26 U.S. 100
1 Pet. 100
7 L.Ed. 69
THE UNITED STATES, APPELLANTS,
THE SALINE BANK OF VIRGINIA, JOHN WEBSTER, AND
January Term, 1828
THIS case came before the Court, on an appeal by the United States, from the decree of the District Court of the United States, for the western district of Virginia; in which Court, the District Attorney of the United States, filed a bill against John Webster, Cashier, and a number of others, as stockholders of the Virginia Saline Bank, to charge them, in their private capacities, for certain deposits of money made with them, and also to subject their joint funds, &c.
The bill charges, that about the year _____ a company was formed by a number of persons, citizens of Virginia, within that district, to carry on the usual and ordinary business of banking. That they established a banking house—assumed the name and style of the 'President, Directors, and Company of the Saline Bank of Virginia.' That they issued notes, or bills, purporting to be payable out of the joint funds—to make discounts and exchanges, whereby circulation and currency was given to their notes and bills. That in discharge of public dues, 10, 120 dollars of their notes, were paid into the Treasury of the United States, before the 21st of October 1819; and, on that day, 5,831 dollars, in said notes, were deposited by an agent of the Treasury, with John Webster, Cashier of the said association, who demanded payment therefor, after obtaining a certificate of deposite; which payment was refused by Webster, who said he had no funds.
At the same time, the agent presented a draft drawn by the Treasurer of the United States, for 4,290 dollars, being also for their notes received in the Treasury, which was the balance of the said sum of 10,120 dollars. This draft was refused also, for want of funds. The bill charges, that Webster possessed funds of the company in specie and notes of solvent chartered banks, and combined with individuals of the company to refuse payment, by fraudulently secreting these funds. The bill prays an account of the funds of the company, and also, to subject the Cashier and stockholders to a personal decree.
There was filed with the bill, the following documents mentioned therein:——
1. 'Virginia Saline Bank, October 21st 1812, William Wham has deposited in this bank, 5,831 dollars, in notes of the same, for safe keeping—to be returned to him, or his order.'
J. WEBSTER, Cashier.
2. 'Virginia Saline Bank, 21st October 1819. I certify, that William Wham, Cashier of the Bank of Columbia, acting as agent for the Treasurer of the United States, this day demanded payment of my receipt of this date, in his favour, for 5,831 dollars. That he presented a draft drawn by the Treasurer of the United States, No. 9,079, dated 18th March 1818, in favour of Jonathan Smith, for 4,290 dollars, and demanded payment for the said deposite and the said draft; whereunto I answered, that I was not prepared with funds, and could not pay the said draft, or deposite, at this time.'
J. WEBSTER, Cashier.
The above-mentioned draft, drawn by the Treasurer, is in these words:——
No. 9,079, Reg'd. March 18th 1818, for the Register,
No. 9079, Dr. 4,290.
Treasury of the United States,
Washington, March 18, 1818.
Sir: At sight, pay to Jonathan Smith, Esq. Cashier Bank United States, four thousand two hundred and ninety dollars, value received.
T. T. TUCKER, Trea. U. States.
JOHN WEBSTER, ESQ.
Cashier Virginia Saline Bank.
To the bill of the United States, the defendants filed the following joint and several plea, with the usual affidavit:——
These defendants, by protestation, not confessing or acknowledging all, or any of the matters and things in the complainants' said bill of complaint contained, to be true, in such manner and form, as the same are therein alleged, and set forth, for plea thereunto say, that the company which assumed the name and style of the 'President, Directors, and Company, of the Saline Bank of Virginia,' whereof mention is made in the said bill of complaint, had not, at the time of the issuing, or of giving currency or circulation to the notes or bills in the said bill of complaint mentioned, or at any time hitherto, any charter incorporating the said company with authority to deal or trade as a bank, or any charter whatsoever; and these defendants further say, that all the notes and bills issued by the said company, and to which circulation and currency was given, as in and by the complaints' bill is supposed, were entitled and offered in payment by the said company, to wit: at the time of the issuing of the said notes and bills, as charged and supposed by the said bill of complaint, to wit, at the western judicial district of Virginia; and these defendants aver, that all the matters and transactions in the said bill of complaint stated, and whereof discovery is sought, relate to the emission of the said bills and notes by the said company, and to the offering the same in payment as aforesaid, all which matters and things, these defendants are ready to aver, maintain, and prove, as this honourable Court may-award; and these defendants are advised, and insist, that they ought not to be compelled to discover, or set forth any matters, whereby they may impeach or accuse themselves of any offence or crime, or be liable by the laws of the commonwealth of Virginia, to penalties and grievous fines; for which cause, these defendants humbly pray the judgment of this honourable Court, whether they shall be compelled to make any other or further answer to said bill of complaint, and humbly pray to be hence dismissed, &c.
J. PINDALL, Defendants' Attorney.
The cause was set for argument, on this plea, by consent. The District Court sustained the plea, and dismissed the bill. From which decree, the United States appealed to this Court.
