Wald v. Wheelon
| Decision Date | 01 April 1914 |
| Docket Number | 81912 |
| Citation | 147 N.W. 402,27 N.D. 624 |
| Court | North Dakota Supreme Court |
Rehearing denied May 20, 1914.
Appeal from judgment of the District Court of McHenry County, Hon A. G. Burr, Judge.
Reversed.
Christianson & Weber, Engerud, Holt & Frame, and J. F. Callahan, for appellant.
The insufficiency of the evidence to establish the alleged agreement might be remedied on another trial, and hence though it would be a ground for a new trial, it would not justify a judgment non obstante veredicto. Meehan v Great Northern R. Co. 13 N.D. 441, 101 N.W. 183.
In any event, the agreement alleged was unlawful, and unenforceable, because its execution involved the commission of a crime. Rev. Codes 1905, §§ 4657, 4658.
An agreement to do something which the law forbids cannot be made the basis of a cause of action. Arnot v. Pittston & E. Coal Co. 2 Hun, 596; Stover v. Flower, 120 Iowa 514, 94 N.W. 1100; Weston v. Estey, 22 Colo. 334, 45 P. 367; Swindell v. Bainbridge State Bank, 3 Ga.App. 364, 60 S.E. 13; Washburn Mill Co. v. Bartlett, 3 N.D. 138, 54 N.W. 544.
The defendant bank was not bound by the agreement, because it was not within any authority of the cashier to make it. Corey v. Hunter, 10 N.D. 5, 84 N.W. 570; First Nat. Bank v. Michigan City Bank, 8 N.D. 612, 80 N.W. 766; 31 Cyc. 1643, 1644.
The same rule that governs the acts of agents of individuals governs the acts of cashiers of banks. Morse, Banks & Bkg. 2d ed. pp. 155, 195 et seq.; 5 Cyc. 457, 463, 464 et seq.; First Nat. Bank v. Michigan City Bank, 8 N.D. 612, 80 N.W. 766.
Plaintiff must make it appear that the acts of the cashier were within his authority. State v. Commercial Bank, 6 Smedes & M. 218, 45 Am. Dec. 280.
A person dealing with the cashier of a bank is bound, at his peril, to see that the cashier is acting within his authority. Corey v. Hunter, 10 N.D. 12, 84 N.W. 570; Rev. Codes, §§ 5769, 5770.
There is no ratification, and there could be no estoppel to the right to question the validity of a contract to commit a crime. Swindell v. Bainbridge State Bank, 3 Ga.App. 364, 60 S.E. 13; Rev. Codes, §§ 5772, 5775; 31 Cyc. 1244, and cases cited in note, 78, 1652 et seq; State v. Commercial Bank, 6 Smedes & M. 218, 45 Am. Dec. 280; Greenawalt v. Wilson, 52 Kan. 109, 34 P. 403; Leggett v. New Jersey Mfg. & Bkg. Co. 1 N.J. Eq. 541, 23 Am. Dec. 728; Chadbourne v. Stockton Sav. & L. Soc. 4 Cal. Unrep. 535, 36 P. 127; Wheat v. Bank of Louisville, 9 Ky. L. Rep. 738, 5 S.W. 305; United States v. City Bank, 21 How. 356, 16 L.Ed. 130; Bank of Commerce v. Hart, 37 Neb. 197, 20 L.R.A. 780, 40 Am. St. Rep. 479, 55 N.W. 631; North Star Boot & Shoe Co. v. Stebbins, 2 S.D. 74, 48 N.W. 833; Lloyd v. West Branch Bank, 15 Pa. 172, 53 Am. Dec. 581, 1 Am. Neg. Cas. 574; Thompson v. McKee, 5 Dak. 172, 37 N.W. 367; Daviess County Sav. Asso. v. Sailor, 63 Mo. 24; Merchants' Bank v. Rudolf, 5 Neb. 527; Cochecho Nat. Bank v. Haskell, 51 N.H. 116, 12 Am. Rep. 67; Bank of United States v. Dunn, 6 Pet. 51, 8 L.Ed. 316; Sturdevant Bros. v. Farmers' & M. Bank, 69 Neb. 220, 95 N.W. 819.
H. B. Senn and A. E. Coger, for respondent.
It is no defense, that a contract by a bank to loan in excess of the law limit is unlawful and unenforceable, where the contract has been executed. Anderson v. First Nat. Bank, 4 N.D. 182, 59 N.W. 1029; 5 N.D. 80, 64 N.W. 114; 5 N.D. 451, 67 N.W. 821; 6 N.D. 497, 72 N.W. 916, 172 U.S. 573, 43 L.Ed. 558, 19 S.Ct. 284.
If the bank has violated the law it can only be taken advantage of by the sovereign power that created the bank. Anderson v. First Nat. Bank, 172 U.S. 573, 43 L.Ed. 573, 19 S.Ct. 284, 5 N.D. 455, 67 N.W. 821; Prescott Nat. Bank v. Butler, 157 Mass. 548, 32 N.E. 909; First Nat. Bank v. Smith, 8 S.D. 7, 65 N.W. 437; Merchants' Nat. Bank v. Hanson, 33 Minn. 40, 53 Am. Rep. 5, 21 N.W. 850; Union Nat. Bank v. Matthews, 98 U.S. 621, 25 L.Ed. 188; National Bank v. Whitney, 103 U.S. 99, 26 L.Ed. 443; Logan County Nat. Bank v. Townsend, 139 U.S. 67, 35 L.Ed. 107, 11 S.Ct. 496; Thompson v. St. Nicholas Nat. Bank, 146 U.S. 240, 36 L.Ed. 956, 13 S.Ct. 66; Walden Nat. Bank v. Birch, 130 N.Y. 221, 14 L.R.A. 211, 29 N.E. 127.
