffering be severe, a sound and healthy state of things will be sooner restored, and permanent prosperity more effectually established. On the other side, it is thought that there may be measures of relief and mitigation, which, while they alleviate the present evil, may lead gradually, but not less effectually, to the re-establishment of a better state of things. In such inquiries, we could only be guided by the speculations of financiers, commercial men, and political economists; who hardly come within the class of professional men, of whom it is said, cuique in sua arte credendum. Are Judges to become the partizans of these and their theories; abandoning the sobriety and certainty which have hitherto been the characteristics of legal proceedings 1 Are we to determine when the public good or safety requires a prohibition of the exportation of specie ? Have we a dispensing power, to protect banks in the refusal to pay their creditors, in order that they may be able to-indulge their debtors 1 Have courts the power to pass relief laws? These things may appertain to legislative powers ; but if courts should assume them, it would be quite as bold and unwarrantable an usurpation, as has ever been attributed to Legislatures, and might justly subject them to more, perhaps, than the censure of public opinion.

But let us examine more closely some of the details of this plea; which, I suppose, is drawn with as much ability as could be brought to the task. After stating the suspension of banks in various cities of the Union, (and there might be some uncertainty in the inquiry how large a portion of the banks of the country must suspend, before the effects afterwards spoken of can be brought about,) the plea adds, “ by reason whereof, an extraordinary scarcity and appreciation of gold and silver coin took place.” Now, in a general sense, every thing which is the subject of commercial exchange may be said to appreciate, or depreciate, as its value changes relatively to other things. But as the constitution of the United States has made gold and silver the measure of value ; as whatever you buy, or sell, must be paid for in this medium, if required; it is loose and inaccurate to speak of it as having appreciated, or depreciated, in reference to other commodities. It is with reference to this, I suppose, that it is alleged in a subsequent part of the plea, that the notes of the bank were not depreciated. Gold and silver had appreciated: for the plea states that the bank had suspended — that is to say, that its notes were not convertible into gold and silver at the pleasure of the holders — that is to say, that one could not be obtained in exchange for the other — that is to say, that one had depreciated relatively to the other. The plea is contradictory. The plea proceeds, “ whereby the payment of the notes of the Bank of South Carolina, and of the debts due and owing by the said bank for deposits, in gold and silver, became impossible.” The word impossible certainly is not used in the ordinary acceptation. It is not alleged, that all the gold and silver in the vaults of the bank had been paid out, and if any remained there, certainly there was no physical impossibility of paying it. It is stated that the bank was, and continued solvent. Taking the whole plea together, it evidently means that the continued payment of specie was impossible, without producing the injurious effects spoken of in reference to the suspension of 1839.

With respect to that suspension, after .stating the previous suspension of other banks, it is added, — “ that in consequence thereof, the demands for gold and silver in payment of bank notes, and deposits in bank notes, became, and were, altogether extraordinary and irregular.” That the demand for specie will be irregular, is inevitable from the fluctuations of human affairs, and in general, banks, as well as individuals, are bound to be prepared for such fluctuations. It would be rather a difficult and dangerous discretion, to determine when the demand was so extraordinary, as to render suspension necessary. I may observe, that if the case were before a jury, it might be difficult to establish such necessity, as there were various other banks, in the same city, and at the same time, which did not suspend. The plea goes on, “having no reference to the quantity of paper in circulation, or unto the credit or solvency of the banks on which such demands were made, but only to the drain of specie for foreign markets, and for the traffic in gold and silver, carried on by persons trafficking in the precious metals.” As I have said, can it be supposed that courts are to judge of, and remedy, the evils arising from the drain of specie for foreign markets, or the trafficking of individuals in the precious metals ? After asserting the solvency of the bank, the plea proceeds, “ but by reason of the confusion of commercial affairs, and the extraordinary demands for coin, the said bank was not able to pay its dues and liabilities, in gold and silver coin, without making oppressive and ruinous exactions on its own debtors.” I say nothing of going into a legal investigation of the confusion of commercial affairs, and the extraordinary demand for coin. The charge against the bank is of having violated its contract of incorporation. The answer is, that we have done so with a good motive, and for a benevolent and patriotic purpose; we have refused to pay our debts, that we might not press injuriously upon our debtors. It is evidently not a plea of legal justification or of legal excuse, but of moral or political excuse. If a breach of contract has been committed, it shews causes why the breach should be waived; if a forfeiture has been incurred, why the forfeiture should be remitted. It is a political plea, and such an one as I hope will never again be offered to a court.

I do not say that it may not be a very good moral, or political, excuse. With that, as a Judge, I can have nothing to do. It has, however, been cheerfully admitted, through the whole course of the proceeding, that the conduct of those having the government of the bank, has been actuated by the most praiseworthy and public spirited motives, and that, from the character of the individuals concerned, it is impossible to attribute to them any other motives. It is for the Legislature to judge of the financial of commercial condition of the country, and provide the means of relieving its embarrassments. It is for the Legislature, also, if a violation of the charier has been committed, to determine whether proceedings shall be instituted to vacate it. I do not say that exigencies may not exist, in which the public safety may require such suspension. Far be it from me to judge or determine of any such matter. But if such a state of things should actually exist, it is to be supposed that upon application to the Legislature, it will authorize the refusal to pay in gold or silver ; or if the exigency should suddenly and unexpectedly arise, so that it would be impracticable to obtain the previous authority of the Legislature, that it would subsequently sanction the act, or forbear to enforce the forfeiture. It would, be unbecoming in this court to suppose, of a co-ordinate branch of the government, that such an application would not be entertained with all due justice and consideration. And I would most seriously impress, if I could, upon every friend of law, order,, and limited government, that nothing can be more likely to provoke the exercise of irregular and arbitrary authority, than to deny, or obstruct, that which is unquestionably just and constitutional. Such exercise of authority might be more likely in relation to the present subject, as it is too plain to be argued, that if the suspension now in question does not amount to a violation of the charter, there is absolutely no limit whatever to such right of suspension, but the pleasure of the banks themselves. If the judgment should be, that banks are not at all bound to redeem their notes in gold or silver; or what would amount to the same thing, that it is at their discretion whether they will redeem them or not; can any one fail.to perceive the continual temptation, of the strongest interest, to abuse their functions, and the enormous evils which may result to society from such abuse 1 Is it better, safer, more for the interest and security of society, that these interested parties should be the judges of the exigency, of the Legislature of the State? The latter, in a technical sense, is a party to the contract, but it has no interest beyond the public advantage. I think it ought not to be said, that in directing this proceeding, the Legislature has in any degree prejudged, or expressed an opinion in relation to the case. There is no other authority to direct such proceeding, and it is impossible that it should in any case direct it, without thus far expressing the opinion, that there are grounds for inquiry. That it offered an alternative, by which even the inquiry might be avoided, certainly cannot make it any more an expression of opinion.

