Supreme Court, Michigan.-Hammond and others v. The President, &c. of the Mich. State Bank,

"We are, respectfully your obedient | the commissioners, appointed by the state, servants,

C. G. HAMMOND,

Auditor-General,

J. J. ADAM,

State Treasurer,

R. P. ELDREDGE,

Secretary of State,

Trustees.

That on the seventh of the same month, complainants received from Joy and Porter an answer, dated on the fourth of May, from which the following is an extract:

Detroit, May 4, 1842.

"GENTLEMEN-We have your letter of to-day, enclosing a schedule of papers which you supposed to be in our office for collection, for the benefit of the state, as the assignee of the Michigan State Bank. With regard to that schedule, we may remark that most of the papers therein mentioned, were never in our office, or in any way subject to our control or supervision. With regard to those which were actually placed in our hands by the State bank, (and none of these papers were placed in our hands by any one else) we have to say that in the present position of the controversy between that bank and the state, we cannot, with safety to ourselves as in dividuals, nor with propriety as professional men, place them in your control.

upon and subject to an express condition to be performed by the state. Upon the performance of that condition, the state would of course acquire an absolute right to the property. And it is equally clear that if the state refused to perform the condition, it must forfeit all right and title in and to the property so assigned.

"In our view, it requires no very great astuteness of mind, or clearness of perception to see this consequence. Now, the state has refused to fulfil and perform the condition upon the performance of which alone, it might acquire the right to take possession of, and control the property, and yet by an act of legislation, endeavors to seize it in fraud of the rights of the bank, in violation of law, and of the most cherished principles of our institutions, and of civil right and liberty. Under these circumstances, you will excuse us, if we cannot see (as you do so clearly) that these assets have become the property of the state, and that you have succeeded as state officers to the right to the possession and control of them.

"We shall very cheerfully render for the present an account to the individual (Mr. Hastings) who is is entitled to it, and we shall as cheerfully render you an ac"The bank does not recognise your count of our doings in the premises when right to take possession of these assets. It it shall be ultimately decided that you does not recognise the right or the power have a right to it. At present the whole of the Legislature to say that its property matter is involved in the suit now pendshall be taken from it and appropriated to ing, relative to this settlement, and by no public use, without a compensation. Nor means yet determined. And for your indoes it choose to submit to arbitrary, un-formation, we may remark that a transacjust and oppressive acts of legislation, which break down all the barriers of private right, and subjects (if the legislature possesses the power which it has attempt ed to exercise in this instance,) all the private property of all the citizens of the state, to the mere will of the Legislature, without control or possibility of procuring any redress. It will not voluntarily submit to be deprived of its property, by the state, in violation of its rights, and in open violation of express stipulations and conditions, and of the universal right guaranteed by the great fundamental principles of our government, to all who enjoy its protection, to acquire and be protected in the possession and enjoyment of their private property. The assignment to which you allude conveyed these and other assets to

tion of this nature, on the part of the state, in open and utter disregard of private rights, and of the protection which is due from the government to these rights, resulting in fact, in a confiscation of property, without a trial by court or jury, cannot take place, pass by, or be acquiesced in by us as counsel for the state bank, as one, where no remedy can be had but silence; no relief, but such as those enjoy, who tamely submit to arbitrary power,'"' &c.

The bill further states, that the Bank claims the property and effects assigned to the State to be the property of the Bank, and that Joy and Porter claim to hold the assets placed in their hands by the State as attorneys for the Bank, and prays that the Bank may be decreed

Supreme Court, Michigan.-Hammond and others v. The President, &c. of the Mich State Bank.

Supreme Court, Michigan.-Hammond and others v. The President, &c. of the Mich. State Bank

presumed to be within the knowledge of the party with whom they contracted, but it is referred to in the agreement itself and the contract is made by both parties in reference to the authority contained in the act appointing the commissioners.

2. As to the power of the commissioners to bind the state to indemnify and pay money.

A power may be given by deed, by will or by act of Parliament. (Sugden on Poncers, 1; Paley on Agency by Lloyd, 191.)

In construing the extent of a power, the intention of the parties must be the guide. (Ib. 459; 2 Cowen 233.) "In construing a power of attorney, therefore, in order to ascertain whether it has been well executed, the letter of the instrument is not to be exclusively regarded; but the important inquiry is, has the intention of the parties been carried into effect." (Wilson v. Troup, 2 Cowen, 234.)

terms as they might deem equitable."
They were authorized to receive an assign
ment of the assets of the Bank, but the act
gave them no power or authority to bind
the state to indemnify or pay money. A
special authority must be strictly pursued
in order to bind the principal. Even in
cases of agencies if the authority of the
agent purports to be derived from a written
instrument, the party dealing with the
agent ought to call for and examine the
instrument itself to see whether it justifies
the act of the agent, and if from his omis-
sion to examine he should encounter a loss
from the defective authority of the agent
it is properly attributable to his own fault.
(Story on Agency 69; Atwood v. Mun-
nigs 7, B, and Creswell 278; Willington
v. Herring 5 Bing. 442, 1 Peters 264, 200,
1 Chitty on Cont. 174-7; Snow v. Perry
9, Pick. 542; Lee v. Monroe, 2 Pet. Cond.
Rep. 531, and note at the end of the case,
13 Petd. Abr. 508,) and the case is much
stronger where commissioners are appoint-
ed by, and derive their authority from a
special act of the legislature. In the case
of Deming v. Smith, (3 Johns C. R. 344,)
where commissioners of loans were ap
pointed by a public act of the legislature
to sell lands for the benefit of the state,
and the act prescribed the necessary no-
tice of sale, and the commissioners sold
without giving the requisite notice, the
sale was set aside, though the purchaser
claimed to be a bona fide purchaser with-struction.
out notice of the irregularity, and the court
say here was a special trust to be executed
by the commissioners of loans for the bene-
fit of the state that their authority to
sell was under the statute prescribing the
mode; that it was a special authority, and
must be strictly pursued, and that every
purchaser was bound to know that spe-
cial authority, for it was contained in a
public act, and if he purchased in a case
where that special authority was not pur-
sued he purchased at his peril.

