[Foster & Elam vs. Neilson.]

reported by its commissioners, and has confirmed those which the commissioners have approved, but has passed no law, withdrawing grants generally for lands west of the Perdido from the operation of the 14th section of the act of 1804, or repealing that section.

We are of opinion then, that the court committed no error in dismissing the petition of the plaintiff, and that the judgment ought to be affirmed with costs.

This cause came on to be heard on the transcript of the record from the district court of the United States for the eastern district of Louisiana, and was argued by counsel; on consideration whereof, this Court is of opinion that the said district court committed no error in dismissing the petition of the plaintiffs; therefore it is considered, ordered and adjudged by this Court, that the judgment of the said district court in this cause be, and the same is hereby affirmed with costs.

THE PRESIDENT AND DIRECTORS OF THE BANK OF THE COMMONWEALTH OF KENTUCKY, PLAINTIFFS IN ERROR vs. JOHN WISTER, JOHN M. PRICE AND CHARLES J. WISTER, Defendants.

In an action for money had and received for the recovery of the amount of a deposit made in the bank of the commonwealth of Kentucky, acting under an act of incorporation passed by the legislature of that state, the defendant pleaded to the jurisdiction, on the ground that the state of Kentucky alone was the proprietor of the stock of the bank; for which reason it was insisted that the suit was virtually against a sovereign state.

The Court are of opinion that the question is no longer open here. The case of the United States Bank vs. The Planters Bank of Georgia, 9 Wheaton, 904, was a much stronger case for the plaintiffs in error than the present; for there the state of Georgia was not only a proprietor, but a corporator. Here the state is not a corporator, since by the terms of the act incorporating this bank, "the president and directors" alone constitute the body corporate, the metaphysical person liable to suit. Hence by the law of the state itself, it is excluded from the character of a party in the sense of this law when speaking of a corporation. [323] It may be added to the reasons which influenced the Court in their opinion, in the case of The Bank of the United States vs. The Planters Bank of Georgia, that if a state did exercise the powers in and over a bank or impart to it its sovereign attributes, it would be hardly possible to distinguish the issue of the paper of such a bank, from a direct issue of bills of credit; which violation of the constitution, no doubt the state here intended to avoid. [324] The act of incorporating the bank of the commonwealth of Kentucky contains a provision by which it is enacted, that the bank shall receive money on deposit without being required to give an obligation under seal to repay it. This enactment must be construed with regard to the practice of banking, and the general understanding of mankind; and must create a liability to the depositor by the simple act of depositing, that is, an assumpsit in law, implied from an act in pais. [324]

- Upon the deposit being made in the bank of the commonwealth of Kentucky, the cashier gave under his hand a certificate that there had been " deposited to the credit of the plaintiffs below, $7730.81, which is subject to their order on presentation of this certificate." The deposit was made in the notes of the bank, and when the same were deposited, and when demand of payment was made, the notes were passing at one half their nominal value. When the certificate was presented to the bank, the cashier offered to pay the amount in the notes of the bank, but they refused to receive payment in any thing but gold or silver. The language of the certificate is expressive of a general not a specific deposit, and the act of incorporation is express, that the bank shall pay and redeem their bills in gold or silver. The transaction then was equivalent to receiving and depositing the gold or silver; if the bank did not so understand it they might have refused to receive it; and the plaintiffs would certainly have recovered the gold and silver, to the amount upon the face of the bills. [325]

[Bank of Kentucky vs. Wister and others.]

The bank having offered to pay the amount of the certificate in their bills, they put their own construction on the same, and they cannot afterwards say that the plaintiffs below should have accompanied the certificate with a check. [326] The bills of the bank were payable to an individual or bearer, and in the action upon the bills there was no averment of the citizenship of the person to whom the bills are payable, and they might therefore have been payable, in the first instance, to a party not competent to sue in the courts of the United States. This Court has uniformly held that a note payable to bearer is payable to any body, and is not affected by the disabilities of the nominal payee. [326]

ERROR to the circuit court of the district of Kentucky. On the 31st October 1824, the agent of the defendants in error, John T. Drake, deposited in the bank of the commonwealth of Kentucky, in the notes of that bank, the sum of $7730.81, and received from the cashier the following memorandum in writing, usually denominated a certificate of deposit.