There are various topics which have been urged with much zeal in the progress of the cause, which I should not think it necessary to touch upon, even summarily, but from respect to the sources from which they w’ere-derived. Such is the argument drawn from the provision of the charter of the bank, that the bank shall not contract debts to more than three times the amount of its capital. If this be an authority to issue to that extent, then the fact that the bank had not made issues or contracted debts beyond that extent, would have been a justification, and should have been pleaded. But no one has contended that this amounts to a justification. If the bank had contracted debts to three times the amount of its capital, and loaned out its specie, so as to insure its own inability to redeem its notes and deposits on demand, could this have been a justification? If not an authority to issue to this extent, it amounts to nothing as an argument. The bank was bound to conduct its affairs prudently, so as to be able to meet the demands upon it. It would be as reasonable, if there had been no such provision, to argue that the bank was authorized to issue to any amount they might think proper, and if they had done so to ten times the amount of capital, rendering their inability to redeem inevitable, there was no violation of the charter. To have contracted debts to more than three times the capital, would have been a violation of the express terms of their charter. It does not follow that they have not violated it by contracting less. The restriction was intended as one security, though a very inadequate one, against the suspension of specie payments.

Such, also, is the argument drawn from the repeated suspensions of the banks during a period of many years, which was said to render the right to suspend almost prescriptive; from the Legislature having sometimes expressly sanctioned such suspensions; and from the fact that it has sanctioned the suspension of its own bank, which, as was said, was created in a state of suspension. Certainly, no one doubts but that banks may suspend with the sanction of the Legislature, as was done by the Bank of England, in 1797. Whatever violations of the charter may be committed, if that does not direct proceedings to vacate them, there is no other authority to call them in question.

If any practical conclusion can be drawn from the facts relied on, it is that the Legislature is apt to listen with very great facility to applications for such sanction. So of other provisions of various laws which it is said look to suspension. Certainly, whenever a bank is created, it is almost inevitable that the possibility of suspension should be looked to, as such things have been very frequent. But I have seen nothing to show that it was looked to with approbation, or that it was contemplated that they should depend on the mere will of the banks themselves. In the instance of directing the Comptroller General not to receive the notes of banks who have suspended payments, certainly it does not appear that such suspensions were looked to with approbation. The banks have sometimes thought it necessary to excuse themselves, as being in some default. But I cannot think it necessary to pursue these topics.

I have not thought it necessary to refer to authorities, for we have hardly any direct authority upon the point. The decisions in the cases from the New York Reports, turn upon the construction of a particular statute of that State. There are expressions in them, on general principles, favorable to the conclusion to which we have come. There is a dictum in the case cited from Pennsylvania which looks the other way ; too lightly thrown out, I think, if by it was intended the conclusion which was drawn from it. As to the case from Alabama, the question seems not .to have been necessarily involved in it, nor to have been very fully considered by the Judge. But however this may be, and notwithstanding the respect which I entertain for the judgment and learning of that Judge, I find myself unable to concur with him.

I think the demurrers to the second and third pleas should be sustained; that the demurrer to the replication to the fifth plea, should go to the plea itself, which should be overruled; and that the cause should be remanded, to be tried on the pleas of the general issue and nul lid record.

Dunkin, Chancellor.

I concur in the judgment of the court, and desire to state, briefly, the reasons which have led me to this conclusion.

Whatever doubts may have been, at one time, entertained, the argument of the Circuit Judge, and the authorities cited in his opinion, seem clearly to have established, that a bank is a private corporation, and that the charter creates a franchise, which may be forfeited by misuser or nonuser.

All corporations are created by the consent of the sovereign authority — in England, of the King, as expressed by Parliament; and in this country, of the People, as expressed through the Legislature. It is the duty of all corporations to act up to the end or design, whatever it be, for which they were created. And it is an implied condition of the grant, that, on failure to perform this duty, the charter may be resumed by the authority which granted it. Such was the doctrine of Lord Holt in Sir James Smith’s case in 1691; such the doctrine of Sir William Blackstone, 1 vol. ch. 18; and such the opinion of the Court of King’s Bench, in Rex vs. Passmore, 2 T. R. 513, decided in 1788.

In this conntry, the authorities are not less distinct, uniform and conclusive. “A private corporation, created by the Legislature, may lose its franchises by a misuser or non-user of them; and they may be resumed by the government under a judicial judgment, upon a quo warranto, to ascertain and enforce the forfeiture. This is the common law of the land, and is a tacit condition annexed to the creation of every such corporation.” This is the language of Mr. Justice Story, in pronouncing the judgment of the Supreme Court of the United States, in Terrett vs. Taylor, 9 Cranch, 43. The doctrine has been repeatedly recognized by that court, as well as by Chief Justice Parsons, Chancellor Kent, and, it is believed, by every judicial authority in the Union, which has had occasion to discuss the subject. Nor is it understood that, on this point, any difference of opinion is entertained by the members of this court.

The result of the authorities, then, is, that when a corporation ceases to perform the purposes for which it was created, the charter becomes subject to forfeiture at the will of the authority which gave it existence. It is a broken contract; and the party in default has no right to complain if he ceases to enjoy the advantages of it. But, although the authority which created the charter, has a right to revoke it, it does, not follow that the right must be exec cised. Reasons may exist, which would render the enforcement of an acknowledged right harsh, impolitic, and even tyrannical. The existence of the right is not the less indisputable.

If it were conceded that the act charged against tbe bank, rendered it no longer capable of fulfilling the great purposes of its creation, little doubt w’ould be entertained, by this court, of the right of the Legislature to resume the charter. Probably the only question on which a serious difference of opinion exists, is whether, by suspending specie payments in the manner charged in the declaration, the bank ceased to discharge the duties which it assumed in receiving the charter.

