Brooks vs. Hill. But in this case ter would not have invalidated the former. the good and bad are inseparably blended. Nay, the vicious is a condition precedent to what would have been a valid enactment. The restraining act was repealed, not in favor of individuals, but of corporations; and where there were no corporations of the character required by it, it remained in full force. If these views are correct, what is the effect of the restraining law upon the claim set up in this case? If the general banking law did not have the effect to repeal the restraining law, then the first step in the or- [126*] ganization of these associations was penal. All securi ties taken by them were void. As nothing is said in the law as to the validity of their issues, this must be determined upon general principles. The principle is this: The organization of the company being forbidden, and its objects being unlawful, its contracts made in furtherance of the illegal objects by such association are all tainted with illegality, and cannot be enforced against either party. The law is not satisfied by the payment of the penalty. See the following authorities on this point. 2 Kent's Com. 466; Story's Conflict of Laws, 244, 248; Lightfoot et al. v. Tenant, 1 Bos. & Pul. 551, 556; DeGroot v. Van Duzen, 20 Wend. 390; Bank U. S. v. Davis, 2 Hill, 458-9; Jackson v. Walker, 5 id. 30; 1 Mau. & Sel. 596; 14 Mass. 322. In the case of Pennington v. Townsend, 7 Wend. 276, the check sued on had been discounted in New York by the agents of the New Jersey Protection and Lombard Bank. The opinion of the court was delivered by Judge NELSON, and the conclusion is as follows: "But it is said that the incurring the penalty of $1,000 is the only consequence of a violation of the restraining act of 1818, and that the contract may be enforced as valid; that the transaction is only malum prohibitum, and not malum in se, and that the former differs from the latter in this, that the penalty is the only punishment or consequence. Castle's case, Cro. Jac. 644, and Rex v. Wright, 1 Bur. 543, cited in support of this doctrine, are not authorities to the extent claimed; they establish the position, that where VOL. I.-11 161 Brooks vs. Hill. a new offense is created by statute, and a penalty affixed, the punishment for an infraction of the law can only be in the mode prescribed. The same principle is recognized in 2 R. S. 696, § 39. Giving full effect to this principle, the civil rights and remedies arising out of the inhibited acts are left untouched, and I apprehend it will be found that so far as these are concerned, there is no distinction between an act malum prohibitum and malum in se. Both are equally forbidden and unlawful; and I will add, both are immoral, and cannot be the foundatiou of a civil right that will be enforced in a court of justice. 14 Johns. 273. In Thallimer v. Brinkerhoof, 20 id. 397, C. J. SPENCER says: 'It is a fundamental rule, that all contracts which have for their object anything repugnant to the general policy of the law, or contrary to the provisions of a statute, are void; for it is a rule as well [127] *in law as in equity, ex turpi contractu non oritur actio.' In the same case Mr. Justice WOODWORTH says: 'An agreement expressly prohibited by statute must necessarily be considered inoperative and void. It will not be seriously urged that the party is subject to the penalty only, and that the courts are bound to consider the contract legal and valid.' The principle had before been avowed, and frequently enforced, that an action in affirmance of an illegal contract, the object of which was to enforce the performence of an engagement prohibited by law, could in no case be maintained. The question had been recently fully examined by the supreme court of the United States, Bank of U. S. v. Owen, 2 Pet. 527, and in which the distinction urged by the plaintiffs, so far as civil rights are concerned, is repudiated as unsound. It is said, if the security should be declared void, still the plaintiffs are entitled to recover the money loaned, under the common counts. Whether this principle is applicable at all to this case, I will not stop to inquire, for there is no pretense for its application to this defendant, inasmuch as no money was ever loaned by the plaintiffs to him. Utica Insurance Co. v. Cadwell, 3 Wend. 302." There is another ground upon which this case might have been decided. Brooks vs. Hill. The defendants in the court below are not declared against as original promisors, but as directors of an incorporated bank, and on a contract of the bank. There being no such body, there can be no directors of it. Defendants cannot be held as sureties of a principal that never existed. Their contingent liability is indissolubly connected with and dependent on the existence of a contracting corporation, apart from the stockholders. Their statutory liability was secondary and subsidiary to that of the principal; and if defendants. could be held liable in any such form, it would be as original promisors, but they are not declared against as such. We have decided the broad question as it was submitted by both parties. On either ground, the plaintiff in the court below must fail. We have not been unmindful of the fact that large interests were involved in this question; that a few bad men will, by our decision, go free with their ill-gotten gains; at the same time, hundreds of misguided and innocent men will be relieved from entanglements into which they have been led by the influence and example of others equally honest and innocent, and in whose judgment they confided. As a general *thing, one common fate appears to have awaited the [128*] banker and his creditor, the deceiver and the deceived -all, or nearly all, are bankrupts. This is the first time this question has been brought before this court for a decision. We entered upon the examination. of it under a full sense of its magnitude and importance. We feel a strong conviction that our conclusions are correct; and this is all we feel it proper or necessary for us to say in reference to our feelings, to the obligations that rested upon us, and the part which we have enacted in the closing scene of this great drama. Judgment reversed. 