[Chambersburg,
October 18, 1824.]
ROGERS and others against The HUNTINGDON BANK.
IN ERROR.
A stockholder in a bank, incorporated under the act of assembly of the 21st of March, 1813, is not authorized to transfer his stock, while he is indebted to the institution on a note discounted in the ordinary way.
Where a stockholder, who was indebted to a bank on a note discounted, and also for an instalment due upon the capital stock, gave a power of attorney to receive the dividends in his own name, and, at the same time, another power of attorney, to transfer his stock to the plaintifFs, who placed in the hands of the attorney a sum of money to pay the instalment, and the attorney, after depositing the money to his own credit, drew a check in favour of the stockholder, and the money was applied to the payment of the instalment, no notice having been given to the bank of'the power to transfer the stock until some months after-wards, it -was held, that the plaintiffs were not entitled, either to a transfer of the stock, or to a return of the money which had been applied to the payment of the instalment.
Error to the Court of Common Pleas of Huntingdon county.
It was an action action against the Huntingdon bank, for money had and received for the use of the plaintiffs. The circumstances of the case were these: Samuel Maxwell held a hundred shares of stock in the bank, on which thirty per cent, of the principal had been paid. On the 18th of October, 1815, Maxwell gave a power of attorney to William E. Smith, to receive the dividends, and, on the same day, he gave him another power, to transfer the ^ stock to the plaintiffs. At the date of these powers, Maxwell was' indebted to the bank, for money borrowed on discount, in the usual manner, for which the bank held his note, with endorsers. There was also an instalment, to the amonnt of five hundred dollars, due on the stock, of which Mr. Smith informed the plaintiffs, and received from them five hundred dollars to discharge it. This money Mr. Smith deposited in the bank, to his own credit, and the day after the deposit, he drew a check, payable to Maxwell, which was applied to the payment of the instalment due on the stock. When this instalment was paid, no notice was given to the bank of the power of attorney from Maxwell to Smith, for the transfer of the stock to the plaintiffs. But sometime after-wards, (the exact time could not be ascertained,) Mr. Smith informed the officers of the bank, of the power which he held, and requested permission to make the transfer on their books. This permission was refused, unless the plaintiffs would pay the money in which Maxwell was indebted to the bank, on his note discounted. On the trial of the cause, two questions arose: — 1. Whether the plaintiffs had a right to receive a transfer of Maxwell’s stock, without paying his note? 2. Supposing they had no right to the transfer, whether they were not entitled to recover the five hundred dollars, which they had paid on. account of the stock? On *78both these points, the Court of Common Pleas decided in favour of the defendants.
Burnside, for the plaintiffs in error,
contended, 1. That the true construction of that part of the 11th article of the 7th section of the act of the 21st of March, 1813, 6 Sm. L. 154, which declares, that ££no stockholder, indebted to the institution, shall be authorized to make a transfer, or receive a dividend, till such debt shall have been discharged, or security, to the satisfaction of the directors, given for the same,” was, that the bank might refuse permission to make a transfer, where instalments were due upon a subscription to the stock, or notes were actually under protest; but that it was never intended to reach the case of one, who had had notes discounted with an endorser in the usual form, and who therefore could not be considered as indebted to the institution, within the meaning of the law. The effect of a different construction, would be to give the bank, in some cases, an unjust preference. If a stockholder should die, leaving a note unpaid, the bank, if it has a lien upon the stock, would be preferred to all other creditors.
2. The plaintiff’s were entitled, at all events, to a return of the ffve hundred dollars paid on account of the stock. The bank had notice, some months after the payment, that it was made under an expectation of a transfer of the stock. It was therefore money paid under a mistake, and cannot be conscientiously retained. Paley on Jlgcncy, 257, 258.
Tod, contra, denied the propriety of the construction given to the act of assembly in question, and observed, that stockholders were frequently enabled to obtain endorsers, because their stock was considered and relied upon, as a security for the payment of the note. He referred to X Ball. L. 323. 4 Sm. L. 153. 5 Sm. L. 23.
2. Where a man receives money which is due to him, without using fraud or artifice to obtain it, he may retain it with a good conscience. When this money was paid, no notice was given to the bank that it belonged to the plaintiffs, and they must have supposed it was the property of Maxwell, because a power of attorney was, at the same time, given to receive the dividends, in his name.
The opinion of the court was delivered by
Tilghman, C. J.
1. Were the plaintiffs entitled to a transfer of the stock, without paying MaxwelVs note? This bank, with many others, was incorporated by the ££act regulating banks,” passed the 21st of March, 1813, (6 Sm. L. 154,) and it is enacted in the 7th section, article 11, “that. the stock of each of the said companies, shall be assignable and transferable on the books of the company only, in the presence of the president or cashier, and in such manner as the by-laws shall ordain; but no stockholder indebted to the institution, shall be authorized to make a transfer, *79or receive a dividend, till such debt shall have been discharged, or security, to the satisfaction of the directors, given for the same.” It was contended, on the part of the plaintiffs, that the words indebted to the institution, should be restrained to debts on account of the original subscription to the capital of the bank. But I can. perceive no ground for such restriction. The words embrace all debts, and there,is good reason for their extending to all. When the directors discount the note of a stockholder, they know that his stock is liable, and therefore may be less attentive to the sufficiency of the endorsers. The endorsers, too, have an interest in the lien of the bank, and it may be presumed that many persons have been induced to endorse, on the strength of this lien. We must not reject the plain meaning of words, and resort to improbable conjectures. I am clearly of opinion, that the construction put upon the law#t>y the Court of Common Pleas, was right.
2. But, are the'plain tiffs entitled to recover back their five hundred dollar’s ? This was an unfortunate payment, very imprudently made. But I have sought in vain for a reason, to make the bank refund'the money. It was fairly due to them when they received it, and they made use of no artifice whatever to induce the plaintiffs to pay it. They had no notice of an intended transfer of stock. The money was paid on account of Maxwell’s stock, — Mr. Smith’s check was payable to Maxwell. Maxwell was the apparent and the legal owner of the stock, and might have transferred it, on the books of the bank, to any other person than the plaintiffs, at any time before the bank received notice of the power of attorney to Mr. Smith. The plaintiffs lose their money, by their confidence in Maxwell. They should have applied for a transfer, before they paid the instalment, and then they would have been safe. To recover in this action, it must be shown, that the defendants have received money, which they cannot, in good conscience, retain. But that has not been shown. The defendants have received nothing, that was not due to them. They could not take notice of transactions between the plaintiffs and Maxioell, which were not communicated to them. It was the business of the plaintiffs, to inquire how Maxwells account stood with the bank, before they bargained for his stock. But, instead of this, they suffered the in-stalment to be paid, in the the name, and on the account of Maxwell. It is a principle of law, that a man who receives money fairly, which is justly due to him, shall not be obliged to refund. I am of opinion, therefore, that the plaintiffs are not entitled to recover.
Judgment affirmed.