Wallace Bank & Trust Co. v. First National Bank of Fairfield

• Decision Date: 30 April 1925
• Citation: 237 P. 284,40 Idaho 712
• Court: Idaho Supreme Court
• Parties: WALLACE BANK & TRUST COMPANY, Appellant, v. FIRST NATIONAL BANK OF FAIRFIELD, IDAHO, and C. C. SILL, Successor of RENSSELAER L. CURTIS, Resigned and Deceased, as Receiver of Said First National Bank, Respondents

237 P. 284

40 Idaho 712

WALLACE BANK & TRUST COMPANY, Appellant, v. FIRST NATIONAL BANK OF FAIRFIELD, IDAHO, and C. C. SILL, Successor of RENSSELAER L. CURTIS, Resigned and Deceased, as Receiver of Said First National Bank, Respondents

Supreme Court of Idaho

April 30, 1925

CONTRACTS-CONSTRUCTION-INTENTION OF PARTIES-CONTRACT TO PURCHASE PROMISSORY NOTES - UNIFORM SALES LAW - MEASURE OF DAMAGES-RECEIVERS-PROVABLE CLAIMS-DEFENSES-ULTRA VIRES-NATIONAL BANKING ACT - TRIAL - INSPECTION OF BOOKS AND PAPERS-DISCRETION OF COURT.

1. The primary test as to the character of a contract is the intention of the parties to be gathered from the whole scope and effect of the language used, and mere verbal formulas, if inconsistent with the real intention, are to be disregarded. It does not matter by what name the parties chose to designate it.

2. An agreement to purchase a specific note upon written demand and to pay therefor the full face value thereof set forth in the agreement plus accruing interest, is a promise to pay on demand the sum named, and the measure of damages on refusal to purchase and pay on demand is the amount named in the agreement, and not the difference between the market value of the note and the contract price.

3. Such an agreement is not a contract for the sale of "goods" but of a thing in action, and is not subject to the uniform sales law.

4. Upon written demand made, the amount of such a contract became due and payable, the contract was fully executed on the part of the appellant, and the amount thereof is provable as a claim in receivership; and the receiver had no option as to adopting or refusing to adopt the contract.

5. The defense of ultra vires must be pleaded, and cannot be raised for the first time on appeal.

6. The validity of acts of banks or their officers prohibited by the National Banking Act, without imposing any penalty or forfeiture, can ordinarily be questioned only by the United States and not by private parties.

7. It is not an abuse of discretion for a court to deny a motion for a general examination of all of the books, documents, files, letters, papers, accounts, records and correspondence of an opposite party, which does not set out particularly the specific book or document sought to be examined, where the motion includes many books and papers which could not be reasonably expected to contain evidence relating to the merits.

APPEAL from the District Court of the Fourth Judicial District, for Camas County. Hon. H. F. Ensign, Judge.

Action on contracts to repurchase promissory notes. Judgment for plaintiff for one dollar. Plaintiff appeals. Reversed.

Judgment reversed with instructions. Costs to appellant.

James E. Babb, for Appellant.

The recovery of the full purchase price was the intention of the contract, since the bank did not in first instance purchase save upon condition for repayment of the purchase price and taking back the sold securities at face and interest. Such an arrangement is in reality a loan only, to be recovered back on demand, same as a note payable on demand, or a sale with stipulation for repurchase which, in legal effect, is a stipulation for rescission and repayment. (Wolf v National Bank of Illinois, 178 Ill. 85, 52 N.E. 896; Boynton v. Woodbury, 101 Mass. 346; Litchfield v. Irvin, 51 N.Y. 51; Sponge Exchange Bank v. Commercial Credit Co., 263 F. 20.)

