
    Morgan and another assignees of Waln against The Bank of North America.
    A party en-tr;msfpr of the g0°r°p0"f¿¿,n" company, fspe™aiae.n on case against those whose permit ranstertobi.-made, an(I wj10 re_ fuse permission.
    It is a principieofequity, Court finds 6 mutual demands, to endeavour to set off one against the other, and Courts of Law in Pennsylvania, have adopted the doctrine of Courts of chancery with respect to equitable set-offs.
    A stockholder who borroAvs money of a Bank, with full knowledge of an usage not to permit a transfer of stock, while the holder is indebted to the Bank, is bound by such usage, and neither he nor his assignees under a voluntary general assignment, can maintain an action against the Bank for refusing to permit his stock to he transferee!.
    
      Query, whether an action could be maintained by a special assignee for a valuable consideration?
    TIIIS was a spetial action on the case, brought by Benjamin R. Morgan and John C. Smith, assignees of Robert Wain, against the Bank of North America, to recover damages for refusing to permit a transfer of certain shares of stock by Mr. Wain to the plaintiffs, and for refusing to nay to them the dividends on those shares. The * J i sii • r -r • . was tried before the Chief Justice at Ntsz Prizes in February last, when a verdict was taken for the plaintiffs, for six cents damages and six cents costs, subject to the Court’s ° to opinion on the evidence.
    The facts proved on the trial were as follow '. — Robert Wain became a stockholder of the Bank of North America in 
      October, 1791, and was elected a director in January, 1792, anc[ s0 continued until January, 1820. Benjamin R. Morgan, one of the plaintiffs, became a director of the same institu1 tion in January, 1811, and remained so until March, 1821. l5th September, 1819, Robert Wain made a voluntary general assignment to the plaintiffs, for the benefit of his creditors. At that time he was the owner of six shares of the stock of the said Bank, and was indebted to it in the sum of 25,786 dollars 92 cents. On the 19th February, 1820, the plaintiffs and Mr. Wain, went to the Bank, accompanied by a notary public, who, after exhibiting to the cashier the certificates of stock and Mr. Wain’s assignment, requested that a transfer might be made to the assignees. The cashier declined giving the permission demanded, saying, that there was an order of the board, with which Mr. Wain was acquainted, that no stockholder indebted to the Bank, should transfer his stock until the debt was paid. In a day or two after, the notary again waited upon the cashier, who gave an answer in writing in these words: — “ The .Bank holds the shares, as a set-off for the debt due from Robert Wain.”
    
    On the part of the defendants it was proved, by a witness who had himself been a director of the Bank of North America twelve years, that during that period, two cases occurred, of which his own was one, in which stockholders became indebted to the Bank, and did not transfer their shares, in consequence of the regulation of the board, not to permit a stockholder to transfer his shares while he remained indebted to the bank. The rule was acquiesced in by the stockholders in both instances. Three cases, which occurred before the witness became a director, also came under his knowledge. In one of them he believed an application was made to the Bank, for permission to transfer. The witness had no doubt Mr. Wain was acquainted with these instances, as he was an active, excellent director, and often on committees of accounts. He must have been acquainted with this regulation and claim of the Bank. There was but one opinion at the board, and Mr. Wain could not have been ignorant of it. The Bank always insisted on the right, and never yielded it. The witness always considered it the fixed law of the Bank. He believed the debts due in the cases mentioned by him, were on notes discounted by the Bank.
    It was agreed by the parties to this suit, that James Willes ■ being a creditor of James Smith (one of the debtors above alluded to) received from him an assignment of two shares in the Bank of North America, with a power to transfer them ; that he attended at the Bank, and claimed the right to transfer, which was denied by the directors, and permission to transfer refused, on the ground that Mr. Smith was indebted to the Bank. After some opposition, Mr. Willes abandoned his claim, and the shares have ever since been held by the Bank. It was further agreed, that William Lewis, esq. counsel for the Bank, advised the directors, while Robert Wain was one of them, that they had a right to refuse the transfer of any stock while the holder was indebted to the Bank.
    The Bank furnished to the assignees of Robert Wain, an account against him, in which, after charging him with the debt due to the Bank, and giving him credit for the six shares of stock at the current price, and the dividends received, there remained a balance due to the Bank of 22,815 dollars 98 cents. It was admitted that the debt due from Robert Wain, arose from notes discounted by the Bank while he was a director.
    
      Rawle, jun. and Rawle, for the plaintiffs.
