McMillan v. The Bull's Head Bank.

merely an engagement,
A guarantor, not being

done by the principal shall be done, not
jointly with the principal, to do the thing.
a joint contractor with his principal, is not bound to do what the
principal has contracted to do, like a surety, but only to answer
for the consequences of the default of the principal. The original
contract of the principal is not his contract, and he is not bound to
take notice of its non-performance, and therefore the creditor should
give him notice; and it is universally held, that if the guarantor can
prove that he has suffered damage by the failure to give such notice,
he will be discharged to the extent of the damage thus sustained.
It is not so with a surety.

In the present case the contract is joint and several, and the principal debtor is a party to it. The others are described in it as sureties, and expressly contract to answer as sureties. All may, of course, be sued together. But a guarantor cannot be sued with his principal, for his engagement is not jointly with the latter, but is strictly an individual contract. There is no case in the books, to our knowledge, and some pains has been bestowed in their examination, in which one contracting jointly with the principal debtor has been deemed a guarantor, and allowed to avail himself of such defenses as are peculiar to that character. The bond does not purport to be a contract collateral to some other engagement of the principal debtor. Its terms did not require that the contemplated loans should be made upon any other or additional security. It authorized loans to be made upon any terms that might be agreed to by the principal and the bank; and the obligation of the sureties was to pay them at maturity if the principal did not. It differed in no essential respect from any ordinary bond of a principal and sureties, conditioned to answer for a default of the principal. In such cases, surely, neither notice of acceptance nor notice of default is necessary to fix the liability of the sureties. We are of opinion that the complaint was good, and the demurrer to it properly overruled.

Upon trial of the issue made by an answer of general denial, the evidence showed that the loans were not made solely upon the credit of the bond. We do not think that this affected the question of liability.

Judgment affirmed.

1

Board of Commissioners of Montgomery County v. Elston.

BOARD OF COMMISSIONERS OF MONTGOMERY COUNTY V. ELSTON.

(32 Ind. 27.)

Taxation of national currency.

The circulating notes of national banks, known as “national currency," are not exempt from taxation by a state.

THIS was a complaint by the appellee against the board of commissioners and treasurer of Montgomery county, to restrain a sale of certain personal property, levied upon by the said treasurer by virtue of a warrant to collect the sum of $418.49, being the amount of tax and penalty on $27,175 in the hands of the appellee on the first day of January, 1868.

One-half of this sum was in treasury notes of the United States, known as "greenbacks;" the remaining portion was in the notes of the national banks, designated as "national currency." This sum had been returned for taxation under protest.

A demurrer was overruled to this complaint, and a perpetual injunction was granted.

R. H. Galloway and P. S. Kennedy, for appellants.

S. C. & L. B. Willson and J. M. Butler, for appellee.

RAY, J. (after stating facts and deciding, in accordance with Bank v. Supervisors, 7 Wall. 26, that the United States treasury notes were not liable to taxation, continued):

There remain but two questions. Has congress attempted to extend this exemption from state taxation to the currency issued by the national banks? If she has declared this exemption, was the subject within her jurisdiction?

The act of February, 1862, declares, that "all stocks bonds, and other securities of the United States held by individuals, corporations or associations, within the United States, shall be exempt from taxation by or under state authority." 12 Stat. at Large, 346, § 2.

And this provision is reenacted, in application to the second issue of United States notes, by the act of July 11, 1863. 12 Stat. at Large, 546.

Board of Commissioners of Montgomery County v. Elston.

And, as if to remove every possible doubt from the intention of congress, so far as treasury notes were involved (the national bank notes not then being issued), the act of March 3, 1863 (12 Stat. at Larg, 709), which provides for a further issue of treasury notes, omits in its exemption clause the word "stocks," and substitutes for "other securities " the words "treasury notes or United States notes issued under the provisions of this act." The act authorizing the issue of national bank notes was approved June 3, 1864, and the 22d section provides that the notes shall express upon their face the promise of the association receiving the same to pay on demand, and that they are secured by the deposit of United States bonds with the treasurer of the United States. But these bonds are not the property of the United States, but of the national bank issuing the notes. It is true, that the government in the act agrees to redeem the notes on failure of the bank, but the primary liability rests upon, and promise to pay comes from, the national bank; and before the government does so redeem, she declares forfeit to herself all bonds deposited as security for the issue, these bonds being in excess of the aggregate of notes, and the bonds her own promise. Thus, in fact, in payment of the notes, by her, she simply pays her own bonds at less than their face, and may cancel an amount of said ponds at their current rate, not to exceed par, equal to the currency redeemed, and shall hold a first and permanent lien for any deficiency in the proceeds of the bonds, if sold, on the assets of the bank. There is no clause in this act exempting the notes from state taxation, but an express provision making its shares liable.