"Frankford, 31st October 1824.-John T. Drake this day deposited to the credit of John Wister, John M. Price and Charles J. Wister, seven thousand seven hundred and thirty dollars and eighty-one cents, which is subject to their order upon presentation of this certificate. Signed, C. G. Waggoner, cashier.-$7730.81.

On the 6th of November 1824, Mr Drake presented the certificate to the bank and demanded payment of the sum mentioned in it, in gold or silver, which was refused by the cashier, who at the same time offered the amount in notes on the bank, which were rejected by Mr Drake. At the time the deposit was made the notes of the bank were of the value of and current in the country at half their nominal

amount.

The payment of the amount of the deposit in gold or silver having been thus refused, Wister, Price and Wister brought their action in the circuit court of the United States for the district of Kentucky. The declaration contained two counts, the first for money had and received, the second a special count upon the certificate of deposit.

At November term 1826, the defendants appeared by attorney, and afterwards filed a plea to the jurisdiction of the court under the corporate seal of the bank. The plea states "that the court ought not to have or take cognizance of this

6

[Bank of Kentucky vs. Wister and others.]

action, because the defendant is a body corporate and politic, created and established by an act of assembly of the commonwealth of Kentucky and constituted by the name and style of The President and Directors of the Bank of the Commonwealth of Kentucky,' and that the whole capital stock of the said corporation is exclusively and solely the property of the commonwealth of Kentucky, and that the state of Kentucky in her political sovereign capacity as a state, is the sole, exclusive, and only member of the said corporation." To this plea the plaintiffs below demurred, and the circuit court having sustained the same, the defendants were ordered to answer over.

Upon the trial of the cause, the plaintiffs proved the facts as stated; and the defendants moved the court to instruct the jury that the plaintiffs had not made out a good cause of action, and that the plaintiffs were not entitled to the nominal amount of the deposit; but to the value of the notes at the time of the demand.

The court overruled these motions, and instructed the jury that the plaintiffs were entitled to the full sum as expressed in the certificate, with interest thereon, from the date of the demand, in lawful money of the United States. The defendants excepted to the opinion of the court, upon all the matters submitted to them, and the case came before this Court upon the bill of exceptions. The facts of the case were not controverted.

For the plaintiffs in error, Mr Nicholas maintained,

1. That the circuit court had no jurisdiction over the

cause.

2. The declaration was insufficient.

3. The court erred in the instructions given to the jury. He argued, that upon the decisions of this Court the jurisdiction could not exist in the case. The courts of the United States take jurisdiction; 1st, According to the subject matter; 2d, The character of the parties; 3d, In cases arising under treaties, &c.

In this case the jurisdiction cannot be assumed, as those principles upon which the courts of the United States

[Bank of Kentucky vs. Wister and others.]

would have jurisdiction from the character of the parties; forbid the same. This Court will look behind the act of incorporation to ascertain who are the corporators; and if they find they are not such parties as can sue or be sued in the circuit court, they will refuse to acknowledge that the court could exercise jurisdiction. Cited, The Bank of the United States vs. The Planters Bank of Georgia, 9 Wheaton, 904.

In this case the state of Kentucky is the only stockholder of the bank; and this appearing, the state is the party, and cannot be sued. It is a sole corporation, using the money of the state, and by its obligations binding the state. The interests of the state are alone involved in the suit, and the judgment of the Court will operate upon the state directly.

2. The declaration is insufficient, because, as the real party defendant is the state of Kentucky, this action should have been so brought, and can only be so sustained.

This Court has decided that a corporation can bind itself by a provision, without seal. In other states of the union, the same principle has been acknowledged; but it is otherwise in Kentucky. In the supreme court of that state, it has been adjudged, that unless this obligation or promise of a corporation is under seal, it is not binding. 1 Marshall's Kentucky Reports, 1. This has now become a part of the municipal law of the state; and it will be regarded in this Court in cases where the decision applies. The certificate of deposit given by the bank was not, therefore, legal evidence of the promise.

3. In this Court it has been held that bank notes are not money; and this action, which is for money had and received, cannot be sustained, as the notes of the bank only were received.

It may also be urged, that as the notes are payable to J. T. Pendleton, or bearer, there should have been an averment that he was a citizen of Kentucky. The action cannot be supported unless the citizenship was stated; this Court not having jurisdiction, unless J. T. Pendleton was a citizen of Kentucky, and averred so to be in the pleadings.

VOL. II.-2 Q