Citizens' Bank & Trust Co. v. Pocatello Milling & Elevator Co.

• Decision Date: 10 August 1925
• Citation: 41 Idaho 403,240 P. 186
• Court: Idaho Supreme Court
• Parties: CITIZENS BANK & TRUST COMPANY, a Corporation, THE NATIONAL BANK OF IDAHO AT POCATELLO, a Corporation, and CITIZENS BANK & TRUST COMPANY, a Corporation, as Trustee, Respondents, v. THE POCATELLO MILLING & ELEVATOR COMPANY, a Corporation, JOHN L. BARR, THE F. C. AYRES MERCANTILE COMPANY, a Corporation, ALLIS-CHALMERS MANUFACTURING COMPANY, a Corporation, Defendants, and THE POCATELLO FLOUR MILLS COMPANY, a Corporation, Appellant

240 P. 186

41 Idaho 403

CITIZENS BANK & TRUST COMPANY, a Corporation, THE NATIONAL BANK OF IDAHO AT POCATELLO, a Corporation, and CITIZENS BANK & TRUST COMPANY, a Corporation, as Trustee, Respondents, v. THE POCATELLO MILLING & ELEVATOR COMPANY, a Corporation, JOHN L. BARR, THE F. C. AYRES MERCANTILE COMPANY, a Corporation, ALLIS-CHALMERS MANUFACTURING COMPANY, a Corporation, Defendants, and THE POCATELLO FLOUR MILLS COMPANY, a Corporation, Appellant

Supreme Court of Idaho

August 10, 1925

PLEADING - ANSWER AND CROSS-COMPLAINT - DEFENSE - CONTRACT - COPY ATTACHED TO ANSWER - AFFIDAVIT OF CROSS-DEFENDANT - FAILURE TO MAKE - EFFECT - BANKS AND BANKING - OFFICERS - AGENCY - POWER TO BIND BANK - HOW SHOWN - EVIDENCE-CONTRACT-CONSIDERATION.

1. Where a contract is pleaded in an answer and a copy is attached thereto, failure to deny the genuineness and due execution thereof by affidavit, does not admit the same under C. S., sec. 6705, when the answer and contract construed together, do not constitute a defense founded upon a written instrument, but set up matters proper for a cross-complaint.

2. The authority of a president or cashier, acting as the managing head of a bank, to bind the bank, may be shown expressly, or may be implied from the facts disclosed, or be shown to exist and be established by the particular usage, practice or mode of doing business of the bank, or by the fact of ratification thereof or acquiescence therein by the bank.

3. Evidence examined, and contract held to be founded upon a valid consideration.

APPEAL from the District Court of the Fifth Judicial District, for Bannock County. Hon. Robert M. Terrell, Judge.

Action to foreclose a mortgage. Judgment for plaintiffs. Reversed and remanded, with directions.

Judgment reversed. Costs awarded to appellant.

Peterson & Coffin, for Appellant.

In so far as the answer of the defendant, The Pocatello Flour Mills Company, to the foreclosure complaint of the plaintiffs was concerned, the failure of the plaintiffs to file an affidavit within ten days, denying the genuineness and due execution of Defendant's Exhibit "B," attached to its answer, precluded the plaintiffs from thereafter raising the question of the authority of the officers of the Citizens Bank to execute said contract. (C. S., sec. 6705; Austin v. Brown Brothers Co., 30 Idaho 167, 164 P. 95; Cox v. Northwestern Stage Co., 1 Idaho 376; Reynolds v. Pennsylvania Oil Co., 150 Cal. 629, 89 P. 610; Knight v. Whitmore, 125 Cal. 198, 57 P. 891; Quartz Glass & Mfg. Co. v. Joyce, 27 Cal.App. 523, 150 P. 648.)

Where one, without collusion or fraud, deals with a corporation, through an officer who is in active management of the corporate business, if the act done by such officer is one which the corporation might do, such corporation will be estopped from relying upon any lack of authority on the part of such officer as a defense against the rights of the party so dealing with the corporation. (Pettingill v. Blackman, 30 Idaho 241, 164 P. 358.)

Mrs. Greene, as president, had both the express and implied authority to enter into the contract in question with the cross-complainant herein. (Allis-Chalmers Mfg. Co. v. Citizens Bank & Trust Co., 3 F.2d 316.)

Jones, Pomeroy & Jones, for Respondents.

Where answer and cross-complaint is filed in one instrument and copy of contract is attached at the end of the cross-complaint, but is referred to in the answer and also relied upon and pleaded in the cross-complaint, an answer to the cross-complaint duly verified, denying the due execution or genuineness of the contract, is all that is required, as the law will not require a futile act. (Cox v. Schnerr, 172 Cal. 371, 156 P. 509; C. S., sec. 6704.)

Pleading an instrument by attaching copy to answer or cross-complaint as an exhibit does not tender an issue or involve an assertion of the truth of the statements and recitals contained in the exhibit. (Sweeney v. Johnson, 23 Idaho 530, 130 P. 997; Schultz v. Rose Lake Lumber Co., 27 Idaho 528, 149 P. 726.)