    The policy of the law being, that the effects of an insolvent should be equally distributed among all his creditors, instead of being monopolised by one or a few, the claim of the plaintiffs which has this end in view, is entitled to much more favour than that of the defendants, who seek to appropriate the whole fund to themselves, to the exclusion of all others. In considering the liability of the shares of stockholders to be applied to the extinguishment of debts due by them to the Bank, it will be proper to advert to the nature of the capital .stock of these institutions, and to the nature and extent of the interests of the stockholders in it. The property held by banking companies is partly real and partly personal. By their charter, the real estate of the Bank of 
      
      North America is confined to a banking house and the lot on which it stands, and to such other real property as may be bona fide mortgaged as a security for debts. Their principal estate is personal, the real being merely accessory to the personal, and permitted to be held to enable them to carry on their backing operations. Nevertheless, both species of property are so intimately blended together, that the character of one, will be found to have a considerable influence upon the other. With respect to the interest of the stockholders, it is perfectly clear that they are not joint tenants, because no survivorship takes place which is an essential incident to this species of tenure. It is equally clear that they are not to be viewed in the light of mercantile partners, because unlike partners, they are not individually responsible for the debts of the company, whose corporate property alone is applicable to the payment of them. None of the consequences therefore, flowing from the relations of joint tenancy and partnership, attach to members of a corporation. The character in which they hold their property is that of tenants in common of a mixed estate, partly real and partly personal, and of course all the characteristics of this kind of tenancy belong to them. Each tenant in common has an undoubted right to withdraw from the concern, and to dispose of his interest to any one, who, by the transfer, becomes the proprietor of an undivided share in the estate of the company. This transferable quality belongs peculiarly to shares in commercial incorporated companies, which are intended, for the benefit of trade, to pass freely from hand to hand. There is nothing in the charter of the Bank of North America, which can authorise the imposition of such á restraint upon the alienation of shares, as they now claim; and even in the bye-laws, which if opposed to the general policy and intent of the corporation are void, there is nothing to support their claim. A corporation may make bye-laws for its own regulation, not inconsistent with the law of the land, or with the intention and objects of the corporation. If contrary to its design and spirit, they are void. 2 Kyd on Corp. 113. Maidstone Case, 4 Burr. 2204. Breton's Case, 4 Burr. 2260. The design of the Bank of North America, as declared in the preamble to the Act by which it was created, 2 Sm. L. 399, was to advance objects of general interest and utility, to promote agriculture and commerce, particularly the latter, by giving them facilities which they would not otherwise possess. These objects do not require that the Bank should possess so great an advantage over the other creditors of an insolvent stockholder, as to have the right to retain his stock ; on the contrary, it is more consistent with general utility, and especially with the interests of commerce, that the transfer of shares should be under the control of the stockholder, unclogged by any lien of the Bank, because the consequences of establishing the lien, would be injurious to his commercial credit. If then' the defendants’ claim rested on a positive bye-law, instead of an alleged usage, it would, if opposed to the general objects of the corporation, be void. Another rule in relation to this subject is, that although a bye-law may regulate the exercise of a right, it cannot destroy or even abridge the right itself. 2 Kyd. 122. Commonwealth v. Woelper, 3 Serg. & Rawle, 33. A bye-law which creates a lien on the stock of a member, tends to abridge and even to destroy the right of alienation, which is incident to this species of property, and which every one, on becoming a .member of the company, acquires. If then a bye-law regularly passed and known, authorising the claim now asserted, would not -be binding, still less would a mere usage of the Bank, introduced we know not how, and known to very few. No lien having been given by the terms of the charter, nor even by a bye-law, it must be supported, if at all, upon the general principles of law. The cases in which the law gives a lien, are thus stated by Lord Mansfield, in Green v. Farmer, 4 Burr, 2221 :-1. Where there is an express contract authorising it. 2. Where a contract may be implied from the usage of trade, or 3. From the manner of dealing between the parties. 4. Where the defendant has acted as factor for the plaintiff. The law is laid down in the same manner, in Jarvis v. Rogers, 15 Mass. Rep. 394. An express contract between the Bank and Mr. Wain, is not pretended. Nor can an agreement be implied from the usage of trade, for there was in fact no trading, and unless it be shewn that the Banks in Philadelphia generally are in the habit of asserting and enforcing the same claim, it does not amount, properly speaking, to an usage. Nor is it to be inferred from the manner of dealing between the parties, that there was an agreement that the Bank should retain in the event which t0ok place. The meaning of this rule is, that where, from the manner of dealing, it is apparent that security arising from the possession of a particular thing was looked to, rather t^e personal credit of the debtor, there the party should not |je compelled to part with the possession until the debt . r r r . was paid. But where personal .credit was originally relied upon, the creditor cannot withhold specific property, either in discharge of the deb', or to compel payment. Esp. N. P. 585. Green v. Farmer, 4 Burr. 2214. Allen v. Megguire, 15 Mass. Rep. 490. The security to which the Bank looked when they discounted Mr. Wain’s notes, was his personal credit, and that of his indorsers. It is beyond á doubt, that except where stock is expressly pledged, which is not very common, discounts are granted upon personal credit alone, and as except in the case of a pledge, a stockholder may unquestionably transfer his stock before his notes become due, it is idle to suppose that the Bank placed any reliance upon a security which might be placed beyond their reach at any moment before the debt was payable.
