Johnson v. Ward
| Decision Date | 31 October 1878 |
| Citation | 2 Ill.App. 261,2 Bradw. 261 |
| Parties | SWEN J. JOHNSON ET AL.v.SAMUEL D. WARD, Receiver, etc. |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
APPEAL from the Circuit Court of Cook county; the Hon. E. S. WILLIAMS, Judge, presiding.
Mr. ELLIOTT ANTHONY, for appellants; contending that power to borrow money by a bank, is a necessary and inherent privilege, though not directly empowered so to do by its charter, cited Morse on Banking, 4; Partridge v. Badger, 25 Barb. 146; Beers v. Phœnix Glass Co. 14 Barb. 358; Curtis v. Leavitt, 15 N. Y. 9; Bank of Australasia v. Breillat, 6 Morris P. C. 152.
Corporations that have the power to borrow money have also the necessary power to give obligations for its re-payment, in any form not expressly prohibited: Curtis v. Leavitt, 15 N. Y. 9; Daniell on Negotiable Instruments, 287.
Corporations have all the powers of ordinary persons, as respects their contracts, to carry out the general purposes and objects of their creation, unless restricted by positive statute or by necessary implication: Weckler v. First Nat. Bank, 42 Md. 581; Littlewood v. Davis, 50 Miss. 403; Barry v. Vurchants Ex. Co. 1 Sandf. Ch. 280; City of Galena v. Corwith, 48 Ill. 423; Richmond R. R. Co. v. Richard, 26 Grattan, 83; Brice on Ultra Vires, 121; Curtis v. Leavitt, 15 N. Y. 53.
An obligation voluntarily entered into for a good consideration, is valid where it does not contravene the policy of the law and is not repugnant to some statute: Wolfe v. McClure, 79 Ill. 564; Pritchett v. The People, 1 Gilm. 525.
The burden of proof is upon the party seeking to impeach such contract: Brice on Ultra Vires, 41; Bulkly v. Derby Fishing Co. 2 Conn. 252; Allegheny City v. McClukan, 14 Penn. 8.
In corporate bodies, the powers of the board of directors are original and undelegated: Hoyt v. Thompson, 19 N. Y. 207; Morse on Banking, 15.
A private corporation, unless expressly prohibited, may execute promissory notes and mortgages, and give security for a debt: Reid v. Bradley, 17 Ill. 321.
And the corporation and nobody else, is judge of the exigencies. Any known assurance can be given: Daniell on Negotiable Instruments, 288; Ill. Cent. R. R. Co. v. Bloomington, 76 Ill. 447; Ottawa Plank Road Co. v. Murray, 15 Ill. 336, Maher v. City of Chicago, 38 Ill. 266; Racine & Miss. R. R. Co. v. Farmers' Loan and Trust Co. 49 Ill. 331; Brice on Ultra Vires, 66.
The bank had the right to make the trust deed in question. Corporations are presumed to contract within their powers, and when a contract is not, on its face, necessarily beyond the scope of the power of the corporation, it will, in the absence of proof to the contrary, be presumed to be valid: Railway Co. v. McCarthy, 96 U. S. 267; Union Water Co. v. Murphy's Flats Fluming Co. 22 Cal. 620; Morris R. R. Co. v. R. R. Co. 29 N. J. Eq. 452; Whitney Ames Co. v. Barlow, 63 N. Y. 62; San Antonio v. McChoffey, 96 U. S. 315; Hitchcock v. Galveston, 96 U. S. 351; Maher v. Chicago, 38 Ill. 266.
Where the contract has been in good faith fully performed; and the corporation has received the benefit, it cannot avail itself of the defense of ultra vires: Ex parte Chippendale D. G. M. & G. 19; Bradley v. Ballard, 55 Ill. 413; West v. Madison Co. Agr'l Board, 82 Ill. 205.
As to the power of directors to act for the bank: West v. Madison Co. Agr'l Board 82 Ill. 205; Miller v. McManis, 57 Ill. 126; Darst v. Gale, 83 Ill. 136; Chicago Building Soc. v. Crowell, 65 Ill. 453; Aurora Agr'l etc. Soc. v. Paddock, 80 Ill. 263; Bradley v. Ballard, 55 Ill. 413; Badger v. Batavia Co. 70 Ill. 302; Holder v. L. B. & Miss. R'y Co. 71 Ill. 106.
