No. 7-Senate, 23rd January, 1844
Memorial of the Union Bank of Florida.
Union Bank of Florida.
January 22d, 1844.
Sir: I have the honor to hand herewith the Memorial of a Committee
appointed by the Stockholders of the Union Bank of Florida,
with a request that you will be pleased to present it to that brunch of
the Honorable the Legislative Council of Florida, over who deliberation
With great respect,
Your obedient servant,
John G. Gamble,
The Hon. the President of the Senate of Florida.
To the Hon. the Legislative Council of the Territory of Florida:
The memorial of the undersigned committee, appointed by the Stockholders
of the Union Bank of Florida, in general meeting, respectfully
That said committees are instructed to explain to your honorable
body, the reasons which, in the opinion of the Stockholders, forbade
their acceptance of an act of the last Legislative Council, entitled, "An
Act to suspend the exclusive of banking powers by the Union Bank of
Florida; to provide for the payment of the Territorial Bonds, issued
to void Bank, out of its assets, and the mortgaged property of the stockholders-
for the liquidation and settlement of the affairs of said Bank,
and for the amendment of the Charter thereof," which Act was approved
on the 15th March, 1843.
In the discharge of that duty, the Committee pray leave, respectfully
to say, that a then recent judicial construction of the meaning
of a clause in its original charter, threatens consequences so ruinous
to the Bank, as to forbid acceptance of, or action under any law
which can admit of doubt as to its meaning; and in the opinion of
the Stockholders, the act referred to, contains sections of doubtful
meaning, and provisions repugnant to each other.
Those defects must be attributed to the circumstances under which
the act was passed. It was on the last day of the session of the Legislative
Council, under a pressure of business which prevented mature
consideration of the effects produced by the striking out of some,
and alteration of other parts of the bill.
By the 4th section of the act, the Bank may or may not forfeit the
stock of a defaulting Stockholder; and it a forfeiture be declared,
the Bank must institute suit against such Stockholder, "as well for
the amount of his stock note, or stock debt, as for the interest due
thereon." A question here arises whether the act considers the
stock note and the stock bond, as one, and the same; or whether by
the "stock debt," the stock bond is meant. The concluding part of
the 5th section favors the latter idea; for it says, "Credits on the
execution, mortgage, or stock debt, shall be given to the amount of
the Territorial Bonds cancelled."
It may be proper here to state, for explanation, that each stockholder
executes a bond, and mortgage for the amount of his Bank
Stock, which is intended to see repayment of the bonds of the Territory,
which were issued to enable the Bank to raise its monied
capital. His stock note is his obligation given to repay any money
which a stockholder may borrow on a pledge of his bank stock; and
this stock note cannot exceed two-thirds of the amount of his bank
The act leaves room to doubt whether, notwithstanding the forfeiture
and sale of his property, the defaulter would not retain some of
the rights of a stockholder; for it says, "The stockholder, having his
property sold as aforesaid, shall not be entitled to any further loan upon
his stock;" but if that be the only privilege of which the defaulter
is to be divested by the forfeiture, he might claim the right to vote
in meetings of stockholders. Such cannot be supposed to have been
the intention of the Legislature; but in a law affecting the charter
of a monied institution, there should be nothing of doubtful meaning.
There are obviously two mistakes in the 5th section. It twice refers
to provisions, as contained in the 5th section, which are not in
it. One of the references was probably intended for the 6th, and the
other for the 7th section.
Sections 6, 7, 8, 9 and 10, have all reference to the 4th section.
They direct how sales of property shall be made-what shall be re-
ceived in payment-how the proceeds shall be appropriated-and
how liens upon mortgaged property, which may be sold, shall be re-
Section 7 authorizes payment for mortgaged property to be made
in Territorial Roads, or in gold and silver, or par funds, at rates to
be declared by the Directors-and the President of the Bank is directed
to invest the gold, silver, and par funds, which may be received,
in Territorial Bonds; which bonds are to be delivered to the Governor
to be cancelled, &c.