Duties may be expressed or implied. The court was warned, with much earnestness, against the danger of recognizing implied trusts, as they were termed. It was urged that this was a criminal prosecution, or in the nature of a criminal prosecution, and that conviction should never follow, unless the offence were plainly written in the law, and the sanction affixed. This seems to me a misapprehension. In the charter of a ferry, no clause is inserted requiring the ferryman to transport passengers; and when a religious or charitable institution is incorporated, their several duties are never defined ; but it has never been questioned that the duties and purposes of each were well understood ; were obligatory; and that, on failure to perform them, the grant might be revoked. So, if a bridge company were incorporated as such, which, instead of building or keeping a bridge, should use the charter of incorporation for the purpose of carrying on banking operations, the court would not hesitate to declare the charter forfeited, both for non-user and abuser.

And this, too, furnishes an answer to the argument, that the bank of South Carolina is not indebted to the charter for its authority to issue bills, (fee., inasmuch as the individuals composing the corporation had, for many years previously, exercised this power. The corporation is the creature of the charter. The Legislature gave existence to that, which had no existence before. The individuality of the members was lost, as well as their rights and responsibilities as such. The charter, in giving existence to a new being, became the origin and source of all its powers and capacities.

It is well stated in the judgment of the Circuit Court, that “ all corporations are created on the assumption that they will subserve the general policy of the State, and be of some public advantage; that the existence of a private corporation is conditional only.” And in Dartmouth College v. Woodward, 4 Wheat. 658, Mr. Justice Washington says : “ The obligation imposed on them, and which forms the consideration of the grant, is that of acting up to the end or design for lohich they toere created by their founder.”

What was the public purpose intended to be accomplished by the creation of the banks 1 What was the obligation imposed upon them, which formed the consideration of the grant of the privileges and immunities conferred upon them, and the condition of their existence as a corporation?

The ordinary idea of a bank, is a place where the money of individuals may be safely deposited ; where loans may be effected; and the notes or bills of which may be used with greater convenience, as a substitute for gold and silver. The original charter of this bank was granted in 1801. For ten years previously, the individuals seeking the charter had conducted an institution on their individual responsibility, which effectually answered all these purposes, and enjoyed the confidence of the community. Desiring a grant from the Legislature, which would alter and limit their responsibility, which would extend their existence, and confer on them other privileges, they undertook that the corporation would continue to discharge the same duties, and would afford the same public advantages.

The constitution had already prescribed gold and silver as the only legal tender in payment of debts. This was. equally obligatory on individuals as on banks. But the ¡usage of the country had given a different character to their obligations. By these usages, and according to the general understanding of the community, the bills of banks Were redeemable on demand, in specie, at the counter of the banks. Their immediate convertibility was their great recommendation to public confidence. Unlike that of an individual, the ability of the bank might be tested in.a raopient. In consequence of this quality, their bills, payable without interest, were readily received in exchange of notes payable with interest. Bank paper and money were, even judicially, regarded as convertible terms, because, in practice and in fact, bank bills could be immediately converted into gold or silver.

The Legislature had, then, a right to expect — it was an implied condition of the charter — that these characteristics of bank paper would be preserved ; that the bank would do no act, would adopt no measure, which would impair the credit of its paper, and thereby destroy its distinctive quality between that and the obligations of individuals.

Practically, it cannot be questioned that the suspension of specie payments impairs, of necessity, the credit of bank paper. The only criterion is its convertibility into gold or silver. Prior to the suspension, this is immediate, and the credit of the bank is perfect. Suspension produces a change as instantaneously as the coldness of the atmosphere causes a depression in the thermometer. Its extent will depend on a variety of circumstances — -the probable duration of the suspension — the character of the directors— public opinion as to the ultimate solvency of the institution. But the mischief is done. Their bills may, and will be, received, for the time, in payment of debts, in the ordinary transactions of life, &c., because nothing else can be obtained. It is the uniform effect of a depreciated currency, to keep out of circulation every othel medium. But such bills are not received as gold and silver, nor are they worth as much as gold and silver, or the notes of specie paying banks. They supply a currency; but the necessary effect of suspension is, that they constitute no longer a sound currency. It becomes less and less sound, the longer the depreciation continues. When the Bank of England suspended specie payment, in 1797, its bills were, at first, ata trifling discount, but before they resumed, in 1821, the bills had, at one time, depreciated to twenty-five per cent, discount; and such is the necessary fate of inconvertible bank paper.

As a place of deposit, the usefulness of the institution is, in the same manner, impaired. It has been decided, that every individal making a general deposit, is entitled to ■demand specie from the bank. So long as the bank con tinues to pay specie, the confidence of the creditor is unshaken, and the bank derives all the advantage from the use of the money. Suspension of specie payments always produces panic among the depositors, if not well-grounded alarm and distrust. The rush of individuals on the banks, at some of the northern cities, on the first intelligence of suspension, afforded conclusive evidence that confidence was gone, and precipitated, if it did not produce, the common ruin of the banks and themselves. Where the institution has been long known, and the character of its officers well established, the immediate effect of suspension is less injurious; but uneasiness always exists, and confidence diminishes, as the bank continues in suspension.

So far as banks are intended to facilitate loans, and thereby accommodate the public, their usefulness and their .functions ought to cease, so soon as they suspend specie payments. In this respect, there should be no difference between banks and individuals. When, from any cause, they become unable to redeem their obligations, they should cease to extend their circulation, or, in other words, to enlarge their indebtedness. They owe it to themselves and the public, to pause, and ascertain their condition. Under an acknowledged inability to redeem in specie, their notes should be no longer exchanged with those of individuals on unequal terms. Doubtless, the banks of this State were much influenced by this principle during the period of suspension. But, if the right to suspend, and continue in suspension, be once recognized,the temptation to over-issue becomes irresistible. This was manifested in the course pursued by the banks after the last war; and until their circulation was checked by the establishment of the United States Bank; and it is still more strongly manifested in the reckless career of the south-western banks since the suspension of 1837.

But it is said, that banks have always exercised the right, of suspending; that this must have been well known to-the Legislature who granted the original charter; and, in the language of the counsel, that “ this bank was born in suspension.” It is true, that when the Bank of South Carolina was incorporated, in 1801, the Bank of England was in a state of suspension. On Sunday, 26th Februa ry, 1797, an order of the Privy Council was issued, directing the suspension of specie payments, and on the following day this order was approved by Parliament. The bank did not resume until 1821, “presenting, during that interval,” says an eminent writer, “ a stupendous phenomenon, unparralleled in history.”

