Leggett v. Bank of Sing Sing

By the Court, Clerke, J.

According to the referee’s statement of facts, which seems to be correct, one James Thompson, in his lifetime, had certain promissory notes discounted for him by the defendants. These notes were indorsed by William E. Leggett, a stockholder of the bank. Thompson died, leaving them unpaid ; and William E. Leggett was appointed his executor, who from time to time reduced the amount of the notes by payments, having taken up the note of his testator and substituted his own. On the 9th April, 1855, some time after the death of Thompson, there remained due, on account of the notes, the sum of $1900; for which, on that day, Leggett made a note, payable at the defendants’ bank on the 1st of August, 1855, signed by himself, as executor, payable to his own order, and - indorsed by him.

It was admitted before us, on the hearing, that all the old notes were given up to Wm. E. Leggett by the bank, at the time he gave them the note for this balance; so that it was not given as evidence of a previous indebtedness, but in lieu of it. It was not, therefore, I think, a mere extension of the claim, but a new indebtedness, so far as Leggett’s liability was concerned. It is clear, at all events, that the bank, at the time of its refusal to transfer the stock, was not entitled to payment for any debt or liability incurred by Wm. B. Leggett, until the 4th August, 1855, allowing three days’ grace.

The question, then, is whether the provision in article 5 of the defendants’ articles of association includes all debts which the stockholders owe the bank, whether payable at the time the transfer of the stock is demanded, or at a future time.

The note for $1900, given to the bank, although signed by him as executor, made him, undoubtedly, personally liable for its payment; but I cannot discover any reason for supposing that this debt or liability was attended with graver consequences to. him than if, for the first time, and as an original transaction, he had his note discounted at the bank, and put the proceeds in his pocket; or, with the proceeds, took up the notes of any other man. It can scarcely be pretended, if this were the case, that the bank could refuse the stock, on the ground that “a debt was due” by Leggett to them. If they could do that, the defendants, or any other bank adopting a similar article, may immediately after discounting a note on which the name of a stockholder appears, payable at any future time, refuse to transfer his stock. It is clear, if the construction insisted upon by the defendants’ counsel were to prevail, that the article must apply to all cases where commercial paper, not yet payable, is held by a bank; the debt being due, according to that construction. But this would be productive of so much inconvenience and embarrassment in a commercial country, that nothing but the most direct and explicit language should authorize us to declare that they possessed this right.

' Besides, without any reference to the general effect of this construction, is it probable that at the time of the adoption of these by-laws by the stockholders, they designed to allow the interdiction on the stock for an obligation before the party failed to perforin it ?' When a man gives his note payable at a future day, it is an essential part of the contract that he shall not be called on to pay it, and shall in no respect be molested in relation to it, until that day shall arrive, and then he is pledged to pay it. This is the contract; and why should we say that a dealer with this bank is subject to greater liabilities, and exposed to more severe restrictions, than attach to any similar indebtedness to other persons? To entitle any creditor to so great an advantage, his right must be derived from very specific language, showing that this species of embargo was intended to apply to prospective, as well as present, obligations to pay. We ought not, therefore, as the defendants’ counsel requires, to give the article in question a liberal construction in his favor.

By giving the words their natural and ordinary acceptation, in the connection in which they are employed in this article, we are able, without any violence to the words themselves, or to the context, to conclude that the debt must be payable at the time when the right to refuse the transfer is claimed. The words are “ debts due by him (the stockholder) to the association.” Indeed it may be affirmed, that every debt, whether payable now, or at a future time, may be termed a debt due ; this is implied by the word debt itself. Both are derived from the same Latin verb, (debeo;) the one directly from it; the other through the French du. But, in the commercial and popular acceptation of the word “due,” when employed participially or adjectively after “ debt,” without adding some verb or participle denoting future time, it is equivalent with payable at the present time. “Due” is the synonyme of “ payable;” and when it is asked if a promissory note is due, it plainly means it is now payable; and even when I speak of a promissory note “due,” without the verb, or “a debt due” it just as plainly means the same thing—present liability to pay.

On the whole, it is reasonable to suppose that, in the article in question, the word was employed to signify debts presently payable, “ the payment of which one party could tender, and the other party demand.”

[New York General Term, September 14, 1857.

The judgment should be affirmed with costs.

Mitchell, Clerke and Davies, Justices.]