    A strong analogy exists between the interest of stockholders and that of part owners of a ship. Part owners, like stockholders, are tenants in common of their respective shares, each having a distinct interest, which on his death passes to his personal representative, and not to the survivors. Abbot, (Story’s Ed.) 103. (83). The rule now established in relation to part owners is, that where one becomes bankrupt, the others may deduct from his share of the profits of the voyage in prosecution at the time, his share of the expenses of that voyage, but for his proportion of the expenses of former voyages which remains unpaid, no deduction can be made j and for no debt whatever have they a lien on his share, of the ship, which passes unencumbered to his assignees. Abbot, 113. (93.) 1 Holt on Shipping, 358, 359. 2 Ves. & Beames, 242. Livingston v. Lynch, 4 Johns. Ch. Rep. 573. Nicoll v. Mumford, Id. 526.
    The cases of stockholders in an incorporated company, and of part owners of ships, though nearly parallel, are however in some respects different; but these distinctions operate in favour of the present argument. Like members of a corporation, part owners have liberty to withdraw from the concern when they please ; but, unlike corporators, they are individually iiable for the whole of the common debts. Another distinction arises from the different nature of the property they respectively hold. The property of part owners is purely personal; that of the corporators of the Bank of North America, both real and personal, which are so amalgamated, that they cannot be separated. When the charter of the Bank expires and its affairs are wound up, the stockholders will be tenants in common of the banking house and all the other real estate held by the company. Any one of them may sue out a writ of partition, and no debt due by him to the Bank would operate as a lien on his share, or prevent a partition from taking place. Nor couid the debt be always deducted out of his share of the personal property ; because the debt might exceed the debtor’s proportion of it, and the balance would be no lien on the real estate. If a lien could not take place on the winding up of the affairs of the Bank, there is no reason why it should before that crisis arrives.
    As a set-off, there is nothing to support the claim advanced by the defendants. Our Defalcation Act, it is true, is very comprehensive in its terms, and the decisions under it have been extremely liberal, but they do not reach the point now proposed. They have gone no further than to establish, that unliquidated damages may be set off, when they arise from a breach of the very contract on which the plaintiff sues. As, for example, damages for a breach of warranty on a sale of goods. Kachlein v. Mulhollan, 1 Yeates, 571, 2 Dall. 237, S. C. Dunlop’s Lessee v. Speer, 3 Binn. 169. Steigleman v. Jeffries, 1 Serg. & Rawle, 477. Heck v. Shener, 4 Serg. & Rawle, 249. Upon the same principle, in an action for a breach of contract, nothing can be set off, not immediately connected with the plaintiff’s cause of action ; much less can a debt be set off, in an action sounding merely in damages, founded upon no contract whatever, but arising from the malfeasance of the defendants. The Defalcation Act of Pennsylvania, though very comprehensive in its provisions, is not so much so as 5 G. 2 C. 30, sec. 28, which authorises a defalcation of mutual credits as well as debts, under which a debt is allowed to be set off even before it is due. Prescot’s Case, 1 Atk. 250. 1 Cooke’s Bankrupt Law, 569, 570.572. Under this section, two cases have occurred, which go far to decide the present question. Gibson v. Hudson’s Bay Company, 1 Str. 645, on a bill hied by the assignees of a bankrupt, to compel the company to permit him to transfer his stock, there being a bye-law subjecting every member’s stock to his debts due to the company, the Court refused to decree the transfer. In the margjnaq note jL 1S stated, that the general doctrine is exploded, for which 7 Vin. Ab. 125, pl. 2, is referred to; and it is so treated in 1 Cooke’s Bankrupt Law, 591. 1 Bac. Ab. 444. In Meliorucchi v. Royal Exchange Assurance Company, 1 Eq. Ca. Ab. 9, where there was no bye-law to support the claim of the company to detain the stock, it was not allowed.