But the suspension of the Bank of England was perfectly consistent with the principle which has been assumed. The authority which granted the charter, can alone avail itself of a breach of the condition. “ The crown,” says Mr. Justice Ashurst, in Rex vs. Amery, “may elect whether it will take advantage of the forfeiture.” The suspension of 1797 was in obedience to an order in council, and with the sanction of parliament. The authority which could alone sue for the forfeiture, had directed the act to be done. In the case of the State vs. the Bank of Charleston, decided at Charleston, in February last, all the court held that the Legislature, by adopting the resolution of approval, of December, 1838, and subsequently amending the charter of the bank, had waived, or released, the forfeiture, which may have been incurred by the suspension of 1837.

So, in 1814, during the war with Great Britain, all the banks in the Middle and Southern States suspended specie payments; and, in 1837, many of them again suspended. But these were extraordinary emergencies, and the* State may well have considered that these were not fit occasions to enforce a forfeiture.

It is not denied that exigencies may arise, in which a bank, or any other corporation, may be excused for conduct which would forfeit their charter. But such excuses are not for judicial tribunals. They are properly addressed to the discretion of that authority which has entire control over the subject, and which is much more competent than a court of justice to estimate the validity of the excuse. Suspension of specie payments is always a bold, perhaps a hazardous measure — it may be one of wisdom. The Legislature, and not the banks, must be the ultimate arbiter as to the sufficiency of the cause. It is no more than a salutary check, that the State should have the power to vacate the charter, when, in their judgment, a mea sure, inconsistent with the objects and design of the institution, has been adopted frivolously, or inconsiderately, or fraudulently. With this restraint, suspension of specie payments would be of rare occurrence, and might be, comparatively, harmless. Without it, the extreme medicine of life would become its daily food. It is only when the banks assume an attitude of irresponsibility, that the power becomes dangerous and alarming.

The constitution declares that no State shall emit bills of credit. Our ancestors had experienced the disastrous effects of an irredeemable paper currency. The mischief originated in the absence of any power to coerce payment, and the consequent recklessness with which-bills were issued, to the ruin of the citizen and ultimate annihilation of State credit.

But a bank which is at liberty to suspend specie payments at the discretion of the directors, has nearly equal power with a State, and; practically, is scarcely more amenable to the ordinary process of the law. The corporation may be sued; but an execution can reach only the real estate which is required for banking purposes, and, perhaps, the specie in their vaults. The indebtedness of the bank may exceed a million of dollars, and the tangible assets amount to a few thousand dollars. Debts may be •due to them to a large or a small amount; they may be good, or they may be worthless. The law affords the creditor no means of ascertaining the condition of the bank, or of rendering its assets available. It is said that this implies fraud on the part of the bank. But who shall pronounce the conduct fraudulent, because the issues of the bank vastly exceed its specie, and the debts due to it have proved comparatively worthless. Banks may continue to do business, may enlarge their circulation, for years after they have become insolvent, and the public remain in entire ignorance of their condition. The Bank of England was, for twenty-four years, in a state of virtual insolvency. The banks of the South-Western States have been in a state of suspension for the last six years, with little prospect of resumption. Their bills are depreciated from 15 to 50 per cent. Yet, these bills still circulate as currency. The banks continue their operations, and will do so, in defiance of public opinion, or of any efforts of individuals to coerce them to a just discharge of their obligations. The whole section of country is inundated with bank paper, much of it as worthless as the old continental money, and with about the same power in the holders to require its redemption. The history, and the probable fate, of many of those institutions, may find a fit prototype in that of the Bank of Vincennes, reported in 1 Blackford, 267. For some years prior to filing the information, the bank had been in a state of absolute insolvency. Yet, during this period, it enjoyed the public confidence; was the depository of the funds of the Federal Government; issued paper to a large amount; made dividends among the stockholders, and strenuously resisted any interference or inquiry on the part of the Legislature, as an infringement of their chartered rights. It was proved, at the trial, that the indebtedness of the bank amounted to $373,000, and that it had, at the same time, “ thirty one dollars in specie, and no other available funds.” “ The idea of a banking company,” says Mr. Justice Holman, in pronouncing judgment of forfeiture, “ with a capital of a million and a half of dollars, created an indissoluble corporation for a term of twenty-one years, must be highly alarming to the community. A chartered right of acting with impunity, is derogatory to the spirit of our government; and, when connected with so much power, might be highly destructive of those equal rights guaranteed by the constitution.” This was a case of complicated fraud. But precisely the same public evils may result without the probability of proving fraud, and, perhaps, without any right to impute it. It is the consequence of great power without practical responsibility.

The only security for the public — that which will preserve to banks the confidence of the community, and perpetuate their usefulness — -is the immediate convertibility of their paper; and when, from any cause whatever, this ceases, a recognized authority in the State to vacate the charter, if in their judgment this extraordinary position was not warranted by the emergency.

Johnson, Ch.

delivered a dissenting opinion, which had not been filed when it was necessary to send this volume to the press, and is therefore most reluctantly omitted.

O’Neall, Evans and Butler, JJ., concurred with Johnson, Ch.

J. Johnston, Ch. and Wardlaw, J. concurred with Richardson. J., Harper, Ch. and Dunkin, Ch.

Judgment reversed.

IN THE COURT OF ERRORS, AT COLUMBIA, MAY, 1843.

The State vs. The Bank of South Carolina.

OPINION OP CHANCELLOR JOHNSON.

The leading questions involved in this cause, and those to which alone I shall address myself, are of much importance in themselves. They are, in some degree, novel, and it cannot be disguised that they have derived additional interest from the political considerations which have been brought into the discussion of them. The world are not yet agreed whether chartered banking institutions, with the powerto issue bills, are or are not a blessing or a curse; and there is, perhaps, as much, or more, diversity of opinion as to the limitations and restrictions that ought to be imposed upon them. With these considerations, happily, the court has no concern. They belong exclusively to the legislative department of the government, and, divested of them, the questions which I propose to consider, depend on plain and well defined principles of law — principles founded on common sense and common honesty, and of universal application. I mean those by which contracts are interpreted, .and by which the parties are required to fulfil them in good faith, and nothing more.