It is the law that the security is not void because the loan is in excess of the law limit. A party who has received the benefit of an agreement cannot question its validity. Smith v. First Nat. Bank, 45 Neb. 444, 63 N.W. 796; State ex rel. Clapp v. Minnesota Thresher Mfg. Co. 40 Minn. 213, 3 L.R.A. 510, 41 N.W. 1020; Mills County Nat. Bank v. Perry, 72 Iowa 15, 2 Am. St. Rep. 228, 33 N.W. 341; Union Nat. Bank v. Matthews, 98 U.S. 621, 25 L.Ed. 188; Union Gold-Min. Co. v. Rocky Mountain Nat. Bank, 96 U.S. 640, 24 L.Ed. 648, 1 Mor. Min. Rep. 432; 5 Cyc. 523; First Nat. Bank v. Flath, 10 N.D. 285, 86 N.W. 867; Fortier v. New Orleans Nat. Bank, 112 U.S. 439, 28 L.Ed. 764, 5 S.Ct. 234; Neilsville Bank v. Tuthill, 4 Dak. 295, 30 N.W. 154.
The plea of ultra vires will not avail to either party, where the contract has been fully executed by the other party. First Nat. Bank v. Bakken, 17 N.D. 224, 116 N.W. 92; Tourtelot v. Whithed, 9 N.D. 467, 84 N.W. 8; Logan County Nat. Bank v. Townsend, 139 U.S. 67, 35 L.Ed. 107, 11 S.Ct. 496.
The plea of ultra vires cannot be set up to defeat a recovery upon negotiable paper bought by a bank. First Nat. Bank v. Smith, 8 S.D. 101, 65 N.W. 439; Prescott Nat. Bank v. Butler, 157 Mass. 548, 32 N.E. 909; Merchants' Nat. Bank v. Hanson, 33 Minn. 40, 53 Am. Rep. 5, 21 N.W. 849.
Can there be a recovery of damages for the violation of a contract, the execution of which would constitute the commission of a crime by the officers of the defendant? This is the question to be considered on this appeal. For an understanding of the facts, we may state that the action was brought to recover damages for the failure of the defendant a state bank, to make a loan to the plaintiff as agreed, and therewith to pay the sheriff of McHenry County March 15, 1910, the sum necessary to effect a redemption of certain real estate from a foreclosure sale, and for which the time of redemption expired on such date, and which, it is alleged, went to sheriff's deed by reason of defendant's breach of contract. Damages in the sum of $ 6,500 were demanded. The answer denies any contract whatsoever with respect to the payment of any obligations of the plaintiff, or any liens or foreclosure against the property; and as a further defense it is alleged that the defendant is a banking corporation organized under the laws of this state, and that the contract set forth in the complaint was wholly beyond the power and authority of any officer of the defendant to enter into by or on the behalf thereof, and wholly in excess of the powers of the defendant bank, and therefore void and unenforceable. One Wheelon, cashier of the bank, was made a party defendant, but in the course of the trial the action was dismissed by consent as to him. A verdict for $ 500 was rendered in favor of plaintiff, and judgment entered thereon. This appeal is from the judgment, and also from an order denying defendant's motion for judgment notwithstanding the verdict. In this court the only distinctive assignments of error insisted upon are the second and third, raised in the motion for a directed verdict. These points are that the agreement alleged would be unlawful and consequently void and unenforceable, because its execution necessarily involved the commission of a crime, and, second, because the bank was not bound by the agreement, as the making of such an agreement was not within the express, implied, or ostensible authority of the cashier. We do not find it necessary to consider separately the last point, as it necessarily follows, from our conclusion on the first point, that it is well taken. It appears that the plaintiff had various conversations with Wheelon, the cashier, with reference to the bank making a loan sufficient to take up the indebtedness against his property and save it from going to sheriff's deed. There were a number of mortgages against it, and over $ 4,000 was needed. For the purpose stated, an application and papers were executed for a loan of $ 4,000, which Wheelon thought he could procure. It appears that in the attempt to make this loan, Wheelon, either on his own behalf, or on behalf of the bank, was only acting as a negotiator; that it was not proposed that the bank itself make the loan. Wheelon found it impossible to secure $ 4,000 on the security offered. New papers were prepared for a loan of $ 3,000, or a trifle over, the mortgage or mortgages and notes running to the bank. The plaintiff was to raise by other means something like $ 1,300, or enough, when added to the proposed loan, to make possible the redemption and the lifting of certain other mortgages on the property. As to the merits, we may say in passing that the evidence to sustain the verdict is, at the best, very slight. It discloses considerable uncertainty as to whether the minds met, as to what was to be done with reference to the additional amount to be raised by plaintiff. On his part, it tends to show that something was to be done by the bank, while, on the other hand, Wheelon claims to have understood that the plaintiff was to raise his part and then call on the bank, so they could co-operate in making redemption and in discharging the mortgages. Defendant's evidence is emphatic on this point. The papers were sent to a bank in another town for execution, for the accommodation of the plaintiff. They were executed before the cashier of that bank, and were by him placed in a basket in the bank where the employees of the bank deposited mail intended to be taken to...
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