National Bank v. M. M. Pittman Roller Mill

• Decision Date: 16 May 1923
• Docket Number: (No. 6955.)
• Citation: 252 S.W. 1096
• Parties: NATIONAL BANK OF CLEBURNE et al. v. M. M. PITTMAN ROLLER MILL.
• Court: Texas Court of Appeals

252 S.W. 1096

NATIONAL BANK OF CLEBURNE et al. v. M. M. PITTMAN ROLLER MILL.

(No. 6955.)

Court of Civil Appeals of Texas. San Antonio.

May 16, 1923.

Rehearing Denied June 13, 1923.

Appeal from District Court, Johnson County; Irwin T. Ward, Judge.

Action by the M. M. Pittman Roller Mill against the National Bank of Cleburne and others. Judgment for plaintiff, and defendants appeal. Affirmed.

Thompson, Barwise, Wharton & Hiner, of Fort Worth, Lockett & Lockett, of Cleburne, and Ellis Douthitt, of Sweetwater, for appellants.

Wm. H. Atwell, of Dallas, for appellee.

COBBS, J.

Appellee sued appellants to recover $8,400 damages caused to appellees by reason of the bank's failure to furnish funds in accordance with the contract with which appellee mill would have purchased 14,000 bushels of wheat from which appellee would have made the sum of $8,400, which represented a reasonable profit appellee would have made on the wheat because of its rise in the market value, from the time it would have been purchased to the time it would have been sold in September, 1921. The bank, a federal corporation, a national bank, becoming insolvent, it and its assets were placed in the hands of A. P. Woolridge, receiver, by the Comptroller of the Currency of the United States, appellants herein.

The contract upon which the suit was predicated was a written agreement as follows:

                     "The National Bank of Cleburne
                           "Cleburne, Tex., May 9, 1921
                

"Mr. M. M. Pittman, Pres., Cleburne, Texas — Dear Sir: In consideration of the execution and prompt payment of three notes executed by you to the above bank on this date, as follows, $2,316.47, Jan. 9, 1922; $3,000.00, Feb. 9, 1922, and $3,000.00, March 9, 1922, we agree to lend you as much as $14,000.00 additional money to purchase wheat this season, said wheat to be stored in separate elevator, and chattel mortgage satisfactory to said bank to be executed by you to secure the payment of this advance of money and same to be repaid as wheat is milled or as notes mature.

                   "Yours very truly,      S. B. Norwood
                                                  "President."
                

Appellee complied with his part of the agreement.

The three main defenses were: (1) The agreement was ultra vires; (2) without consideration; and (3) the alleged damages were too remote and uncertain to base a recovery upon. The case was tried by the court without a jury and the court made and filed his findings of fact and conclusions of law and thereupon entered a judgment in favor of appellees against the National Bank of Cleburne and A. P. Woolridge, receiver, for the sum of $8,400, which judgment further provided that the judgment against Woolridge was not personal but only against him in his official capacity. A statement of facts was also filed in the case. Findings of fact and conclusions of law were also made and filed by the court.

Not following the order of assignments and propositions, we will dispose of the important questions raised in the order of their logical sequence rather than as presented by counsel.

Considering first the question raised that under the laws of the United States there is no power expressed or implied that authorized a president of a national bank to make the contract such as here exhibited without express authority from the board of directors or from the by-laws, or any ratification thereof by such board:

At the time of this transaction, appellee was a customer of said bank, having borrowed the sum of $22,000 from the bank through its president; he had repaid $14,000 thereof, leaving a balance of approximately $8,000 due the bank when the suit was filed. Pittman was insolvent, owing large sums of money, and the roller mill was his and his wife's homestead. The president of the bank, for the bank, persuaded Pittman to incorporate the mill in consideration that Pittman would do so and execute his notes to the bank; it agreed on its part to loan to such corporation the sum of $14,000. This was done, and the corporation executed to the bank its three notes for the Pittman debt aggregating $8,316.47, and the bank agreed to loan the $14,000 additional, to purchase wheat during the season, and appellee turned over the mill stock to the bank to secure the claim. Obviously the bank, realizing it had no security for its past indebtedness, and realizing the only asset appellee had was the mill, his homestead, it induced appellee by this promise to incorporate, and appellant agreed to advance the money to buy wheat for the business in hand which obtained all the security needed for the past debt, thereby putting itself in a better position and the appellee at a very great disadvantage and in a worse fix.

Here we may discuss together whether the doctrine of ultra vires or failure of consideration each together or separately will defeat the contract and save appellant from the consequences of its wrong. It has been well settled that when such transactions are within the general scope of the business of the corporation, as this obviously was, and in its interest and for its benefit, based upon a valuable consideration, and such as the grantor has power to receive, it is valid. Cook on Corporations, vol. 2, § 775; Reese on Ultra Vires, §§ 47-50, 105; Bond v. Terrell Cotton & Woolen Mfg. Co., 82 Tex. 309, 18 S. W. 691; Exchange Bank of Fort Worth v. Hensley & Roland (Tex. Civ. App.) 240 S. W. 679; Border National Bank v. Am. National Bank (C. C. A.) 282 Fed. 73; Thompson v. St. Nicholas Bank, 146 U. S. 240, 13 Sup. Ct. 66, 36 L. Ed. 956; Hanover National Bank v. First National Bank, 109 Fed. 421, 48 C. C. A. 482; Boston & Tex. Co. v. Guaranty Life Ins. Co. (Tex. Civ. App.) 233 S. W. 1025. Here, the bank...