author: Mr. Justice Green

text:
    Bourguignon Building Association versus Commonwealth.
    1. The provisions of the Act of April 10th 1879 (P. L. 10), exempting mutual savings funds anti building and loan assoedations from taxation, are repealed by the provisions of the Act of June.7th 1879, § 4 (P. L. 112), imposing taxation upon the capital stock of corporations.
    2. A building association is not a savings fund, within the meaning of the excepting clause of section 4 of the Act .of June 7th 1879 (P. L. 112), and is therefore liable to taxation as therein provided.
    May 16th 1881. Before Sharswood, C. J., Mercur, Gordon, Paxson, Trunkey, Sterrett, and Green, J J.
    Error to the Court of Common Pleas of Dcwjylvm county : Of May Term 1881, No. 151.
    This was, in the court below, an appeal from the settlement of the Auditor General and State Treasurer against the above named Building Association for tax on capital stock, under the provisions of the Act of June 7th 1879 (P. L. 112), for the year ending the first Monday of November 1879.
    The following case stated was agreed on, viz.:
    The company is a building association incorporated in 1878, under the Act of 29th April 1874, with a nominal capital of $1,000,000, divided into shares of $200 each. At the time of its incorporation, no' capital had been paid in. 1615 shares have been subscribed, payable one dollar per month ou each share. Up to the first Monday of November 1879, $50,113.45 had been paid in. This money is loaned out to' members on mortgage security. ■ _.
    By the Act of Assembly approved April 10th 1879, building associations are exempted from the tax claimed under the settlement made in this case.. The Act was- formally accepted by appellants, and thereupon new letters' patent were issued thereunder.
    The Commonwealth demands the tax in cpiestion under the provisions of the general Revenue Act of June 7th 1879.
    The following questions are submitted to the court:

      First. — Are the provisions of the Act of April 10th .1879, exempting the appellants from taxation, repealed by the general Revenue Act of June 7th 1879?

      Second. — If repealed, does the Act of-June 7th 1879 impose a tax upon the capital stock of building associations ?
    If the Court find both these propositions against the appellants, the judgment is to be entered-for the Commonwealth for $73.03; otherwise judgment to be entered for the Bourguignon Building Association.
    After argument the court below filed the following opinion, April 13 th 1881:
    “ The facts are agreed upon and appear in the case stated. Upon these, two questions are submitted to the court:
    ‘‘ First. — Are the provisions of the Act of April 10th 1879,' exempting the appellants from taxation, repealed by the general Revenue Act of June 7th 1879 ?
    “ This association brought itself within the protection of the Act of April 10th 1879 by filing the certificate of acceptance required by the ninth section of said act. This released it from taxation under existing laws. Wo do not, however, see anything in the letter or the spirit of this Act to indicate a legislative intent to exempt these associations from any burden or taxation imposed by subsequent legislation,'and certainly it has no contract feature which good faith is called upon to enforce and protect against the Commonwealth’s right to tax. It does not strike me that the liability of the defendant to the Tax Act of June 7th 1879 depends upon the-question of a repeal of a former Act. 'The Act of April 10th 1879 may have served its purpose. It ended litigation. It took these associations out of the grasp of the Act of 1868, and any other act then in force. But it did not cast its shadow into the future. We .cannot entertain the argument that because of the eighth section of the Act of April 10th 1879, these associations are not subject to a tax imposed by a subsequent general tax law. There is no attempt to exempt them from future taxation, or from any special tax that might be imposed. The language of the section is peculiar: ‘The bonus or tax due to the Common wealth upon the capital stock of corporations, as provided for by Act of 1st of May 1868, or by any other act, shall not apply to or be due from mutual savings fund or building and loan associations,’ and therefore the necessity of a repeal of this Act, either by implication or express words, in order to make effectual the subsequent tax, if there is one imposed in general terms, by a general, tax law, is not apparent. This doctrine is not in conflict with Egypt Street, 2 Grant, 455, and other kindred cases, including Kilgore v. Commonwealth, 9 W. N. C. 184, relied upon by the defendants to show that implied repeals are not favored. The right to tax the capital of mutual savings fund or building and loan associations, was not relinquished by the sovereign power of the legislature, and hence there is no right to be restored, or law repealed, before effect is given to a general tax law. There is no principle better established, and it requires no long array of cases to prove it, that no surrender of the general power of taxation by any legislative act can be implied. It must be expressed: Erie Railway Co. v. Commonwealth, 16 P. F. S. 84.
    “We come now to consider, Second. — If repealed, does the Act of Juno 7th 1879 impose,a tax upon building associations?
    “The title of the Act is “To Provide Revenue by Taxation,’ and if we turn to the fourth section, under which the tax is imposed against the defendants, we find no appearance of an intention on the part of the law-making power to limit the scope of its grasp by any words of special or limited designation. Hence it is we read, ‘ That every company or association whatever, now or hereafter incorporated by or under any law of this Commonwealth, or now or hereafter incorporated by any other state or territory of the United States, or foreign government, doing business in this Commonwealth, . . . except foreign insurance •companies, banks and savings institutions,’ shall be subject to a tax. There is no escape for the defendants from the sweep of this section, unless it falls within the exception.
    “ The. ingenuity of the argument that ‘ Building Associations,’ because ‘the monthly deposit is made up of the members’ savings,’ because ‘ they may afford to the indigent an opportunity to save and profitably invest their savings,’ and because of the designation of other companies in connection with them in legislation as ‘ savings fund and loan associations ’ belonging to the excepted class of ‘ banks and savings institutions,’ falls upon the imagination, and. does not convince the understanding. The same ingenuity is taxed to demonstrate that building associations are not to be taxed as ‘ banks and savings institutions,’ under the seventeenth section of the act.
    “ ‘ Banks and savings institutions ’ are a class of corporations having banking privileges, ahd have been long known to the law-making power, and the use of these terms is not misunderstood, and should not be misconstrued. They were in use and the subject of legislation and taxation, long before‘building associations’ demanded special exemptions. Building associations have heretofore been exempt from the operation of tax impositions, but always by their technical names.
    “ Again, ‘ banks and savings institutions ’ were exempt from the operation of the fourth section of the Act of May 1st 1808, and in the proviso of the same section we find ‘ building associations ’ exempt from liability ‘ for any tax to the Commonwealth, when such companies make or declare no dividends.’ And further on, in the General Tax Act of April 21th 1871, in section 5, both classes are included in the exemption, as follows, to wit: ‘ excepting also banks a/ncl savings institutions, building associations and foreign insurance companies.’ And also in the third section of the Act of March 20th 1877, entitled ‘ An Act to equalize taxation of corporations and companies,’ the same designation of corporations is used to save them from the tax imposed, ‘ except building associations, banks, smi/ngs institutions and foreign insurance companies.’ We cannot, therefore, arrive at any other conclusion than that ‘ banks and savings institutions’ have been uniformly applied to a different class of corporations than ‘ buildmg associations,’ and hence that the latter are not, by any legislative understanding, within the exception of the fourth section of the Act of June 7th 1879.
    “ We are of the opinion that the defendant is liable for the tax assessed under the law as it now stands, and therefore find in favor of the plaintiff for the sum of seventy-three and 3-100 dollars ($73.03), and against the defendant, the Bourgnignon Building Association.”
    The following exceptions were filed by the Bourguignon Building Association to the above judgment and finding of the Court:
    (1) Because the leaimed court erred in deciding that the General Revenue Act of June 7th 1879, repealed the provisions of the Act of April 10th 1879, exempting defendants from State taxation.
    (2) Because the learned court erred in deciding that the defendants were taxable upon the capital stock under the General Revenue Act of June 7th 1879.
    (3) Because the learned court erred in entering judgment for the Commonwealth on the case stated.

      [Bourguignon Building Association O. Commonwealth.]
    The Court dismissed the exceptions, whereupon the building association took this writ of error, assigning for error, the dismissal of the exceptions and the entering of judgment in favor of the Commonwealth.

      J. W. M. Newlin and M. H. Stutzbach (J. P. Klinges with them), for the plaintiffs in error.
    (1.) The Act of April 10th 1879 is an express declaration of the legislative intention that building associations shall be exempt from taxation. The general Eevénue Act of June 7th 1879, approved within a month of the April Act, contains only the usual general words used in all bills taxing corporations, and does not name building associations. Though approved on different dates, during the same legislative session, the two acts were in fact passing through the formal stages of enactment simultaneously, and, we contend, they must be read together. They can be, and therefore should be, construed harmoniously, so that both may stand. Building associations are expressly named and exempted in the April Act — they are not expressly named and taxed in the June Act. There is therefore no expressed inconsistency. On general principles a subsequent general statute does not repeal a prior special statute: Kilgore v. Commonwealth, 9 W. N. C. 184; Brown v. Commissioners, 9 Harris 37; M‘Farland v. State Bank, 4 Ark. 410 ; Ottawa v. La Salle, 12 Ill. 339; Shinn v. Commonwealth, 3 Grant Cas. 205; Bounty Accounts, 20 P. F. S. 96; Williams v. Pritchard, 4 T. R. 2.
    The general and permanent legislative intent is shown by the fact that by all the tax laws passed prior to the Act of April 10th 1879 (see section 4 of Act of May 1st 1868 ; section 5 of Act of April 29th 1874, P. L. 70 ; and section 1 of Act of March 20th 1877, P. L. 6), building associations were in express terms exempted from taxation; aud there was, therefore, at the time of the passage of the Act of April 10th 1879, no law in force imposing a tax upon the capital stock of- these associations from which they could then be exempted. There would, therefore, be no purpose in said exemption clause if it related only to laws then in force imposing taxes, for there were none for this purpose. There must, therefore, have been some other pirrpose to be attained for inserting this exemption clause; and this purpose, we claim, was to exempt them from all taxes to be imposed by the Acts then before the legislature (such as the Eevenue Act of June 1879, then in process of enactment), in which these associations were not called specially by their well-known name. While limited partnerships, insurance companies, transportation companies, mining companies and all other stock corporations are named by their proper names in the Act of June 7th 1879, as subjects of taxation, in no part of said act are building associations included by name, which we think the Legislature would have done (considering tbe fact that they had just passed a law exempting them) if they had intended to include them in said act. It does not seem possible that it could have been the intention of the legislature to enact a law imposing a tax on the capital stock of these associations, when almost in the same breath they had enacted and declared that they should not be subject to any law imposing such tax on capital stock.
    This exemption is not merely from the operation of the acts specially named, but also from taxation “ by any other act.” This clearly meant subsequent general legislation. Had it been the intention to tax these associations by the Act of June 7th 1879, the legislature, no doubt, would have said so in clear terms; since the fact that they had been exempt,from the payment of a tax by the Act of April 10th 1879, was fresh in their mind.
    Unless acts passed at the same session of the legislature, on the same subject, are read together, it may easily happen that the governor may affix his signature to two bills in the inverse order of the date of their final passage by the legislative houses, and thus by accident or design reverse the true legislative intent.
    (2.) But even if the June Act repeals the April Act, we contend that building associations fall within the terms “ savings institutions,” which are exempted by the provisions of the June Act. The popular term “ building associations ” is a misnomer, “savings institutions” would be a more appropriate name, In the various acts relating to them they are termed “ mutual savings fund or building and loan associations.” — Act of April 12th 1859, preamble; Act of April 10th 1879. The savings character of the association, in the view of the legislature, is further indicated by the second section of the Act of April 12th 1859, and the thirty-seventh section of the Act of April 29th 1871, limiting the periodical payment on stock to a sum not exceeding $2 per share.

