Cumberland State Bank v. White

• Decision Date: 29 November 1927
• Citation: 222 Ky. 126
• Parties: Cumberland State Bank v. White, et al.
• Court: United States State Supreme Court — District of Kentucky

222 Ky. 126

Cumberland State Bank v. White, et al.

Court of Appeals of Kentucky.

Decided November 29, 1927.

1. Appeal and Error. — In action by contractor for loss of profits by breach of contract to erect bank building, defended on ground that bank could not enter into contract without consent of state banking commissioner, Court of Appeals must presume that contract supported judgment of court sustaining demurrer to defense, where contract was not made part of record.

2. Banks and Banking. — In action by contractor for loss of profits by breach of contract to erect bank building, answer by bank, alleging that erection of banking house was unnecessary for transaction of legitimate business of bank, making contract void, under Ky. Stats., section 582, stated no defense, and demurrer to answer was properly sustained.

3. Banks and Banking. — In action by contractor for loss of profits by breach of contract to erect bank building, erection of banking house was not an "investment in drafts, bills of exchange, or other securities," in violation of Ky. Stats., section 579, forbidding bank making such investment in certain amounts without authority of banking commissioner; section 581 not being applicable.

4. Banks and Banking. — Under Ky. Stats., section 582, providing that capital of bank can be invested in realty only to amount that is necessary for legitimate business of bank, board of directors, within limit of charter, may determine what is necessary for conduct of legitimate business of corporation.

5. Banks and Banking. — Supervisory power of state banking commissioner over state banks does not prevent bank from making contract, otherwise legitimate, without first obtaining consent of banking commissioner.

6. Banks and Banking. — Power by state banking commissioner to protect depositors and others from contract by bank, which renders it menace to depositors and others, does not permit bank to escape liability for breach of contract not prevented by law, which it has made because of probable consequences thereof.

7. Banks and Banking. — Bank, contracting for erection of banking house, is liable to contractor in damages for breach of contract though contract was unwise, and would probably have resulted in state banking commissioner taking steps to protect depositors and others from its consequences.

8. Appeal and Error. — On appeal from judgment against bank awarding contractor damages for breach of contract to erect banking house, Court of Appeals is not required to determine correctness of amount awarded, or whether verdict of jury was in accordance with law, where there is no bill of exceptions or evidence before Court of Appeals.

Appeal from Harlan Circuit Court.

LEE & SNYDER for appellant.

C.B. SPICER and E.H. JOHNSON for appellees.

OPINION OF THE COURT BY JUDGE LOGAN.

Affirming.

The appellees in this case composed a partnership. They entered into a contract with appellant whereby they agreed to erect a banking house for appellant in the town of Cumberland at a cost of $9,627.86. They executed a bond for the faithful performance of the contract, and the premium on the bond was $144.42. Appellant decided not to erect the bank building, probably persuaded in reaching the decision by the state banking department, and appellees instituted suit to recover damages from appellant by reason of the breach of the contract. it is alleged in the petition that appellees could have erected the building in accordance with the terms of the contract at a cost of $7,767.83, and that their profit would have been $1,860.25. They sought to recover the profit which they could have made, together with the expenses which they had incurred.

The answer of appellant is in three paragraphs. A demurrer was sustained to the second paragraph, and this appeal involves the sole question as to whether the lower court correctly sustained the demurrer to that paragraph of the answer. As we understand that paragraph of the answer appellant attempted to rely on the defense that it could not enter into such a contract without the consent of the state banking commissioner. In the absence of the contract we must assume that such was the nature of the...