    The main ground of the defence is the alleged usage of the Bank and Mr. Wain’s supposed assent to it. This part of the case rests upon the testimony of one witness, who mentions but five cases as having occurred, from the institution of the Bank to the present period ; certainly too few to constitute a general, uniform, undeviating usage. In only one instance was any opposition made; in the others the claim of the Bank was acquiesced in. Mr. Wain’s knowledge of the usage is proved, and also that there was but one opinion at the board oft the subject. Giving to this evidence the fullest effect it can claim, it amounts to no more than this, that the board of directors, and Mr. Wain among the number, entertained an opinion on a subject closely connected with their own interests; that they acted upon that opinion ; and were fortunate enough to induce some of their debtors, who by the time their notes were protested, had little stock remaining, and who were not in a situation to contend with a wealthy and powerful corporation, to acquiesce in their demands. There was therefore no such usage or assent to it, as will bind Mr. Wain or his assignees. An usage is only binding, when it is ancient, undeviating, and reasonable; and even when it has these characteristics, if against the established rules of law, it has no effect. Resp v. Guardians of the Poor of Philadelphia, 1 Yeates, 476. Shefflin v. Hervey, Anthon’s N. P. 57. It must also be general, Money v. Leach, 3 Burr. 1767. It is not sufficient, therefore, to shew, that it is the practice of the Bank of North America, without shewing that it is acted upon by the banks generally. It is not an ancient usage. If the Bank had been created at a remote period, and its charter could not be found, and this alleged right had been invariably insisted upon, it might be presumed that the charter authorised , , . r ’ _ ° . r ,. , . the claim; but there is now no room for such presumption, because the charter is before us, and is silent on the subject. It is not reasonable ; because it tends to put the corporation, without any superior equity, upon higher ground than other creditors : And if there be any soundness in the doctrine already contended for, it is against the established rules of lav/, and therefore whether ancient, general, and reasonable, or not, it cannot be sustained. The usage attempted to be set up, amounts merely to a construction of the charter, which does not belong' to the corporation^ but to the judicial powers. To point out the danger of permitting the corporation virtually to alter their charter, by giving it a construction to suit their own purposes* would be superfluous. *f Every man who becomes a member of a corporation, looks to the charter; in'that he puts his trust, and not in the uncertain will of a majority of the members.” Per Tilghman C. J., Commonwealth v. St. Patrick’s Society, 2 Binn. 449. It does not follow, because Mr. Wain was a member of the board, that he was of opinion that the Bank had a right to retain, or that he even assented to it; he may have been’ overruled by the majority, while his own- opinion was decidedly against it. But, admitting that he went with the majority, a man is not bound by an opinion which, upon' closer investigation and better information, he finds to be wrong. If-a man makes an acknowledgment, or promises to' pay, under a mistake of his rights, he is not bound. Evans v. Llewellyn, 2 Bro. Ca. 150. Levy v. Bank of the United States, 1 Binn. 27. Blesard v. Hirst, 5 Burr. 2670. It is worthy of remark, too, that the conduct of Mr. Wain, in relation to this subject, was not an admission against himself, but merely an opinion entertained by him, in an official character, upon a question of law, on cases which came before the board, and in which his opinion coincided with his interest. That this asserted right formed part of the contract with Mr. Wain, cannot be supposed. He was then in good credit, and to that, and the solidity of his endorsers, alone, - the Bank looked. His stock certainly could not have been in the contemplation of either party at the time, for' it was- not expressly pledged, and it was in Mr. Wain’s power to disp0se 0f jtj at any moment before his notes became due.
    What were the opinions of the Legislature and of several of the banks in this city, is deducible from the charters of t^e Philadelphia Bank and the Farmers’ Es? Mechanics’ Bank, both of which contain special clauses authorising them to detain thé stock of a debtor stockholder. 4 Sm. L. 133. 5 Sm. L. 23.
    
      y. S. Smith and Binnetj, for the defendants.
    The first charter of the Bank of North America was granted on the 18th of March, 1782. 2 Car. & Bio. L. 324. It was repealed on the 13th September, 1785; and a new charter granted by an Act passed on the 17th of March, 1787, 3 Car. & Bio. L. 188, which has been extended from time to time since. By a bye-law passed on the 4th November, 1782, the directors are authorised to make rules and regulations for the management of the affairs of the corporation, provided, they are not repugnant to the laws and ordinances of the corporation. In pursuance of this bye-law, rules and regulations were made on the 12th of November, 1782. The sixteenth regulation directs that “The sale or alienation of bank stock shall be made by transfer, in a book kept as a register thereof, in the Bank, in the presence of the president or attending directors, who, with the accountant, shall witness the said sale.” The eighteenth, prescribes the form of the certificate ; the nineteenth, the form of the transfer, and of a power of attorney to sell the stock of an absentee; and the twentieth, the form of a proxy.