For the purpose of arriving directly at the principal matters of controversy, I propose to concede, 1st, that the bank is a private corporation ; 2d, that the charter, (the Act of incorporation,) confers on it certain privileges or franchises, which may be forfeited for non-use or abuse; 3d, that the proceeding (sci. fa.) is the proper mode of trying the question of forfeiture; and following the example of the circuit court, I shall avoid the technical questions raised as to the pleadings, and refer to them only so far as may be necessary to present the questions to be considered.

The charter has been generally treated in the argument, and I think properly, as a contract between the State and the bank; and to ascertain what that contract is, and whether it has or has not been broken, we must refer to the Act of incorporation, which called the corporation into being. In doing this, however, it will be necessary to refer only to such of the provisions as bear upon the question in hand.

The bank, as stated in the judgment of the circuit court, was first chartered in December, 1801, to continue until the 1st January, 1823. In 1815, the Legislature passed an Act amendatory of the charter, by which it was authorized to deal in inland hills of exchange, a power not before granted or exercised. In December, 1822, the charter was renewed by Act of the Legislature, for the term of. 12 years, to he computed from the 31st of that month, with the right to enjoy all the powers, privileges, immunities and benefits, and subject to all the restrictions granted and imposed by the charter under which it then acted. The charter was again renewed by Act of the 20th December, 1832, for a period of twenty-one years, to be computed from the day on which its previous charter would expire, and it is under this Act that it now exercises banking powers; and by this Act it is “ permitted and authorized to exercise and enjoy all the privileges, rights, powers, immunities and benefits which it now exercises and enjoys under its charter, or which the Planter’s and Mechanic’s Bank, and the Union Bank of South Carolina, or either of them, now exercise, possess a id enjoy, under any Act of the General Assembly of this State now in force ;” and it is further provided, “ that the said Bank of South Carolina, for the charter so renewed and extended, shall, on the 2d day of January next after the expiration of its charter, pay into the treasury of the lower division of this State, a bonus of sixteen thousand eight hundred and seventy-five dollars; and it is further provided, that it shall and may he lawful for the hank to increase its capital to one million of dollars, paying an additional bonus. in proportion to such increase of capital.”

We are thus referred back to the previous charters of this Bank, and of the Planter’s and Mechanic’s and Union Banks, to ascertain what are the powers, privileges and immunities granted, and the restrictions imposed, by the Act last referred to.

I have looked into these Acts with some attention and care, and I have not been able to find that any express authority is given to the banks to make or issue bills or notes — but that is necessarily implied from many of their provisions — or that the notes or hills, when issued, shall bo regarded in the nature of a circulating medium. It is, however, declared, that the hills and notes issued by the bank, promising to pay money, “ shall he binding and obligatory on the said corporation, in like manner, and with the same force and effect, as upon any private person or persons, if issued by him, her or them, in his, her or their natural capacities, and shall be assignable,” &c. 8 Stat. at Large, 21. They are expressly authorized to deal in bills of exchange and gold and silver bullion, and “ generally to do and execute all and singular such matters and things which to them may be thought necessary and proper for the good government and management” of the bank. Amongst other limitations and restrictions imposed on the bank, they are forbidden to receive a greater interest than six per cent, per annum, or at any time to incur debts to a greater amount than three times the amount of their capital, “ exclusive of the monies actually deposited in the hank for safe keeping,” &c.

The breaches of this charter complained of in this proceeding, are, 1st, that while the said bank was transacting business, as aforesaid, and when the said bank had issued a large amount of bills, viz: $750,000, which were then outstanding and in circulation, as a part of the actual currency of the State; and when the said bank had also in deposit large sums of money, in all amounting to $350,000, on the 18th of May, 1837, the president and directors of the said bank resolved to suspend payment in gold and silver, the legal current coin pf the said State, as well of the bills issued and put in circulation by the said bank, as of the money received on deposit; and that from the said 18th ofMay, 1837, until the 13th of September, 1838, the said bank did actually refuse to pay, when demanded, in gold and silver, the bills issued by the said bank, and the monies deposited in the said bank; and during all that time continued to issue bills in the nature of a circulating medium, to receive money on deposit, and discount promissory notes. &c. 2d. That afterwards, on the 14th day of October, 1839, the said bank again suspended specie payments as it had done in 1837, and continued so to do until the 25th July, 1840, and during all that time continued to issue bills, •to lend money, and discount notes, as it had done during the previous suspension ; and it is charged that these acts were done “ to the great damage of the State, in violation of the trusts and conditions of the said Act of incorporation given and granted, as aforesaid, to the said Bank of South Carolina, in and by the last mentioned Act of the General Assembly, and to the utter perversion of the ends, objects and purposes for which the powers, authorities, liberties, privileges and franchises, aforesaid, were given ánd granted to the said Bank of South Carolina.”

And it may be observed here, once for all, that this declaration charges no new act to have been done or committed by the bank, which is not expressly authorized by the Act, except the suspension of specie payments ; nor is the act of suspension any where expressly prohibited or declared to be cause of forfeiture. But it is insisted that we must look beyond the charter itself, and inquire whether it is not a violation of some condition implied from the nature of the contract; and I agree that in this, as in all other contracts, all that is necessary to carry into effect the expressed intent of the parties may and must be implied. And if one employ a carpenter to build an house, the law implies an obligation on his part that he will do it in a faithful and workmanlike manner; or a smith to shoe his horse, he is bound to do it skilfully, although that is not expressed. In the language of Mr. Justice Washington, in Dartmouth College vs. Woodward, 4 Wheat. 658, in reference to private corporations, “ the obligation imposed on them, and which forms the consideration of the grant, is that of acting up to the end or design for which they were created by their founder.”

