Dana v. Bank of St. Paul

• Decision Date: 01 January 1860
• Citation: 4 Minn. 291
• Parties: DANA & WHITE vs. THE BANK OF ST. PAUL.
• Court: Minnesota Supreme Court

Page 291

4 Minn. 291

(4 Minn. R. p. 385.)

DANA & WHITEvs.

THE BANK OF ST. PAUL.

Supreme Court of Minnesota.

Error to district court, Ramsey County.

Action by plaintiffs here on a contract set up in the complaint.

The answer alleged that the defendant is a bank organized under the act of July 26, 1858, entitled "An act to authorize and regulate the business of banking;" and that the contract set up in the complaint was not signed by the president and cashier of the bank, as required by sec. 19 of the act.

Plaintiffs demurred to the answer. The demurrer was overruled, and judgment entered for defendant.

Points and authorities for plaintiffs in error: —

Even conceding that the defendants are not a corporation sole, and have a president and cashier, and have not ratified the contract, and that the contract was not signed by the president and cashier, the answer is still insufficient. The statute is directory only. Formerly the doctrine was, that corporations could only contract through their corporate seal, and could not make a simple contract. Angell & Ames on Corp. 198. But that doctrine has been long exploded. Angell & Ames on Corp. 199; 2 Kent Com. 233; Clark v. Guardiaus of Cuckfield Union, 1 B. C. C. 81. And that technical doctrine being discarded, it would seem to result from the very structure of these artificial beings that there are two general modes in which they may contract: first, by vote; second, by their duly authorized agents. Angell & Ames on Corp. 199; Trustees First Baptist Church v. The Brooklyn Fire Insurance Co. 19 N. Y. 310.

Points and authorities for defendant in error: —

The court did not err in overruling plaintiff's demurrer to defendant's answer. Minn. Stat. 858, § 18; Angell & Ames Corp. § § 291, 297, 299, 301; Story Agency, § 115; Story Cont. § 312; Farmers and Mechanics' Bank v. Troy City Bank, 1 Doug. (Mich.) 458; Bank of the United States v. Dunn, 6 Peters, 51; Bank of Metropolis v. Jones, 8 Peters, 12; Salem Bank v. Gloucester Bank, 17 Mass. 1-29; Foster v. Essex Bank, 17 Mass. 479; Moss v. Livingston, 4 N. Y. 208; 4 Fla. 192; 12 U. S. Dig. 139, § 124; Dedham Institution v. Slack, 6 Cush. 408; Holt v. Bacon, 25 Miss. 567; 14 U. S. Dig. 79, § 21; Farmers' Bank v. 2 McKee, Pa. St. 318; Hughes v. Bank of Somerset, 5, Litt. 45; Pendleton v. Bank of Kentucky, 1 T. B. Mon. 180.

W. H. Peckham, for plaintiffs in error.

Wm. Hollinshead, for defendant in error.

FLANDRAU, J.

Demurrer to answer. The complaint alleges that the plaintiffs made a contract with the defendant, the nature of which, in this connection, it is unnecessary to state; that the defendant was a corporation organized under the general banking law of the state (Comp. Stat. 854); alleges breach, and claims damages. The answer simply avers "that the contract or agreement alleged and specified in the said complaint, was not signed by the president and cashier of the said bank, the defendant, as required by the provisions of section nineteen of said act," referring to the general banking law above cited. The section of the act upon which the answer is framed is in the following words: "Contracts made by the bank or banking association established under the provisions of this act, and all notes and bills issued and put in circulation as money, shall be signed by the president and cashier thereof." The only possible aspect in which this answer can be sustained, is upon the supposition that the defendant can make a contract or incur an obligation in no other way than by the signature of the officers designated in the statute; because, as the complaint states simply that "the defendant contracted and agreed," etc., if it can be made to appear that the defendant could contract and agree in any other than the statutory way, then the answer admits that it did so contract, and is bad.

There is nothing peculiar in the act under which the defendant is incorporated; it is a general act under which any person or persons may become incorporated for the purpose of banking, and when so incorporated, they become invested with the usual powers that are exercised by banks, "and such incidental powers as may be necessary to carry on such business." Section 12. Such corporations have always possessed the right to exercise all their powers through agents of their own selection, quite as completely as a natural person. Barnes v. Ontario Bank, 19 N. Y. 158, Comstock, J.; and there can be no good reason advanced why they should not possess this ability. From the very nature of these associations, they must transact their business in almost all cases through agents; the choice of whom, and the distribution of duties and powers among them, therefore, becomes to the bank a question of vital moment, while to those who deal with the bank, the only question of importance is whether the agent who acted had sufficient authority to bind the principal in the particular transaction to which he seeks to commit it, and not who such agent is or by what official title he is designated. This power of appointment existing in corporations in the absence of any statutory regulations or limitations leads us to inquire what was the object the...