Union Sav. & Trust Co. of Seattle v. Krumm

• Decision Date: 09 November 1915
• Docket Number: 12682.
• Citation: 152 P. 681,88 Wash. 20
• Court: Washington Supreme Court
• Parties: UNION SAVINGS & TRUST CO. OF SEATTLE v. KRUMM.

152 P. 681

88 Wash. 20

UNION SAVINGS & TRUST CO. OF SEATTLE v. KRUMM.

No. 12682.

Supreme Court of Washington

November 9, 1915

Department 2. Appeal from Superior Court, King County; Kenneth Mackintosh, Judge.

Action by the Union Savings & Trust Company of Seattle against J. T Krumm. From the judgment, plaintiff appeals. Remanded, with directions to modify.

McClure & McClure and Donworth & Todd, all of Seattle, for appellant.

Griffin & Griffin and Walter S. Fulton, all of Seattle, for respondent.

ELLIS J.

The plaintiff brought this action to recover an overdraft of the defendant at its Renton branch, amounting, as alleged, to $4,931.12. The answer of the defendant consisted of denials five affirmative defenses, and four counterclaims. The first affirmative defense set up a credit of $4,300. This the jury allowed by a special verdict, finding the defendant indebted to the plaintiff on the overdraft in the sum of $631.12. It is admitted that this finding was fully supported by the evidence; no error being assigned upon it.

In the second affirmative defense and first counterclaim it was alleged that the Orillia Lumber Company and the plaintiff entered into a contract with the defendant on the last day of April, 1912, whereby he was to cut and deliver to the lumber company and to the plaintiff at the mill of the lumber company sawlogs at the price of $4 per thousand feet, board measure, the plaintiff and the lumber company agreeing to receive and pay for not less than 25,000 feet of logs for each working day for two years, extending from the last day of April, 1912, to July 15, 1914, that the defendant delivered logs under such agreement to the amount of $4,937,050 feet at the agreed price of $19,748.42, and that there was due a balance thereon of $576.02. This sum was also allowed by special verdict.

In his third affirmative defense and second counterclaim the defendant set up damages in the sum of $8,000 for loss of profits because of the failure of the plaintiff to receive more than the logs above mentioned, or to receive logs at all after April 4, 1914, under the agreement pleaded in the first counterclaim. By a special verdict the jury found $5,299 damages on this second counterclaim.

In the fourth affirmative defense and third counterclaim it was averred that the lumber company and the plaintiff, on January 1, 1913, entered into an agreement with the defendant whereby he was to purchase teams and wagons, build a road necessary to be built, and haul lumber from the sawmill of the lumber company to the railroad station at Orillia at the price of $2 per thousand feet, and that the lumber company and the plaintiff were to furnish him not less than 25,000 feet of lumber per day to haul at that price for not less than one year; that pursuant to this agreement he hauled lumber from March 1, 1913, to April 4, 1913, and that there was a balance due for that service amounting to $1,596.87. In this counterclaim he further alleged damage in the sum of $2,000 through the failure of the plaintiff to carry out the agreement after the 3d day of April, 1913. On this third counterclaim the jury by a special verdict allowed $1,596.87 as the balance due for services performed and $1,750 damages in loss of profits.

The fifth affirmative defense and fourth counterclaim was for $36 for hauling brick from Orillia to the mill of the Orillia Lumber Company, which it was alleged the defendant did under an agreement with the plaintiff. By a special finding the jury also allowed this amount.

Prior to final issue the plaintiff moved to strike from the second and third counterclaims the allegations of damages through plaintiff's failure to accept logs from and furnish lumber to the defendant to haul. This motion was denied.

The reply put in issue the making of the contracts alleged in the counterclaims, denied on information and belief that the defendant performed the services alleged, and set up affirmatively that such contracts, if made by any one purporting to be its agent or representative, were ultra vires.