    The defence we place upon three grounds :
    1. Independently of the charter, bye-laws, and usage of of the Bank, the defendants had an equitable lien.
    2. By the charter, bye-laws, and usage, they had a right . to retain.-
    3. The right was given by Mr. Wain’s own agreement.
    1. The plaintiffs’ action is in the nature of a bill in chancery, seeking to obtain a transfer of stock ; and they have no claims which are not of a character purely equitable. Strictly, they could not sue in their own names. Mr. Wain is the party standing on the books of tbeBank as the owner of the stock, and if the action had been brought by him, for the use of his assignees, the Bank could defend on equitahle grounds. In equity, they are entitled to be paid, before he is entitled to receive his stock j and before a Court of chancery would assist him to obtain a transfer, they would compel him to pay what was due. A mortgagor, who goes into chancery to redeem, will not be permitted to do so, until he has paid a bond which is not secured by mortgage. Putting aside byelaws, usage and agreement, had Mr. Wain claimed the interposition of a Court of equity in his behalf, he would be obliged to do equity; and the plaintiffs, who are not purchasers for a valuable consideration, but trustees under a gent ral voluntary assignment, are in no better situation than himself.
    If the Bank of North America were an unincorporated association, no question could be raised as to the liability of the members, as partners ; for it has been decided by this Court that such an association is a partnership, and that each of the members is individually responsible for the debts of the company. Hess v. Werts, 4 Serg. & Rawle, 356. The distinctions between partnerships and corporations, are not applicable to the present case. A corporation has perpetual succession, and the corporators are not liable in so-lido ; but, in other respects, they are partners. Introduction to Kyd on Corp. The great object in obtaining a charter, is to secure an exemption from individual responsibility. With regard to their rights and responsibilities, as between the members of the association, the charter makes no difference ; and, wherever, independently of a charter, a lien would take place, a charter will not take it away. If the company are to be regarded as partners, there is an end of the question ; for partners are only entitled to the clear balance, on a statement of an account of profit and loss. Fox v. Flanbury, Cowp. 449. West v. Skip, 1 Ves. 239. Watson on Part. 140. Where one has received part of the joint fund by way of loan, it is equity, that when a distribution takes place, what he has already received should be deducted from his share. If, by the regulations of the Bank, shares were transferable from hand to hand, there could be no account with a person to whom a transfer was made; but if, on the other hand, nc right of alienation existed, it is equally clear, Shat the corporators would be liable to account on the expiration of the charter. ■ Without the permission of the com» pany, no old member could sell out, and no new one be introduced. ■ If therefore, by virtue of a regulation emanating solely from the will of the Bank, a new partner comes in, he ^oes s0 subject to the equity which existed against the shareholder from whom he derived his interest,, and is liable to an account. Any one who purchases a share, does it withi notice of the equity of the Bank, because all transfers must be made in a.book kept for the purpose ; and if he does not inquire how the account stands, it is his own folly.
    The whole of the property of the Bank is considered personal. It is the result of a joint contribution for the purpose of trading; and it is not necessary, as in the case of a ship, that it should be kept entire ; but for the purposes of trade, in the objects of the association, it is lent out to different persons. The loan to Mr. Wain was in pursuance of this leading object, and was therefore strictly a loan by the Bank in its corporate character. This feature distinguishes the present case from that of Meliorucchi v. The Royal Exchange Assurance Company, in such a'manner as to make it an authority in our favour. The loan to Sir Justus Beck, it is stated, was not made by the company in their corporate capacity, wherein alone, it is said, he stood related to them, but as private persons ; for which reason, they coqld not stop his stock, whjch he held .as a member of the company in his corporate character. The precise meaning of this distinction is not explained ; but it is manifest that it was of the, essence of the case, and the point on \yhich the decision turned, and that if the loan had been in their corporate capacity, the company would have been deemed partners, and the consequences of partnership visited upon the members.. Before-the case oí.ex parte lounge the same rule was uniformly extended to part owners of ships. In Doddington v. Hallet, 1 Ves. 497, Lord Hardwicke held, that the clear balance 'only was to be divided among them, as partners. This decision, which was upon a bill in equity and is upheld by the irresistible reasoning of Lord Hardwicke,. has stood for more than half a century, and ought not to be overturned by a doubt, unsupported by reasoning, expressed by Lord Eldon, in an. order in a case of bankruptcy, from which thpre was no appeal. If the opinions of the Legislature are to1 have any weight, they are in favour of the claim asserted by the defendants ; for, in passing the Act of the 29th oi'April, 1819, Pamph. L. 226, authorising stock to be taken in execution,.they took care to'preserve the equitable right of the corpbrations, with regard to the payment of debts due from the stockholders' to the company. Their giving express liens,. . . , - i i . ... in granting charters to certain banks, amounts to nothing; for laws are not always drawn up by men of legal education. Their conduct, in this respect, however,.is a full answer to the allegation, that the claim of the Bank is contrary to the policy of the law.
