Planters' Bank v. Union Bank

Mr. Justice STRONG

delivered the opinion of the court.

Whether the payment in Confederate notes, and the quartermaster’s acceptance of them in discharge of the balance, was a satisfaction of the claim of the plaintiffs upon the defendants is a controlling question in the case. The Circuit Court instructed the jury that it-was not, because payment was made to the quartermaster in Confederate notes, which the court was of opinion he had no authority to receive, though holding that the military authorities thus exacting payment were invested with all the rights of a creditor.

It might be difficult to maintain, if the military authorities were clothed with the rights of creditors, that is, if .they had succeeded to the position and title of the plaintiffs, that'they could not determine what funds they would receive in payment of the balance on the defendants’ books to the credit of the plaintiffs. It is not perceived why they could not accept Confederate notes in discharge of a debt which had become due to them. But a grave question lies back of this. Bid the order of General Banks justify any payment of the balance to the military authorities ? If it did not, it is immaterial in what currency the payment was made. Payment in any currency was no protection to the debtors. The validity of the order is, therefore, the .first thing to be considered. It was made, as we have seen, on the 17th of *495 August, 1863. Then the city of New Orleans was in quiet possession of the United States forces. It had b.een captured more than fifteen months before that time, and undisturbed possession was maintained ever after its capture. Hence the order was no attempt to seize property “flagrante bello,” nor was it a-seizure for immediate use of the army. It was simply'an attempt to confiscate private property which, though it may be subjected to confiscation by legislative authority, is, accoi’ding to the modern law of nations, exempt from capture as booty of war. Still, as the war had not ceased, though it was not flagrant in the district, and as General Banks was in command of the. district, it must be conceded that he had power to do all that the laws of war permitted, except so far as he was restrained by the pledged faith, of the government, or by the effect of Congressional legislation. A pledge, however, had been given that rights of property should be respected. When the city was sur-, rendered to the army under General Butler, a proclamation was issued, dated May 1st, 1862, one clause of which was as follows: “All the rights of property of whatever kind will be held inviolate, subject only to the laws of the United States.” This, as was remarked in the case of The Venice,* “ only reiterated the rules'established by the legislative and executive "action of the National government in respect to the portions-of xthe States in insurrection, occupied and controlled bj7 the troops of the Union.” That action, it was said, indicated the policy of the government to be, not to regard districts occupied and controlled by National troops as in actual insurrection, or their inhabitants as subject, in most respects, to treatment as enemies.

Substantial, complete, and permanent military occupation and control was held to draw after it' the full measure of protection to persons and property consistent with a neeessáry subjection to military1- government. - We do' not assert', that anything'in General Butler’s proclamation' exempted' property within the occupied district from liability to confis *496 catiou as enemies’ property, if in truth it was such. All that is now said is that after that proclamation private property in the district was not subject to military seizure as booty of war. But admitting, as we do, that private property remained-gubject to confiscation, and also that the proclamation applied exclusively to inhabitants of the district, it is undeniable that confiscation was possible only to the extent and in the manner provided by. the acts of Congress. Those acts were passed on the 6th of August, 1861, and on the 17th of July, 1862. No'others authorized the confiscation of private property, and they prescribed the manner in which alone confiscation could be made. „ They designated government agents for seizing euemies’ property, and they directed the mode of procedure for its condemnation in the courts. The system devised was necessarily exclusive. ' No authority was given to'a military commandant, as such, to efieet any confiscation. And under .neither of the acts was the property of a banking -institution made confiscable. Both of them had in view the. property of natural persons who were public enemies, of persons who gave aid and comfort to the rebellion, or who held office under the Confederate government, or under one of the States composing it. In no one of the six classes of persons whose property was by the act of 1862 declared subject to confiscation was an artificial being included. It is, therefore, of little importance to inquire what, under the general laws of war', are the rights of a conqueror, for during the recent civil war the government of the United States asserted no general right in virtue of conquest to compel, the payment of private debts to itself. On the contrary it was impliedly disclaimed, except so far as the acts of 1861 and 1862 asserted it. Those enactments declaring that private property belonging to certain classes of persons might be confiscated, in the manner particularly described, are themselves expressive of an intent-that the rights of conquest should not be exercised against private property except in the cases mentioned, and in the manner pointed out. Aud it is by no means to-be admitted that a conquering power may compel private debtors to pay *497 their debts to itself, and-that such payments extinguish the claims of the original, creditor. It does indeed appear to be a principle of international law that a conquering state, after the conquest has' subsided into government, may exact payment from the state debtors of the conquered power, and that payments to the conqueror discharge the debt, so that when the former government returns the debtor is not compellable to pay again. This is the doctrine stated in Phillimore on International Law,* to which we have been referred. But the principle has no applicability to debts not due to the conquered state. Neither Phillimore nor Bynkershoeck, whom be cites, asserts that the conquering state succeeds to the rights of a private creditor.