      Lyman D. Gilbert, deputy attorney-general (Henry W. Palmer, attorney-general, with him), for the Commonwealth.—
    This is a pure question of legislative intention, as expressed by tbe formal words of the Act of June 7th 1879, in connection with the provisions of former acts. Building associations are clearly included in the enacting clause of the act, and are not within the clause exempting “ foreign insurance companies, banks and savings institutions.”
    The Act of May 1st 1868, is the first general codification of tax law. That act draws a distinction between “ savings institutions ” and “ building associations,” and shows (1) that where the legislature did not intend to tax building associations., they expressly exempted them by name; (2) that the legislature in that act treated “foreign insurance companies, banks and savings institutions” as a class, just as they do in the Act of June 7th 1879. The next general tax act was the Act of April 21th 1871, in which the same distinction was continued, both classes — “ savings institutions ” and “ building associations” — being expressly exempted by name. ' So in the next general tax law, of March 20th 1877, “building associations ” and “ savings institutions ” were distinguished, and both exempted by name. The inference from this prior legislation is irresistible that “ banks and savings institutions ” conveyed to the legislative mind a different meaning than that indicated by “ building associations.”
    Now when we come to the tax law of June 7th 1879, and find that the former class (banks and savings institutions) are again expressly exempted, but that “ building associations ” by their identifying name are omitted from the exempting clause, the inference is equally strong that the legislature intended that such associations should cease to be exempt, and should fall under the taxing clause, within the general terms “ every company or association whatever,” etc. And the equity of the change is plain. “ Foreign insurance companies, banks and savings institutions ” are all taxable under another section of the same act, or under other acts, while “ building associations ” are not. It is more than doubtful if the exemption of such corporations would be constitutional under Art. IX. § 1 of the constitution.
    No canon of construction warrants the argument, insisted on by the other side, that an act of the legislature is to be affected by another act passed on a prior day of the same session. On the contrary, this court has' held that they cannot inquire into circumstances attending the passage of a bill, but must construe the act just as they find it.
    But further, we contend that the tax from which building associations were exempted by the Act of April 10th 1879, was not a similar tax to that imposed by the Act of June 7th 1879, —which is an annual tax on capital stock — but was, as expressly stated, “ the bonus or tax due to the Commonwealth upon the capital stock of corporations, as provided for by Act of May 1st 1868, or by any other act: ” i. e., it was the “ bonus ’’ or tax. imposed on the creation of a corporation under the Act of 1868, as the price of its birth. That is wholly different from the annual tax on capital stock, imposed by the 8th section of the Act of 1868. It follows therefore, that the Act of April 1879, operated on an entirely different subject; and (whether that is so or not) it cannot control the operation of the later Act of June 1879.
    June 6th 1881.
   Mr. Justice Green

delivered the opinion of the court,

The fourth section of the “Act to provide revenue by taxation,” approved June 7th 1879, provides as follows : “That every company or association whatever, now or hereafter incorporated by or under any law of this commonwealth, or now or hereafter incorporated by any other state or territory of the United States, or foreign government, and doing business in this commonwealth, or having capital employed in this commonwealth in the name of any other company, association or associations, person or persons, or in any other manner, except foreign insurance companies, banks and savings institutions, shall be subject to, and pay into the treasury of the commonwealth, annually, a tax to be computed as follows,” &c., &c. The facts of this case are brought before us by a case stated, in which it is agreed that the appellant “ is a building association incorporated in 1878, under the Act of April 29th 1874, with a nominal capital of $1,000,000, divided into shares of $200 each.” It is also agreed that “ up to first Monday of November 1879, $50,113.45 (of capital) had. been paid in,” and “This money is loaned out to members on mortgage security.”

By the terms of the case stated it appears, therefore, that the appellant is an association incorporated by a law of this commonwealth, having a paid-up capital of $50,113.45, on the first Monday of .November 1879.

Apparently, the language of the Revenue Act of June 7th 1879 subjects the appellant to the payment of a tax upon its capital stock. It is contended, however,.that it is not liable to such a tax, upon two grounds: 1st, because building associations are exempted from the tax claimed, by virtue of the Act of April 10th 1879, relating to mutual savings fund, building and loan associations; and, 2d, because the Act of June 7th 1879 does not, when properly construed, impose a tax upon building associations. As it is undoubted that the Act of April 10th, 1879 does exempt from taxation all building associations, which prior to, and at that time, were subject to taxation by existing 1 iws, the contentions of the parties to this litigation are presented by the case stated in the two following questions:

First. Are the provisions of the Act of April 10th 1879, exempting the appellants from taxation, repealed by the General Revenue Act of June 7th 1879 %

Second. If repealed, does the Act of June 7th 1879 impose a tax upon the capital stock of building associations ?

The court below having decided both these questions against the appellant, and sustained the settlement made by the auditor-general and state treasurer, the association has brought the case'liere for review by writ of error.

As to the first question, the language of the 8th section of the Act of April 10th 1879 is as follows : . “The bonus or tax due to the commonwealth upon the capital stock of corporations, as provided for by Act of first of May one thousand eight hundred and sixty-eight, or by any other act, shall not apply to, or be due from, mutual savings fund, or building and loan associations.” The effect of this provision undoubtedly was to exempt mutual savings fund and building and Joan associations from the payment of the bonus or tax imposed upon them by the Act of May 1st 1868, or by any other act in force on April 10th 1879, but that was its whole effect. Neither this section nor any other of the Act of April 10th 1879 assumed to surrender the right of the commonwealth to impose any taxes she might choose to impose in the future; not the slightest attempt is made to prohibit subsequent legislation in hostility with that of the Act in question. Hence it cannot be doubted, that on any day after the 10th day of April 1879, it was within the authority of the commonwealth, acting through the law-making power, to re-impose any taxes which were removed by the legislation of that date. While it may be argued with some force that it would be inconsistent for the same legislature to remove a tax by one Act, and re-establish it by another of subsequent date, yet that is but an argument of inconsistency at the best. It would be very proper to be addressed to the legislative body as a reason for not passing the subsequent act, but it is absolutely of no force when addressed to a court which is bound to construe and enforce plain legislative words. Were the subject an open one it would be enough to suggest that in the interval between the dates of the two acts, there may have occurred such a change in the financial affairs of the Commonwealth, or in the opinions of the members of the legislative body, respecting those affairs, as to induce them to re-impose taxes which they had by the earlier act removed. •In view of these considerations, it is evident that if the act of June 7th 1879 imposes the tax in question, it is scarcely essential to the discussion, to determine whether it is a repeal of the Act of April 10th preceding. But if it were material, the question is not difficult of solution. The 18th section of the Act of June 7thprovides, “that this shall go into effect immediately, and that all laws or parts of laws inconsistent herewith, or which are hereby substantially re-enacted be, and the same are hereby repealed.” The 8th section of the Act of April 10th is certainly and necessarily.inconsistent with the 4th section of the Act of Juno 10th, if the latter imposes a tax which the former removes, and hence the question is not one of implied, but express repeal. In the case of Commonwealth v. Fayette Co. R. R. Co., 5 P. F. S. on p. 455, we said, “ The act of April 12th 1859 expressly repeals any existing law inconsistent with the provision as to taxation, and as the defendants are conceded to he within the words of the act, the limitation of taxation in their 5th section is clearly altered or repealed.”

