CURTIS, GRAHAM AND BLATCHFORD, Respondents, against
LEAVITT, Receiver, Appellant.

LEAVITT, Receiver, Appellant, against CURTIS, GRAHAM and
others, Respondents.

Associations incorporated under the act to authorize the business of banking, have capacity to borrow money, as incidental to the banking business and to the powers expressly granted.

The right of corporations generally to borrow money as incidental to the
express powers granted by their charters, considered. Vide, post, pp. 62,
to 66, 169, 219 to 222, 262, 267 to 270.

Whenever a corporation can lawfully contract a debt for borrowed money, or
otherwise, in the course of its business, it can give a time engagement to
pay the debt, and such engagement may be in any form which does not
come within the prohibition of some particular statute.
Prior to the act of May 14, 1840, prohibiting time notes, &c., banking associa-
tions organized under the general law of 1838, could issue their obligations,
payable at a future day, with or without seal, to secure a debt for moneys
loaned, provided such obligations were not intended or calculated to circulate
as money. Such obligations were not prohibited by any statute of this
state, and the right to issue them was incidental to the various banking
powers expressly granted to such associations.

Curtis and others against Leavitt.

The restraining laws of this state (1 R. S., 712), so far as they prohibit per sons and corporations from issuing notes, &c., upon loan or for circulation as money, without special authority of law, are still in force; but special authority of law to issue such notes is given to banking associations, by the general act of 1838, upon the conditions, however, of securing and having them countersigned as therein specified. Without performing those conditions, circulating notes or obligations of any kind, intended or calculated to circulate as money, cannot be issued. Pp. 70, 71.

But there is nothing in the restraining laws, or the general act of 1838, to interfere with the incidental powers of corporations, whether banking or not, or of banking associations, to create and issue the evidence of a debt lawfully contracted, provided the obligation or assurance is not designed for circulation as currency or adapted to that purpose. Pp. 68-72. The North American Trust and Banking Company, an institution organized under the general act aforesaid, in April and May, 1840, issued instruments called bonds, first for $1,000,000 and then for $500,000, in sums of £225 or $1000 each;-the $1,000,000 being payable in five and the $500,000 in seven years, in sterling money. These obligations were intended for sale in England, in order to raise money for the uses of the company. The interest was payable semi-annually in London, no place for the payment of the principal being specified. The corporate seal was impressed upon each bond, but without the use of wax or other tenacious substance; Held, that such instruments were not within the prohibition of the restraining laws, and were valid securities for the moneys loaned 'thereon, even if they were regarded as unsealed obligations, and, therefore, in legal effect mere promissory notes. Pp. 73, 74, 156, 172, 226.

Held, further, that banking associations are not subject to the provisions of the safety fund act (Laws of 1829, ch. 94), and, therefore, not affected by section thirty-five of that act, which prohibits the issuing of "bills and notes," unless payable on demand and without interest. Pp. 678 155, 171. In order to secure the payment of the aforesaid bonds, and facilitate their sale in market to raise money, the aforesaid North American Trust and Banking Company, under the pressure of great embarrassments, and either actually insolvent or in great danger of insolvency, (but its officers then entertaining an honest expectation, in the exercise of a reasonable intelligence, of going on with its business and paying all its debts), pledged a large portion of its assets, consisting of the bonds and mortgages in which its capital stock had been paid by the subscribers thereto; Held, that the pledge was not void under the ninth section of "the act to prevent the insolvency of moneyed corporations," &c. (1 R. S., 588), because such pledge was not made with intent to prefer any particular creditor over others. Notwithstanding the fact of insolvency, according to any definition of the term a conveyance by a moneyed corporation is not within the said ninth section. unless made with intent to prefer a particular creditor over others. The intent to prefer is a fundamental fact which must be alleged and proved Pp. 109, 139, 198,

Curtis and others against Leavitt.

It seems, also, that a conveyance or security made for the purpose of procuring advances of money, and not to secure existing creditors, cannot be brought within the said ninth section. Pp. 112, 142, 175,

The transfer aforesaid was not authorized (so it is assumed) by any previous resolution of the board of directors of the company; but it was contemporaneously and subsequently approved by the conduct of the company, which actually received the proceeds of the bonds secured by such transfer; and it was also subsequently ratified by resolutions of the board. The bonds were sold or pledged, for value, to parties who took them in good faith and without notice of any want of authority to make the transfer. Held, that if the eighth section of the statute "to prevent the insolvency of moneyed corporations," &c., aforesaid, which declares that no conveyance, &c., shall be made by a moneyed corporation, of its effects, &c., unless "authorized by a previous resolution of the board of directors," would have made the transfer void otherwise, yet that such purchasers or pledgees of the company's bonds, secured by the transfer of corporate assets, are to be regarded as "purchasers for a valuable consideration, and without notice" of the property transferred, and whether they took directly from the company, or from intermediate parties, are within the saving clause of the said eighth section.

Where the only consideration of such purchase or pledge is an antecedent debt due from the corporation, Quere, whether the purchaser can be protected under such saving clause. Pp. 178. 195.

It seems that the said eighth section was intended to restrain the officers and particular agents of moneyed corporations, from acting, in the cases specified, without previous authority from the board of directors, but it does not prevent the corporations themselves from manifesting their approval in any mode of conduct appropriate to such bodies. The rule of agency, that a principal may confirm an act done without his authority but in his name, applies. Per COMSTOCK and BROWN, JS, JOHNSON and BOWEN concurring; SHANKLAND, PAIGE and SELDEN, contra. Pp. 48, 137, 174, 189, 249.

The aforesaid transfer of assets was in the form of two deeds, one of them transferring to trustees bonds and mortgages held by the company, to the amount of $1,200,000, to secure the said million issue of the company's bonds; the other to the amount of $600,000, to secure the said half million issue. Each deed recited the issuing of the bonds, for the purpose of being sold in England, and empowered the trustees to receive payment of the principal and interest of such of the bonds and mortgages assigned as should be paid or collected, and to reinvest the moneys so received by them, and to hold such new investments as a security for the ultimate payment of those who should become the holders of the company's bonds issued under and secured by such trust deed. It empowered the trustees, in case of default of the company to pay the principal or interest of any of its bends secured by such trust, "to borrow money upon, and to sell and dispose of the said bonds and mortgages." It further provided, that until default should be made in payment of the principal or interest to become due upon the