State Bank v. Crease, 6 Ark. 292 (1845)

Oct. 1845 · Arkansas Supreme Court

6 Ark. 292

State Bank vs. Crease et al.

Under the act of 22d December, 1840, the president and cashier of the State'Bank, were entitled to receive specie in payment of their salaries.

Their salaries were payable in dollars, which, legally, means gold or silver.

Nor were their rights in this respect effected by the liquidation act of 184$.

The powers and privileges, which the several boards of directors were authorized to exercise before the passage of the liquidation act, and which were not prohibited by it, they could exercise until their official powers were determined, by the surrender of the assets of the bank to the receivers.

Until the happening of that event, the board of directors of the principal bank possessed the power, under the act of 1840, to appoint clerks and a teller, fix their compensation at any sum not exceeding, in the aggregate, $2,000 per annum, and to cause the same to be paid them by the cashier in specie.

Writ of error to the circuit court of Pulaski county.

Action of debt, upon the official bond of the cashier of the Bank of the State of Arkansas, brought by the bank against John H. Crease, principal in the bond, and his securities, determined in the Pulaski circuit court, at the Nov. terna, 1843, before the Hon. J. J. CxENDENIN, judge.

The declaration alleged, as a breach of the bond, that, on the 31st March, 1843, Crease paid to S. M. Rutherford, for his services as president of the bank, $58 33 in specie: to C. B. Magruder, for his services as teller and book-keeper, $91 67 in specie: to N. T. Gaines, for his services as discount clerk, $75 00 in specie, and retained for his own services, as cashier of the hank, $150 00 in specie; amounting in the aggregate to the sum of $375 00, so paid out and retained by him for the services of said officers from the 1st to the 31st day of March, inclusive, 1843. Then followed an averment, that said officers were only entitled to the said sums of money, respectively, in Arkansas bank paper at par, and that Crease paid them, and retained for himself, the specie, contrary to law, and of his own wrong.

The defendants pleaded that Crease was authorized, by Jaw, to-pay the officers, mentioned in the declaration, and retain for him--selfj-specie for their services, absque hoc that he did it contrary to law, and of his own wrong. The plaintiff took issue upon the plea,

. therbase was submitted to the court, sitting as a jury, and the parties agreed upon the following statement of facts:r,lst, “By an act of the legislature, passed in 1840, the salary of the cashier of the bank was fixed at $1,80(3 per annum, the salary of the president at $700, and the president and. directors of the bank were authorized to appropriate the sum of $2,000, per am num, for the payment of clerks, &c. The board of directors, in pursuance of the act, employed C. B. Magruder as teller and book-keeper, at a salary of $1,100, and N. T. Gaines as discount clerk at $900, per annum; and that all of said officers were employed at the respective salaries aforesaid, from the passage of said act. until the assets of the bank were turned over to the receivers.-

2d, “That on the 28th day of March, 1842, the board of directors passed the following resolution: Whereas, the officers of this bank, since the suspension of specie payments by the banks of this State, have received the paper of these suspended banks (which is riow only worth 33 j cents in the dollar) in payment of their salaries, and whereas additional duties have been imposed upon them, therefore resolved, that each of the officers of this bank be permitted to draw in specie his salary from the 1st of March up and until the bank shall pass into the hands of the receivers, and their official services shall cease. The board, also, at the same meeting, passed a resolution of thanks to the officers of the bank, for the faithful manner in which they had severally performed their duties.

3d, “That the assets of the bank were turned over to the receivers, on the 7th day of June, 1843, under an act, entitled “an act to place the Bank of the State of Arkansas in liquidation,” approved 31st January, 1843, and an act supplemental thereto, approved 3d February, 1843; and that during the period of time contemplated in the above resolution of the board, the officers of the-bank performed extra services, imposed upon them in consequence of the liquidation act.

4th, “That Crease, as cashier, in pursuance and by virtue of the-above resolution, did, on the 31st day of March, 1843, pay to Ruth-” erford, as president of the bank $58 83: to Magruder as teller and book-keeper $91 67: to Gaines, as discount clerk $75 00, and retained for himself, as cashier $150 00, in specie, for the services of said officers, respectively, from the 1st to the 31st day of March, in-, elusive, 1843: and that he made no other payments to them in specie.