Section 4 says that "the purchaser of such mortgaged property
shall hold the same, fully, and entirely released from all lien created
thereon by reason of such mortgage," while section 6 says, that "the
lien created by said mortgage, shall in no case be released, until the
Territorial Bonds for which such property is mortgaged, shall be can-
celled by the proper officer." And the 7th section says: "The
mortgage lien shall not be divested, until the gold, silver, or par
funds, are invested in bonds to the amount aforesaid, and the same
placed in the hands of the proper officer to be cancelled."
These provisions of the act declare that the Board of Directors
shall not be trusted, even to the extent to which the laws of the
Territory trust every Marshal, Sheriff, and Constable; and yet
they require that they shall be trusted to the greatest possible extent,
by the purchasers of the property which the act directs to be
sold under execution. In all other cases, the purchaser of property
sold under execution, receives title therefor from the Marshal,
Sheriff, or Constable, who makes the sale, upon payment of the
purchase money; but the purchaser under this act, will not be assured
of his title by the payment of his money. The Marshal may
fail to pay over the money to the Bank. The President may not
immediately be able to invest the gold, silver, or par funds, in Territorial
bonds-or the officers of the Bank may abuse their trust,
and make other disposition of the purchase money, than that enjoined
by the act. Can it be expected that any purchaser will pay
his money, and trust to so many contingencies for his title.
Entertaining these views of the act, the Stockholders of the
Union Bank of Florida were constrained to decline accepting it as
an amendment of their Charter; and they instructed the undersigned
respectfully to ask of this Legislative Council an amendment
of the Charter, which will enable the Bank to compel its own
Stockholders to comply with their engagements, and facilitate the
liquidation of its debts.
For the better understanding of what is asked by the Stockholders,
and is required by the interests of the Territory, and of
her bondholders, the Committee pray leave to describe briefly the
remedy which the Bank possessed originally, and that which it
now has, against its defaulting Stockholders.
The remedy under the original Charter, was by suit upon the
Stock Note: which suit the defaulter could get rid of, by payment
of the arrears of interest due by him; leaving the Bank to pay its
attorneys' fees and commissions. This remedy was found to be so injurious
to the Bank, that it obtained an amendment of its Charter, at
the session of the Legislative Council in 1838-'9; by which the
shares of the defaulting Stockholder were to be forfeited, and to
be sold at auction to the highest bidder-the purchaser to secure
the same by mortgage of property, and to be then entitled to the
privileges of an original Stockholder. The Bank can then owe the
defaulter for the amount of his Stock Note, and the interest which
may be due thereon.
This last remedy was efficacious, until the increasing embarrassments
of the Bank created a desire in many Stockholders to
retire from connection with it. Forfeited shares could not then
find purchasers, while parties desiring to leave the Bank, would
willingly have their shares forfeited, if by paying their Stock Notes
in its depreciated liabilities, they could release their property from
the mortgage lien. Under the state of things, the Bank ceased to
act under the amended Charter, except in cases where the securities
held by it were evidently insufficient to pay the amount of
Stock, and other debts. The remedy, therefore, has ceased to be
resorted to, except in cases of known insolvency. To apply it is
other cases now, will be to deprive the holders of Territorial bonds
of one-third of the security which they now have.
What is now asked at the hands of the Legislative Council, is
such an amendment of the Charter of the Bank, as will enable is
to compel a defaulting stockholder to pay the amount of his bond
and mortgage, which were given to secure the Territory for the
bonds issued to the Bank. Without such an amendment, great loss
will accrue to the Territory and her bondholders and the Bank,
in its efforts to compel defaulters to pay their interest. With the
amendment now asked, the Bank will be able to call in its outstanding
liabilities with rapidity and certainty; and until those depreciated
liabilities shall have been taken is, the Bank will not
receive payment of interest, or of principal debt due to it, in anything
which can avail in paying either the interest or principal of
the Territorial bonds.
The amendment which is now asked, is one which will authorize
the foreclosure of the mortgage of the defaulting stockholder. The remedy
will act coercively upon stockholders alone, and will in no
way affect any other portion of the community. Seeing then, that
it is asked solely for the purpose of compelling defaulters to do
justice to the Territory, so the holders of her bonds, and to their
copartners in the Bank, the Committee indulge the sanguine hope
that it will not be refused by the honorable the Legislative Council;
and they pray leave, herewith, to present a draft of such a law as
the Stockholders think will effect the denied object. Its first section
is amended in the very words of a section which was submitted
to, and approved by the Stockholders in general meeting.
