Hutchins v. Richmond

• Decision Date: 26 March 1901
• Citation: 128 N.C. 72,38 S.E. 252
• Court: North Carolina Supreme Court
• Parties: HUTCHINS . v. PLANTERS' NAT. BANK OP RICHMOND.

38 S.E. 252

128 N.C. 72

HUTCHINS .

v.PLANTERS' NAT. BANK OP RICHMOND.

Supreme Court of North Carolina.

March 26, 1901.

NATIONAL BANK — CONTRACT — GUARANTY — ULTRA VIRES—PLEADING—COMPLAINT—DEMURRER. A complaint alleged that defendant, a national bank, by letter agreed that a draft drawn by plaintiff, not to exceed a certain sum, on a certain firm, for goods shipped to them by plaintiff, should be paid, and that in consideration of such guaranty plaintiff shipped the goods to such firm, but that the draft had not been paid, and defendant refused to pay it. Held, that where a corporation has entered into a contract not illegal, which the other party has performed, it will not be heard to claim ultra vires to avoid performance on its part, and, since the national banking act does not prohibit such a contract, the complaint stated a cause of action, and a demurrer thereto should be overruled.

Appeal from superior court, Durham county; Council, Judge.

Action by J. W. Hutchins against the Planters' National Bank of Richmond. From a judgment sustaining defendant's demurrer to the complaint, plaintiff appeals. Reversed.

Boone, Bryant & Biggs, for appellant.

Manning & Foushee, for appellee.

CLARK, J. The defendant demurred on the ground that, "being a national bank, it had no power, under the national banking act creating it, to guaranty the debt sued upon." The judge sustained the demurrer and dismissed the action. The plaintiff's appeal presents only the correctness of that ruling for review.

The allegation in the complaint, which is admitted by the demurrer, is that the defendant by letter agreed that a draft drawn by plaintiff, not to exceed $300, upon Chalk-ley & Co., for hides to be shipped them by plaintiff, should be paid, and that in consideration of that guaranty the plaintiff shipped the hides to Chalkley & Co., but "defendant failed and refused to pay the draft as it had contracted and agreed to do, and the same was protested for nonpayment, " etc. The national banking act contains no prohibition against such banks guarantying paper, but it is contended that the terms of the statute do not authorize a national bank to make a contract of guaranty. In People's Bank v. Manufacturers' Nat Bank, 101 U. S. 181, 183, 25 L. Ed. 907, It is said: "A guaranty is a less onerous and stringent contract than that created by indorsement. We see no reason to doubt that, under the circumstances of this case, it was competent for the defendant to give the guaranty here in question. It is to be presumed that the vice president had rightfully the power he assumed to exercise, and the defendant is estopped to deny it Where one of two innocent parties must suffer by the wrongful act of a third, he who gave the power to do the wrong must bear the burden of the consequences." In Railroad Co. v. McCarthy, 96 U. S. 258, 267, 24 L. Ed. 693, it is said: "The doctrine of ultra vires, when invoked for or against'a corporation, should not be allowed to prevail where It would defeat the ends of justice...