In the case of The Union Improvement Co. v. The Commonwealth, 19 P. F. S. 140, the company was, by the express provision of a supplement to its charter, exempted from taxation on its capital stock and dividends. Yet we held that it was liable to such tax under the general language of the Act of May 1st 1868, inqiosing tax upon all corporations without any words either of special or general repeal. The decision was put solely upon the ground that the Act of 1868 subjected to taxation the capital stock of all corporations, and that therefore it must be intended to repeal even previous acts which gave special exemption. On page 143 it was said, by Williams, J., “ It is true that this company .was exempted from taxation by a special act, but this is wholly immaterial, if it was the intention of the legislature to repeal the exemption by the Act of 1868. If no such repeal wras intended, why did the legislature declare that the stock of all companies whatever, except banks, savings institutions and foreign insurance companies, should be subject to the tax imposed by the act % The exemption -of these three classes of corporations from the operation of the act conclusively shows that the legislature intended to include wdthin its provisions all other corporations whatever, whether they had been previously exempted from taxation or not. If such was not their intention, why were they not included within the saving provisions of the act ?” This language goes much farther than any requirement of the present case demands. In the case just cited, the exemption was by a special act which constituted part of the charter of the company, and, of course, it ivas limited to that particular corporation. In the case at bar, the plaintiff in error is one of a class, and claims the benefit of a general act exempting all building associations. The Act of May 1st 1868, contained no general repealing clause, but did contain a section (the 16th) which repealed a number of acts and parts of acts by precise description, but none of which embraced the exempting Act of April lltli 1862, which applied to the Union Improvement Compauy. Notwithstanding all this it was determined by this court that the moro general language of the Act of 1868, making the capital stock of all corporations liable to taxation, operated as a repeal of the special exemption in question. In the case of Erie Railway Co. v. Commonwealth, 16 P. F. S. on p. 87, the present Chief Justice said: “ There is no principle better established, and it requires no long array of cases to prove it, than that no surrender of the general power of taxation by any legislative act can be implied.” In the present case there is no language in any part of the Act of April 10th 1879, as we have heretofore shown, that purports to surrender in the least degree the general power of taxation possessed by the commonwealth. Under the case last referred to it is heid that such surrender cannot be implied. "We are, therefore, clearly of opinion that the Act of June 7th 1879 was a fresh and independent exercise of the taxing power, unrestrained by any previous surrender or limitation, so far as building associations are concerned, and also that it operated as an express repeal of the Act of April 10th 1879, exempting such associations from taxation.

The remaining question submitted by the case stated is: “Does the Act of June 7th 1879 impose a tax upon the capital stock of building associations ?” The express language of the act includes “ every company or association whatever ” . . . “ except foreign insurance companies, banks and savings institutions.”

A building association is neither a foreign insurance company nor a bank, and it cannot, without a manifest abuse of terms, be denominated a savings institution. Technically, building associations and savings institutions have not a feature in common. In the practical details of their operation they are totally dissimilar. The latter were well known and in general use long before the former were heard of or had any authorized existence.

, If there were the slightest doubt as to whether the legislature regarded savings institutions and bmld/ing associations as the same, it is instantly dispelled by observing the manner'in which they ai’e treated in vaxlous acts. The Act of May 1st 1868 imposed taxation upon all companies whatever,” “ except banks and saving institxxtions and foreign insurance companies,” but yet provided in the sanxo section “ that building associations, plank-x-oad, or turnpike companies shall not be liable for any tax to the commonwealth, when such companies make or declare no dividends. ”

If “ building associations ” were already exempt from the operation of the 4th section because they were “ savings institxxtions,” the proviso clause of that section, which exempts them when they declare no dividends, would be an absurdity.

In the 5th section of the Tax Act of April 24th 1874 occurs the following clause: “ and excepting also banks and savings' institutions, building associations and foreign insurance companies.” If the two classes were the same, of course they would not receive separate designations:

Precisely the same independent designation of these two classes of corporations occurs in the excepting clause of section 3 of the General Tax Law of March 20th 1877. When the Act of June 7th 1879 was passed, all companies or associations whatever were subjected to the tax, “ except foreign insurance companies, banks, and savings institutions,” and the conclusion is irresistible, that inasmuch as in the previous Acts upon the same subject building associations were included in the excepting clauses by express mention, they were omitted from the excepting clause of this act because it was so intended. It is unnecessary to pursue tbe discussion. We are of opinion that the learned court below were correct in their conclusions upon both questions submitted, and therefore

Tbe judgment is affirmed.


source: Caselaw Access Project

author: Mr. Justice Trunkey

license: Public Domain

text:
    Lebanon National Bank versus Karmany.
    1. Slate courts have jurisdiction in actions brought against national banks, under the provisions of section 5197 of the Revised Statutes of the _ United States, to recover back the penalty imposed by section 5198" of said statutes upon suck banks for taking usurious interest.
    2. Bletz v. Columbia National Bank, 6 Norris 87, followed.
    3. The Act of Congress of February 18th 1875, whereby this jurisdiction is expressly conferred, being purely remedial in its character, may be construed to apply where the right of action accrued before its passage, as well as after.

      4. There are no banks of issue in Pennsylvania authorized to receive interest at a higher rate than six per cent.

      5. The Act of May 28d 1878 (P. L. 109), expressly subjecting all banks of issue to the provisions of the Usury Law of May 28llll858 (P. L. 622), was not intended as a recognition of the fact that prior to that date such banks bad not been subject to the provisions of that law, but simply to remove any ground for fictitious claims to the effect that they were not so subject.
    6. Although, by the provisions of the Usury Law of May 28th 1858 (P.L. 622), no penalty is imposed for taking a greater rate of interest than srx per cent., yet no greater rate than that is “ lawful,” within the meaning of section 5197 of the Revised Statutes of the United States.

      7. A national bank situate in Pennsylvania cannot lawfully take more than six per cent, interest; if it does so, it. becomes liable for the penalty imposed upon it by the provisions of section 5198 of the Revised Statutes of the United States.
    8. Suit may be brought for this penalty by the person paying the usurious interest, at .any time after the said payment, even though the indebtedness on which the usurious interest was paid has not been discharged.
    9. In such suit the plaintiff is entitled to recover twice the entire amount of interest paid, not twice only the amount of the excess above the legal rate.
    10. In such suit the defendant cannot set off a judgment held by it against the plaintiff.
    It. Semble, moreover, that after recovery of judgment by the plaintiff, the court will not exercise its equitable power to set off one judgment against the other.
    12. Where a declaration clearly sets forth the cause of action and the matters claimed, mere defects in form will not now avail as formerly.
    13. Necessary form and allegations of a declaration, in a suit against a national bank, to recover the penalty for taking usurious interest, discussed and passed upon.
    May 17th. 1881. Before Sharswood, O. J.,_ Meecub, Gordon, Paxson, Trunkey, Sterrett, and Green, JJ.
    Error to the Court of Common Pleas of Lebanon county: Of May Term 1881, No. 3.
    Debt, by David M. Karmany against the Lebanon National Bank, to recover back twice the amount of usurious interest paid by the plaintiff on certain loans and discounts, as the penalty prescribed by section 5198, Devised Statutes of the United States, for the taking of usurious interest by national banks.
    The declaration averred, in a single count, that within two years from the commencement of the action the plaintiff paid and the defendant knowingly took and received a greater rate of interest than six per cent., the lawful rate in Pennsylvania, on seventy several transactions of loan and discount (specifying them particularly), such payments of illegal interest amounting in the aggregate to $1,845.12; and the plaintiff claimed to recover, as the penalty prescribed by said Act of Congress, twice the said amount, to wit, the sum of $3,690.24.
    The defendant pleaded nil debet,, and special pleas to the following effect, viz.: 1. That the court has no jurisdiction of the action, the jurisdiction of suits to recover penalties incurred under statutes of the United States being exclusively in the courts of the United States. 2. That the bank defendant, under the laws of the United States and its charter, is authorized to reserve and take interest at the rate allowed by the laws of Pennsylvania to be taken by banks of said state having power to issue circulating notes; that the following-named state.banks were incorporated by the laws of Pennsylvania prior to January 1st 187é, and continued in existence at the time of the commencement of this suit, having power to issue circulating notes, and with power to take and reserve such rates of interest on any loan'or discount as might be agreed upon by the parties contracting with said banlis, to wit:
    Name. Date of Act of Incorporation. L.
    The Southwark Banking Co. of the City of Philadelphia . . . June 3d 1871 1873, App.-1359
    The Franklin Bank of the City of Philadelphia....... April 1st 1870 1870, 736
    The Germania Bank, located in the City of Philadelphia .... June 3d 1871 1874, App. 335
    The States Banking Co., located at Philadelphia . . . June 3d 1871 1873, App. 987
    The Twenty-Second Ward Bank of Germantown, Philadelphia . . May 17th 1871 1871, 886
    The Manayunk Bank, located in the City of Philadelphia .... June 14th 1871 1871, 1358
    The Bank of America, located at Philadelphia....... April 37th 1870 1871, App. 1533
    The People’s Bank of the City of Philadelphia....... Feb. 35th 1870 1870, 337
    The Butchers’ and Drovers’ Bank, at Philadelphia..... April 37th 1870 1871, App. 1537
    The West End Bank, to be located at Philadelphia...... Nov. 30th 1871 1873, App. 1383
    The Market Bank, to be located at Philadelphia...... April 37th 1870 1871, App. 1534
    The Stroudsburg Bank, at Stroudsburg .......... March 6 th 1873 1873, 793
    The Quaker City Bank .... May 33d 1871 1871, 1058
    The State National Bank .... June 3d 1871 1873, App. 1357
    The Safe Deposit and Trust Co. 1 of Wheatland, now the Peun. > Bank of Pittsburgh. ) The Petroleum Bank, at Philadel-1 pbia, now the Shackamaxon > Bank. j April 5th 1873 Nov. 30th 1871 5 1873, 973 ] 1873, 165 ( 1873, App. 1381 { “ 1037
    The special plea further averred that the interest taken by the defendant in the transactions declared on was at a rate agreed upon between the plaintiff and defendant. 3. A special plea of set-off, averring that a larger sum than the plaintiff claimed to recover was due by the plaintiff to the defendant, which the defendant claimed to set off in this action.

