Wegner v. First National Bank of Casselton

• Decision Date: 17 June 1919
• Court: North Dakota Supreme Court

173 N.W. 814

42 N.D. 397

AMANDA WEGNER, Executrix of the Estate of Ernest Wegner, Deceased, Respondent, v. FIRST NATIONAL BANK OF CASSELTON, NORTH DAKOTA, Appellant

Supreme Court of North Dakota

June 17, 1919

Action to recover for wrongful delivery of a cashier's bank check sent to the defendant bank with a letter of instructions.

From an order of District Court, Cass County, Cole, J., overruling a demurrer, defendant appeals.

Affirmed.

Demurrer overruled. Order of the trial court affirmed, with costs to the respondent.

Lawrence & Murphy, for appellant.

An obligation on the part of a bank relating to the guaranty of performance of a contract with a third party in which the bank has no interest is ultra vires, and not binding upon the bank except for benefits actually received. International Harvester Co. v. Upham (N.D.) 166 N.W. 507; Cottondale Bank v. Oskham Nolte Co. 59 So. 566; Third Nat. Bank v. Savings Bank, 244 Mo. 554, 149 S.W. 495; Ayr v. Hughes, 87 S.C. 382, 69 S.E. 657; Norton v. Bank, 61 N.H. 589, 60 Am. Rep. 334; Grow v. Cocknel, 63 Ark. 418, 36 L.R.A. 89; Norton v. Bank, 60 Am. Rep. 334; Bank v Bank, 97 Tex. 536, 80 S.W. 601; Taylor v. Bank, 174 N.Y 181, 62 L.R.A. 783, 66 N.E. 726.

An attempt by a state to define the duties of a national bank or to control the conduct of their affairs is absolutely void whenever such attempted exercise of state authority conflicts with the laws of the United States relating to the purposes or efficiency of these agencies of the Federal government. Davis v. Elmira Sav. Bank, 161 U.S. 275, 40 L.Ed 700; Easton v. Iowa 188 U.S. 220, 47 L.Ed. 452. To the same effect see Larabee v. Dolley, 175 F. 365; Elizabethtown First Nat. Bank v. Com. 143 Ky. 816, 137 S.W. 518; Nat. Bank v. Pennsylvania Fuel Co. 215 Pa. 115, 64 A. 374; Green v. Bennett (Tex.; 1908) 110 S.W. 108; State v. Nat. Bank, 84 Vt. 167, 78 A. 944; First Nat. Bank v. Am. Nat. Bank, 173 Mo. 153, 72 S.W. 1059; Hansford v. National Bank, 10 Ga.App. 270. See also discussion by Justice Shiras in Easton v. Iowa 188 U.S. 220, 47 L.Ed. 452.

National banks are not to be viewed as solely operated for private gain. Easton v. Iowa 188 U.S. 220, 47 L.Ed. 452; M'Cullough v. Maryland, 4 Wheat. 425, 4 L.Ed. 606; Osborn v. Bank of United States, 9 Wheat. 738, 6 L.Ed. 204; Merchants Bank v. Armstrong, 65 F. 936.

The Federal statutes constitute the measure of authority of national banks. They have no other powers than such as are expressly granted and such additional implied powers as are necessary to carry into effect the express powers granted by the National Banking Act. Logan County Nat. Bank v. Townsend, 139 U.S. 67, 35 L.Ed. 107; Sav. Bank v. Kennedy, 167 U.S. 362, 42 L.Ed. 198; Seligman v. National Bank, 3 Hughes, 147, 647, Fed. Cas. No. 12,643; National Bank v. Kennedy, 42 L.Ed. 198.

Although a national bank may guarantee negotiable paper on transferring or discounting it in the ordinary course of business, it cannot guarantee the papers of others solely for such other's benefit. People Bank v. National Bank, 101 U.S. 181, 25 L.Ed. 907; Bowen v. Needles Bank, 87 F. 430, 94 F. 925; Smelter Supply Co. v. Bank, 173 F. 859; Tallapoosa Nat. Bank v. Monroe, 32 L.R.A.(N.S.) 550; Appleton v. Citizens Nat. Bank, 101 N.Y.S. 1027, 216 U.S. 196, 54 L.Ed. 443; International Harvester Co. v. State Bank (N.D.) 166 N.W. 507; Fidelity Co. v. National Bank (Tex.) 106 S.W. 782; Commercial Bank v. Pirie, 82 F. 799; Seligman v. Charlotville Bank, 3 Hughes, 647, Fed. Cas. No. 12,642; Thelmanny v. Paper Co. 108 Iowa 333, 79 N.W. 68; Knickerbocker v. Wilcox, 83 Mich. 200, 47 N.W. 123; Norton v. National Bank, 60 Am. Rep. 334; Bushnell v. National Bank, 74 N.Y. 290; Flannagan v. National Bank, 23 L.R.A. 836, 56 F. 959; Baily v. National Bank, 97 Ill.App. 66; Fidelity Company v. National Bank, 48 Tex. Civ. App. 301; Barron v. McKinnon, 179 F. 959; Commercial Nat. Bank v. First Nat. Bank, 104 Am. St. Rep. 879; First Nat. Bank v. American Nat. Bank, 173 Mo. 153, 72 S.W. 1059; First Nat. Bank v. Sixth Nat. Bank, 212 Pa. 238, 61 A. 889; Norton v. Bank, 61 N.H. 589; St. Joe Bank v. National Bank, 32 U. S. App. 52, 66 F. 691; Bank v. Smith, 40 U. S. App. 690, 77 F. 129; Judge Hook in National Bank v. Baird, 17 L.R.A.(N.S.) 526, 160 F. 642; McCormick v. Bank, 165 U.S. 538; 167 U.S. 364, 42 L.Ed. 198; First Nat. Bank v. National Exch. Bank, 92 U.S. 128.