All of which is respectfully submitted to your honorable body.
John G. Gamble
Ch's H. Dupont.
Benj. F. Whitner
E. C. Cabell,
Committee of Stockholders, Union Bank of Florida
Bill Accompanying the Memorial
An Act to amend an act entitled, An Act to Incorporate the subscribers
to the Union Bank of Florida.
Section 1. Be it enacted by the Governor and Legislative
Council of the Territory of Florida, That upon failure by a stockholder
in said Bank, for the space of [blank] months, to pay up his
stock note, or to renew the same, and pay the interest thereon for
the time to which it may be renewed, the Board of Directors may
declare the shares of said defaulting stockholder forfeit, and may at
once proceed to foreclose the mortgage which was given by the defaulting
party to secure his said shares of stock, and the judgement of
the Court, upon such foreclosure, shall be for the amount of the stock
bond, payment whereof is seemed by exit mortgage, with the addition
thereto of the interest which may have accrued, and be then due
upon the stock note of the defendant.
Sec. 2. Be it further exacted, That for property which may be
sold under judgment obtained by virtue of the provisions of this
act, payment shall be received only in the bonds of the Territory of
Florida, which were issued to said Union Bank of Florida, for the
purpose of raising its capital, or in gold, silver, or par funds; Provided,
however, That if such sale be made for bonds as aforesaid, the
sale shall not be made, unless there be bid, and paid, for each piece
of property so sold, a sum equal to that for which said property is
mortgaged; and if the sale be for gold, silver or par funds, it shall
not be made unless there be bid, and paid, for each piece of property
so sold, a sum sufficient to purchase an amount of said Territorial
Bonds equal to that for which said property is mortgaged: and the
value of such bonds, on the respective days of sale, shall be adjudged
by the Directors of said Bank, and shall be announced by the officer
before the sale; and in the event of the sale being made for Territorial
Bonds, the nett [sic] proceeds shall be credited on the execution, and
if the proceeds of sale be in gold, silver, or par funds, the credit upon
the execution shall be for the value thereof in Territorial Bonds
aforesaid as may have been previously adjudged by the Board of Di-
rectors, and as proclaimed by the officer conducting the sale; and it
shall be the duty of the said officer to advertise the property levied
upon, for the space of sixty days before the day of sale; and each advertisement
shall state that this sale will be made for Territorial
Bonds or specie funds only.
Sec. 3. Be it further enacted, That the gold, silver and par funds,
which it may receive in payment of the property which may be said
under this act, shall be held by said Union Bank of Florida as a fund
to be invested by the President or Cashier of said Bank, in such bonds
of the Territory of Florida as were issued to enable it to raise its
capital; and said investment shall be made as early as practicable
and upon the best terms then attainable: and if any officer of said
Bank shall convert the funds so received, to any other purpose than
that of purchasing said bonds of the Territory, each officer, so offend-
ing shall be liable to indictment, and on conviction, shall be fined in
a sum not less than the amount so misapplied, nor more than twice its
amount; and such person shall thereafter be ineligible to any office
in said Bank.
Sec. 4. Be it further enacted, That the forfeiture of shares of
stock, authorized by the first section of this act, shall not operate to
divest the Bank of any lien which it may have had on the property
of the defaulting stockholder, (whether by virtue of the provisions of
the Charter, or by other contract,) but the same shall remain bound
for the security of any debt which he may owe the Bank, whether
as payer, endorser, or surety until the same shall be satisfied.
Sec. 5. Be it further enacted, That the said Union Bank of Flo-
rida, may, from time to time reduce the number of shares in its capi-
tal stock by cancelling the same: Provided, that there shall be pre-
viously delivered to the Governor of the Territory, for the purpose of
being cancelled, one hundred dollars of said bonds of the Territory,
for each share which may be cancelled.
Sec. 6. Be it further enacted, That this act shall take effect so
soon as by a written communication from the President of said Union
Bank of Florida, the Governor of the Territory shall have been ad-
vised of its acceptance by the stockholders of said Bank, as an
amendment of their Charter; which acceptance the Governor shall
announce by proclamation.