The cashier or president acting as managing head of the bank does not have power to do every act which is within the powers of the bank, but his implied authority is restricted to the usual business of the bank and does not extend to unusual or extraordinary transactions. (Stockmen's Nat. Bank v. First Nat. Bank, 38 Idaho 395, 221 P. 150; Sandy River Bank v. Merchants & Mechanics Bank, 1 Biss. 146, F. Cas. No. 12,309; First Nat. Bank v. Drovers' etc. Bank, 244 F. 135, 156 C. C. A. 563; 3 R. C. L. 75; Culpeper Nat. Bank v. Walter & Walter, 114 Va. 522, 77 S.E. 484; Arbogast v. American Exch. Nat. Bank, 125 F. 518, 60 C. C. A. 538; West St. Louis Sav. Bank v. Shawnee County Bank, 95 U.S. 557, 24 L.Ed. 490; 2 Thompson on Corporations, sec. 1532; Smith v. Northampton Bank, 4 Cush. (Mass.) 1; Case v. Citizens' Bank, 100 U.S. 446, 25 L.Ed. 695; State v. Forsyth, 41 Mont. 249, 108 P. 914, 28 L. R. A., N. S., 501; 3 Fletcher on Corporations, p. 3315.)

The cashier is the chief executive officer, still he is but an agent and his acts are governed by general rules of agency, and if he exceeds his authority, his acts will not bind the bank. (3 R. C. L., sec. 71, p. 444.)

While C. S., sec. 5663, provides that a written instrument is presumptive evidence of consideration, yet such presumption of consideration will not overcome the express language therein, showing that it is without consideration. (Lane v. Richards, 119 Iowa 24, 91 N.W. 786; Bender v. Been, 78 Iowa 283, 43 N.W. 216, 5 L. R. A. 596.)

TAYLOR, J. William A. Lee, C. J., and Wm. E. Lee and Givens, JJ., concur.

OPINION

TAYLOR, J.

This action was brought by the Citizens Bank (now Citizens Bank & Trust Company), individually and as trustee, and the National Bank of Idaho at Pocatello, to foreclose a mortgage given by the Pocatello Milling & Elevator Company as security for sums owed to respondents, and to the Citizens Bank as trustee for several parties named. A number of parties were made defendants, among them the appellant, the Pocatello Flour Mills Company, and the F. C. Ayres Mercantile Company, a cestui que trust. For brevity, we will refer to the Citizens Bank as the bank, the Pocatello Milling & Elevator Company as the milling company, the F. C. Ayres Mercantile Company as the Ayres company, and the Pocatello Flour Mills Company as appellant.

Respondents presented a motion to dismiss this appeal. It does not appear from the showing that the appellant has, voluntarily or otherwise, accepted benefits or received the advantages of the judgment so as to preclude it from prosecuting this appeal. The motion is denied.

The complaint alleges that--

". . . . The claims or interests of said defendants and each of them, if any they have, are subsequent and subordinate and inferior to the lien of said mortgage."

The answer of appellant, so far as material herein, admits all of the allegations of the complaint, except that it denies that its claim "is subsequent or subordinate or inferior to the lien of the said mortgage; but on the contrary alleges the fact to be," as a part of the answer, that it has a mortgage upon the same property, given to it by the milling company on November 1, 1921, for a then existing debt in the amount of $ 19,817.20, with the further allegation:

". . . . That the interest of this defendant in the property in said complaint described is specifically hereinafter set forth in the cross-complaint of this defendant and is based upon the terms and conditions of that certain contract made and entered into between this defendant on the one part and the plaintiff, Citizens Bank & Trust Company, on the other part, on the 12th day of December, 1921, a full, true and correct copy of which said contract is hereto attached, marked exhibit 'B,' and by reference made a part of this answer the same as if set forth herein in full; and in this connection this answering defendant alleges" that the bank, in the execution of that contract, was acting for itself and as trustee, as set forth in the complaint, and "that out of the proportionate share of the mortgaged premises or the proceeds thereof, to which the Citizens Bank, one of the plaintiffs herein, for itself and as trustee, is entitled, this answering defendant, under the terms of said contract as aforesaid, is entitled to an interest in the said mortgaged premises or the proceeds thereof," then proceeding to set out what that proportion was, and that the contract alleged was made, executed and delivered for a valuable consideration, "and that the same has been by the said Citizens Bank and by this answering defendant carried into effect, and that both of said parties have, since the execution and delivery of the said contract, changed their position on account thereof and by reason thereof."

The appellant then "prays judgment that the plaintiffs be permitted to foreclose their mortgage as in said complaint set forth, and that the Court, after hearing, fix a reasonable attorney's fee to be allowed the plaintiff herein as a part of the costs of said actions, and that the Court in its decree fix the respective interests of the parties under and by virtue of that certain contract of December 12th, 1921, of which a copy is hereto attached as Exhibit 'B,' and for such other and further relief as to the Court may seem meet and equitable in the premises," and, "further answering plaintiff's complaint on file herein, and by way of cross-complaint thereto," appellant pleaded its mortgage and all facts necessary to foreclose it, and the contract with sufficient allegations to enforce it, with a recital that a true and correct copy thereof, marked Exhibit "B," was annexed to and made a part of the cross-complaint, and prayed judgment...