Minor v. The Mechanics' Bank of Alexandria. 1 P. If a cashier, on leaving his office, fail to pay over or account to the bank for any part of the moneys of the bank received by him, the presumption is that he wilfully wasted or misapplied them, and the burden is on him or his sureties to show the contrary. A condition of a cashier's bond, "well and truly to execute the duties of cashier," includes not only honesty, but reasonable skill and diligence. A usage of the board of directors, to permit the cashier to misapply the funds of the bank, cannot exonerate his sureties. The cashier's bond, in this case, was held to cover all defaults in duties, from time to time annexed to the office, by those having the control of the bank. The question, whether a nolle prosequi may be entered against one or more defendants, in an action on a joint and several bond, is a matter of practice, to be decided upon consid erations of policy and convenience. The defendants having severed in their pleadings, and no right to contribution being affected, a nolle prosequi entered after judgment against the sureties, as to the principal obligor, was held regular. THE substance of the pleadings and of the exceptions is stated in the opinion of the court. The condition of the joint and several bond declared on was as follows: "Whereas the above-bound Philip H. Minor hath been duly elected to the office of cashier of the Mechanics' Bank of Alexandria, the conditions of the above obligation are such, that, if the above-bound Philip H. Minor shall well and truly execute the duties of cashier of the Mechanics' Bank of Alexandria, then this obligation to be void, but otherwise shall remain in full force and virtue in law." The sureties severed from the principal in their pleas, and judg ment was given against them before the principal had appeared. After he had appeared and pleaded severally, a nolle prosequi was entered as to him. Taylor and Jones, for the plaintiffs. Swann and Wirt, (attorney-general,) contrà. [ *62 ] * STORY, J., delivered the opinion of the court. This is a writ of error to the circuit court of the district of Columbia, sitting at Alexandria. The plaintiffs in error were original defendants in the cause, and the suit is now before this court upon the judgment of the court below, upon certain pleas of the defendants, to which there was a demurrer; and also upon the instructions given and refused by the court, upon the trial of certain issues of fact, joined by the parties. The action is debt upon an official bond, given by Philip H. Minor, cashier of the bank, and by four other persons, as his sureties, with condition that Minor "shall well and truly execute the duties of cashier" of the bank, and was originally brought against all the parties to the bond. The declaration proceeds for the penalty of the Minor v. The Mechanics' Bank of Alexandria. 1 P. bond, without any notice of the condition, and avers, by way of breach, the non-payment of the penalty. The sureties, after oyer oI the bond and condition, (which thereby became part of the declaration,) severed themselves from the principal, and pleaded nine several pleas. To the first two of these pleas, demurrers were put in; and the court below, upon consideration, gave judgment upon the demurrers in favor of the bank; and the correctness of this decision constitutes the first subject of inquiry. Exceptions have been taken, both to the matter and the form of these pleas; and if the matter of them, or either of them, might constitute a good bar to the action, it may then be necessary to consider whether that matter is pleaded with due propriety and certainty, according to the established rules of pleading, so as to escape objection upon general demurrer. Both of them are, in effect, though not in form, special pleas of nul tiel corporation. The first plea, in substance, avers that, by the charter granted by the act of congress of the 16th of May, 1812, c. 87,1 the capital stock of the bank was, by the charter, fixed and limited to consist of $500,000, bonâ fide; that the whole capital stock was not bona fide filled up and subscribed for; but, on the contrary, by a collusion between the commissioners under whose direction the subscriptions were taken and the subscribers, a large portion of the capital stock, to wit, 18,000 shares, amounting to $180,000, were filled up by false and colorable subscriptions; the ostensible subscribers, after payment of the first instalments, were fraudulently permitted to withdraw the same, and future payments by them were dispensed with, while they were still rated and held out as stockholders, for the purpose of color ably filling up the subscription of the whole capital stock [* 63 ] and electing a board of directors; and that, in this man ner and by these means, and by no other, the bank was put into operation. This plea is meant to rest upon two grounds to sustain its legal propriety. First, that the subscription of the whole capital stock of $500,000 was a condition precedent to the putting of the bank into operation as a corporation. Secondly, that the collusion between the commissioners and the subscribers for the 18,000 shares, being fraudulent, made their subscriptions a mere nullity. Various answers have been given at the bar to the legal sufficiency of the matters thus pleaded. In the first place, it is said that the defendants are estopped, by the bond, to deny the legal existence of the corporation. In the next place, that the charter does not make the subscription of the whole capital stock a condition precedent to 1 2 Stats. at Large, 735. Minor v. The Mechanics' Bank of Alexandria. 1 P. the establishment of the bank. In the next place, that the question whether the bank was regularly and bona fide put into operation, is matter not inquirable into in a suit of this nature, but only upon a quo warranto, instituted by the government. And, in the last place, that the whole stock being in fact subscribed, the fraudulent intention and acts of the parties did not make the subscription of the 18,000 shares a nullity. Let us, then, consider what is the true construction of the charter itself, upon the points raised at the argument, supposing it to have been (which in terms it is not) incorporated into the plea, and therefore judicially before us. The 1st section of the act of the 16th of May, 1812, c. 87, provides: "That the subscribers to the Mechanics' Bank of Alexandria, their successors and assigns, shall be and hereby are created and made a body politic, by the name and style of the Mechanics' Bank of Alexandria; and by such name and style shall be and are hereby made able and capable in law, to have, purchase, &c., lands, &c., &c., and the same to sell, &c., to sue and be sued, &c., &c.; subject to the rules, regulations, restrictions, limitations, and provisions hereinafter prescribed and declared." In this section, there is no limitation as to the number of the subscribers necessary to constitute the corporation. The subscribers, whether many or few, are declared to be incorporated; and, unless there be some restriction or limitation