      Issue was joined, on these pleas.
    On the trial, before Henderson, J., the plaintiff proved the several transactions declared on in the nwrr., on which interest had been paid at the rate of eight per cent., except that in several instances there were minor discrepancies in the amounts of interest averred to have been paid and the amounts proved to have been paid. The total variance amounted to $33.35.
    On cross-examination the plaintiff testified that a short time after bringing this suit he assigned all his interest in whatever might be recovered to a stranger.
    The defendant offered in evidence, under the plea of set-off, certain judgments recovered by defendant against the plaintiff, exceeding in amount the penalty claimed in this action. Objected to, on the ground that set-off is not admissible in an action for a statutory penalty. Objection sustained. Exception. (First assignment of error.)
    The defendant presented numerous points, requesting the Court to instruct the jury substantially as follows :
    1-6. State courts have no jurisdiction of a suit to recover a penalty incurred under a law of the United States, or if they have, it is only by virtue of the Act of Congress of February 18th 1875, and no recovery can be had for usury taken before that date. Answer. The first six points deny the jurisdiction of the state courts; we are of the opinion that this is not now an open, question, that the state courts have jurisdiction, and' thát the plaintiff may recover the. full penalty, twice the amount of interest paid, for a violation of said section 5198.
    7-11. That certain state banks (above named), or some of them, are “ bánks of issue,” having the right to take such rate of interest as may be agreed upon, and that the defendant national bank therefore has, under section 5197, Revised Statutes, the same right. Answer. These points substantially involve the same proposition, and are answered in the negative. It does not appear that the banks named are banks’of. issue, having the right to charge a rate of interest greater than six per cent, per annum. And in fact and in law there is no bank of issue in Pennsylvania authorized to charge a rate of interest in excess of the legal rate.
    ,12, 13. That under the laws of Pennsylvania parties are allowed to reserve and contract for such rate of interest as they may agree upon; and that therefore the defendant bank has the same right. Answer. There is nothing in the statute allowing parties to contract in reference to the rate of interest as therein provided, which authorizes those banks to take, reserve or charge a rate of interest or discount iá excess of the legal rate, which is six per cent, per annum.

      14, 15. No action will lie for recovery of the penalty until the payment of the principal of the notes on which usurious interest was taken, and it appearing by the evidence that the notes for $7,500 and $6,000 respectively remain unpaid, there can be no recovery of the penalty as to usurious interest taken thereon. Answer. Negatived.
    16, 17. No more than twice the amount of. the interest paid in excess of the legal rate can be recovered. Answer. Negatived.
    18. This action is a personal one, and it appearing that the plaintiff has assigned his interest in the suit, he cannot recover. Answer. This action is brought,.maintained and prosecuted by the person who paid the usurious interest or discount, and there is no evidence of such an assignment as to work an abandonment of it, or justify the court in saying it cannot be maintained.
    19, 20. The action being a penal one, the recovery of one penalty is all that is permitted. Answer. Negatived. ' A recovery may be had for twice the amount of interest or discount received and drawn on usurious contracts, within the period allowed by law, notwithstanding the interest may have been charged and received on several notes or loans on the renewals of them, if the interest so received was illegal.
    21-25. There being but one count in the declaration, and the evidence showing a variance between the allegata and the probata, there can be no recovery in this action. Answer. Negatived. There is no such variance between the proof and the declaration as is fatal to a recovery.
    27. The defendant is entitled to set off any debts, dues, or demands it may hold against the plaintiff. Answer. There can be no offset in this action.
    Verdict for the plaintiff for $3,526.98. The defendant moved in arrest of judgment, and filed substantially the following reasons: The declaration is defective in that it does not sufficiently set out the Act of Congress, or any violation thereof ; and does not conclude contra formam staiuti; it does not set out the jurisdiction of the court. It contains but one count, claiming penalties on several different transactions; the narr. avers that usurious interest was taken on loans and discounts, while the proof is that it was taken on notes and drafts which are not set out in the na/rr. For this and other variances between the proof and the declaration, there can be no recovery.
    The court overruled the motion in arrest of judgment, and entered judgment on the verdict, Henderson, J., filing the following opinion :
    “ The motion for a new trial has been withdrawn; we shall briefly dispose of the motion in arrest of judgment. The declaration is sufficiently formal, and clearly and distinctly sets out the cause of action. It has substance, even if defective in or for the want of formal averments ; it was amendable, and is cured by the verdict, or may still be amended, so as to conform to the evidence and supply any mere technical defect. This court has jurisdiction, and of this we take notice, it is not necessary to plead it formally, and if it was, the jurisdiction is apparent, and in this no reason exists for an arrest of judgment. It is trifling to say that there was no proof of the Net of Congress. It is the law of the land, of which we may well take notice, but it was before court and jury from the first to last so fully and clearly that it would have been useless to make a note of it or call for proof. There is no necessity for more than one count; the action is debt; the cause of action is clearly stated ; it is sufficiently certain for an indictment, if the taking of usurious interest had been made an indictable offense. There is no variance between the verdict and the claim set out in the narr. This is not an action for a fixed and definite penal sum; it is an action to recover a penalty which is determined by the amount of interest or discount paid and received, and necessarily requires some calculation, and a mere discrepancy in a date or amount, depending on the testimony in the cause, is not such a variance as defeats the action ; this may be amended before or after verdict. There is no substance or merit in any of the reasons assigned ; the truth is manifest that a large amount of usurious interest has been talcen cmd receimd by the defendant from theplaintiff, and to whittle away the rights of the plaintiff, under the law, by sharp and severe technical points of pleading after verdict, is a denial of justice.

      “We overrule the motion in arrest of judgment.

      “ And now, May 3d 1880, it is ordered and directed that judgment be entered on the verdict on payment of jury fee.”
    The defendants took this writ of error, assigning for error the exclusion of their offer of judgments held by them against the plaintiff, the answers to their points, the overruling of their motion in arrest of judgment, and the entering of judgment on the verdict for the plaintiff.

      Grant Weidmcm and O. P. Miller, for the plaintiff in error.
    —Although this court has decided in favor of the jurisdiction of a state court in such an action as this, we respectfully urge a-reconsideration of the question, on the following grounds. By the Revised Statutes of the United States, section 117, approved June 22d 1871, it is provided: “ The jurisdiction vested in the courts of the United States, in the cases and proceedings hereinafter nientioned, shall be exoltLsive of the courts of the several states. First.....Second. Of all suits for penalties and forfeitures incurred under the laws of the United States.” By “ An Act to correct errors and to supply omissions in the Revised Statutes of the United States,” approved February 18th 1875, section 5198 is amended by adding thereto, “ That suits, actions and proceedings against any associations v/nder this title may be had . ... in any state, county or municipal court in the county or city in which said association is located, having jurisdiction in similar cases.” The “ title ” referred to is general, viz.: National Banks, title LXII. This general provision is not repugnant to the prior provision that United States courts shall have exclusive jurisdiction of suits for penalties incurred under United States laws. A statute creating a new jurisdiction should be strictly construed: Dwarris on Statutes, *736. Congress cannot give jurisdiction to state courts to try offenses against the laws of the United States : Huber v. Reily, 3 P. F. Smith 118 ; Martin v. Hunter’s Lessee, 1 Wheat. 301; Ely v. Peck, 7 Conn. 212. In any case, the jurisdiction did not exist prior to the Act of 1875, and as nearly all of the alleged usurious transactions took place before that act was passed, the judgment below was erroneous.
    The state banks mentioned in the plea were banks of issue, having the right to stipulate for any rate of interest: Act of April 16th 1850, §§ 1, 10, 22, Pamph. L. 177. This power of banks organized under that act was recognized in the act without special legislation authorizing - it, and where the legislature did not intend it to be used they expressly denied it: see Charter of Lock Haven Savings Bank, Pamph. L. 1872, p. 166, § 1. That sirch power existed is further shown by the express repeal of such powers by the Act of May 23d 1878, sections 1, 2; Pamph. L. 109. The object for giving national banks similar privileges to those enjoyed by state banks is stated in Tiffany v. Nat. Bank of Missouri, 18 Wallace 109 ; and their power was recognized by the Circuit Court of the United States for Pennsylvania in First Nat. Bank of Mount Pleasant v. Duncan, 6 W. N. C. 158.
    By the laws of Pennsjdvania it is not illegal to agree upon a higher rate than six per cent., though the debtor cannot be compelled to pay more: Act of May 28th 1858, § 2; Pamph. L. 622; Appeal of Second Nat. Bank of Titusville, 6 W. N. C. 156; Miners’ Trust Company Bank v. Roseberry, 31 P. F. Smith 312. National banks, therefore, have the same right: Tiffany v. National Bank of Missouri, 18 Wallace 109. The question whether there was such an agreement in this case should have been submitted to the jury.
    The principal of the debt in this case is still unpaid, and until a lender has received more than the principal loaned, and legal interest, the offense of usury is not consummated: Brestle v. Mehaffie, 7 Harris 117; Duncan v. First Nat. Bank of Mount Pleasant, 11 Bankers’ Mag. 787; Brown v. Second Nat. Bank of Erie, 22 P. F. Smith 214.
    The penalty recoverable is twice the excess paid over the legal rate, not twice the entire interest: Brown v.- Second Nat. Bank of Erie, 22 P. F. Smith 214; Iiin'termister v. First Nat. Bank of Ohittenango, 3 Hun (N. Y.) 345.
    The plaintiff, having assigned his interest in the suit, has no standing to maintain it.. The statute professes to deal ■only with the parties to the transaction: Miners’ Trust Company Bank v. Roseberry, 31 P. F. Smith 312; Titusville Bank’s Appeal, 6 W. N. C. 153; Smith v. Exchange Bank of Pittsburgh, 26 Ohio St. 141.
    The variances between the allegata and th^probata were fatal. The penalty is measured by the offense as charged and proved, and the amount lent must be exactly laid, because it defines the penalty. A slight variance in an action for usury is substantial : Commonwealth v. Commercial Bank, 4 Casey 397; Smith v. Brush, 8 Johns. 84 ; Hendrick v. Seely, 6 Conn. 176 ; Russell v. Society, 9 Conn. 508; De Forest v. Frary, 6 Cowen 151. The narr. was in other respects defective in substance 'and form.
    This being an action of debt, set-off is permissible.