This is the true rule, and the rule applicable to this case.

،،

Here the agreement was entered into by the commissioners, as appears upon the face of it. By virtue of the authority vested in them by an act entitled an act authorizing the Auditor-General," &c., "to settle with the Michigan State Bank," &c. The authority under which the commissioners acted therefore is not only

What was the intention of the Legislature when they passed the act authorizing the settlement? Was it their intention when they appointed commissioners and gave them authority and power to settle with an insolvent debtor upon such terms as they might deem equitable, that those commissioners should be at liberty to bind the state to imdemnify and pay money to an unlimited extent? This is contrary to common sense, and to all rules of con

It is contended on the part of the appellants that the act authorizing the settlement gave the commissioners full discretionary power to do what they might deem equitable in the premises, and the commissioners having deemed it equitable that the state should make the indemnities and payments specified in the condition annexed to the agreement, it is legally bound so to do.

Where a discretionary power is given, it means that a legal discretion is to be exercised, not a wild arbitrary and capricious discretion, which has neither law nor reason to control it. It must be a sound discretion exercised upon a view of all the circumstances to render it a legal discretion. (6 Johns Ch. R. 222; S. C.. Cowen 505; 1 Harr Ch. R. 126; Story on Agency, 67.)

But how came this word equitable to be used in the act?

Supreme Court, Michigan.-Hammond and others v. The President, &c. of the Mich. State Bank. April 10, 1839, an act was passed (see | public trust, for a public benefit. (See act No. 44,) appointing commissioners, 17 Eng. Com. Law Rep. 328.) And so and authorizing them to settle with the far as they acted legitimately, and within Michigan State Bank. April 12, 1839, the scope of their authority under the powthe commissioners report, (see House Doc. ers conferred, effect ought to be given to 925, No. 51) that the Bank claims an the agreement, and no further. The powequitable offset against the demand of the er and authority under which they acted State, for moneys advanced to state offi- was special and limited. "An agent concers to the amount of $50,000. The al- stituted for a particular purpose, and unlowance of which the commissioners der a limited power, cannot bind his thought was not legitimately within the principal if he exceeds his power. The scope of their power and duties, under the special authority must be strictly pursued. act by which they were appointed. The Whoever deals with an agent constituted committee "suggest" in their report, (page for a special purpose, deals at his peril 930) for the consideration of the Legisla- when the agent passes the precise limits ture, that the question of settlement de- of his power, (2 Kent 620, Story on Agenpends upon the justice or equity of the cy 69, 77.) And it is a well settled princlaims of the Bank against the state, and ciple in the construction of powers, that becomes in a measure a matter of expedi- where there is a complete execution of a ency, &c., and they ask the Legislature power, and something more is added, to settle the matter, whether these claims which is improper, the execution is good, shall be allowed or not. and the excess only is void. (Coke, Litt. 258, a 4; Cruise Dig. 217, § 45, id. 218, § 49-50; Warner v. Howell, 3 Wash. C. Č. Rep. 12. See also Griffith v. Harrison 4 T. R. 744, where the court say "no doubt could ever have been made whether a man might not do less than his power, or if he did more, whether it should not be good to the extent of his power.") In Robinson v. Hardcastle (2, T. R. 252,) Buller, J. says "I take it to be a clear rule of law, on the execution of a power that the execution must have reference to the power itself, and that a person claiming under the execution takes under the deed by which the power is created; and therefore the uses limited by the power must be such as would have been good if limited by the orginal deed." In the case of Alexander v. Alexander, (2 Ves. 644,) it was held that the execution of a power might be good in part, and bad in part, and the excess only is void, if the boundaries between the excess and the proper execution be clear." (See also 4 Cruise Dig. 218, § 49, 50; 2 Thomas' Coke 693, note.)

Upon this report being made to the legislature, they passed a joint resolution April 19, 1839, (see resolution No. 29,) appointing "Commissioners to settle with the Michigan State Bank upon such terms as they may deem equitable."

No settlement was effected by the commissioners appointed by this resolution, and February 1, 1840, Act No. 8 was passed adopting the language of this resolution. This is the way the word equitable comes to be used in the act. It was intended merely to give the commissioners power to allow the Bank on the settlement these equitable offsets against the State, and nothing more, and this all appears from the public, and published acts, resolutions and documents of the Legislature, and being public acts and documents, all parties were bound to take notice of them.

III. If the commissioners exceeded their power and authority in attempting to bind the State to indemnify and pay money, then is the agreement void in toto, or is only so much void as exceeds the power and authority given them by the

act.

In construing the contract or agreement, and ascertaining how far it is obligatory upon the state, it is proper to attend as well to the character of the commissioners, as the terms of the contract. The commissioners in this case were appointed by a public act to discharge a

This rule applies as well to agents acting under special authority as to persons executing a power. (Story on Agency, 156 to 160; 2 Kent 617-618; State of Illinois v. Delafield, 8 Paige 527; S. Č. on appeal, 2 Hill 155.)

In Nixon v. Hyseratt, (5 John's R. 58,) where an agent was authorized to sell and convey to the purchaser in fee as should

Supreme Court, Michigan -Hammond and others v. The President, &c. of the Mich. State Bank.