It follows then that the order of General Banks was one which he had no authority to make, and that his direction to the Union Bank to pay to the quartermaster of the army the debt due the Planters’ Bank was wholly invalid. . This makes, it unnecessary to consider iii detail the exceptions taken by the defendants to the rulings of the Circuit Court, respecting the order and the alleged payment under it; for if the order was invalid, payment to the quartermaster did not satisfy the debt.

It is further assigned for error by the defendants, thát the court allowed the plaintiffs to withdraw a remittitur entered by them of part of a verdict obtained on a former trial of the case. The only objection made in the court below to the allowance wTas, that the remittitur was an acknowledgment of record that the amount remitted was not due. There had been a former trial in which the plaintiffs had obtained judgment for $113,296.01, with five per cent, interest from November 25th, 1863. This was a larger amount of interest than the petition of the plaintiffs had claimed, and they entered on the judgment a remittitur of the excess, expressly reserving their rights to the balance of the judgment. Subsequently a new trial was granted, and it is now cou *498 tended that the remittitur had the effect of a retraxit. As it was entered after judgment, such would perhaps be its effect if the judgment itself had not been set aside and a new trial had not been granted.* . But such cannot be its operation now. If it takes effect at all it must in its entirety, and the plaintiffs must hold their first judgment for the balance unremitted. As that judgment no longer exists, there is no reason for holding that the remission of a part of it is equivalent to an adjudication against them. This assignment of error is, therefore, not sustained.

Another error assigned by the defendants is, that the court ordered execution to issue on the judgment first recovered. for the sum of $26,752.63, without prejudice to the plaintiffs’ rights to recover the balance, that amount having been admitted to be due, and that this was done before the motion for a new trial'was disposed of. It must be admitted that though there was a judgment in exi.stende, the order of an execution at the time it was made was anomalous. But' there does not appear to have been any objection to.it, and it is not shown that the defendants have sustained any injury in consequence of its issue. It may fairly be presumed that the defendants assented to the order, and admitted that the sum for which.t'he execution was directed was due. The new trial afterwards granted was limited to the controversy respecting the excess of-the claim over $26,752.68, which, as' the order stated, “was admitted by the defendants to be due the plaintiffs.”.

The only remaining errors assigned by the defendants which require notice, grow out of the refusal of the court to charge the jury as requested, that if they found the balance of account sued for was composed wholly or in part of direct remittances from the plaintiffs to the defendants of Confederate treasury notes, and of-collections of drafts payable and paid in such notes, and if they found that the banks were necessary instruments of the Confederate government *499 for putting its issues of Confederate notes in circulation and forcing them upon the country, and that the plaintiffs, as. one of the banks, willingly lent itself as an instrument of that government, then the plaintiffs could not recover such amount of the balance thus composed of treasury notes-and collections. The point, it will be observed, does not assume that the plaintiffs were willing agents, or agents at all of the Confederate govem'ment in putting into circulation the notes which went to make up the balance of account standing to their credit. It assumes only that they had, as such agents, put some of the issues of the government into circulation, at-some time, in some transaction with some person, not necessarily the (defendants. That assumption, had it been sustained by the finding of the jury, was wholly impertinent, and therefore the only relevant question presented by the point was, whether Confederate treasury notes had and received by the defendants for the use of the plaintiffs were a sufficient consideration for a promise, express or implied, to pay anything. After the decision in Thorington v. Smith the point could not have been affirmed. A promise .to pay in Confederate notes, in consideration of the receipt of such notes and of drafts payable by-them, cannot be considered a nudum pactum or an illegal contract.

Nor should the court have charged that, in the circumstances of this case, no action would lie for the proceeds of the sales of Confederate bonds which had been sent by the plaintiffs to the defendants for sale, and which had been sold by them, though the proceeds had been carried to the credit of the plaintiffs and made a part of .the accounts. It may be that no action would lie against a purchaser of the bonds, or against the defendants on any engagement made by them to sell. Such a contract would have been illegal. But when the illegal transaction - has been' consummated; when no court has been called upon to give aid to it; when the proceeds of the sale have been actually received, and received in that which the law recognizes as having had valué; and when they have been carried to the credit of the plaintiff's, the case is different. ' The court is there not asked to enforce *500 an illegal contract.. The plaintiffs do not require the aid of anj? illegal transaction to establish their case. It is enough that the defendants have in hand a thipg of value that belongs to them. Some of the authorities show that, though an illegal contract will not be executed, yet, when it has been executed by the parties themselves, and the illegal object of it has been accomplished, the money or thing which wsft the price of it may be a legal consideration between the parties for a promise, express or implied, and the court will not Unravel the transaction to discover its origin. Thus, in Faikney v. Reynous,* a plaintiff was allowed to recover in an action on a bond given by a partner to his copartner for differences paid in a stockjobbing transaction prohibited by act of Parliament. This was the case of an express agreement; to pay a debt which could not have been recovered of the firm. Petrie v. Hannay†f was a similar case, except that the partner plaintiff had paid the differences by a bill on which there had been a recovery against him, and his action against his copartner for contribution was sustained. This was an action on an implied promise. Ex parte Bulmer‡ goes much-farther, and perhaps farther than-can now be sustained. We are aware that Faikney v. Reynous. and Petrie v. Hannay have been doubted, if not overruled, in England, but the doctrine they assert has been approved by this court.§ Lestapies v. Ingraham||is full, to the same effect. We think, therefore, the court was not in error in refusing to affirm the defendants’ points.

No .more need be said respecting the exceptions taken and errors assigned by the defendants -below. None of them are sustained. '

A single assignment of error made by the plaintiffs below remains to be consideréd, . At-the trial they asked for the following instruction: “If'the jury should find from the *501 evidence that the defendants received Confederate currency on behalf of the plaintiffs, and entered it to the credit of the plaintiffs on the books of the bank, and used it in their general business, the defendants thereby became the debtors of the plaintiffs, and that the measure of the indebtedness was the value of Confederate currency in the lawful money'of the United States at the time the credit Avas entered and the collections were made.” This instruction the court declined giving,'but in lieu thereof charged the'jury that the measure of indebtedness for receipts, or collections, made by the defendants in Confederate currency and used by them in their general business, was the valúe of such currency at the date of demand of payment made by the plaintiffs, and not at the date when such currency Avas received and used by the defendants in their business. This refusal to instruct the jury as requested and the instructions actually given are now complained of as erroneous. We think, however, they were correct in vie\v of the assumed and conceded facts. We do not controvert the position that generally a bank becomes á debtor to its depositor by its receipt of money deposited by him, and that money paid into- a bank ceases, to be the money of the depositor and becomes the money of the bank which it may use, returning an equivalent when demanded, by paying a similar sum to that deposited. Such is undoubtedly the nature of the contract between a depositor and his banker. So also a collecting bank ordinarily becomes the o-wner of money collected by it for its correspondent, and consequently a debtor for the amount collected, under obligation to pay on demand, not the identical money received, but a sum equal in legal value.