The evidence was voluminous. We shall not attempt to state more than the salient facts. The plaintiff is a trust company doing a general trust company and banking business, with its principal office in the city of Seattle, and is operating a branch bank at the town of Renton in King county. At the time of the various transactions here in question one O. R. Woolley was the manager of the Renton branch, his name appearing as such both on the stationery and on the front window of the banking building in Renton. It appears from the evidence that he had no express authority to make loans in excess of $1,000 without submitting them to the officers and directors of the parent concern, but it also appears that he had sometimes exceeded this authority to the knowledge of and without objection from the officers and directors. There was no circumstance in evidence from which notice to the public of this or any other limitations of his authority could be implied. For some years the plaintiff, through its Renton branch, had from time to time made loans to the Orillia Lumber Company, which indebtedness had reached an aggregate prior to this time of about $11,500, which it was admitted was authorized by the officers and directors of the plaintiff. To secure this indebtedness the plaintiff held a mortgage on the lumber company's plant and other assets. In addition to this indebtedness Woolley, as manager of the Renton branch, had from time to time advanced further moneys to the lumber company without the knowledge of the officers or directors and without security, so that the indebtedness, including that authorized, amounted to between $15,000 and $20,000 in the spring of 1912. About that time the mill, through an explosion and consequent fire, was destroyed. Woolley, in order to save this indebtedness, entered into an arrangement with Struthers and Hightower, officers and chief stockholders of the Orillia Lumber Company, whereby the plaintiff was to take over the business of the lumber company, rebuild the mill, operate it in the name of the lumber company until the indebtedness should be paid, and then turn it back to the lumber company. It appears that the money advanced for this purpose, and in operating the mill in pursuance of this agreement, was advanced by Woolley without the knowledge of the officers or directors of the trust company, and that the whole transaction was concealed from the company by means of a system of false bookkeeping. It was in pursuance of this arrangement that Woolley entered into the agreements with the defendant here for the cutting and hauling of logs, for the hauling of lumber, and for the hauling of brick, as set out in the defendant's several counterclaims. The making of these contracts and their performance by the defendant, substantially as set out in the counterclaims, was fully sustained by the evidence. It was admitted that all of the defendant's contracts were oral.

At the conclusion of the evidence plaintiff challenged its sufficiency to sustain the second, third, and fourth counterclaims on the grounds that the contracts therein alleged were ultra vires; that the contracts, if made, were made by an agent without actual authority and outside of the apparent scope of his authority; that the contracts, being oral, were void under the statute of frauds. The challenge was overruled. The plaintiff requested that the jury be instructed to return a verdict in its favor upon the second, third, and fourth counterclaims and each of them. This request was denied. The jury, in addition to the special verdicts above mentioned, returned a general verdict in favor of the defendant for $8,599.77, being the full amount found due to the defendant in the special verdicts, less $631.12, found due to the plaintiff on the overdraft. After verdict, the plaintiff moved for judgment non obstante for the amount found due on the overdraft, and in the alternative for a new trial upon all the statutory grounds. These motions were overruled. Judgment was entered in favor of the defendant on the general verdict. The plaintiff appeals.

The appellant contends: (1) That the acts of Woolley in taking over and operating the mill were ultra vires of the trust company, and that therefore the contracts with the respondent in furtherance of that transaction were void; (2) that the taking over of the mill and the making of the contracts with the respondent were outside of the actual authority of Woolley as manager, and were not within the apparent scope of his authority, and the contracts therefore cannot be enforced; (3) that the logging contract was, in substance, an oral undertaking on the appellant's part to answer for the debt of the lumber company, and was therefore void under the statute of frauds; (4) that the contracts for logging and for hauling lumber were contracts by their terms not to be performed in one year from the making thereof, and, being oral, were void under the statute of frauds.

1. The first two questions must not be confused in the discussion. If the directors of the trust company could have legally authorized the taking over of the management of the mill for the purpose of paying or reducing the debt of the lumber company to the trust company, then it is obvious, however invalid it may have been for lack of such antecedent authorization, that the transaction was not ultra vires.

Though the appellant was organized as a trust company, it is admitted that, in addition to its business as a trust company, it was and is engaged also in a general banking business, as it has the unquestioned power to do under the act governing trust companies. 2 Rem. & Bal. Code § 3349. It therefore had every implied power that...