A contract of a corporation which is ultra vires in the proper sense, namely, outside the object of its organization and therefore beyond the powers conferred upon it by the legislature, is not voidable, but wholly void, and of no legal effect. Transportation Co. v. Pullman Palace Car Co. 139 U.S. 24; Navigation Co. v. Hooper, 160 U.S. 514, 16 S.Ct. 379; Union P. R. Co. v. Chicago, R. I. & P. R. Co. 163 U.S. 564, 16 S.Ct. 1173; McCormick v. Bank, 165 U.S. 538, 17 S.Ct. 433; Bank v. Kennedy, 167 U.S. 362; California Nat. Bank v. Kennedy, 167 U.S. 365, 42 L.Ed. 198.

In an ultra vires transaction a national bank is liable only to the extent of benefits actually received. Cherry v. City Nat. Bank, 144 F. 587; Armstrong v. Chemical Nat. Bank, 83 F. 456; Meyer & C. State Bank v. First Nat. Bank, 248 F. 679; American Bank v. National Wall Paper Co. 77 F. 85; Bank v. Pire, 82 F. 799; Towle v. Investment Co. 78 F. 688.

Lovell & Horner, for respondent.

When no time for the performance is expressed the law implies a reasonable time for performance after the obligation arises. Quimby v. Lyon, 63 Cal. 394; Pauly v. Sage, 15 Conn. 56; Field v. Brown, 45 N.E. 464; Warder v. Nolan, 57 N.E. 821.

The amended complaint of the plaintiff and respondent fairly states a cause of action, and is not demurrable. Thomas v. City Nat. Bank (Neb.) 58 N.W. 945; Second Nat. Bank v. Howe (Minn.) 42 N.W. 200; Tourtelot v. Whited, 9 N.D. 467; First Nat. Bank v. State Bank, 15 N.D. 594; First Nat. Bank v. Bakken, 17 N.D. 224; Grant County State Bank v. N.W. Land Co. 28 N.D. 479; First Nat. Bank v. Flath, 10 N.D. 281, 86 N.W. 867; First Nat. Bank v. Messner, 25 N.D. 263, 141 N.W. 999; Hindman v. First Nat. Bank (Ky.) 57 L.R.A. 108; Patterson v. First Nat. Bank (Neb.) 102 N.W. 765; Northern Nat. Bank v. Lewis (Wis.) 47 N.W. 834; Ditty v. Dominion Nat. Bank, 75 F. 769; Wilson v. Pauly, 72 F. 129; First Nat. Bank v. Burns (Ohio) 49 L.R.A.(N.S.) 764; Pattison v. Syracuse Nat. Bank, 80 N.Y. 82.

OPINION

BRONSON, J.

This is an appeal from an order overruling a demurrer to the complaint. The facts as they appear from the complaint are substantially as follows:

In October, 1914, the deceased Wegner, of whose estate the plaintiff is executrix, contracted to purchase from the Northern Trading Company certain land in McHenry county, for $ 4,500, $ 2,000 being paid in cash, and the balance, $ 2,500, to be paid on March 1, 1915, when a warranty deed and an abstract of title was to be given, showing the land free and clear from all liens and encumbrances. Later, when an abstract of title was furnished, a trust deed for $ 100,000 appeared as a lien against the land and also a mortgage for $ 1,500. The attorneys for the deceased noted these liens and, in their opinion, required the same to be released and discharged. On March 13, 1915, the defendant, through its cashier, sent to the First National Bank of Everly, Iowa a draft for $ 3,000 on the deceased and inclosed a warranty deed to the land, conveying the same free of encumbrances. The bank in Iowa in a letter, was authorized to deliver the deed upon payment of $ 3,000 exchange and collection charges. In such letter the defendant further stated: "On receipt of this money we are instructed to place of record a satisfaction of prior encumbrances which we hold here and to furnish you with an abstract of title which will show free and clear of all encumbrances. This we undertake to do."

On March 25, 1915, the cashier of the defendant bank personally wrote the bank in Iowa explaining about the mortgages outstanding as liens, and that they would see to it that the necessary releases were filed so that the deceased got a perfect title free of encumbrances. On April 6, 1915, the bank in Iowa replied to the letter of the defendant bank, dated March 13, 1915, inclosed a cashier's check for $ 2,500, and stated in such letter as follows: "In regard to this collection, will say that we are inclosing herewith cashier's check for $ 2,500 in payment of this deed, which you are to hold until the Northern Trading Company shall complete the abstract which we inclose herewith to the above-described land according to the opinion of Mr. Wegner's attorneys, Messrs. Buck & Kirkpatrick, which is attached to the abstract. We are sending this to you upon your guaranty that the abstract will show the above-described land free and clear of all encumbrances and the abstract returned to us. When this is done you may turn over the $ 2,500 to the Northern Trading Company."

On April 8, 1915, the defendant bank acknowledged receipt of said letter of April 6, 1915, and stated: "We note the terms under which this is sent, and the matter will have our careful attention."

The Northern Trading Company did not pay off the encumbrances mentioned, and the same continued as valid liens against the land in question. The defendant bank delivered the cashier's check for $ 2,500 to the Northern Trading Company, without receiving or securing the releases required, in violation of the instructions contained in the letter received from the bank of Iowa.

The complaint, in the first cause of action, alleges, in addition to the facts stated, that the defendant bank fraudulently conspired with the Northern Trading Company to wrong and defraud the deceased by converting and delivering such cashier's check, and by converting and appropriating the...