5th, “That the paper of the bank, when the salaries of the above officers were fixed, was at par in the city of Little Rock, and continued so to be until the liquidation act went into effect, during which time the bank was paying specie.”

The parties submitted to the court, whether, upon the foregoing facts, the plaintiff should recover in the action, and if the court found for plaintiff, it was agreed that damages should be assessed at $391.

The court decided that plaintiff should not recover, and gave judgment for defendant. Plaintiff brought error.

Hempstead, for the plaintiff.

Ashley & Watkins, contra.

The principal defendant was sued upon his bond for complying with its very letter and 'spirit. If any other authority were wanting, it is to be found in the resolutions of the board of directors, of the 28th March, 1843, who, up till the 7th day of June, 1843, had the lawful and sole control of the bank. Tide Liquidation Act of 31st January, 1843, sec. 5.

Johnson, C. J., not sitting; Maohn, special judge, sitting with Oldham, J.

Maoism, special judge,

delivered the opinion of the court.

This was an action instituted by the bank against the defendants; in the circuit court of Pulaski county, at the November term, 1843, upon Crease’s bond as cashier of the principal bank at Little Rock, and it was assigned for a breach of the condition of the bond, that he, as such cashier, on the 31st day of March, 1843, paid to the President, teller, discount clerk, and retained for himself, for their respective services as officers of the bank from the first to the thirty; first day of March, 1843, inclusive, the aggregate sum of three hundred and seventy five dollars in specie, and averred that such officers were not entitled to receive the payment of their salaries in specie," but in Arkansas bank paper at par.

The allegations contained in the breach, so far as they relate to the amount paid the President of the bank, or that retained by tho cashier himself, show no violation whatever of the condition of the cashier’s bond. By an act of the legislature, passed the 22d of Dec., 1840, the salary of the President of the principal bank was fixed at seven hundred dollars; the cashier’s at one thousand, eight hundred dollars; and the President and directors were authorized to appropriate the sum of two thousand dollars per annum for the employment of clerks and teller. The salaries of these officers were thus fixed by the legislature, payable in dollars; which legally Means gold or silver; and for services rendered under this act, as such officers of the bank, they acquired the constitutional right to demand, and receive in payment, gold or silver, and could not lawfully be compelled to accept' the depreciated paper of the banks of this State. A different position than this, we apprehend, would lead to dangerous consequences, as it would sanction a violation of the.constitution of the country, disregard the inviolability of contracts, and alienate that confidence in our free institutions, so necessary for their maintenance, as well as for the permanency of the government itself.

The rights of these officers, in this view, is in no wise affected by the act of the legislature passed in. 1843, placing the bank in liquidation, and which took effect on the 10th day of February of that year. The 28th section of that act shows that it was intended only as a limitation and modification of the charter of the bank for the purpose of liquidating its affairs. It left the directors of the principal bank and the branches, as well as all the other officers of the bank in full possession of all the powers, privileges and rights which they acquired under the charter and the several acts of the legislature amendatory thereto, subject to the restrictions, limitations .'and modifications contained in the act of liquidation. That did no.t, and was never designed to affect, or in an)r manner impair the private rights of any of the officers of the principal bank, or of its branches; nor did it in any manner change or alter the salaries of those officers. All the powers and privileges, which the several boards of directors were authorized to exercise before the passage of this act, and which were not prohibited by it,' they could still exercise until their official jjowers were determined by the surrem der of the assets of the bank to their successors: — the receivers appointed by the legislature. Until the happening of that event, the board of directors of the principal bank possessed the power under the act of 1840 to appoint clerks and a teller, fix their compensation at any sum not exceeding in the aggregate two thousand dollars per annum, and cause the same to be paid them by, the cashier without restriction as to the kind of funds. This is what was done in the case of the clerk and teller. The directors did not in that particular exceed the scope of their authority, and, therefore, the payment made by the cashier to those officers under the resolution of the board of directors was lawful.

We see no error in the judgment of the circuit court, and the .same is affirmed.