      W. M. Derr, for the defendant in error.
    It is settled that state courts have jurisdiction in this case: Bletz v. Columbia Nat. Bank, 7 Norris 87; Stephens v. Monongahela Nat. Bank, 7 Norris 157, 166; First Nat. Bank of Clarion v. Gruber, 8 W. N. C. 119.
    June 20th 1881.
   Mr. Justice Trunkey

delivered the opinion of the court,

In the twenty-eight points presented to the court below and in the more than thirty assignments of error, no question is made but that the plaintiff paid and the defendant received a large amount of usurious interest. That fact was too patent to be gainsaid. The court submitted* to the jury to find ■the amount of interest charged on the several loans and discounts, and if in excess of the legal rate, with instructions that there could be no recovery for usurious interest paid' on any contract or note not declared upon. This submission, involving the merits of the case, is not specified among the alleged errors.

The numerous assignments do not' present so many points, and some of these do not seem to be so material as to require remark. In passing it may be noted that the statutes in this state providing for amendments in pleadings are very liberal, even permitting the courts to allow the filing of a declaration or plea after verdict, and these statutes have been liberally construed as remedial. When a declaration clearly sets forth the cause of action and the matters claimed, objections for defects in form will not avail as formerly.

. The defendant denied the jurisdiction of the court. In Bletz v. Columbia Nat. Bank, 6 Nor. 87, it was decided that state courts have jurisdiction in an action by a borrower against a national bank, to recover back twice the amount of illegal interest paid by the borrower to the bank and taken in violation of the National Bank Act. That was the jjoint in the case. Since, the judgment has been repeatedly followed, without attempt to add to the reasoning of Agnew, C. J., who supported it independently of the. Act of February 18th 1875, amending section 5198 of the Revised Statutes of the United States. No sufficient reason appears for departure from the authority of that case. Moreover, said amendment expressly gives jurisdiction in said action to the state courts, and as it is purely remedial, it might be construed to apply where the action accrued prior to its date as well as after.

The defendant asked instructions that the banks named in the special plea are banks of issue, under the laws of this Commonwealth, within the meaning of section 5197 of the R. S. U. S., to which the court answered: “ It does not appear that the banks named are banks of issue, having the right to charge a rate of interest greater than six per cent, per annum. And in fact, and in law, there is no bank of issue in Pennsylvania authorized to charge a rate of interest in excess of the legal rate.” This ruling was in accord "with the opinion of Agnew, C. J., in First Nat. Bank of Clarion v. Gruber, 6 Nor. 468, and with the subsequent decision of this court in the same case: 8 W. N. C. 119. At the second trial nearly all the same charters were pleaded as in this case. It is not alleged that these banks ever did issue circulating notes. It was not the legislative intent that they should have that right. Until their charters wore construed to give it by National Banks, it was not suspected that such power had been granted. At the first session of the legislature after the national banks had set up this construction in court, a statute -was enacted subjecting all banking corporations to the Act of May 28th 1858, relating to interest for the loan or use of money. It was well to remove any ground for said fictitious claims, and in doing so no validity or sanction was given those which were previously made.

In answer to the defendant’s twelfth and thirteenth points the jury were instructed that nothing in the statutes of this Commonwealth, relating to*the rate of interest, authorizes banks to take, reserve or charge a rate of interest in excess of six per centum per annum. The statute provides, “ The lawful rate of interest for the loan or use Gf money, in all cases where no express contract shall have been made for a less rate, shall be six per cent, per annum.” When a greater rate shall have been reserved or contracted for, the debtor shall not be required to pay the excess over the legal rate, and at his option he may deduct the excess from the amount of the debt, or when he shall have voluntarily paid the whole debt,with interest exceeding the lawful rate, he may recover the excess of interest by action: Act May 28th '1858, P. L. 622. This statute inflicts no penalties for charging or receiving unlawful interest, and it has been said that it is not unlawful for a debtor to pay, or a creditor to receive, more than the lawful rate, and that the man who agrees to pay more commits no violation of law, and is not bound to repudiate his contract: Appeal of Second Nat. Bank of Titusville, é Nor. 528. It is strictly true that no violation of law is committed in the making of such contract, that will be followed by pains and penalties, or forfeitures; or that such contract will be deemed a fraud upon other persons; and the remarks were to the end that the taking of more than six per cent, interest is not a fraud per se upon creditors. In another sense, the contract for a greater rate of interest than six per centmn is in violation of law. In absence of a contract for a less rate, the plain letter of the statute is, six per centum per annum is the lawful rate of interest, and if the parties contract for a greater rate the contract is voidable as to the excess; the debtor need not pay the excess, and if he pay the excess voluntarily he may recover it back by action. The court was clearly right in the instruction as as to the rate of interest banks may receive or charge on loans and discounts.

It is alleged that the court erred in refusing the defendant’s points that no recovery can be had for the penalty under section 5198, unless the debt was also paid. The section is : “ The taking, receiving, reserving or charging a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in the nature of an action of debt, twice the amount of the interest thus paid, from the association taking or receiving the same.” “ Two categories are thus defined, and the consequences denounced. 1. Where illegal interest lias been knowingly stipulated for, but not paid ; there only the sum lent, without interest, can be recovered. 2. Where such illegal interest has been paid; then twice the amount so paid can be recovered in a penal action of debt, or suit in the nature of such action, against the offending bank, brought by the persons paying the same .or their legal representatives Barnet v. National Bank, 8 Otto 555. The terms of the statute are too plain for different constructions. If illegal interest be contracted for the debt shall bear no interest. If such interest be paid, the offending bank is liable in an action for twice the amount. That liability is incurred the moment the bank takes the illegal interest. The intendment is to prevent banks contracting or receiving more than lawful interest for the use of money. To permit a bank which had actually received illegal interest, when sued for the penalty, to chop round and call it a credit on the principal, would vitiate the vindicatory clause of the statute. In such case the taking would amount to nothing more than a contracting to receive. The statute inflicts twice the penalty for taking that it does for contracting : Monongahela Nat. Bank v. Overholt, 38 Leg. Intell. 185. In Pennsylvania the statute authorizes the debtor, at his option, to deduct the excess of interest from the debt, or to pay the whole debt and unlawful interest, and then recover back the excess over the lawful. Such statutes and decisions under them throw no light on the question now pending.

It is urged that the court erred in refusing the defendant’s point that no more can be- recovered than twice the amount of the interest paid in excess of the legal rate. The statute makes the receiving or charging “ a rate of interest greater than is allowed ” “ a forfeiture of the entire interest.” In case the greater rate of interest has been paid ” the debtor may recover back “ twice the amount of interest thus paid.” The bank may take or charge the “ rate ” allowed by the laws of the state where it is located, and if no rate ” is fixed by said laws, it may take or charge a “ rate ” not exceeding seven per centum. It is clear the word rate is used in the same sense throughout. The lawful rate, measure, is certain, and a greater rate, whatever it may be, is a fixed measure by agreement of the parties. The entire interest forfeited is just the rate which was contracted. IJpon payment and receipt of a greater rate than is lawful, twice the amount thus paid is twice the rate, twice the entire interest. To„say that the meaning is, only a part of said greater rate, only the excess over the lawful rate, may be taken to measure the penalty, is a wresting of the words. The defendant cites and relies on tlie case of Hintermister v. First Nat. Bank of Chittenango, 3 Iiun, 345, where it was decided that only twice the amount paid in excess of the lawful interest can be recovered. Great weight is justly given to the decision of that court, but in this case we think its reasoning and conclusion are directly at variance with the statute. We adopt the ruling of-Dillon, .Cir. J. of U.S., thattlie amount of the recovery is twice the full amount of interest paid, and is not limited to twice the excess of interest paid over the legal rate: Crocker v. First Nat. Bank of Chetopa, 3 Cent. L. Jour. 527.

In answer to the defendant’s twenty-seventh point the court charged that there can be no set-off in this action. The plaintiff's claim is not within the Defalcation Act, which applies where the parties are “ indebted to each other upon bonds, bills, bargains, promises, accounts or the like.” It arises from the defendant’s violation of a statute, remedial and penal, which gives the borrower the right to recover back from the bank twice the amount of illegal interest paid, for the two-fold purpose of compensation and example — the recovery being a recompense to the one and a punishment of the other : Monongahela Nat. Bank v. Overholt, supra. It was decided in Barnett v. National Bank, 8 Otto 555, that in an action on a bill of exchange, the defendant could not set off a claim for twice the amount of illegal interest he had paid the bank; that his remedy for the wrong was a penal suit, and he could have redress in no other mode or form of procedure. That set-off is not allowed in such actions is well settled. When the prescribed action for recovery is debt, or action in the nature of debt, it gives no right of set-off. After the plaintiff shall have obtained judgment, if the defendant have a judgment against the plaintiff in another case, there is power in the court to order one judgment to be set off against the other, governed by equitable principles. But such principles do not apply in a suit where the claim is in the nature of a penalty for violation of a statute so as to allow defalcation.

Nothing need be added to the'opinion of the learned judge of the Common Pleas, wherein he gave his reasons for denying the motion in arrest of judgment.