    2. The charter and bye-laws, by which the directors are authorised to make such rules and regulations as may be necessary for the government of the corporation, also give a lien. The regulation of the 12th of November, 1782,. was evidently passed with a view to enforce the claims of the Bank against those stockholders who were in their debt, by-requiring all transfers to be made in the books of the Bank, and in the presence of its officers, who of course must be acquainted with the debts due to the institution. That the bye-laws of a corporation may confer the right to retain the Shares of a debtor stockholder, is fully established, not only by the case of Child v. Hudson's Bay Company, 2 P. Wms. 207, but by those cited against us.
    3. But if all other grounds of defence fail, the case is plain upon Mr. Wain’s own implied agreement, which neither he nor his assignees can resist. Where there is an established usage, as to the mode of doing business, it enters into and forms part of all contracts made in relation to such business. Usage and custom have been confounded in the opposite argu -aent. Usage need be neither ancient nor general. Two individuals may establish an usage or course of dealing between themselves, and so may a bank with its customers, and it is not essential to its validity, that similar institutions should be governed by the same rule. Liens from the course of dealing, very often take place, and so far from being- deemed unreasonable, they are highly favoured' by Courts of justice. They may always be secured, provided the debtor has notice beforehand. Ex parte Deez, 1 Atk. 228. Rushforth v. Hadfield, 7 East. 224. Green v. Farmer, 4 Burr. 2214. Ex parte Bevan, 9 Vez. 223. Kirkman v. Shawcross, 6 T. R. 14. Davis v. Bowsher, 5 T. R. 488. 2 Phill. 
      
      Ev. 123. 2 Bos. & Pull. 44. note a, Whitaker on Liens, 35, 36. Madd. Ch. 537. Edge v. Worthington, 1 Coxe’s Cases, 212. Mandeville v. Welch, 5 Wheat. 284. Lincoln and Kennebeck Bank v. Page, 9 Mass. Rep. 155. Weld v. Gorham, Mass. Rep. 366. Blanchard v. Hilliard, 11 Mass. 85. The established, undeviating usage of the Bank of North America was, never to permit a stockholder to transfer his shares, while his debts to the Bank remained unpaid. This usage was brought home to the knowledge of Mr.. Wain, who was himself for twenty-seven years, an active and influential director, fully concurring with the rest of the board in applying to others the rule by which he is now unwilling' to be bound himself. He received his discounts when this practice was in full force, and with-a perfect, knowledge that it-was uniformly exercised ; it was therefore a part of his contract that he would be bound by it. Misconception of the abstract legal right of the Bank to retain, would not vitiate his agreement that they should, retain. The question is n,ot so much what is the right of the Bank, as what was the understanding of the parties. If Mr. Wain had his notes discounted with an understanding that the rule which was invariably applied to others, would be applied to him, let the general principles be what they may, equity will enforce the contract.
   The opinion of the Court was delivered by

Duncan J.