The record contains the articles of association called for by the bill, with a list of the subscribers, the 4th article whereof, is in these words, viz: 'No stockholder shall be answerable in his person, or individual property, for any contract or engagement of the said company, or for any losses, deficiencies, or defalcations of the capital stock of the said company; but the whole of the said capital stock, together with all the rights and credits, and all the property, both real and personal, belonging to the said company, and nothing more, shall, at all times, be answerable for the legal and equitable demands against the said company.'
By the articles of association, it appeared, that the subscription of the stock of the company, began on the 14th of August 1814.
The legislature of Virginia, had thrice enacted laws on the subject of unincorporated banking companies, in February and in November 1816; and in August 1817. Tate's Digest, 41, 42.
The following are the provisions of the laws of Virginia upon this matter:——
1. It shall not be lawful for any association, or company, not having a charter incorporating such association or company, with authority to deal or trade as a bank, now formed or in being, or which hereafter may be formed within the limits of this Commonwealth, for the purpose of discounting notes, bills, or other securities, for the payment of money or other valuable thing, and issuing notes, drafts or bills, whether payable to order or bearer, or any other securities for the payment of money or other valuable thing, in the name, or on account, or for the benefit of, any such association or company, or otherwise for the purpose of dealing, trading, or carrying on business as a bank; to commence or continue the discounting of any notes, or bills, or other securities, for the payment of money or any other valuable thing, or the issuing of any notes, drafts or bills, or other securities for the payment of money, or other valuable thing, or such dealing, trading, or carrying on business, as a bank; and every member, officer or agent of any such company or association, that may so commence or continue such discounting or issuing of notes, drafts, bills, or other securities, or the dealing, trading, or carrying on business as a bank, shall be held and taken to be guilty of a misdemeanor, and, upon conviction thereof, on indictment, information or presentment, shall be liable to be fined at the discretion of a jury, in a sum not less than one hundred, nor exceeding five hundred dollars. And, if any such company or association, or any president, manager, cashier, or other officer or agent of such company or association, shall pay out, deliver, put in circulation, or issue any note, draft, bill, or other security, for the payment of money or other valuable thing, purporting to promise, order, request or stipulate the payment of money or other valuable thing, or that money or other valuable thing is payable by, or on behalf of such company or association, or any person or persons as agent or agents thereof; each member, officer and agent thereof shall be, in like manner, liable to the same penalty.
All contracts that hereafter may be made by individuals for the purpose of forming themselves into any association or company, for discounting and issuing notes and other securities, for the payment of money or other valuable thing, as mentioned in the first section of this Act, or dealing, trading, or carrying on business as a bank; shall be, and the same are hereby declared to be utterly null and void.
2. The capital stock of any association or company, trading, discounting paper, or issuing notes, in violation of this Act, and all capital stock subscribed to such association or company; shall be held in trust for the benefit of the commonwealth, and it shall be the duty of the Attorney General, whenever he shall be informed of the existence of any such company or association, to institute a suit in the Superior Court of Chancery for the district of Richmond, in behalf of the Commonwealth, for the purpose of recovering the capital stock aforesaid. In such suit, it shall be lawful to make all or any of the members of such company or association, and any officer, agent or manager thereof, parties defendant—and to call upon and compel them, or either of them, to exhibit all their books and papers, and an account of all such matters and things as may be necessary to enable the Court to make a decree in pursuance of the provisions of this Act. The members of any such association or company, made defendants in such suit, shall be held severally liable to the Commonwealth for their respective proportions of the capital stock held in such company or association, at the institution of such suit, or the time of the decree, or by any person or persons, for his, her or their benefit; and the Court shall decree against the defendants, respectively and severally, the amounts that they and each of them may respectively and severally hold as aforesaid, in the capital stock of such company or association, or by any person or persons for his, her, or their use or benefit, to be levied of the proper goods and chattels, lands and tenements of such defendants: Provided, however, That no disclosure made by any party defendant to such suit in equity, and no books or papers exhibited by him in answer to the bill, or under the order of the Court, shall be used as evidence against him in any motion or prosecution under this law—and that a recovery in such suit shall be a bar to every motion or prosecution against any defendant to such suit for the recovery of any penalty, or the infliction of any punishment prescribed by this Act.
See also 1 Randolph's Rep., 71 to 101 inclusive.
The case was submitted to the Court without argument, by the Attorney General of the United States; and by Messrs. Webster and Dodridge, for the appellees.
Mr. Chief Justice MARSHALL delivered the opinion of the Court.——
This is a bill in equity for a discovery and relief. The defendants set up a plea in bar, alleging that the discovery would subject them to penalties under the statute of Virginia.
The Court below decided in favour of the validity of the plea, and dismissed the bill.
It is apparent that in every step of the suit, the facts required to be discovered in support of this suit would expose the parties to danger. The rule clearly is, that a party is not bound to make any discovery which would expose him to penalties, and this case falls within it.
The decree of the Court below is therefore affirmed.