Savings Bank of San Diego v. Barrett

HARRISON, J.

—The plaintiff is a corporation organized under the provisions of title X of the part of the Civil Code relating to corporations, and seeks by this action the foreclosure of a mortgage executed to it by the defendant June 15, 1893, to secure the payment of his promissory note of the same date. Judgment was rendered in favor of the plaintiff, and the defendant has appealed.

The defendant admits the execution of the note and mortgage, but defends the action thereon upon the ground that the same was without consideration, and in support of his defense alleges that in June, 1888, he executed a promissory note and a mortgage securing the same upon the lands described in the complaint to one Hamilton, who afterward sold and transferred the same to the Consolidated ¡National Bank of San Diego; that in June, 1891, this hank sold and transferred the same to the plaintiff herein; that shortly before the maturity of this note,

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he executed to the plaintiff the note and mortgage upon which the action was brought, and that the sole consideration therefor was the surrender and delivery to him, by the plaintiff of the Hamilton note and mortgage. It is contended by him that upon these facts it appears that the note and mortgage sued upon were without consideration; that under the power conferred upon the plaintiff in section 571 of the Civil Code it could only "loan” the funds of its stockholders and depositors, and was incapable of purchasing or becoming the owner of the Hamilton note; that, notwithstanding the transfer of said note to the plaintiff, it was worthless in its hands, and its surrender to the defendant did not constitute a consideration for the execution of the note and mortgage sued on.

It is unnecessary to determine whether the defendant is in a position to make this defense to the payment of the note executed by him to the plaintiff, since we are of the opinion that for other reasons the judgment of the superior court must be affirmed.

Section 571 of the Civil Code provides: "Corporations organized for the purpose of accumulating and loaning the funds of their members, stockholders, and depositors, may loan and invest the funds thereof, receive deposits of money, loan, invest and collect the same, with interest, and may repay depositors with or without interest.” The authority given by this section to such corporation to “invest” its funds is distinct from that given to “loan” them, and may be exercised with the same effect. While the latter term is technically limited to transactions in which the corporation delivers to the borrower and the borrower receives from it a given sum of money upon his agreement with it to repay the same, the former includes all of the transactions in which the funds of the corporation are placed or employed by it for the purpose of receiving an income therefrom. Webster defines the term “invest” as follows: “To lay out (money or capital) in business, with the view of obtaining an income or profit; as to invest money in bank stock.” The Century Dictionary gives the following definition of the word: “To employ for some profitable use; convert into some other form of wealth, usually of a more or less permanent nature, as in the purchase of property or shares, or in loans secured by