In form* this is a special action on the case, for refusing to permit Robert Wain to transfer-to the plaintiffs, his assignees, six shares of the stock of the Bank of North America, on their- books, agreeably to a bye-law. In January, 1791, Robert Wain became a stockholder ; January, 1792, a director, and so continued until January, 1820. On the 15th September, 1819, he made a general assignment to the plaintiffs, for the benefit of hi's creditors. At this time be was largely indebted to the Bank. On the 20th November, 1819, thé Bank stated an account, and delivered it to his assignees on the 25th. In that account he is charged with his notes and indorsements due at the time of assignment and still unpaid, and credited with the amount of his stock at the , current price. The balance still due to the Bank is 22, 185 dollars. Benjamin R. Morgan was appointed a director in January, 1811, and continued so till March, 1821. On the 19th February, 1820, the plaintiffs, with Mr, Wain and Mr. Lohra, a notary, made a formal demand of the cashier of the Bank, to permit the transfer of these shares to be made on their books. 1'his was declined. On the 20th Mr. Lohra renewed this demand. The cashier refused» claiming to hold the shares as a set-off against the debt of Mr. Wain’s, observing, that there was an Older or bye-law or understanding, which Mr. Wain, being a director, well knew, “ that no stockholder could transfer his stock, while in debt to the Bank ; that the debt must be paid, before the Bank would suffer a transfr-r of the stock.” It. was given in evidence, that Mr. Wain well knew of this early regulation of the board. It was an unvaried course, always insisted on, and in no instance departed from ; — acted upon by the unanimous opinion of the directors, while Mr. Wain was in the direction. There was no bye-law or written regulation of the board on the subtect of transfers, but the byelaw of the 12th November, 1781, which prescribed, “that the sale or alienation of Bank stock should be made by transfer, in a book kept as register thereof, in the Bank, in presence of the president, or attending directors, who with the accountant, should witness the said sale.”

That a party entitled to a transfer of stock, may maintain' a special action of assumpsit against those whose duty it is to permit the transfer to be made, in the manner prescribed by this bye-law, cannot be questioned. This principle was decided, in The King, on the prosecution of Dawe’s executors v. The Governor and Company of the Bank of England, Dougl. 526, and in the notes, 528. In The Union Bank v. Laird, 2 Wheat. 390, chancery was resorted to, to compel the transfer; but in this State, where there is no other relief than what a common law Court can give, damages only can be recovered. ' The remedy is by special action on the case ; for the very ground of that action is, that the law will not suffer an injury and a damage without a remedy. Winsmore v. Greenback, Wilies, 581. But in whatever shape the claim comes before the Court-, in whatever forum it is to be decided, either of law or equity, whether it be special assumpsit directly on the contract, or whether the contract be inducement and the gravemen ex delicto, or bill in chancery, the same.rule must prevail; for in mercantile questions, there is no distinction between Courts of law and of equity. Mercantile law is founded on principles of equity, and it is fp*' this reason, as Mr. Justice Buller observed, in Tooke v. Hollingworth, 5 T. R. 229, “Courts of law have of late years said, that where an action is even founded on a tort; they would discover some mode óf defeating the plaintiff, unless his action,were also founded1 on equity; arid that though the-property might, on legal grounds, be with the plaintiff, if there were' any claim or charge by the defendant, they would not consider the retaining of the goods as a conversion.” X is a principle in equity, that wherever the Court ha's found a demand on one side and on the other, to endeavour that one should be set off against the other. Ryall v. Rowles, 1 Vez. 875. This Court has in all instances very liberally extended the Defalcation Act, and very freely and to the. full extent, adopted all the doctrines of Courts of equity, with respect to equitable set-offs. Murray v. Gray's administrator. Dunlop v. Speer. Heck v. Shener. Steigleman v. Jeffries. It would be an unnecessary undertaking to define the character of these certificates of stpck, whether in their nature they partake, in any degree, of the quality of negociable paper, or are purely assignable; passing into the hands of the assignees, who, like every other, purchaser of a chose in action, must always abide by the case of him from whom, he buys. And to decide whether the equitable specific assignee for a valuable consideration, without notice of the restriction in the transfer, could not compel a legal transfer without relation to the accounts between the Bank and the stockholder, would be an arduous one. But these inquiries . are not necessary, for this is not the case of such assignees. The plaintiffs are general assignees of Mr., Wain, and stand precisely in his situation ; they cannot be entitled to any property to which he has not a title, — to any remedy which he did not possess. The stock passed into the hands of his assignees, subject to all the rights and all the equities of the Bank ; and this without taking into consideration the evidence of at least the knowledge of one of the plaintiffs of the restriction on transfers, where the stockholder was debtor to the Bank. It is reduced to the narrow question, was this regulation of the Bank, — this usage to retain, — -this course of dealing between the Bank and her customers, unquestionably -known as it was to Mr. Wain, binding on him ? That such a bye-law was within the power of the Bank, — a bye-law imposing this restriction, — giving the pow'er, is decided in Child v. Hudson’s Bay Company, 2 P. Wms. 207. The agreement of the stockholders