elsewhere in the act, it is most manifest that the court cannot intend that any particular amount of subscriptions is indispensable. The 2d section provides: "That the capital stock of said corporation may consist of $500,000, divided into shares of ten dol[ * 64 ] lars each, and shall be paid in the following manner: * that is to say, one dollar on each share at the time of subscribing, one dollar on each share. at sixty days, and one dollar on each share ninety days after the time of subscribing; the remainder to be called for as the president and directors may deem proper, provided they do not call for any payment in less than thirty days, nor for more than one dollar on each share at any one time." The argument of the defendants is, that "may," in this section, means "must ;" and reliance is placed upon a well-known rule in the construction of public statutes, where the word "may" is often construed as imperative. Without question, such a construction is proper in all cases where the legislature mean to impose a positive and absolute duty, and not merely to give a discretionary power. But no general rule can be laid down upon this subject, further than that that exposition ought to be adopted in this as in other cases, which carries into effect the true intent and object of the legislature in the Minor v. The Mechanics' Bank of Alexandria. 1 P. enactment. The ordinary meaning of the language must be presumed to be intended, unless it would manifestly defeat the object of the provisions. Now, we cannot say that there is any leading object in this charter, which will be defeated by construing the word "may" in its common sense, as imparting a power to extend the capital stock to $500,000, and not an obligation that it shall be that sum and none other. It is by no means clear, from this section, that the legislature contemplated that there should be a capital of $500,000, on which the bank was to commence or carry on its operations. On the contrary, three instalments only are required to be absolutely paid in, and the residue of the capital stock is to be paid in only when the president and directors may deem it proper; so that the capital stock, except at the discretion of the board, may never extend beyond the amount of $150,000, for any practical purposes, either as security to the public or as the basis of discounts. Now, the plea itself does not attempt to deny that all but 18,000 shares of the stock were bonâ fide subscribed for; so that, for aught that appears, the capital stock on which the bank carried on its operation may have far exceeded that sum. It has been urged, that public policy requires such an imperative construction of the clause for the public security. But it is a sufficient answer to that suggestion, that no such public policy is avowed or can be inferred from the general terms of the act. When the legislature intends to restrict the capital stock of a bank, or to require any portion of stock or stockholders to be indispensable for its legal existence and operations, it is not uncommon to incorporate such a restriction into the charter. The omission to do so is quite as significant * that [* 65 ] the legislature did not deem such a restriction subservient to any manifest public policy. The legislature might well presume, after prescribing the maximum to which the capital stock should extend, that the actual capital to be employed might safely be left to the discretion of the stockholders, or its agents. The 13th section of the charter contains provisions for the security of the public against over-issues by the bank, and if any such restriction had been intended, as the argument supposes, it would naturally have found a place. It declares that no stockholder shall be answerable for any losses, deficiencies, or failure of the capital stock, for any larger sum than the amount of the stock belonging to him; excepting that if the total amount of the debt of the bank shall exceed twice the amount of its capital stock, over and above deposits, then the directors shall, in their private capacities, be liable for the excess; and if the directors shall not have property to pay the amount of the excess, then every stockholder shall be liable for their Minor v. The Mechanics' Bank of Alexandria. 1 P. deficiencies, in proportion to their shares in the bank. Whether, therefore, the capital stock be great or small, if there be debts due from the bank exceeding twice the amount of the capital stock, which may fairly be construed to mean the capital stock actually paid in, the stockholders become ultimately liable for the excess; and this liability furnishes, if not an ample, at least a reasonable security against the public evils which the argument supposes might result from not requiring the whole capital to be subscribed for. At all events, we cannot perceive any clear legislative intention to make the subscription of the whole capital stock a condition precedent to the corporate existence of the bank, and unless it is so made by the charter, the matter of the plea falls, and cannot sustain the defence. If, however, this interpretation of the charter could not be supported, and the subscription of the whole capital stock were a condition precedent, the result, so far as the first plea goes, would not be varied. The fraud and collusion asserted in that plea, if admitted in its fullest manner, does not lead to the conclusion which it seeks to establish. If the subscription were fraudulently made with a view to evade the provisions of the charter, the law will hold the parties bound by their subscriptions, and compellable to comply with all the terms and responsibilities imposed upon them, in the same manner as if they were bona fide subscribers. It will not make the subscription itself a nullity, but it will deprive the subscribers of the power of availing themselves of the same. The 3d section of the act manifestly contemplates cases of fraudulent subscription, and provides "that all the subscriptions and shares obtained in conse[*66] quence thereof shall be deemed and held to be for the sole and exclusive use and benefit of the persons subscribing, or in whose behalf the subscriptions respectively shall be declared to be made, at the time of making the same; and all bargains, contracts, promises, agreements, and engagements, in anywise contravening this provision, shall be void; and the person, &c., subscribing, &c., shall have, enjoy, and receive the share or shares respectively, &c., and all the interest and emoluments thence arising, as freely, fully, and absolutely as if they had severally and respectively paid the consideration therefor; any such bargain, &c., to the contrary notwithstanding." * This section seems to us conclusive upon the point. It avoids all bargains contravening the provisions in respect to subscriptions, and gives to the subscriptions the same effect as if they were bona fide made for the real use and benefit of the subscribers; and independently of this provision, it would be extremely difficult to maintain, upon general principles of law, that a private fraud between the |