Logan County Nat Bank v. Townsend

Citation35 L.Ed. 107,139 U.S. 67,11 S.Ct. 496
PartiesLOGAN COUNTY NAT. BANK v. TOWNSEND
Decision Date02 March 1891
CourtUnited States Supreme Court

W. F. Browder, for plaintiff in error.

John Feland, for defendant in error.

Mr. Justice HARLAN, after stating the facts in the foregoing language, delivered the opinion of the court.

This writ of error brings up for review a judgment of the court of appeals of Kentucky, affirming a judgment of the circuit court for Logan county, in that commonwealth, in favor of the defendant in error against the Logan County National Bank, a banking association organized under the act of congress.

The petition states that in June, 1879, the plaintiff, Townsend, sold to the bank, through Hugh Barclay, Jr., its cashier, $12,800 of the bonds of Logan county, Ky., issued in aid of the Owensboro & Russellville Railroad, with six months' interest accrued thereon, for the cousideration of 68 1/2 cents on the dollar, and of the promise and agreement of the bank that it would, upon plaintiff's demand, replace the bonds for him, at thesam e price, or less; that, relying upon such promise and agreement, he made the sale to the bank, and it refused to comply with its promise and agreement, although requested to do so. It also alleges that, at the commencement of the action, as well as at the time of plaintiff's demand, the bonds were worth, dollar for dollar, par, and accrued interest; and that by reason of the refusal of the bank to comply with its promise and agreement the plaintiff has sustained damages in the sum of $4,032, the difference between the price paid by it for the bonds and their par value, and $384, the amount of six months' accrued interest. The prayer of the petition is for a judgment for damages in the sum of $4,416, and costs, and all proper relief.

The defendant filed a general demurrer as well as an answer to the petition. The answer contains five paragraphs. In the first paragraph, it denies that the plaintiff at any time sold to it $12,800 or any other amount of the bonds of Logan county; in the second, that it ever promised or agreed with the plaintiff that it would replace any bonds sold by him, at any price, on demand or at any time; and in the third, that he ever sold the bonds to its cashier for and on its account. It avers in the fourth paragraph that, in June, 1879, and before and after, Barclay was engaged on his own account in an effort to depress the value of the bonds, and to that end endeavored to induce the Logan county court, composed of the county judge and justices of the peace, to refuse to levy a tax to pay interest on them; that the plaintiff then and there owned the bonds in question; that he and Barclay, in furtherance of their personal ends, conspired to prevent a levy, agreeing that plaintiff should use his personal influence with one of the justices to prevent him from ruling in favor of one, and should allow Barclay to sell the bonds, with bonds owned and controlled by him, at a price determined on; that Barclay was to guaranty, and did guaranty, that as a result of such sale the value of the bonds of the county would be reduced, so that the plaintiff could buy the same amount at a price less than that at which Barclay was to sell the plaintiff's bonds; that said bonds were reduced in value, by or after their sale, far below the agreed price, so that plaintiff could at any time during the succeeding month have purchased the same amount at much less than he received for those sold for him by Barclay; that Barclay deposited the proceeds of the bonds in the defendant's bank to the plaintiff's credit, and the entire amount thereof was paid out on the plaintiff's checks; and that defendant was in no way connected with the transaction, otherwise than that, Barclay having deposited such proceeds in the bank, it paid them to the plaintiff.

It is averred in the fifth paragraph of the answer that Barclay had no authority, right, or power to make, for or on account of defendant, the contract set out in the petition; that defendant had itself no right, power or authority to make it; and that it was a mere gambling transaction, a mere dealing in and betting upon the future value of the bonds, and unauthorized by the defendant's charter or by law.

The general demurrer to the petition was overruled. The plaintiff filed a demurrer to the fourth and fifth paragraphs of the answer, which was overruled as the former, and sustained as to the latter.

The plaintiff filed a reply to the third and fourth paragraphs of the answer, denying all the allegations of each, and charged that Barclay was engaged in June, 1879, and after that time, in an effort to depress the value of bonds, not on his own account, but as cashier and director of the bank, with its knowledge and consent, the bank endeavoring to enrich itself by depressing the value of the bonds of the county. To this reply the bank filed a rejoinder.

The jury returned a general verdict for the plaintiff, and also made a special finding in answer to specific questions. In response to the question, 'Did Townsend sell the bonds to the defendant bank or to Hugh Brcl ay, Jr.?' the jury answered, 'To defendant bank;' and to the question, 'What was the contract made at date of sale?' the answer was, 'That defendant would replace the bonds to plaintiff at the price paid at that time or less.'

