THIS case was brought up, by writ of error, from the Circuit Court of the United States for the District of Vermont.
It was a suit brought by the Bank of the United States, under the following circumstances:
During the existence of the charter granted by Congress to the Bank of the United States, it had established a branch of that institution at Burlington, in the state of Vermont. The Bank, when chartered by Pennsylvania, became the owner of the property and effects of the former corporation, and of course of the property and effects of the branch at Burlington. Being about to close and withdraw that branch, the board in Philadelphia received the following offer:
To the President and Directors of the Bank of the United States.
John Peck and Lyman and Marsh and others, propose to purchase of the Bank of the United States the property of the office at Burlington, Vt., as it was upon the 2d day of March, 1836, upon the following terms, viz.:
Bills discounted, 2d March, 1836, $70,121
$72,254.
With average of interest.
Blood & Burdick's debt, 1.600.00 At the face.
McIntire & Bean & Rolfe's debt, 3,000.
54,523.
Suspended debt, 5,000.
Banking-house and appurtenances, and house and
lot in Vergennes. 10,000.
$141,777.
To be paid in four or five annual instalments, with 5 per cent. interest, and such security given as shall be satisfactory.
JOHN PECK, for himself and others.
Philadelphia, 10th March, 1836.
The offer was accepted, and the plaintiffs in error signed four joint and several notes, dated on the 1st of April, 1836, payable to the order of Mr. Jaudon, cashier, at the Union Bank, in the city of New York. Each note was for $35,500 dollars, and they were payable one, two, three, and four years after date. Separate notes were given for the interest payable at intervals of six months, and the small balance remaining being paid in cash.
When the first note was becoming due, Peck & Co. were not prepared to pay it, and requested the bank to discount other paper for them to the amount of $15,000 to place them in funds; and amongst this other paper was a note by Lyman & Cole for $5000, which was indorsed over to the bank by Peck & Co. The bank having acceded to this proposition, the first note was given up as paid, as was also the second and third when they became due. The note by Lyman & Cole, however, was not paid, and constituted one of the items of this suit.
By reference to the above list of assets, it will be perceived that the 'suspended debt' is valued at $5000. Two of these items were brought forward in the bill of exceptions, and are noticed in the opinion of the court. It is proper, therefore, to give the following explanation of the matter, copied from the brief of Mr. Phelps:
Among the items of the suspended debt sold to the defendants for the sum of $5000, the nominal amount being over $26,000, were two sums standing upon the books of the bank in the list of suspended debts, as due from one Burrows, and from the firm of Truesdell & Co. The debt of Tresdell & Co. had been compromised by the payment of fifty per cent., so that the balance of 50 per cent., which stood upon the books of the bank at the time of the sale to the defendants, was not due. The amount paid by Truesdell & Co. had been deducted from the original debt, so that the sum apparently due was only the remaining half.
The Burrows debt had also been cmpromised, and was in a similar condition, except that the sum to be paid by him under the compromise had not been paid.
The compromise of the debts against Truesdell & Co. was made by the directors of the branch, with the approbation and concurrence of the parent board. At the time when this was done two of the defendants were directors of the branch, and acted in the matter.
The directors of the branch were directed by the parent board to make semi-annual returns, showing the condition of the branch, the suspended debts, &c. Two of these returns, signed by two of the defendants as directors, show the precise condition of these debts. They being marked with the letter D, signifying desperate, and a note being appended, showing that the apparent balances were not due. These transactions took place long before the sale to the defendants. The defendants claim that they should be indemnified for the amount of these apparent debts not really due.