A bank may be bound by any undertaking entered into on its behalf, by any of its officers provided they have been thereto duly authorized: Morse on Banking, 11, 105; Angell & Ames on Corporations, 153; 1 Daniell on Negotiable Instruments, 288; 2 Kent Com. 280.
Where a corporation receives the benefit of money loaned, it cannot avoid payment by denying its authority to contract the loan: Darst v. Gale, 83 Ill. 136; Ottawa Plank Road Co. v. Murray, 15 Ill. 336; Sackett's Harbor Bank v. Codd, 18 N. Y. 242; Oneida Bank v. Ontaria Bank, 21 N. Y. 490; McCracken v. San Francisco, 16 Cal. 591; Grogan v. San Francisco, 18 Cal. 590; Premental v. San Francisco, 21 Cal. 351; Chicago Building Soc. v. Crowell, 65 Ill. 453; Brice on Ultra Vires, 608; Parish v. Wheeler, 22 N. Y. 503; Bissell v. M. S. R. R. Co. 22 Ill. 258; Hazelhorst v. Savannah, R. R. Co. 43 Ga. 54; Bradley v. Ballard, 55 Ill. 413; Miller v. McManis, 57 Ill. 126; DeGraff v. American Linen Thread Co. 21 N. Y. 128; Gas Co. v. San Francisco, 9 Cal. 453; Railroad Co. v. Howard, 7 Wall. 413; Tracy v. Talmage, 14 N. Y. 162; Labriskie v. C. C. & C. R. R. Co. 23 How. 381; Cary v. Cleveland etc. R. R. Co. 29 Barb. 35; McClure v. Manchester R. R. Co. 13 Gray 124; Ill. Cent. R. R. Co. v. Bloomington, 76 Ill. 447.
Where an act of the directors is in excess of their authority, a shareholder knowing it must dissent within a reasonable time, or his assent will be presumed: Watt's Appeal, 78 Pa. St. 370; Curtis v. Leavitt, 15 N. Y. 66; Parish v. Wheeler, 22 N. Y. 494; Steam Nav. Co. v. Weed, 17 Barb. 378; Silver Lake Bank v. North, 4 Johns. Ch. 370; Cluster Glass Co. v. Dewey 16 Mass. 94; Tracy v. Talmage, 14 N. Y. 162.
A party dealing with a corporation has a right to presume that it acts according to its charter: Akin v. Blanchard, 32 Barb. 527; Parish v. Wheeler, 22 N. Y. 494.
The relation of a depositor to a bank is that of creditor and debtor: Ketchum v. Bank of Commerce, 19 N. Y. 513; Chapman v. White, 2 Seld. 417; Curtis v. Leavitt, 15 N. Y. 52; Morse on Banking, 25; In reFranklin Bank, 1 Paige, 249; Com'l Bank of Albany v. Hughes, 17 Wend. 94; Graves v. Dudley, 20 N. Y. 80; Foley v. Hill, 2 H. L. Cas. 39; Croskill v. Bower, 32 Beav. 86; Carr v. Carr, 1 Minn. 541; Bullard v. Randall, 1 Gray, 605; Downer v. Phœnix Bank, 6 Hill, 297.
The money deposited becomes the property of the depositary: Morse on Banking, 25; Brahm v. Adkins, 77 Ill. 263; Carroll v. Cone, 40 Barb. 220; Clark v. Titcomb, 42 Barb. 122.
The bank was not trustee for the depositor; it was a mere bailment: Morse on Banking, 28; Steele Adm'r v. Clark, 77 Ill. 471; Perry on Trusts, 37; Keem v. Collier, 1 Met. 415; In reFranklin Bank, 1 Paige, 249; Story on Bailments, § 88; Marine Bank v. Rushmore, 28 Ill. 463; Boyden v. Bank of Cape Fear, 65 N. C. 15; Tinkham v. Heyworth, 31 Ill. 519; Edwards on Bailments, 66; Marine Bank v. Chandler, 27 Ill. 525.