The demand sued upon was one provable against and in the receivership. (Wolf v. National Bank of Illinois, supra; Roehm v. Horst, 178 U.S. 1, 20 S.Ct. 780, 44 L.Ed 953; Central Trust Co. v. Chicago Auditorium Assn., 240 U.S. 581, 36 S.Ct. 412; 60 L.Ed. 811, L. R. A. 1917B, 580; Penn Steel Co. v. New York City Ry. Co., 198 F. 721, 117 C. C. A. 503; Howard v. Maxwell Motor Co., 269 F. 292; Wm. Filene's Sons Co. v. Weed, 245 U.S. 497, 38 S.Ct. 211, 62 L.Ed. 497.)

The uniform sales law applies only to sale of goods and documents of title to goods, such as bills of lading and warehouse receipts, etc., and does not apply to sales of promissory notes. (C. S., secs. 5673, 5784; Smith v. Linglebach, 177 Wis. 170, 187 N.W. 1007; Millard v. Green, 94 Conn. 597, 110 A. 177, 9 A. L. R. 1610, 1618.)

Where the specific identical properties sold are specified the title passes and if the price is named therefor it may be recovered. (O. A. Olin Co. v. Lambach, 35 Idaho 767, 209 P. 277; 3 Williston on Contracts, secs. 1365, 1369, 1376, 1377, 1472; 35 Cyc. 302, 325, 326, 706, 707.)

The court below erred in denying motion for inspection and examination. (Federal etc. Co. v. Public Utilities Com., 26 Idaho 391, 143 P. 1173; Merrill v. National Bank of Jacksonville, 173 U.S. 131, 19 S.Ct. 360, 43 L.Ed. 640; Preston v. Equity Savings Bank, 287 F. 1003.)

Where the right of inspection is founded upon contract it will be enforced even in cases where plaintiff has other means of information, to say nothing of a case such as this where the sole means of information is in defendant. (Ballenberg v. Wahn, 103 A.D. 34, 92 N.Y.S. 830; 18 C. J. 13, sec. 118, p. 1121; Amsinch v. North, 62 How. Pr. 114-117; 18 C. J. 1117, sec. 112; 1118, sec. 117; 1121, sec. 118; 1125; Bronson v. Kensey, 3 McLean, 180, 4 F. Cas. 220; C. S., sec. 7193.)

The change in the attitude of the courts in investigating the books and accounts of such corporations is declared in Wilson v. United States, 220 U.S. 614, 31 S.Ct. 718, 55 L.Ed. 610; followed in Burnett v. State, 8 Okla. Cr. 639, 129 P. 1110, 47 L. R. A., N. S., 1175, notes; Hammond Packing Co. v. Arkansas, 212 U.S. 322, 15 Ann. Cas. 645, 29 S.Ct. 370, 53 L.Ed. 530.

J. W. Edgerton and Sullivan & Sullivan, for Respondents.

If a receiver refuses to adopt an executory contract of an insolvent, he is not liable therefor, and the assets in his hands cannot be subjected to a claim for damages. (Scott v. Rainier P. & Ry. Co., 13 Wash. 108, 42 P. 531; Wells v. Hartford Man. Co., 76 Conn. 27, 55 A. 599; People v. Globe Mutual L. Ins. Co., 91 N.Y. 174; 34 Cyc. 265-267; Fidelity Safe Deposit & Tr. Co. v. Armstrong, 35 F. 567; Casey v. N. P. Ry. Co., 15 Wash. 450, 48 P. 53; Lenoir v. Linville Imp. Co., 123 N.C. 922, 36 S.E. 185, 51 L. R. A. 146; Tennis Bros. Co. v. Wetzel & T. Ry. Co., 140 F. 193; Richmond & Danville R. Co. v. Scott, 88 Va. 958, 14 S.E. 763, 16 L. R. A. 91; Coy v. Title Guarantee & Trust Co., 198 F. 275; Butterworth v. Degnon Con. Co., 214 F. 772, 131 C. C. A. 184; 8 Fletcher, Cyc., Corp., sec. 5289; Maxwell v. Mo. Valley Ice & C. S. Co., 181 Iowa 108, 164 N.W. 329; Sunflower Oil Co. v. Wilson, 142 U.S. 313, 12 S.Ct. 235, 35 L.Ed. 1025; Brown v. Warner, 78 Tex. 543, 22 Am. St. 67, 14 S.W. 1032, 11 L. R. A. 394.)