Among other instructions given to the jury for the plaintiff was the following: 'The court instructs the jury that if they believe from a preponderance of the proof that the plaintiff, Townsend, sold to the defendant, the Logan County National Bank, the bonds mentioned in the petition, and the defendant agreed and promised on demand to return the bonds to the plaintiff at the price paid, or less, and upon demand refused to do so, they must find for the plaintiff the difference between the price paid and the value of the bonds at the time the demand was made.' The court refused to give the following instruction asked by the bank: 'That the defendant is a national banking association, capable of exercising only such powers as are expressly or impliedly conferred upon it by its act of incorporation, and that the power to buy and sell municipal bonds for purposes of speculation, or to engage in the purchase or sale of such securities for the purpose of manipulating or controlling their market value, is not conferred upon the defendant bank by the provisions of its charter; and that if the jury believe from the evidence that the cashier, Barclay, paid Townsend the full market value for his bonds, and bought them for the sole purpose of enabling him or the bank to manipulate or control the price of said bonds in the market for speculative purposes, they must find for the defendant, provided that they shall believe that the plaintiff at the time knew that the bonds were to be used for such purposes.' Other instructions were given and refused, but none of them distinctly involved the question of the liability of the defendant to the plaintiff under its charter and the act of congress relating to national banking institutions.

The court of appeals of Kentucky thus disposed of that question: 'The last ground is that the contract is ultra vires the corporate authority of the bank, in direct violation of its charter, and, consequently, is not such an obligation as will charge the bank or make it to any extent, either in law or conscience, liable in damages or otherwise for breach of the conditions. It seems to us that if the proposition be conceded it would not avail appellant, for if it had no authority under its charter to purchase the bonds it cannot, in justice and conscience, refuse to abide by the judgment in this case, which involves nothing more than the return of the bonds and receipt of what it paid for them. To do less cannot be justified without permitting it to profit by its own wrong in violating the law of congress under which it exists. Probably, according to a fair construction of the national bank act, the power is not expressly given to appellant to purchase and deal in bonds of the character in question; but neither is it expressly prohibited by the act to do so, and there is a proper and well-recognized difference between 'the case of an engagement made by a corporation to do an act expressly prohibited by its charter or some other law and a case where legislative power to do the act has not been granted.' See Hitchcock v. Galveston, 96 U. S. 341, and numerous authorities there cited. In that case the following from State Board of Agriculture v. Citizens' St. Ry. Co., 47 Ind. 407, was quoted with approval: 'Although there may be a defect of power in a corporation to make a contract, yet if a contract made by it is not in violation of its charter, or of any statute prohibiting it, and the corporation has by its promise induced a party relying on the promise, and in execution of the contract, to expend money and perform his part thereof, the corporation is liable on the contract.' If the special findings of the jury in this case be taken as true, there needs no argument to show that the rule thus laid down applies to the contract we are considering, and o a dopt the opposite of that rule would invite a disregard of the provisions of the national bank act, as...

To continue reading

Request your trial
151 cases
  • Meholin v. Carlson
    • United States
    • Idaho Supreme Court
    • March 3, 1910
    ... ... BANK ... STOCK-PURCHASE OF-PAYMENT BY NOTE-DEFENSES-AGREEMENT LIMITING ... Judicial District for Ada County. Hon. Fremont Wood, Judge ... Action ... by the receiver of ... "it did not lie with the plaintiff to raise this ... point." ( Logan Co. Nat. Bank v. Townsend , 139 ... U.S. 67, 11 S.Ct. 496, 35 L.Ed. 107; ... ...
  • Citizens Nat. Bank of Meridian v. Golden
    • United States
    • Mississippi Supreme Court
    • March 23, 1936
    ...obligations and ex delicto responsibilities that are not recognized in any of the cases cited. Logan County National Bank v. Townsend, 67. 11 S.Ct. 496. 35 L.Ed. It will be observed by the court that the denials were made by the appellant in its answer to the bill of complaint filed in the ......
  • Dunlop v. Mercer
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • October 31, 1907
    ... ... The ... arguments and decisions in Andrews v. Bank, 20 Colo ... 313, 36 P. 902, 46 Am.St.Rep. 291, and Herryford v ... matter ( Chicot County v. Sherwood, 148 U.S. 529, ... 533, 534, 13 Sup.Ct. 695, 37 L.Ed. 546; ... National Bank v. Matthews, 98 U.S. 621, 629, 25 ... L.Ed. 188; Logan County Bank v. Townsend, 139 U.S ... 67, 76, 11 Sup.Ct. 496, 35 L.Ed ... ...
  • Ring v. Spina, 230.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • April 19, 1945
    ...12 Wall. 349, 20 L.Ed. 453; City of Parkersburg v. Brown, 106 U.S. 487, 503, 1 S.Ct. 442, 27 L.Ed. 238; Logan County Nat. Bank v. Townsend, 139 U.S. 67, 11 S.Ct. 496, 35 L.Ed. 107; In re Builders' Finance Ass'n, D.C.S.D.Cal., 26 F.2d 123. Any other conclusion would mean that for many, perha......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT