Potts v. First City Bank

[343]

Opinion

KINGSLEY, J.

In April 1965, William R. Flint, Betty Louise Flint (his wife) and Margaret Parr, as incorporators, duly organized a corporation known as Gourmandises, Inc. The articles of incorporation provided for a single class of stock, in the amount of 20,000 shares with a par value of $10 per share. The two Flints subscribed for 100 shares of stock and paid the corporation $1,000 therefor. No other stock was ever subscribed for or issued. The three incorporators were designated as the original board of directors; Margaret Parr resigned immediately after the incorporation and no successor was ever named in her place.

The corporation then caused to be formed a limited partnership, known as Flint’s Galley, in which it was the general partner and other persons, including two members of the advisory board of defendant bank, were limited partners.

The corporation opened a commercial account with defendant bank, in the name of Gourmandises, Inc., doing business as Flint’s Galley. The initial deposit in that account was $6,000; only the Flints were authorized to withdraw funds from that account.

Gourmandises, Inc., attempted to borrow money from the bank but the bank refused to make a loan to the corporation and would only make a loan directly to the Flints as individuals. On October 5, 1965, the bank loaned $6,000 to the Flints evidenced by a promissory note executed only by the Flints. The bank did not seek a corporate guaranty or endorsement by Gourmandises, Inc. On January 3, 1966, the bank obtained a renewal note for the $6,000 loan to the Flints. That note, also, was executed only by the Flints and, again, the bank did not ask for or obtain a corporate guaranty or endorsement of the note from Gourmandises.

The $6,000 loaned to the Flints was deposited in the corporate bank account as a loan to the corporation, and Gourmandises, Inc., executed a note for that sum to the Flints. The money was used in the operation of the restaurant.

On April 25, 1966, Mrs. Lamoreaux loaned $10,000 to Gourmandises, Inc., and this was deposited in the corporate bank account.

On April 27, 1966, prior to any withdrawal of these funds, the bank offset the bank account for $6,124.58, which was the sum owed by the Flints together with accrued interest. Mrs. Flint protested the offset of the corporate bank account by the bank. Flint’s Galley ceased operations because of lack of funds. Gourmandises, Inc., filed bankruptcy and plaintiff