It is insisted, however, that the act approved June 30, 1864, entitled "An act to provide ways and means for the support of the government, and for other purposes" (13 Stat. at Large, 218), exempts this issue of the "national currency," as it is entitled. The first section of that act declares that "all bonds, treasury notes and other obligations of the United States shall be exempt from taxation by or under state or municipal authority."

The last section is as follows:

"§ 13. And be it further enacted, that the words 'obligation or other security of the United States,' used in this act, shall be held to include and mean all bonds, coupons, national currency, United States notes, treasury notes, fractional notes, checks for money of authorized officers of the United States, certificates of indebtedness, certificates of deposit, stamps, and other representatives of value of

Board of Commissioners of Montgomery County v. Elston

whatever denomination, which have been or may be issued under any act of congress."

This, at a first glance, might seem to bring "national currency" within the exemption, and, as we are not indebted to counsel for a solution of the difficulty, doubtless has misled them in the argument. But the words in quotation in the thirteenth section are technical, and are not the identical words used in the same order in the first • section, and therefore the reference to that section would be more than questionable. All doubt, however, is removed by the use of the same technical phrase, in the eleventh section of the same act, in which it is provided, " that if any person having control, custody, or possession of any plate or plates from which any obligation or other security, or any part thereof, shall have been printed,” etc., “or shall have or retain in his custody or possession, after a distinctive paper shall have been adopted by the secretary of the treasury for obligations and other securities of the United States, any similar paper adapted to the making of any such obligations or other security," etc., "every person so offending shall be deemed guilty of a felony, and shall, on conviction thereof, be punished," etc.

It thus appears plain that the entire intent and purpose of the last section of the act was to throw around "national currency" the same guards against counterfeiting that were by law provided for "obligations and other securities of the United States."

Clearly, no exemption in any act prior to the authority given to issue "national currency" can apply, and as they are not obligations of the United States, in any proper sense of that expression, as they do not rest primarily on the promise of the government to pay them as her own debt, but simply on her promise that she will amply indemnify herself in her own bonds, and only after failure of the bank and forfeiture of the bonds to her will she regard herself as finally liable; certainly, there is nothing in the letter of the law exempting this circulation from taxation; and though we do not discuss the power of congress to make such exemption, we are free to admit that we see nothing in the paper itself or the circumstances of its issue which would authorize such a limit to be placed on the power of the state to tax.

It follows, that the amount of the assessment on the moiety consisting of treasury notes was unauthorized and illegal; and that the amount rated upon that portion consisting of currency of the national banks was legal and proper.

VOL. II.-42

Under a rule often expressed in this court, the appellee, not having tendered to the treasurer of the county the amount legally due, cannot successfully invoke the aid of the court by the interposition of its extraordinary remedy of injunction to prevent the collection of a tax in part legal and in part illegally assessed.

Judgment reversed, and cause remanded, with direction to sustain a demurrer to the complaint for injunction. Costs here.

MEANS, appellant, v. SwORMSTEDT.

(32 Ind. 87.)

Promissory note — Personal liability of agent on.

The secretary of an incorporated company gave a promissory note, using the words "We promise to pay," etc., and signed it with his own name, with "Sec'y" affixed, and impressed thereon the seal of the corporation. Held, that he was not personally liable thereon.

THIS action was brought on a promissory note, of which the following is a copy:

$483.00.

Madison, Ind., March 18, 1868.

Ninety days after date, we promise to pay to the order of Means, Kyle & Co. four hundred and eighty-three dollars, without any relief from valuation or appraisement laws. Value received. Payable at the Nat'l Branch Bank, Madison, Ind.

(Signed)

WM. B. SWORMSTEDT, Sec'y.

On the note was an impression of a seal bearing the words "Neal Manufacturing Co., Madison, Ind.," of which company Swormstedt was secretary. The revenue stamp was canceled by his initials. The defendant demurred to the complaint for want of sufficiency of facts stated, and the demurrer was sustained. From this ruling the plaintiff appealed.

C. E. Walker and W. S. Roberts, for appellant.

H. W. Harrington and C. A. Korbly, for appellee.