What, then, was the end or design, of the Legislature in incorporating this bank ? It is no where expressly declared, but if we look into the powers granted, and the nature of the institution, we can hardly be mistaken in supposing that the advantages and conveniencies which would result to the community by the facility of obtaining loans of money, by the increase in the amount of the circulating medium, and by the greater facility in the transportation or remittance oflarge sums of money, and the bonus paid for the charter, were benefits contemplated to be derived by the State. Nor can it be supposed that the Legislature contemplated no benefit to the bank. No set of men will be found to accept of such a charter, with all its hazards and responsibilities, from pure love of country. Neither the time nor the occasion called for so much disinterested patriotism. The bank expected, and the Legislature unquestionably intended, to confer on it the usual profits and e noluments arising from banking operations, and to this end conferred on it, in the language of the Act of 1801, the power “ generally to do and perform all and singular such acts, matters and things which to them shall or may appertain.” And if this grant means any thing, (and, according to the maxim, ut res mages valeat quam pereat, it must have some effect, if possible,) it conferred on the bank all the rights, powers and privileges necessary to carry on their business, according to the general usages of banks, in all respects, except in such particulars as were expressly provided, and subjected it to all the liabilities and restrictions imposed by the usage. To the usage, therefore, we must look for all the implied powers and liabilities of the bank,

Let us begin with the organization of a bank. The amount of the capital, as in this case, is usually limited by the Act of incorporation, and the stock is subscribed, and is paid for in specie, or whatever else the bank may regard as an equivalent, unless otherwise provided in the charter — sometimes in other stocks, of which $300,000 subscribed by the State to the State Bank, to be paid by a certificate of the Comptroller, bearing an interest at the rate of six per cent, per annum, will furnish an example. (See Stat. at Large, 8 vol. p. 12.) We know, too, that subscriptions for stock are, for the most part, paid in the bills of other specie paying hanks, which the officers of the bank undertake to convert into specie, as a convenience to the stockholder; that, government and other marketable stocks readily convertable into money, are frequently received in payment; and in some cases the bond or note of the stockholder, bearing interest, is accepted as a substitute. But in all these cases care is usually taken to require payments in specie, to suit the probable demands on the bank, If the whole amount of the capital should be paid in specie, (a thing which has rarely or never occurred within the memory of man,) unless put into action, it would remain a useless and unproductive mass; and it is known, that to avoid this, it is usually invested in productive marketable securities, which may be made available at short notice; and we have it from high authority, that specie in the proportion of about one third or one fourth of the amount of the circulation, is ordinarily sufficient to meet the current demands, the bank depending on the proceeds of notes and bills of exchange, payable at maturity, and daily falling due, to meet any extraordinary emergency. Such is a general internal view of the banking institutions of this State; and for the purpose of meeting the question fairly, it may be conceded that generally the bank was bound to redeem its notes in specie, when demanded.

By the terms of the charter, the Bank was authorized to incur debts and issue bills to three times the amount of its charter; and can it be supposed, that the Legislature, with a knowledge that the capital of the Bank was to be made up and employed in the manner before stated, expected that it would or could be, at all times, prepared to meet all the demands that might, under all circumstances, be made upon it? — and contend that the failure to do so, should operate as a forfeiture of their charter.

Banks are created, born, with the elements of suspension in them, which the slightest circumstances may call into action. No Bank would accept a charter for the privilege of issuing bills to the precise amount of the specie in its vaults, at a lower rate of interest than is allowed by law for the loan of money by an individual, diminished still more by the expenses of Banking operations; and to make any profit at all, (and be it remembered that that is one of the ends of its incorporation,) it must take the hazard of being unable, at all times, to meet the demands upon it. Combinations of other banking institutions or private individuals, or a panic, might almost at any time force them to suspend. As appropriate to this subject, I remember to have somewhere seen an anecdote in relation to one of the private Banks in England. A horse having taken fright, ran away with a carriage, and dashed it to pieces against the Banking-house — a facetious observer said of it afterwerds, “that there had been a run upon the Bank.” The bill holders took the alarm, and rushed upon the Bank, with a fury little short of the late Cincinnati mob. Explanations were vain, they would hear none. And when the excitability of the human passions in relation to pecuniary matters are remembered, such a case might well have, occurred.

But let us examine the veritable, actual history of Banks, in reference to the necessity of the suspension of specie payments, at the time this Bank was first incorporated in 1801. The Bank of England, perhaps the most magnificent institution of f jie kind in the world, was in a state of suspension, and Alison, in his history of Europe, now publishing in numbers, (see the 3d No. p. 405,) says that “ the consequences, whether for good or for evil, were not attributable to Mr. Pitt, the prime minister,but. they were forced on him by stern necessity. Bankruptcy, irretrieveable national bankruptcy, stared him in the face, if the momentous step were any longer delayed and it is universally agreed, that whatever evils might have resulted from the measure, it enabled Great Britain, and furnished her with resources, to sustain the most expensive, sanguinary, and protracted war to be found in the annals of the world. But it is said that this suspension was authorized by the Privy Counsel, and therefore justifiable. That is true, but I know of no higher authority to show that suspensionsare sometimes less injurious to the public interest, than the exhaustion of all the resources of the Bank by continuing to pay specie. Let us come nearer home for an example. Who has forgotten that in 1812 every Bank in the United States suspended specie payments, and did not resume until 1817, after the termination of the late war with Great Britain, and that the army and navy were paid.and subsisted by the bills of these non-paying specie Banks? Andean we forget that the Southern Army were paid and subsisted by the bills of our own Banks, to which, although I do not know the fact, this Bank, the Bank of South Carolina, in all probability, contributed its due proportion? And why was all this? Simply because.the supply of specie was unequal to the demand, and if every dollar had been drawn out of the Banks, the public interest would not have been subserved, though the Banks would have been ruined. No one ever heard this, complained of as a violation of their charters, either judicially or otherwise. On the contrary, the Legislature, by the Act of 1815, passed during this suspension, conferred on this very Bank greater powers than she had before exercised, that of dealing in Inland Bills of Exchange. It may be said, that this was a great public emergency, which justified the Act, arid certainly it was justified in public opinion. But arc the public concerned in nothing else but the payment and subsistance of its army and navy? Are not the interests of commerce, in a degree, equally the objects of the care and attention of the Legislature ? And may not emergencies arise out of them which would impose on the Banks the like necessity of suspending specie payment? The Legislature, at the time of granting this charter, knew that the Bank was to be organized and conducted in the manner, and would be exposed to^the perils, before stated, and that even the public interest, as in’ the case of the Bank of England, might require it to suspend, and it cannot be supposed that a forfeiture for that cause would have been left to implication. So much for the past. Let us now look to the suspension of specie payments in 1837, which extended to all the Banks in the United States, except those of Massachusetts. This i¡=¡ recent history, and we all know, without reference to the chronicles of the day, that this was forced upon the Banks by the extraordinary demands for specie for exportation abroad, and the Banks had no alternative but to suspend, or to suffer all the specie to be carried out of the country, leaving them powerless, bankrupt, and the country from Maine to Louisiana and the Rocky Mountains, probably without a ■ dollar of the precious metals; and throughout that whole extent, not a murmer of complaint is heard against any one of the Banks, and no one, then or now, believes that payment in specie, by this Bank, or any of the Banks of this State, would have promoted their own interests or subserved the public benefit or convenience. Let us hear what we, the people of this State, through our representatives, have said of it. In his message to the Legislature, at the commencement of the Session, in November, 1837, and when all the Banks were in a state of suspension, and remained so until September following, Governor Butler brings to their view the fact of suspension, and exhibits a statement of their actual condition, obtained from materials furnished by them. That portion of the message, and it seems a resolution of the Legislature, which I have not been able to obtain, declaring their confidence in the soundness of their banking institutions, were referred to the committee of Ways and Means, of which one of the counsel for the State in this cause, (Mr. Memminger) was the Chairman, and the following is their report.

