American Nat. Bank of Denever v. Hammond

• Decision Date: 10 October 1898
• Citation: 55 P. 1090,25 Colo. 367
• Parties: AMERICAN NAT. BANK OF DENVER v. HAMMOND.
• Court: Colorado Supreme Court

55 P. 1090

25 Colo. 367

AMERICAN NAT. BANK OF DENVER v. HAMMOND.

Supreme Court of Colorado

October 10, 1898

Appeal from district court, Arapahoe county.

Action by William S. Hammond against the American National Bank of Denver. There was a judgment for plaintiff, and defendant appeals. Reversed.

Appellee as plaintiff below, seeks to recover from appellant the balance due upon the purchase price of the contents of a drug store, sold by him to Edward and Frank Crowl, and bases his right upon the following facts, claimed by him to have been established at the trial: That, at the time negotiations for the sale were pending, the latter referred him to appellant for information regarding their financial responsibility, and the value of mining stock which they proposed to pledge as collateral for the payment of the balance of the purchase price; that at this time the Crowls were indebted to appellant, which indebtedness was secured by mining stock of the same company which they proposed to pledge appellee; that an agreement existed between them and the bank that they should refer the appellee to it for the above information,and that it should recommend them to him as solvent persons, and the mining stock good security for the amount for which he expected to extend them credit in the transaction, so that the Crowls might be enabled to purchase from him, who, in turn, were to pledge the property thus obtained as security for the indebtedness due from them to appellant; that he applied to the bank for this information, and that, pursuant to this agreement, appellant represented to him that the Crowls were solvent, and the mining stock valuable, and good security for the amount for which he expected to accept it as collateral, which representations were false, and known by appellant so to be, and made for the purpose of inducing him to sell to the Crowls, in order that it might be benefited in the manner above indicated; that, relying upon the truth of these statements, he consummated the deal with the Crowls and received from them the mining stock in question as security for the unpaid balance of the purchase price; that on the consummation of the deal between himself and the Crowls, the latter pledged to appellant the property purchased, and that it has taken possession of and sold it that the Crowls are insolvent, and the mining stock of no value; and that he is unable to collect from them the unpaid balance for the property so sold. At the trial appellant offered to prove that the property purchased was not worth the sum for which appellee had sold it, which offer was refused; and, inter alia, the court instructed the jury that the measure of damages, in case they found for the appellee, would be the amount for which he gave credit to the Crowls upon the sale, with interest. There was a verdict and judgment for appellee. Such further reference to the record and evidence as may be necessary for an understanding of the questions decided will be found in the opinion.

T. J. O'Donnell, W. S. Decker, and Milton Smith, for appellant.

Cranston, Pitkin & Moore and T. E. Watters, for appellee.

GABBERT J. (after stating the facts).

Of the numerous errors assigned by appellant, it is only necessary to pass upon those included in the following propositions suggested by its counsel: First. That it was no part of the business of the bank to make representations regarding the financial condition of the Crowls, or the value of the mining stock, and, therefore, it is not liable for the statements of its officers in this respect; that the evidence does not establish the allegations of the complaint; that appellee was not justified in relying upon the statements of the bank officials respecting the Crowls and their mining stock; and that the statements attributed to these officials were but mere expressions of opinion or belief, and therefore not actionable. Second. That the court erred in its instruction regarding the measure of damages, and in refusing to permit appellant to introduce evidence touching the value of the stock of merchandise.

1. A corporation must act through its agents, who can only bind it within the scope of the powers for which it was created (Cooley, Torts [2d Ed.] 136; Weckler v. Bank, 42 Md. 581); but where, through its agents, assuming to act in its behalf, it reaps and retains the fruits of an unauthorized transaction, this doctrine is no longer applicable, for it cannot interpose the defense of ultra vires, and still retain the benefits thus acquired (American Nat. Bank v. National Wall-Paper Co., 23 C.C.A. 33, 77 F. 85; Thomp. Corp. §§ 6015, 6016). It was no part of the business of appellant to make representations or statements regarding the financial responsibility of the Crowls, or the value of the mining stock, and for such representations alone it could not be held liable; but, coupled with the agreement said to have existed between it and the Crowls, and the alleged object of the bank in aiding them to secure the property of appellee, in connection with its acts in subsequently acquiring this property for its own benefit, it cannot escape liability upon the ground that the transaction was not within the scope of its corporate powers, and, if the facts upon which appellee relies were established, he was clearly entitled to recover the damages sustained by reason of the acts of appellant.

Relative to the proposition that the evidence does not establish the facts upon which appellee relies for a recovery, it is not necessary to notice the testimony, except in so far as its sufficiency or materiality bears upon the issues. If sufficient in this respect, it was the province of the jury to determine the facts, and, if the testimony supports the issues tendered by the complaint, the verdict and judgment cannot be disturbed upon this ground; so that a disposition of this question depends upon the views expressed on the remaining ones, included in the first pr...