would be equally binding on them and all who stand in their shoes, as a bye-law. Bye-laws bind, because the members of the corporation, either individually, or by those who represent them, are supposed to give their assent to them. A course of dealing, — a usage, — an understanding, — a contract express or implied, is the lien of the parties and a law to them, provided they are not repugnant to the charter or the laws of the land. This is contrary tó neither. If the restrictive clause had been inserted in the Act of Incorporation, as it is in the charters of the Philadelphia Bank, Farmers’ and Mer chanics’ jScmi,and Union Bank of Georgetown, then, according' to the decision of the Supreme Court of the United States, in The Union Bank v. Laird, “ no person could acquire a legal right to any share, except under a legal transfer, according to the rules of the Bank under the Act of Incorporation, of which he is bound to take notice.” The understood notice to Mr. Wain, his continuing to deal with the Bank, with full knowledge of this term and condition, is equally binding on him and the present plaintiffs, as if it were a written regulation, a bye-law, a provision ini the charter, or clause inserted in the very certificate of stock. The Bank had an undoubted right to say to any stockholder, “We discount your note ; but remember, until it is paid, we shall hold your stock in security. You shall not be permitted to transfer it, until you pay us.” There is nothing unfair in this.. The terms are known and are accepted, as between the parties to the present agreement, — the stockholder and the Bank. This amounts to an hypothecation, a pledge of the stock. How it would have been, in a controversy between a bona fide purchaser for valuable consideration and without, notice, who pays his money to the stockholder on the faith of the certificate, entrusted with the symbol of the property, the constructive legal possession, the title deed, on its face an instrument transferable and assignable, I do not give any opinion. It is a very diffe* rent question. But as between these parties, call this answer 0f the Bank what you please, — lien, set off, legal or equitable, pledge, retainer, stoppage, course of dealing, general understanding, usage, contract express or implied; it *s a bar in law and equity to this action. Liens are either, by the common law, a general usage, or a course of dealing and understanding between the parties themselves, or on a contract express or implied. 1 Bl. R. 651. 4 Burr. 2221. 6 East. 519. In Davis v. Bowsher, 5 T. R. 488, it is decided to be the general law, that where a banker has advanced money to another, he has a lien on all paper securities which come to his hands, for the amount of a general balance. These can never be taken from.him, without paying him, unless such securities were delivered on an agreement so to do; and Justice Grose, in that case, stated the question to be, whether, under all the circumstances of the case, the banker had not a lien for the general balance; and that the evidence went far to shew he had, according to the general dealing and understanding between the parties. If this be sound doctrine, it settles the present question. Here was positive evidence of a general dealing and explicit understanding between Mr. Wain and the Bank, that his stock, like the stock of all others, was to remain untransferred, until his debts were paid. Here was a public institution, declaring it to be a term on which they loaned their money to the stockholders. Here is one of the directors conducting their affairs on that principle, and with that understanding, for many years; for the first time objecting to that rule, calling for a transfer to be made to his assignees, in defiance of this notorious regulation, which had never been deviated from, and rigorously and -impartially imposed on all. Can the Bank be said tortiously to refuse that which the party agreed he never would demand ? If the action be in tort, and the plea, Not guilty, would not this be a complete defence? Volenti non jit injuria. If it be in assumpsit, on the plea of non assumpsit, would the allegata and probata agree ? The matter alleged would be a promise unconditionally to suffer the transfer to be made ; the matter proved would be a promise, on condition he paid all that was due to the Bank. If it were a bill in chancery, would not the defendants’ answer, disclosing and proving the facts, silence every equitable pretension ? Where is the equity in the plaintiffs’ demand ? They demand not only that to be done which the Bank never agreed to do, but which their constituent agreed never to ask them to do. I can see no equity in the plaintiffs’ demand, no inequity in the defendants’ refusal. There can be no want of equity in the Bank, who merely insist on holding, as a security, that, which, from a fair consideration of the evidence, it must be implied, Mr. Wain agreed they should hold. Equity never would deprive one creditor of any plank which the law affords him, and give it to another creditor. Mr. Wain having appropriated the stock to the payment of this particular debt, could not make a second appropriation of it to his general creditors. The assignees take it cum onere, subject to the prior incumbrance of the Bank. The definition of an equitable lien, is that it is an equitable obligation which the conscience of another is bound to perform. Perry v. Philips, 1 Ves. jun. 254.

This case has, on the difference of opinion between the assignees of Mr. Wain (whose duty it was to try the question) and the Bank, been brought before the Court, in the most amicable manner, for their decision on the rights of the parties, without relation to any matter of form, and to obtain the opinion of the Court on the merits. The Court are of opinion, that in no form in which the claim could be put, can it be sustained, until the debt due by Mr. Wain to the Bank be satisfied. We direct judgment to be entered for the defendants.

Judgment for the defendants.  