“ The Committee of Ways and Means, to which was referred so much of the Governor’s Message as relates to the conditon of the Banks of our State, and the Resolution of the House, declaring our confidence in our banking institutions, beg leave to report: — That they have examined the condition and exposition of the Banks accompanying the Message, and feel satisfied that they are entitled to the public confidence.”

Does this look like the State intended that a condition was implied in the charter, that suspension should be a cause of forfeiture 1 Again, by the Act incorporating the Commercial Bank of Columbia, the bills of that Bank are made receivable for taxes and all other public dues, as long as they continue to redeem them in specie; but provides, that if they suffered any of their bills to be protested, the Comptroller should prohibit their receipt, “unless good and satisfactory cause should be shewn him by the said corporation, for protesting in a court of justice the payment thereof.” Contemplating, evidently, the possibility and necessity of suspending payments.

Lending and putting in circulation her bills during the time of suspension, thus, as it is said, increasing the evils incident to it, is charged upon the Bank as a violation of its charter. That charge is, I think, fully met in the Circuit Court opinion. But the truth will, perhaps, afford the best commentary. The Banks, although they had suspended specie payments, retained the confidence of the community, and that confidence has been fully realized. Their bills were sought after with avidity. There were, in fact, no others in circulation, nor was there any specie which could be made available in the country. The specie paying Banks never suffered one of their own bills which came into their possession, to pass their portals, and the fact is well known that the whole crop of 1839 was purchased and paid for in the bills of the suspended Banks. They -were received without hesitation, at par, in the payment of all debts and contracts, and if it were put to the community to decide, I do not hesitate to say, that they would pronounce, with the exception, perhaps, of those who entertain prejudices against Banks, that the suspension was a general benefit. Say that depreciation in the value of their bills was the inevitable consequence of suspension — The planter was indemnified in the sale of his produce, and the merchant in the sale of his wares. The Bank had no power to force their bills into circulation, and if individuals thought proper to make rags, shin-plasters, kites, or coon-skins, the measure of value, the State has no concern tin it — nay, cannot counteract it. The value of Bank paper always has been and always will be, subject to fluctuation; and even the precious metals are not exempt from the general consequences of a redundant or inadequate supply.

So much for our domestic materials; we will now look abroad and see what we can glean by the way side.

The question, whether the suspension of specie payment by a Bank, was a cause of forfeiture, came directly up in the case of the State of Alabama vs. Tombigbee Bank, 2 Stewart’s Rep. 30, referred to in the judgment of the Circuit Court, and it was held to be no cause of forfeiture. It arose incidentally in Pennsylvania, in the case of the Commonwealth vs. The United States Bank, which will be found in Appendix C, to the Brief in this cause. Mr. Justice King, the President of the Court of Common Pleas, delivered the opinion of the Court, and in remarking on this question, which seems to have been freely discussed in the argument, he says, “No one could assert, as a general doctrine, that the non-payment of a debt by a corporation to its creditor, was such a misuser of its franchises as would induce a forfeiture of its charter.” In the case of The People vs. The Washington and Warren Bank, 6 Cowen, 216-7, the question came before the Supreme Court of New York, and the language of Wood-worth, Justice, who delivered the judgment of the Court, appears to me entirely appropriate. “ I cannot,” says he, “assent to the proposition that insolvency merely, at a particular time, however produced, is good cause for dissolving the corporation. Its continuance must be such as to afford substantial ground to consider the object for which the institution was created, as defeated.” Again — “ The refusal to pay, unless arising from continued insolvency, is, in my apprehension, no ground of forfeiture. The remedy of the creditor would seem to be by action. As to suspending operations, that may, in some cases, be a prudent and justifiable measure, and consistent with ultimate solvency.” And he might have added, with the interest of the Bank and the community; and all the researches of the counsel have not been able to rake up, from the rubbish of ages, a single case or dictum, controverting the correctness of this doctrine.

There is a principle running through these cases, whici, although so commonplace as to be often overlooked, pervades every contract, and is of Universal application. Parties may make any contract they think fit, if the .subject contracted about is in itself lawful; and if the party bound, do that which it requires of him, or forbears to do that which it forbids, in good faith, and loss or injury happen to the other party, it is damnum absque injuria.

I have before stated, that the declaration does not charge the Bank with any act prohibited by the charter, or the omission to do any act expressly enjoined by it. Nor is there any allegation that the affairs of the Bank were not conducted in perfect good faith. I have shewn, I think, conclusively, that although the Bank was bound, generally, to redeem her bills in specie, it was not expected that she should do so under all circumstances, because it was impossible, and that suspension was forced upon her by circumstances which she could not controul. If loss has happened to the State, it is damnum absque injuria.

But why refer to authorities ? Why reason about this matter? The specie of all the world would probably not be sufficient to redeem all the Bank paper now in circulation in the United States; and although it might be proved by a deduction, as conclusive as a mathematical conclusion, that the Banks ought to pay all their liabilities in specie when demanded, the fact stares us in the face, and we cannot shut our eyes upon it, that the thing is impossible.

The suspension of 1837 is one of the causes of forfeiture charged in this declaration, but I did not understand that it was intended to be particularly relied on, and I cannot suppose that it was thought to be tenable. The Legislature, one of the contracting parties under whose authority this proceeding was instituted, has declared that the Bank, notwithstanding this suspension, was entitled to the “public confidence,” a concession necessarily implying that its affairs had been conducted with propriety — and it is notorious, that the whole community admitted the necessity and approved the; suspension.