As to by-laws of a corporation, their functions, and contracts made under them: Field on Corporations, § 307; Flint v. Pierce, 99 Mass. 68; Mellen v. Whipple, 1 Gray, 317; Field v. Crawford, 6 Gray, 116; Dow v. Clark, 7 Gray, 198; Fay v. Noble, 12 Cush. 1; Royal British Bank v. Turquand, 5 E. & B. 248; Hoyt v. Thompson, 19 N. Y. 207; City of Ottawa v. Maxey, 20 Ill. 413; Mec. & F. Bank v. Smith, 19 Johns. 115; Gallalen v. Bradford, 1 Bibb, 209; Morse on Banking, 52.
As to estoppel of a corporation: Chicago Building Soc. v. Crowell, 65 Ill. 453; Hough v. Cook Co. Land Co. 73 Ill. 23; Bradley v. Ballard, 55 Ill. 413; Wilson Sewing M. Co. v. Boyington, 73 Ill. 534; Aurora, etc. Soc. v. Paddock, 80 Ill. 263; Hoyt v. Thompson, 19 N. Y. 218; Allegheny City v. McClurken, 41 Penn. 89; Maher v. City of Chicago, 38 Ill. 266; Angell & Ames on Corporations, § 256; Supervisors v. Schenck, 5 Wall. 581; Pendleton v. Arry, 13 Wall. 305; State v. Trustees, 8 Ohio St. 403; State v. Van Horne, 7 Ohio St. 331; Barrett v. County Court, 44 Mo. 199; City of Chicago v. Wheeler, 25 Ill. 478; Bank of Middlebury v. Rut. & Wash. R. R. Co. 30 Vt. 159; Bradstreet v. Bank of Royalton, 42 Vt. 128; Brice on Ultra Vires, 453; Despatch Line v. Bellamy Mfg. Co. 12 N. H. 205; Mors v. Averill, 10 N. Y. 453; Olcott v. Tioga R. R. Co. 27 N. Y. 546; Ottawa Plank Road Co. v. Murray, 15 Ill. 336; Bissell v. M. S. R. R. Co. 22 N. Y. 272.
An unauthorized act may be ratified: Morse on Banking, 80; Hooker v. Eagle Bank, 30 N. Y. 83.
The receiver stands in place of the corporation: High on Receivers, 200; Curtis v. Leavitt, 15 N. Y. 51; Morse v. Chapman, 24 Ga. 249; Devendorf v. Beardsley, 23 Barb. 656; Hyde v. Lynde, 4 N. Y. 387.
When securities are pledged to secure a debt, the pledgee acquires a special property in them: White v. Platt, 5 Denio, 269; Casey v. Cavaroc, 96 U. S. 476; Casey v. Schneider, 96 U. S. 496.
Corporations are liable for the frauds of their agents when committed in the course of their employment: Phil. R. R. Co. v. Quigley, 21 How. 202; Aldrich v. Press Printing Co. 9 Minn. 133.
The decree is contrary to the decisions of the Supreme Court of this State: Bradley v. Ballard, 55 Ill. 413; Aurora etc. Soc. v. Paddock, 80 Ill. 263; Chicago Building Soc. v. Crowell, 65 Ill. 453; West v. Madison Co. Agr'l Board, 82 Ill. 205; Badger v. Batavia Paper Co. 70 Ill. 302; Darst v. Gale, 83 Ill. 136; Germania Ins. Co. v. Hutchberger, 1 Chicago Law Jour. 63.
Mr. W. C. GOUDY, for appellants; contending that the bank had power to borrow money in the usual course of business, cited Curtis v. Leavitt, 15 N. Y. 51; Planter's Bank v. Sharp, 6 How. 323; Brice on Ultra Vires, 122.
A bank authorized to take negotiable paper can assign and transfer it: McIntyre v. Preston, 5 Gilm. 38; Planter's Bank v. Sharp, 6 How. 323.
The relation between the bank and its depositors was that of debtor and creditor: Bank for Savings v. Collector, 3 Wall. 513; Morse on Banking, 25; Tinkham v. Heyworth, 31 Ill. 519; Marine Bank v. Fulton Bank, 2 Wall. 252; Thompson v. Riggs, 5 Wall. 678; Ketcham v. Bank of Commerce, 18 N. Y. 513; Chapman v. White, 6 N. Y. 412; In reFranklin Bank, 1 Paige, 249.
The bank having the power to dispose of the notes and mortgages, the persons who took them were not obliged to see how the money was used: Perry on Trusts, § 789.
Messrs. HOYNE, HORTON & HOYNE, for appellee; insisting that the money used in creating the...
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