In such case the proper action, if any, is one for damages against the insolvent, and not an action for specific performance or for the agreed price. (High on Receivers, sec. 273D; 34 Cyc. 266, 267; 8 Fletcher, Cyc. Corp., sec. 5289; Texas Co. v. International & G. N. Ry. Co., 250 F. 742; Wolf v. National Bank of Illinois, 178 Ill. 85, 52 N.E. 896; Chemical Nat. Bank v. Hartford Deposit Co., 161 U.S. 1, 16 S.Ct. 439, 40 L.Ed. 595; S.E. Co. v. W. N.C. Ry. Co., 99 U.S. 191, 25 L.Ed. 319; Central Trust Co. v. East Tenn. L. Co., 79 F. 19; Brown v. Warner, 78 Tex. 543, 22 Am. St. 67, 14 S.W. 1032, 11 L. R. A. 394; Maxwell v. Mo. Valley Ice & C. S. Co., 181 Iowa 108, 164 N.W. 329; Scott v. Rainier P. & R. Co., 13 Wash. 108, 42 P. 531.)

Where the insolvent is liable for damages in such a case, the judgment will be a general claim and entitled only to be paid pro rata out of the assets. (34 Cyc. 265; 20 Ency. Law, 375; Spader v. Mural Decoration Mfg. Co., 47 N.J. Eq. 18, 20 A. 378; Malcomson v. Wappoo Mills, 88 F. 680; Central Trust Co. v. East Tennessee L. Co., 79 F. 19.)

The motion for inspection of the bank records was too broad, sweeping and indefinite. (State v. District Court, 27 Mont. 441, 94 Am. St. 831, 71 P. 602; Ketchum Coal Co. v. District Court, 48 Utah 342, 159 P. 737, 4 A. L. R. 619; 6 Ency. Pl. & Pr. 802, note, 809, note, 810, note; Olney v. Hatliff, 37 Hun (N. Y.), 286; Morrison v. Sturges, 26 How. Pr. 177; Allen v. Allen, 58 Hun. 604, 11 N.Y.S. 535.)

Cannot inspect to ascertain whether a party has a cause of action. (18 C. J. 1120; Moore v. C. S. Co., 175 A.D. 972, 161 N.Y.S. 984; Walsh v. Press Co., 48 A.D. 333, 62 N.Y.S. 833; Goodyear India Rubber Mfg. Co. v. Gorham, 31 N.Y.S. 965; Nathan v. Whitehill, 67 Hun, 398, 22 N.Y.S. 63; Brownell v. National Bank, 20 Hun (N. Y.), 517; Hoyt v. Exchange Bank, 8 N.Y.S. 652; Frowein v. Lindheim, 12 N.Y.S. 526; Thompson v. E. R. Co., 9 Abb. Pr., N. S., 212; 14 Cyc. 371.

TAYLOR, J. William A. Lee, C. J., Wm. E. Lee, Budge and Givens, JJ., concur.

OPINION

TAYLOR, J.

This action was brought by appellant, Wallace Bank & Trust Company, against the First National Bank of Fairfield and Rensselaer L. Curtis, receiver, to recover judgment in the sum of $ 23,846.43 upon nine written agreements involving nine notes with interest therein specified. On motion of the appellant in this court, C. C. Sill, as receiver of the First National Bank of Fairfield, was substituted as one of the respondents in place of and as the successor of, Rensselaer L. Curtis, resigned and deceased. We will hereafter refer to the parties as the Wallace Bank and the Fairfield Bank.

The complaint pleads fully all the facts and agreements with relation to the transaction, setting out all the notes, agreements for their purchase by the respondent, with all the correspondence, notices and demands.

One of the notes in the sum of $ 2,000 with accrued interest had been paid to the Wallace Bank, but it alleges that in the collection of this note $ 46.43 expense was incurred in excess of the amount collected. The remaining $ 23,800 is the total of the eight notes...