Bank Commissioners v. James Bank

Upon a careful examination of the provisions of the act of 1840, relative to the redemption of bank notes by the agents of banks and of banking associations, I have arrived at the conclusion that the counsel for the defendants is right, in this case, in supposing that it is necessary to leave the circulating notes at the agency until the termination of the twenty days from their first presentment for payment, or to present them a second time, at or after the expiration of that period, in order to render a neglect to redeem such bills at the agency and to pay the extra interest thereon, an absolute forfeiture of the charter of the bank, or of the franchises of the banking association. The whole question arises under the fifth section of the act. (Laws of 1840, p. 155.) The first clause of this section is remedial, and gives to the bill holder, who makes a demand of payment at the agency, interest at the rate of twenty per cent per annum, from the time of the demand and refusal of payment. He may, therefore, immediately sue the bank, or association, and may recover the amount due him upon the bills together with the extra interest given by the statute. Or he may wait the twenty days and then again demand the payment of such bills, with interest, for the purpose of subjecting the bank to a forfeiture of its privileges if such payment is again refused ; and to enable him to apply to the comptroller for payment, under the last clause of this section, if his demand is against an association organized under the general banking law.

The second and third clauses of this section, however, are highly penal; the second rendering the bank liable to *460be proceeded against by the bank commissioners for a forfeiture of its charter, and the third absolutely prohibiting such bank from ever again putting in circulation any of its bills or notes after default in payment at the agency has continued for more than twenty days. This part of the section, therefore, must be construed with some degree of strictness; or at least in such a mannér as to enable the bank to save the forfeiture by redeeming the particular bills at its agency, and paying the interest thereon, before it shall be subjected to such serious consequences. And I do not see how this can be done without requiring the holder of the bills to leave them with the agent bank for the twenty days, or to present them again at the agency, at or after the expiration of that period. It cannot, however, be necessary that the holder of the bills should present them the second time at the last moment of business hours on the twentieth day, or even on that day. For the bank which is in default in not paying its bills at the agency when they were first presented for redemption, must at its peril provide its agent with funds to redeem such bills whenever they are again presented for payment at or after the end of the twenty days from the time of their first presentment.

It is not stated in the petition in this case who presented the bills which wrere not paid at the agency ■ nor are the numbers or the amount of the bills presented, nor any other description of them given, so as to enable the defendant to ascertain whether they have not been redeemed at the banking house in Greenfield, where it is sworn the bank has continued to redeem its bills without interruption since August last. But as the petition is founded upon the affidavit of the cashier of the agent bank, it is not the fault of the bank commissioners that the agent of the defendant has not. furnished the officers of the James Bank the necessary infer mation to enable them to determine whether the package referred to in the petition was not presented and paid at the banking house of the association, at Greenfield, within the twenty days. I think there is very little reason to *461doubt that the bills which were presented at the agency were not in fact redeemed within the twenty days; and what is most probable that many parcels were presented for payment and refused, and were not redeemed either there or elsewhere within twenty days after they were thus presented at the agency. But I am obliged to refuse this application, upon .the construction of the statute that it must be satisfactorily shown that the bills were at the agency for redemption at the end of the twenty days, or were presented there for payment afterwards, so as to enable the defendant to redeem them at that place ; though I do not> in fact believe the bills in this case would have been redeemed if they had been thus presented the second time at the agency.

The order to show cause must be discharged and the petition dismissed, and the temporary injunction is of course dissolved ; but without prejudice to the right of the petitioners to renew their application, if they shall think proper to do so, upon a new state of facts.