Scofield v. State Nat. Bank of Lincoln

• Decision Date: 16 October 1879
• Parties: GILBERT B. SCOFIELD AND MARY SCOFIELD, PLAINTIFFS IN ERROR, v. THE STATE NATIONAL BANK OF LINCOLN, AND OTHERS, DEFENDANTS IN ERROR
• Court: Nebraska Supreme Court

2 N.W. 888

9 Neb. 316

GILBERT B. SCOFIELD AND MARY SCOFIELD, PLAINTIFFS IN ERROR, v. THE STATE NATIONAL BANK OF LINCOLN, AND OTHERS, DEFENDANTS IN ERROR

Supreme Court of Nebraska

October 16, 1879

ERROR to the district court for Otoe county. Tried below before GASLIN, J., sitting in that county. The case is fully stated in the opinion.

AFFIRMED.

G. B Scofield, for plaintiffs in error.

1. Corporations have only such powers as are specially given by their charters, and national banks have no power to take deeds of trust or mortgages on real estate as security, and have no power not conferred by Congress. An injunction will be granted to prevent a sale by the bank of such mortgaged property. Matthews v. Skinker, 62 Mo. 329. Beaty v. Knowles, 4 Pet., 152. Wiley v. First Nat'l Bank Brattleboro, 47 Vt. 552. Fowler v. Scully, 72 Penn. State, 468. McMaster v. Reid, 1 Grant cases, Penn 36. It will be seen from these authorities, from both the state and federal courts, that the "State National Bank of Lincoln" had no right to purchase the note and mortgage described in the record, and that any pretended purchase would be a nullity; hence, having acquired no title to either, a decree of foreclosure would be void, there being no foundation on which an action could be based, and this court will prohibit by injunction any attempt to enforce such a decree. The defendant admits by its motion the allegations in the petition to be true. If the act of Congress, under which the defendants were organized, is the law governing the powers and duties of national banks, and as expounded by the courts, then the decree of foreclosure was fraudulent illegal, and void, and a court of equity has power to grant relief against such a judgment or decree. Dobson v. Pearce, 12 N.Y. 156. Scott v. Shreave, 12 Wheat., 605.

2. A court of equity has always, in the exercise of its admitted powers of jurisdiction, had power to grant relief against judgments and decrees obtained by fraud or misrepresentation. M'Donald v. Neilson, 2 Cow., 139, 193. Reigal v. Wood, 1 Johns. Ch., 402. Dilly v. Barnard, 8 Gill & Johns., 170. Carrington v. Holabaird, 17 Conn. 530. Duncan v. Lyon, 3 John., 352.

E. F. Warren, for defendants in error.

1. The petition shows that a decree had been rendered between the parties in a former suit, and it is alleged, in effect, that the court committed errors of law upon the hearing, and in entering judgment. If so, it should have been reversed in an appropriate proceeding. This is not such a proceeding but an independent action. A final decree in chancery is as conclusive as a judgment at law. Sibbault's Case, 12 Pet., 492. Kelsey v. Murphy, 26 Penn. State, 78. Bank of U. S. v. Beverly, 1 How., 148. Low v. Mussey, 41 Vt. 393. Rector v. Rotton, 3 Neb. 171. The questions of the validity of the mortgage, the right of the bank to foreclose the same, the amount due thereon, were directly before the trial court, and decided on the trial. The plaintiffs are estopped by that decree, and cannot be heard de novo. Jackson v. Wood, 8 Wend., 9. Aurora City v. West, 7 Wall., 82. Loring v. Mansfield, 17 Mass. 394. Carey v. Gale, 13 Vt. 639. Davis v. Talcott, 12 N.Y. 184. Woodgate v. Fleet, 44 N.Y. 1.

2. There are some cases that hold that a national bank can not take a mortgage to secure a present loan; that it is ultra vires, and renders the mortgage void. Union National Bank v. Mathews, 62 Mo. 329. Fridley v. Bowen, 87 Ill. 151, and others. But the doctrine in these cases has been reversed in National Bank v. Mathews, 8 Otto, 621. The supreme court of the United States have reversed the judgment of the supreme court of Missouri in the case of Bank v. Mathews, and declared the law to be otherwise; so the question is settled. The court say that even if it were ultra vires that defense could not be taken advantage of by private parties, a judgment of ouster and dissolution being the proper punishment for such a violation by the bank of its charter.

OPINION

MAXWELL, CH. J.

In the year 1878, the plaintiffs filed their petition in the district court of Otoe county, setting forth in substance, that on or about the 5th day of August, 1871, Gilbert B. Scofield executed to the State Bank of Nebraska a promissory note for the sum of $ 600, due January 1, 1872, and to secure the payment of the same himself and wife executed a mortgage upon certain real estate in Nebraska City. That on the 16th day of November, 1871, said state bank was organized as a national bank, under the provisions of the act of Congress, approved June 3, 1864, and the amendments thereto. And that under and by virtue of said act of Congress, the State National Bank was prohibited from purchasing, dealing, or speculating in mortgage securities of any character, or promissory notes, unless taken to secure a debt contracted by the bank, or to prevent a loss upon a loan made by it after its organization. That about the first day of January, 1873, the State National Bank, through its officers, had assigned to it the note and mortgage hereinbefore mentioned. That said purchase and assignment were illegal and void, so far as these plaintiffs are concerned, and that the plaintiffs are not now and never have been indebted to the State National Bank of Lincoln. That about the 3d day of April, 1875, the State National Bank of Lincoln commenced proceedings in the district court of Otoe county to foreclose said mortgage, and that on or about the eighth day of December, 1876, a decree of foreclosure was rendered by the court in said cause, and the plaintiffs allege that the proceedings of foreclosure and the decree are null and void. That the State National Bank was not the owner of said note and mortgage and had no lawful right to bring suit thereon. That the State Bank of Nebraska, before the pretended assignment of the note and mortgage, was indebted to the plaintiff, Gilbert B. Scofield, in the sum of $ 833, which should have been applied as payment upon said note and mortgage. That upon said illegal and void foreclosure the State National Bank has obtained an order of sale, and is about to sell said mortgaged premises, etc. The plaintiffs pray for an order restraining the defendants from proceeding under said order of sale, and that said decree of foreclosure may be set aside and held for naught, etc.

The defendants in their answer set up the decree of foreclosure, and allege that the plaintiffs appeared in that action, and plead as a defense to the same the matters set up in the petition in this case, together with the set-off of $ 833, and that said matters have been fully adjudicated and determined. The plaintiffs filed no reply to the answer, but filed a motion for judgment on the pleadings, "and to strike out of the answer of the defendants all that portion after the word 'mentioned,' in the 15th line of the answer, because the statements are irrelevant, false, and untrue as appears from the records of this court." The motion was overruled and the case dismissed.

Did the court err in overruling the motion and dismissing the case? We will first consider the motion to strike out.

The first ground assigned is because the statements are irrelevant. The word "irrelevant" signifies "is not pertinent," or applicable. Matter is said to be irrelevant in a pleading which has no bearing upon the subject matter of the controversy, and cannot affect the decision of the court. But matter which constitutes a defense to an action is not irrelevant and should not be stricken out. The motion in this case includes matter which, if true, constitutes a defense to the action, and was properly overruled.

The second ground is that the statements are untrue. Can this question be determined on a mere motion? We think not. Where an answer raises an issue of fact, the question of its truth or falsity must be determined in some other manner than by a motion to...