But it is to be observed this is the rule where money has been deposited, or collected, and when there has been no contract or understanding- that a different rule should prevail. • The circumstances of the present case are peculiar. It seems to have been conceded in the court below that the deposits were, made in Confederate currency, and that the collections were made in like currency Avi’th the assent of the plaintiffs. The instructions asked of the court assume this. *502 The Union Bank then became the agent of the plaintiffs to receive and to collect, not money, but Confederate notes, or promises, and the obligation it assumed was to pay Confederate notes when they should be demanded. The subject of the contract was a commodity, not money, and there was no default in the Union Bank until a demand was made and refused. And from the nature of the transaction it is to be inferred that the intent of the parties was that the one should impose and the other assume only a liability to return to the plaintiffs notes of the Confederate government like those received, or collected; notes promising to pay a like sum. And it is not perceived that the effect of the assumption is changed by the fact that the defendants used the notes received in their general business, if they did use them, prior to any demand for the fulfilment of their undertaking. Such use was in contemplation of the parties from the beginning. In Robinson v. Noble's Administrators,* a promise to1 pay in Cincinnati at a certain time, “in the.paper of the Miami Exporting Company, or its ■ equivalent,” was held by this court to impose upon the promisor only a liability to make good the damages sustained through his failure-to pay at the day, and that those damages were measured by the market value of the paper at the time when payment should have been- made. The promise was assimilated to an engagement to deliver a certain quantity of flour, or any other commodity, on a given day. A loan for consumption to be returned in kind contemplates a restoration not of the identical thing loaned, but of -a similar article equal in quantity, and if no return be made, all that the lender can require is the value of the thing which should have been returned at the time when the contract was broken. The value at the time of the loan is not to be considered. Both parties take the risk of appreciation or depreciation. Why should not a similar rule be applied to the present- case? ' Ought the plaintiffs to recover more than the damages they have sustained from the breach of the contract? Ought they to be *503 placed in a better position than that- they would occupy if the defendants had paid-them the right quantity, of Confederate notes when they were demanded? We think not. Clearly if the notes had appreciated after they were received by the defendants, and before the demand was made, the plaiutifft would have been entitled to the beneñt of the appreciation. This is because of the nature of the transaction, and it would seem, for the same reason, the risk of depreciation was necessarily theirs.

This ease differs very materially from Marine Bank v. Fulton Bank* There, it is true, the collecting bank received depreciated currency of the Illinois banks, and, it may be assumed, with the assent of its correspondent. But there were positive instructions to hold the avails of the collections subject to the order of the bank which had sent the notes for collection; and the proceeds of the collections were an authorized lawful currency. The two banks, therefore, stood to each other in the relation of debtor and creditor, and the collecting bauk acknowledged that relation immediately on the payment of the notes which had been sent to it fof collection. Not so here. The collections were' not made in money, and it was not the understanding of the parties that money should be paid. We hold, therefore, that the Planters’ Bank ought not to be permitted to recbver more than the damages sustained by it in consequence of the defendant’s failure to deliver Confederate notes when they were demanded, and those damages are measured by the value of those notes in United States currency at the time when the demand was made and when the notes should have been delivered; and in so holding we do not intend to deny or qualify the doctrine asserted in Marine Bank v. Fulton Bank, or in Thompson v. Riggs.† It follows that the charge given to the jury was correct.

■ There is, then, nothing in the record complained of by either party which would justify our ordering a new trial.

Judgment aeeirmed.

Commercial Bank of Albany v. Hughes, 17 Wendell, 100; Foley v. Hill, 2 House of Lords Oases, 36; Carr v. Carr, 1 Merivale, 541, note; Sims v. Bond, 6 Barnewall & Adolphus, 389.

2 Wallace, 258.

Vol. 3, part 12, ch. 4.

Bowden v. Horne, 7 Bingham, 716.

4 Burrow, 2069.

3 Term, 419.

13 Vesey, 316.

Armstrong v. Toler, 11 Wheaton, 258; McBlair v. Gibbes, 17 Howard, 236; Brooks v. Martin, 2 Wallace, 70.

5 Barr, 71; see also Farmer v. Russell, 1 Bosanquet & Puller, 296.

8 Peters, 181.

2 Wallace, 252.

5 Wallace, 663.