Elkhart Cnty. Nat. Farm Loan Ass'n v. Heilman

• Citation: 196 N.E. 350,101 Ind.App. 183
• Decision Date: 18 June 1935
• Docket Number: No. 14921.,14921.
• Parties: ELKHART COUNTY NAT. FARM LOAN ASS'N v. HEILMAN.
• Court: Court of Appeals of Indiana

101 Ind.App. 183

196 N.E. 350

ELKHART COUNTY NAT. FARM LOAN ASS'N

v.HEILMAN.

No. 14921.

Appellate Court of Indiana, in Banc.

June 18, 1935.

Appeal from Superior Court, St. Joseph County; J. Fred Bingham, Judge.

Action by Abram L. Heilman against the Elkhart County National Farm Loan Association. Judgment for plaintiff, and defendant appeals.

Affirmed.

Verne G. Cawley, of Elkhart, for appellant.

Raymer & Olds, of Elkhart, for appellee.

DUDINE, Chief Judge.

This is an action instituted by appellee against appellant, to recover for a loan of money by appellee to appellant.

The complaint was in two paragraphs, the first being in the usual form of complaint on a promissory note, and the second proceeding upon the theory of money had and received.

Appellant filed several paragraphs of answer including a general denial as to each paragraph of complaint, and a paragraph of answer alleging that appellant corporation did not have power to execute the note, and that its execution of said note was ultra vires.

Appellee filed three paragraphs of reply including a general denial as to the affirmative paragraph of answer.

The cause was submitted to the court for trial without a jury and the court found for the plaintiff on the first paragraph of complaint, and rendered judgment accordingly. The court made no finding as to the second paragraph of complaint.

Appellant corporation duly filed a motion for new trial, assigning as causes therefor that the decision of the court was not sustained by sufficient evidence, and that the decision was contrary to law. This appeal is based upon the overruling of said motion.

The evidence indisputably shows that the loan was made; that the money went into the general fund of appellant; and that appellant has not accounted to appellee therefor.

Appellant contends that it did not have power to execute the note sued on, inasmuch as such power was not included in the powers expressly given it by the charter and the Federal Farm Loan Act (39 Stat. 369, § 11, 12 USCA § 761), and inasmuch as such power was not impliedly granted as being reasonably incident to and necessary to the carrying out of the powers expressly granted; that the execution of the note in suit was an ultra vires act.

[1][2] Appellee contends the mere fact that the execution of the note by appellant was an ultra vires act does not prevent him from recovering on the note. Appellee cites several Indiana authorities in support of said contention, including Wright v. Hughes (1889) 119 Ind. 324, 21 N. E. 907, 12 Am. St. Rep. 412, and Seamless Pressed Steel & Mfg. Co. v. Monroe (1914) 57 Ind. App. 136, 106 N. E. 538. Both of said cases are directly in point, and sustain appellee's said contention.

Appellant's counsel admit “that such is the law as laid down by numerous decisions of this and the Indiana Supreme Court, and that if appellant were a corporation organized under the laws of this state, or even of any other state, and doing business in this state, the decisions referred to *** would control the decision of this case,” but “*** appellant most earnestly contends that they (said decisions of this and the Indiana Supreme Court) have nothing whatsoever to do with the question to be determined here because of the fact that it (appellant) is a federal or national corporation, and that being a corporation organized under an act of Congress, the law applicable to the question in issue must be that stated or laid down by the federal courts, and not by the courts of this state.”

Under the “federal court rule” recovery cannot be had on an ultra vires contract although the contract has been fully performed on one side, and the benefits received by the other party. See Fletcher Cyc. Corp., § 3468, and numerous authorities there cited. This rule is not followed, however, in most of the state courts. A majority of the courts which have passed upon this have repudiated the federal rule.

The rule prevailing in the state courts may be stated as follows: “In most of the states, recovery is permitted on an ultra vires contract on behalf of the party which has fully performed, provided the other party has received the...