Judgment affirmed.


author: Mr. Justice Paxson

text:
    Wagner’s Appeal.
    A. held the equitable title to a tract of land. B. held two judgments against A., constituting respectively the first aud third liens on said tract. An intervening judgment against A. was held by A’s wife. B., not knowing in whom the title to tire tract was vested, but supposing it to be in A.’s wife, proposed to A. that a mortgage of the tract should be given to him by A. and his wife, equal in amount to the two judgments held by him, and undertook thereupon to satisfy the first of said judgments and to assign the other to A.’s wife. The proposal was accepted by A. and carried into effect, A.’s wife saying nothing as to the true ownership of the tract. The- tract, being subsequently sold under the mortgage, was bought in by A.’s wife for an amount less than the amount of her judgment. In distributing the proceeds of said sale, the court held that B. was deceived as to the title of the tract, and that A.’s wife should not have remained silent in relation thereto. The satisfaction of B.’s first judgment was accordingly stricken off, and a portion of the fund awarded to B on account thereof, as a first lien upon the tract. On appeal from this decree, by A.’s wife: Held, that the same was erroneous. There being no evidence that A.’s wife knew by what motives B. was prompted m making the arrangement in question, it was not her duty to disclose to him the true ownership of the tract. Besides non constat that she would have purchased the tract at the sale had she known she was not entitled to have her bid applied upon her judgment as a first lien. Held, therefore, that she was entitled to have it so applied.
    , May 9th 1881. Before Sharswood, C. J., Merour, Gordon, Paxson, Trunkey, Sterrett, and Green, JJ.
    Appeal from the Court of Common Pleas of Perry county: Of May Term 1881, No. 41.
    Appeal of David Wagner and Isabella his wife, in right of said wife, from i decree distributing the proceeds of a sheriff’s sale of the real estate of said David Wagner. The sale was under a judgment obtained upon a mortgage of said real estate held by one Charles Troutman. The proceeds of the sale were $710.
    An auditor being appointed to distribute the fund, reported that the following judgments had been entered up against David Wagner prior to the date of the mortgage:
    1st. Jacob Wagner’s judgment, No. 96, Aug. T. 1875, for $330. Assigned to Charles Troutman, and marked satisfied of record.
    2nd. Isabella Wagner’s judgment, -No. 148, Jan’y T. 1877, for $723.64. J
    3d. Charles Troutman’s judgment, No. 6, April T. 1877, for $230.47. Assigned to Isabella Wagner.
    Isabella Wagner’s first judgment appearing to constitute the first valid lien upon the premises, the auditor awarded to her the full proceeds of tlie sale. Charles Troutman filed exceptions to the auditor’s report, and subsequently obtained a rule to show cause why the satisfaction of judgment No. 96, August T. 1875, should not be set aside, depositions were taken, and after hearing, a decree was entered setting aside the satisfaction of said judgment, and annulling the assignment from Troutman to Isabella Wagner of the judgment No. 6, April T. 1877. The reasons for this action are fully set forth in the opinion of this court.
    The exceptions to the auditor’s report, aftei’wards coming up for argument, the court entered a decree that the proceeds of the sheriff’s sale be first applied to judgment No. 96, August T. 1875, and then to judgment No. 148, January T. 1877, which would exhaust the fund.
    Wagner, and wife thereupon took this appeal, assigning for error the action of the court in striking off satisfaction of judgment No. 96, August T. 1875, and in annulling the assignment to Mrs. Wagner of judgment No. 6, April T. 1877, and also the decree of the court appropriating the proceeds of the sheriff’s sale first to the first-named judgment.

      Ohas. A. .Ba/mett, for the appellants.
    Mrs. Wagner did not conceal the fact of her want of title, because she liad no reason to suspect it was believed she had any. She did not induce Troutman to satisfy one judgment nor to assign the other, because she was not consulted by him in the matter. She only acquiesced in the contract made by Troutman in her absence: and his own willful mistake “ in believing that she owned the Cummins property in her own right was the efficient cause of doing what he did.” She was therefore, not guilty of even negative fraud: Carr v. Wallace, 7 Watts 401. Silence only postpones when it is fraudulent: Beaupland w. McKeen, 4 Cas. 124; Robinson v. Justice, 2 P. & W. 19; Keeler v. Vantuyle, 6. Barr. 250. A person will not be relieved who has been deceived through silence, if he had full means of information of which he has failed to avail himself: Crest v. Jack, 3 Watts 240 ; Hepburn v. McDowell, 17 S. & R. 383; Commonwealth v. Moltz, 10 Barr 531.

      Sponsler and Potter, for the appellee.
    No writ of error has been taken in No. 96, Aug. T. 1875, to the action of the court, ordering satisfaction to be stricken off. This is an appeal merely from the decree distributing the proceeds of the sheriff’s sale. The judgment already mentioned appearing at the time of the entering of that decree to constitute the first valid lien, the decree was right. The propriety of the court’s action in striking off the satisfaction cannot in this proceeding be questioned.
    October 3d 1881.

   Mr. Justice Paxson

delivered the opinion of the court,

Isabella Wagner, one of the appellants, was the purchaser, at the sheriff’s sale of the real estate of her husband, the proceeds of which is the subject of the present contention. The p>r.ice she paid was $710. At the time of the sale she held a judgment against her husband for the sum of $723.69. As the record stood, this judgment was the first lien on the real estate sold, and was sufficient to absorb the entire fund. The auditor awarded the fund to Mrs. Wagner’s judgment, No. 148, Jan. T. 1877. The learned court upon exceptions reversed the auditor, and gave a p>ortion of the fund to the holder of a subsequent mortgage not reached by the sale. In order to accomplish this, the court struck off the satisfaction of a judgment which before the sale had stood upon the record as a prior lien to Mrs. Wagner’s judgment, but which at the time of the sale was satisfied of record. The court also declared null and void the assignment to Mrs. Wagner of the Charles Troutman judgment, No. 6, of April T. 1877, which judgment at the time of the sale was the second lien. The circumstances which induced this action of the court below are substantially as follows :

David Wagner (appellant") had an interest in what was known as the “ Cummins property,” which he held by virtue of articles of agreement and payment of the purchase-money, having no deed therefor. The liens against the property were: 1st. j'acob Wagner’s judgment for $330, assigned to Charles Troutman. 2<1. Isabella Wagner’s judgment for $723.64. 3d. Charles Troutman’s judgment for $230.47. It will be seen that Troutman was the holder of liens Nos. 1 and 3. It apapears he was in doubt whether the title to the real estate was vested in Wagner or in his wife. Probably-believing the title to be in Mrs. Wagner, in which case his judgments against her husband would not be liens, he agreed with the latter that if he and his wife would execute a mortgage to him, Troutman, for the amount of the two judgments he held against Wagner, with a little bonus added, as we gather from the statement of facts by the court, he, Troutman, would satisfy the first of the said judgments, and assign the other to Mrs. Wagner. This was done, and the record so stood at the time of the sheriff’s sale. The mortgage so given, having proved to be worthless, i. e., not reached by the sale, the learned court rescinded the arrangement, upon the ground that Troutman was deceived in regard to the title. lie believed it to have been in Mrs. Wagner, whereas it was in her husband. There was no charge of fraud against Mrs. Wagner. She never claimed to hold the title, but the learned court was of opinion that Troutman was misled by her silence; that she might have spoken, but did not, and suffered Troutman to remain under the impression she was the owner, and by this means obtained the satisfaction of one judgment, and the transfer of another, which were valid liens against her husband’s real estate, giving therefor a worthless mortgage.

We are not called upon to consider the eases cited as to the effect of silence when it is a duty to speak. They have no application. Mrs. Wagner was under no such duty, so far as this record shows. Troutman made no inquiry of her in regard to the title. We have nothing to show she ever knew he was under the belief she held the title. The transaction was between Troutman and her husband. The former got just what he bargained for, viz.: a mortgage which bound the property, whether the title was in the husband or the wife. He evidently thought the title was in the wife, in which case his two judgments against the husband were Worthless. He may have thought he was making a thrifty bargain with Mrs. Wagner in exchanging his judgments for a mortgage, which, though a subsequent lien, bound, as he thought, the property. All that can be said about the matter is that in attempting to get an advantage over Mrs. Wagner, Troutman overreached himself. This would not entitle him to the extraordinary relief accorded him by the court below.

Aside from this, the money must be distributed to the liens as they stood at the time of the sheriff’s sale. Mrs. Wagner bought the property upon the faith that her judgment was a first lien; non constat, that she would have purchased it at all had she known she was not entitled to have her bid applied upon her judgment.

The decree is reversed at the costs of the appellee and distribution ordered in accordance with this opinion.