The suspension of 1839 is, it seems, the gravamen of this prosecution. That differs from the former, principally in the circumstance that it continued only about half the time. The circumstances under which it occurred, were also somewhat different. In the first, all the Banks in the Uni ted. States, except those of Massachusetts, had suspended. In the last only the Banks in Philadelphia and Baltimore, in Virginia and North Carolina, and South and West of Charleston, and the Planters’s and Mechanic’s Bank, the Union Bank, the State Bank, and the Rail Road Bank of Charleston, had suspended ; the Bank of the State of South Carolina and the Bank of Charleston, only, continuing to pay specie; and an argument against the necessity for suspension, has been drawn from the circumstance, that the two Banks last named, continued to redeem their paper. But that cannot bear the test of examination, The pressure on two Banks, haying incurred liabilities to thp same amount, with the same means, may be very unequal, as in the case of a,ran upon one of them, originating either in convenience, caprice, or a combination against it. And the operations of one may go on smoothly and safely, and the other may be drained of all its immediate resources, although equally solvent. In illustration of this, I trust I will be pardoned for stating a fact, derived from the President of the Commercial Bank of Columbia, which had not suspended specie payments. The Bank of the State of South Carolina, as before remarked, continued to redeem her bills in specie, and yet, at the time, the Commercial Bank had in its possession an amount of the bills of the former Bank, equal, at least, to fifty per cent, over and above all the specie which she had in her vaults, as ascertained by the Report of her President, and if this amount had been pressed upon her, she, too, would, in all probability, have been forced into suspension, but it was forborne in the spirit of courtesy.

Having established, as I think, satisfactorily, that the bare suspension of specie payments is not a ground of forfeiture, it follows, necessarily, that it was incumbent on the State to charge and prove some fact which would have amounted to a forfeiture, as the non-use or abuse of its franchises; the neglect to exercise them, in the language oí Judge Woodworth, for so long a time as would “afford a substantial ground to consider the object for which the institution was created, as defeated or some abuse of its powers for unworthy or fraudulent purposes, by which loss or injury was sustained by the community, as the suspension of specie payments when the bank had the means of paying, and without necessity; resorting to means to depreciate its own paper, and purchasing it at a discount; putling paper into circulation without providing the ordinary means to redeem it; or any other dishonest or fraudulent practices.

If I am wrong in this, the fifth plea, which has been characterized as rigmarole, contains, notwithstanding, in my judgment, the material of a perfect justification. The declaration, it will be remembered, does not charge any deceitful, dishonest or fraudulent practices against the bank. This plea states, that in consequence of the suspension of the banks in Baltimore, Philadelphia, Virginia and North Carolina, of the banks south and west of Charleston, and of a portion of the banks in Charleston, and the demands for specie being extraordinary and irregular, “ the said bank was unable to <pay its clues and liabilities in gold and silver coin" and that she resumed as soon after as her means enabled her to do so, with safety to her own interest and the interests of the community. The fact that she was forced into suspension by circumstances which she could not control, without fault or blame on her part, is her justification.

It is said that this is mere matter of excuse. The line which separates excuse and justification never has been and never can be defined. The extremes are palpable enough, but the point at which they meet invisible, intangible. Take the cases of murder and manslaughter as an example. If one kill another of malice prepense, indicated by his laying in wait, that is murder ; but if he kill him in sudden heat and passion, on reasonable provocation, it is clearly manslaughter. But what precise state of facts will or will not amount to reasonable provocation, cannot be ascertained by any rule ; and the only means heretofore devised for solving the difficulty, is the trial by jury. So here, if the defence does not, as I suppose, amount to a perfect justification, as matters of excúse they present a mixed question of law and fact, which a jury alone are competent to solve. I have not looked into the pleadings with reference to this result; but I feel assured that the distinguished counsel for the State would not suffer a case of such importance, and of so much concernment to the community, to go off on a mere question of pleading, and the court would order a resf ondeas ouster if that should be necessary.

The counsel have indulged in speculations as to the unreasonableness of supposing that the Legislature would incorporate a bank with the privilege, express or understood, of not paying their bills in specie. I refer to the Act incorporating the Bank of the State of South Carolina, 8 Stat. at Large, 24, where it will be found that its capital consisted entirely of public stocks, and the pledge of the State to support the bank, without a dollar of specie. That, however, was at a momentous crisis, when all the banks in the Union were suspended, and was no doubt justifiable. But with .the policy of a contract made with the State, the court have nothing to do. All that is expected, all that the court can do, is to declare the law of the contract. The State, whilst she exacts only the reasonable performance of the obligations to her, never repudiates her own.

There are others who think, and perhaps justly, and I confess I am strongly inclined to the opinion, that the world would have got on in the end as well without the aid of chartered banking institutions, and that all the legitimate objects of their institution might as well have been obtained by the means of personal credit or private institutions. The fact cannot, how-. ever, be disguised, that under the stimulating influence of a superabundant quasi currency — and whether substantial or not, is immaterial to- the question — all the departments of agriculture, commerce and manufactures, of science and literature, have been fostered and flourished in the United States to an extent unknown in modern times; and whether the revulsion which is now felt in the pulse of the body politic, is destined to a collapse more dangerous than the original disease, is yet to be determined. Of one thing, however, I am perfectly assured, that when the rage for banking, which is now rapidly passing away, shall have subsided, no company will be found to accept a charter to be forfeited for suspension of specie payments under all circumstances ; an event which may and must, in all probability, happen; and if what I have not already said, does not demonstrate it, I refer with confidence to the learned and able report of the late Mr. Stephen Elliot, the first President of the Bank of the State of South Carolina, to the Legislature, in 18 — , re-published by the order of the Legislature, and bound up with the Acts of 1840, in whidi be concludes that emergencies may and must arise, in which suspension is inevitable; and to the no less able report of his successor, the late Judge Colcock, with whom I was long associated on the Bench, to the Legislature, justifying the suspension of that and all the other banks of the State, in 1837, as forced upon them by circumstances over which they had no control. And that is responded to with an approving voice by the report of the committee of Ways and Means, in the resolutions of the session of the Legislature, in 1837. And yet that very act is charged against this bank as a damning sin, a sin not to be justified, palliated or forgiven!

I am of opinion, therefore, that the judgment of the circuit court ought to be affirmed.