163 Weed vs. Snow. WEED et al. vs. SNOW. S. being indebted to W. & Co., as.indorser on a promissory note, assigned to them as collateral security a mortgage he held against H., which W. & Co., were to collect and apply on the note. W. & Co. advertised the mortgaged premises for sale, under the statute; but before the day of sale, it was agreed between them and S. that the premises should be bid off at the sale by A. S. W., for the amount due on the mortgage, and that he should hold them in trust for S. and W. & Co.; and that if within one year S. paid W. & Co. what was due on the note, A. S. W. should convey the premises to him, but if not, then he should sell them at public or private sale for what they would bring, pay W. & Co. from the proceeds, and the balance, if any, pay to S. In pursuance of the agreement the premises were bid off by A. S. W. for $572, the amount due on the mortgage. S. failed to pay W. & Co., and A. S. W. advertised and sold the premises, which were purchased by W. & Co. for $25, who afterwards sued S. for the balance due on the note. Held, S. could not show in bar of the action that the mortgaged premises purchased by W. & Co. were, at the time of sale, worth the amount due on the note. CASE reserved from Lenawee Circuit court. Assumpsit against defendant as indorser of a promissory note. Plea, general issue. On the trial, by consent of parties, the following agreements were introduced in evidence: An agreement between [*129] plaintiffs and defendant, dated Nov. 29, *1839, which stated that the defendant had that day assigned to the NOTE. - Where one holding property in mortgage converts it to his own use, the mortgage debt is thereby satisfied to the extent of the value of the property. Davis v. Rider, 5 Mich. 423; Place v. Grant, 9 id. 42. If a conveyance of real estate be made as a security, whatever its form, equity will hold it a mortgage. Rogan r. Walker et al. 1 Wis. 527; Orton v. Knab, 3 id. 576; Plato v. Roe, 14 id. 453; Sweet v. Mitchell, 15 id. 461; Kent v. Agard, 24 id. 378. One acquiring legal title by purchase at sheriff's sale, under an agree ment with the debter to hold the land as security for the money loaned to pay off the judgment, will be regarded as a mortgagee. Reigard v. McNiel, 38 Ill. 400; see also Harbison v. Houghton, 41 id. 522, and Walsh v. Brennan, 52 id. 193. Mortgagee cannot purchase at his own sale or equity of redemption is not barred. Waite v. Dennison, 51 Ill. 319. When a sale under foreclosure amounts to a new mortgage. Klock v. Walker, 70 id. 416. Weed vs. Snow. plaintiff's certain notes and mortgages, among which were a note and mortgage against William A. Hawkins, for $394.48, "which several notes and mortgages are intended as collateral security to them for his endorsement of J. D. Palmer & Co.'s note for $498.86, due and payable the 11th January, 1839. The understanding between the parties is this, that the said plaintiff's shall endeavor to collect, by course of law or otherwise, and in their own names, or in the name of said Snow, the money due or to grow due on the said several securities, and apply the proceeds after paying the costs and expenses of collecting, towards the extinguishment of said Snow's liability as indorser of said note of J. D. Palmer & Co., and the surplus, if any, refund to him, said Snow; and that in the mean time all legal proceedings against said Snow be foreborne." Also an agreement between plaintiffs and defendant, dated May 5, 1842. This last agreement, after reciting the previous assignment and agreement between the parties, and stating that the property mortgaged by Hawkins was advertised to be sold on the mortgage, on the 7th of May, then instant, was as follows: "Now it is understood and agreed by and between the said several parties concerned in this matter, that the said property so advertised for sale under the said Hawkins mortgage (when the same shall be offered for sale) may be bought by Alpheus S. Williams, or other disinterested person, for the whole amount due by said Hawkins on said mortgage and its accompanying note and costs, to whom the deed or evidences provided for by the statute shall be duly made, who shall thereafter hold the said property, or the interest which he may acquire therein, in trust for the said N. & H. Weed & Co. (the plaintiff's), and the said Fielder S. Snow (the defendant), as follows, subject to any equity of redemption or other condition which the law may annex to his purchase, to wit: in trust that if within one year from this time the said Snow shall pay to said N. & H. Weed & Co. the balance which may be due them on said note of J. D. Palmer & Co., and all costs and expenses connected with the same and with said securities, then said Williams, or other person who shall pur |