text:
    Stuart versus Bigler’s Assignees.
    1. Where an action is brought to recover a debt for which collateral security-has been given, it is incumbent on the plaintiff either to produce and restore the collateral security, or to account satisfactorily for its non-production.
    2. The plaintiff cannot escape this duty by showing that the collateral security subsequent to its deposit has bpcome worthless, since non oonslat,
      but that he may have disposed of it to advantage while it still was £>f value.
    3. A. borrowed a sum of money from B., depositing certain coupon bonds as collateral security. B. afterwards becoming insolvent made an assignment for the benefit of creditors, leaving his affairs in great confusion. His assignees failed to find among his assets the identical bonds deposited by A., but discovered many other bonds of the same kind. Said bonds, although, at the time of their deposit, of considerable value, had, in the meantime, become worthless. A. tendered to the assignees the full amount of his debt, demanding from them the bonds deposited by him. These they declared themselves unable to restore, but tendered instead a like number of the similar bonds found by them among B.’s assets. This tender A. refused to accept. In an action by the assignees against A. to recover the ampunt of money loaned to him by B.: Hold, that there whs evidence to go to the jury of a conversion of the bonds by B., and that if the jury found that there had been such conversion, plaintiffs were not entitled to recover without accounting to defendant for tire proceeds of said bonds. Held further, that the burden was upon the plain tiffs'to rebut the prima facie presumption that such a conversion had taken place, by either producing the bonds or satisfactorily accounting for their non-production, and that in case they failed to do this they were not entitled to recover. Held further, that the tender by the plaintiffs of the other bonds found among B.’s assets, of the same kind as those deposited by A., was not good, for the reason that there was no proof that those bonds had been continuouslyin B.’s possession from the time of the loan by him to A., and might have been purchased by him after they became utierly worthless.
    4. Semble, that if said bonds had been in B.’s possession from the time of the loan by him to A., the tender of them by the plaintiffs would have been good, and A. wo,uld have been bound to accept them.
    May 18th 1881. Before Sharswood, C. J., Merour, Gordon, Paxson, Trunkey, Sterrett and Green, JJ.
    Error to the Court of Common Pleas of Dauphm County : Of May Term 1881, No. 85.
    This was an issue between John A. Bigler to the use of his assignees, G. Jordan and George W. Porter, plaintiffs, and "Win. P. Stuart, defendant, to test the validity of a judgment entered by plaintiff upon a judgment note given by defendant.
    On the trial, before Pearson, P. J., the following facts appeared : Stuart, on February 24th 1874, applied to John
    A. Bigler for a loan of $500, offering as security six coupon bonds for $100 each, issued by the Masonic Hall Association of Harrisburg. These bonds were then worth in the market their face value. Bigler agreed to advance the money, telling Stuart that he had. already a number of the same bonds, held by him as collateral for loans to others. Stuart accordingly gave Bigler his note for $500, at sixty days, drawn to Bigler’s order, and deposited his bonds, receiving from Bigler $560- in cash. Be paid interest on the note until December 24th 1874, but not afterwards.
    On October 25th 1875, Stuart called at the office of Bigler’s attorney, by appointment. The latter produced a judgment note for $525.10, being the amount of the loan, with interest, which he requested Stuart to sign. Stuart did so, receiving back his sixty-day note. The same day the judgment note was entered up.
    About two weeks afterwards Stuart met Bigler on the street and asked him whether the judgment was not sufficient security without the bonds. Bigler replied, “ Oh, no. When you pay the money we will give you the bonds and note both back.”
    In 1870 Bigler became insolvent, and on September 7th of that year made an assignment for the benefit of his creditors. His affairs -were found to be in great disorder. Among the assets which passed to the assignees were many bonds similar to those deposited by Stuart, but not those identical bonds.
    On January 20th 1880, Stuart presented a petition to the court for a rule to show cause why the judgment against him. should not be opened and he let into a defense. The rule was afterwards 'made absolute, and defendant thereupon pleaded payment with leave, &c. Before trial of the cause Stuart called on Jordan and demanded his bonds, tendering debt, interest and costs. Jordan said he was unable to produce the identical bonds, but tendered six others of the same kind, which had been found among Bigler’s assets. This tender Stuart refused. At the trial Stuart made a like tender and demand. The bonds had remained at par for some time after February 1874, but after April 25th 1876 had become utterly worthless.
    The defendant requested the court to charge, in substance, that the plaintiffs were not entitled to recover unless they produced and restored to defendant the identical bonds deposited by him with Bigler, or unless they satisfied the jury that said bonds were lost, or, at least, not sold by Bigler to others. That from the facts in the case the jury might infer thac Bigler had sold the bonds, and that if they so found, the plaintiffs having failed to give an account of the proceeds of said sale, could not recover. Finally, that in any event the plaintiffs were bound to show that Bigler had not sold the bonds deposited by defendant, before they could tender other bonds of the same kind to defendant.
    The court refused all the defendant’s points and gave a bindiug instruction to find for the plaintiffs. Verdict and judgment accordingly. Defendant thereupon took this writ, assigning for error the refusal of his points by the court and the binding instruction to find for the plaintiffs.

      Levi B. Alricks and Ovid F. Johnson, for plaintiff in error, cited :
    Smith v. Rockwell, 2 Hill(N. Y.)482; Spalding v. Bank, 9 Barr 31; United States v. Peabody, 8 Harris 456; Lishy v. O’Brien, 4 Watts 142 ; Mullen v. Morris, 2 Barr 87 ; Girard Fire and Marine Insurance Co. v. Marr, 10 Wright 504; Kemmerer v. Wilson, 7 Casey 110;. Hanna v. Holton, 28 P. F. S. 334; Ocean National Bank v. Fant, 50 N. Y. 474; Simes v. Zane, 1 Phila. 501; Ashton’s Appeal, 23 P. F. S. 153; Lyon v. Huntingdon Bank, 12 S. & R. 61.
    L. W. Hall and Eugene Snyder, for defendants in error.
    We admit, in accordance with the authorities cited by plaintiff in error, that, under ordinary circumstances, we would be bound to produce and return the collaterals. But here there is no obligation upon us to do this, since the collaterals have become worthless. We were not bound to sell the collaterals (Robinson v. Hurley, 11 Iowa 410; O’Neill v. Whighan, 6 Norris 394), although Stuart had it in his power at any time to force us to do so : Granite Bank v. Richardson, 7 Met. 407. Only in ease actually so sold would the value realized amount to payment fro tanto : Rice v. Catlin, 14 Pick. 221; Middlesex Bank v. Minot, 4 Metc. 325. Otherwise, Stuart ran all the risk of depreciation. He might also have avoided this, had he pleased, by tendering payment while the collaterals were still of value, and demanding them back : In re Kettera’s Estate, 5 Harris 424; Androscoggin R. R. Co. v. Auburn Bank, 48 Me. 335.
    Even if we were bound to restore the collaterals our tender of the same kind of bonds was sufficient: Weeks on the Doe trine of damnum absque injuria 106. There was no evidence to go to the jury of Bigler’s having converted the bonds. The judgment should therefore be affirmed.
    October 3d 1881.
   Mr. Justice Paxson

delivered the opinion of the court,

The fact that the bonds deposited by the defendant below with John A. Bigler, to secure the former’s note for $500, had become worthless, would not of itself constitute a valid defense t-o the note in suit. Bigler had no power to sell the bonds, and the defendant gave him no instructions to do so. Hence, if they remained in Bigler’s hands the depreciation thereof must fall upon the defendant. His remedy was to order their sale, or pay his note and take up the bonds. It appears, however, that the bonds were not in Bigler’s possession at the date of the assignment. They did not pass to the assignees as. a part of the assets, nor have the assignees been able to find them, after diligent search.

It is incumbent upon the assignees, before they can recover, against the defendant, to produce the bonds or account for them This is sustained by abundant authority: Ocean National Bank v. Fant, 50 N. Y. 474; Spalding v. Bank, 9 Barr 28 ; Bank v. Peabody, 8 Harris 454; Story on Promissory Notes, 445, 448; Edwards on Bills, 503, 4 ; Smith v. Rockwell, 2 Hill, 482. It is not a sufficient answer to say that as the bonds are now of no value their non-production is damnum absque viyuria. At the time they were deposited with Mr. Bigler, and for a considerable time afterwards, they were worth par. The fact that they were not in his possession at the time of his failure is evidénce to go to the jury of a conversion of the bonds by Bigler. This, however, may be explained or rebutted by showing what he did with them. The burden of proving this was upon the plaintiffs below. This burden cannot be shifted upon the defendant by reason of Bigler’s absence or the confusion in which he left his papers and his business generally. These are matters for which the defendant is not responsible.

During the trial below the defendant made a tender of the debt, interest and costs, and demanded his bonds. The plaintiffs were unable to produce the bonds, but produced and offered other bonds of similar character, identical with those in controversy save in the numbers. These the defendant refused. The tender of the bonds was not good, for the reason that there was no proof they had been continuously in Bigler’s possession. They might have been purchased after they had become worth less. Had there been proof that the bonds offered to defendant had been in Bigler’s possession from the time he made the loan to defendant to the time of the assignment, it. would have been sufficient, under the authority of Gilpin v. Howell, 5 Barr 41, where it was held that £v where one purchases stock for another, and takes a transfer on the books of the bank into his own name, it is sufficient if he always retain so much of the same stock as will enable him to transfer to his principal, on demand, the whole amount purchased for him, and that it is not necessary that he should retain the identical scrip or shares.”

If, therefore, Bigler had always retained on hand six $100 coupon bonds of the Masonic Hall Association of the city of Harrisburg, as the collateral to defendant’s note, it would not matter that the defendant’s bonds had by accident been mixed with other bonds of like character, and disposed of to other parties. Under such circumstances the tender of any other six similar bonds would have been sufficient. As the case stands there is nothing to show that Bigler did not sell defendant’s bonds at their face value, and replace them with other bonds after their depreciation. It is not for the defendant to show a-sale or conversion by Bigler, if snob be the fact. It is for the plaintiffs to account for the bonds. There is no hardship in this rule. They or their assignors are the only persons presumed to have knowledge of the transaction. When they attempt to perform this duty the defendant will have an opportunity of learning what became of his property.

I have indicated the principles which should rule this case, without referring specifically to the numerous assignments of error. What has been said sufficiently covers the case.

Judgment reversed, and a venire facias de novo awarded.


author: Mr. Justice Mercur

text:
    Workingmen’s Building and Loan Association versus Roumfort.
    A., holding an order upon the treasurer of a building association for a certain sum, presented the same, but was refused payment. He pressed the treasurer, however, and finally obtained from him his individual note for the amount due, drawn to the order of B. & 0., and by them indorsed. At maturity B. & O. took up the note and paid A. the full amount thereof. A. subsequently brought suit against the association for the amount of the original order. After issue joined, that suit was marked to the. uso of B. & O. who, however, protested formally against this action. Held, that the fact that B. & C. had indorsed and taken up the treasurer’s note under the mistaken impression that they were his sureties to the association, did not entitle A. to recover against the said association in the above suit. Held further, that the formal protest by B. & O. against marking the suit to their use, prevented any of their rights being passed upon therein.
    May 19th 1881. Before Sharswood, O. J., Mercur, Gordon, B anson, Trunkey, Sterrett, and Green, JJ.
    Error to the Court of Common Pleas of Dauplwn coxmty: Of May Term 1881, No. 129.
    This was an action of assumpsit by Charles E. Konmforfc against the Workingmeu’s Building and Loan Association, to recover the amount of a certain withdrawal order, drawn by the treasurer of the said association in favor of the plaintiff. Defendant pleaded non assumpsit, payment with leave, &c. After issue joined, the suit was marked to the use of George Eaerster and William Hamer. Subsequently a protest was filed of record by said Eaerster and Hamer against having the suit marked to their use.
    On the trial of the cause, before Henderson, J., the facts of the case aj>peared to be as follows : Plaintiff, being a member of the association defendant, gave notice of withdrawal therefrom on January 28th 1878. The President and Secretary thereupon drew, on'February 5th 1878, an order in plaintiff’s favor, upon Luerssen, treasurer of the association, for the amount to which plaintiff was entitled on withdrawing, viz. : $727.50. There not being sufficient funds then in the treasury to cash the order, the same was retained by the secretary. By February 27th a sufficient sum had been collected, and the order was accordingly on that day handed by the secretary to the plaintiff, who at once presented it to Luerssen. Luerssen, however, declined to pay the order, but being pressed by plaintiff, at length, on March 16th 1878, gave to him a check for the amount, postdated by four days. This check was on the Mechanics’ Bank of Harrisburg, and was drawn by Luerssen • as treasurer of the association. Plaintiff presented the check at the bank on March 20th 1878, but was told that the association was not in funds. He then went again to Luerssen and demanded his money. On April 4th 1878, he at length received Lnerssen’s individual note for the amount, payable thirty days from date, drawn to the order of George Faerster and William Hamer, and by them indorsed. On maturity the note was taken up by the indorsers, the plaintiff receiving from them the full amount thereof. On October 31st 1878, plaintiff instituted the present suit, to recover from the association defendant the full amount of his withdrawal order.
    The plaintiff called William Hamer as a witness, and offered to show by said witness that he never was the bail to the defendant for Luerssen, treasurer, and that he was informed by plaintiff that he and George Faerster were his (the treasurer’s) sureties, and responsible for his non-payment of the order of February 5, 1878, and finally, believing that he and Faerster were bail, they gave their own or indorsed the note of Luerssen for the a,mount due Roumfort by defendant in the spring of 1878; and that, at maturity thereof, still believing they were sureties for Luerssen, they paid the note, and that they, Faerster and Hamer, have since, and before this suit commenced, brought suit and have recovered an award of arbitrators against Roumfort for the amount paid, with interest.
    Objected to by defendant.
    The Court. — It having been alleged and offered to be proved by the defendants that this order in question, as well as the check given for it, were subsequently paid by a note of Luerssen, indorsed, &c., this testimony is now admitted as explanatory of the entire transaction. So much of the offer, however, as relates to a suit and award of arbitrators in same by Faerster and Hamer against Roumfort is rejected. Exception. (First assignment of error.)

      Tlie plaintiff requested the court to charge inter alia: “ If the jury find that William Hamer and George Faerster paid O. E. Roumfort by mistake, then, in law, a payment by a stranger is prima faeie a purchase of the claim, not an extinguishment of it, and on a verdict for the plaintiff the court can make a proper appropriation of the fund.” Answer : “ We do not see the force of the proposition. This suit is marked for the use of George Faerster and William Hamer, the equitable plaintiffs, and tlie court can protect their interests in it in case of recovery.” Exception. (Sixth assignment of error).
    The court charged inter alia, as follows: “ It is contended by the defendant that the order and check were fully paid and satisfied by the acceptance of the individual note of Luerssen at thirty days; that it was payment to the plaintiff, and as such accepted by him. This is a question entirely for the jury. And it will be observed that the note was drawn by Luerssen in his individual capacity, and not as treasurer; also, that additional time was given, the note being made payable at thirty days, to the order of George Faester and William J/I- Hamer, substantially, in appearance at least, a new and distinct transaction. On the face the sureties appear as accommodation indorsers, and the payment of the note by them would not extinguish it. [But it is urged that they indorsed the note under a mistake of fact, believing at the time, as represented to them, that they were the sureties on the treasurer’s bail bond, and that Roumfort was liable to be called upon to repay the money to them; that a suit has been brought to recover it.' The question of Roumfort’s liability to repay to the indorsers is not involved here, and whether he is, or is not, does not affect the liability of this defendant.] They, as accommodation indorsers, have all the rights of Roumfort against Luerssen. [The question for you to determine is whether or not this note was accepted in payment of the claim and in release of the association. If it was accepted in payment and satisfaction of the claim the plaintiff cannot recover. If, however, it was only taken as additional or collateral, for it does not appear that the check was given up, it does not extinguish the claim against the association. It is true,_ however, if the order is still unpaid, if it was not paid by Luerssen, it lias not been paid by the association, and it is not in the mouth of the association to set up a payment by a volunteer under a mistake of fact.]” The portions of the above charge included within brackets were excepted to by defendant, and constituted respectively the tenth and eleventh assignments of error.
    Verdict and judgment for the plaintiff in the sum of $143.12. Defendant thereirpon took this writ, assigning for error, inter alia, the admission of plaintiff’s offer of evidence, the answer to'plaintiff’s point above cited, and the portions of-the charge of the court above set forth included within brackets.

      Wallace De Witt (with whom was M. W. McAlarney), for the plaintiff in error.
    The acceptance by Roumfort of the indorsed note' amounted to payment. The transaction had every element of a perfect accord and satisfaction. The thing received was of legal value and was altogether effectual and valid. The accord was, besides, executed. There was an acceptance of a higher security from the debtor : Jones v. Johnson, 3 W. & S. 276. There was also additional consideration given by the debtor to the creditor, viz : new security : Weakly v. Sterling, 9 Watts 280; McIntyre v. Kennedy, 5 Casey 454; Brown v. Scott, 1 P. S. Smith 357; Hooker v. Hnbbard, 97 Mass. 177; Sellars v. Johnson, 65 N. C. 104. All these circumstances prove that the note was accepted as payment. The obligation of the association to plaintiff was therefore discharged, and the questions arising between him and the indorsers of the note have nothing to do with the present ease. The rights of those indorsers cannot be settled in the present suit, they having expressly protested against the marking of the suit to their use.

      Levi B. Abricks and Hamilton Abricks, for the defendant in error.
    -There was no agreement on the part of plaintiff to accept the note as payment. The presumption, therefore, is that it was received as collateral. Whetlier it was or not is for the jury: Wesley Church v. Moore, 10 Barr 278; Oliphant v. Church, 7 Harris 318; Hart v. Boller, 15 S. & R. 163; Weakly v. Sterling, 9 Watts 280; McIntyre v. Kennedy, 5 Casey 454; Brown v. Scott, 1 P. F. S. 357. While it is true that plaintiff has realized on this c'ollateral, yet there has been properly no payment, because the indorsers from whom he received the money were mistaken as to their liability, and may recover back from plaintiff the sum paid by them to him.
    Circuity of action is avoided by allowing a recovery in this suit without waiting until plaintiff has been sued by the indorsers, because, the suit being marked to the use of those indorsers, they will thus be at once reimbursed.
    October 3d 1881.
   Mr. Justice Mercur

delivered the opinion of the court,

On withdrawing from the association the defendant in error-accepted an order on the treasurer of the company, duly signed by the president and secretary, for the sum the former was entitled to receive. The order was dated on the 5th of February, but was not handed to him until the 27th. At its date the money in the hands of the treasurer was not sufficient to pay it. Its delivery was therefore withheld, until other and sufficient funds had been put into his hands. At the time of its delivery the funds were sufficient. Failing to get the money on the order, on the 16th of March he gave it to Luerssen, the treasurer, taking his check dated four days thereafter for the amount. On presenting this check at bank there was no 'money to meet it. On the 4th of April, in place of this check, he took the note of Luerssen, at thirty days with interest, payable to the order of George Faerster and William- M. Hamer, and by them indorsed. They paid the note before or at maturity, so-the defendant in error received the money before he commenced this suit.

It is not necessary to discuss the question whether giving time and taking the note with security operated as a payment of his claim against the association, before the note'was actually paid, as the case does not stop there. The note was paid. The money was received by the defendant in error, and is still retained by him. He now claims that, inasmuch as Faerster and l-Iainer indorsed the note of Luerssen under a mistaken belief that they were security for him as treasurer of the association, it gives a right of action to recover the same money of the company. If this note had been given at the request of the company, and the defendant in error had been compelled to repay the money to the indorsers, a different question would arise; but such are not the facts presented here. The court charged “ the question of Roumfort’s liability to repay to the indorsers is not involved here, and whether he is, or is not, does not affect the liability of this defendant.” In this the learned judge erred.

If the debt due the defendant in error has been fully paid to him under an arrangement with Luerssen, who was justly bound to pay it, we cannot see on what principle the association has again become liable to pay it. The court appears to have blended the rights of the defendant in error with the rights of the indorsers. It therefore charged that “the suit is marked for the use of George Faerster and W. H. Ilamer, the equitable plaintiffs, and the court can protect their interests in case of a recovery.”

Several reasons may be stated why this view is not correct. They were not parties to the action. The suit was brought in the name of the defendant in error alone. After the case was ' put at issue he caused the suit to be marked for the use of Faerster and Iiamer ; but they afterwards, by their counsel, appeared in court and protested against the suit being-so marked, all of which is shown by the record. This was a most unequivocal disclaimer of the submission, of any of their rights to be passed upon in the trial of the cause. Having thus withdrawn, the suit stood as if tlieir names had never been put on the record. It should then have been tried as it was commenced, on the exclusive right of the defendant in error. If the indorsers acquired any right of action by reason of their payment of the note, it was either against the defendant in error, or Luerssen, or both of them. A right to recover in this suit depends on the validity of a lawful claim of the defendant in error against the association, and not on the equities of the indorsers. By indorsing and paying the individual note of Luerssen they did not become creditors of the association.

When the order was delivered the latter had enough money in the hands of its treasurer to pay the order. Without so applying it, and after giving a check which was dishonored, he gave this individual note to pay money for which .he was personally liable. To discharge his liability to the association he gave Ills own note to a creditor, to whom it was paid. A misapprehension between the maker and the indorsers of the note as to the liability of the latter as sureties of the treasurer, does not make the association liable to them. There was no privity of contract between it and them. Their purpose was not to pay its debt, but a debt of Luerssen. He had no power to bind the association for the payment of this note, and he did not assume to do so. It follows that the first, tentli and eleventh assignments are sustained, and so much of the sixth as is iu conflict with this opinion. We see no error in. the remaining assignments.

Judgment reversed and a venire facias de novo awarded.