Laidlaw v. Pacific Bank
Before: THE COURT.
Synopsis
Banks—Power to Incur Indebtedness—Contract Ultra Vires.—A bank incorporated under the aet of April 11, 1862, has no power to contract any debt for borrowed money, or for money paid out at its request by a stockholder in discharge of its obligation to a depositor. Such contract is ultra vires and void, regardless of the relation of the stockholder to the bank.
Id.—Liquidation of Insolvent Bank—Preference of Non-Stockholding Depositors.—Section 10 of the aet of 1862 gives non-stock-holding depositors a security in the capital stock and assets of an insolvent bank in liquidation, which should be satisfied before any other creditor should be permitted to apply any portion thereof to the satisfaction of his debts, whether he be a stockholding deposito- or a general creditor.
Id.—Action by Assignee of Ultra Vires Contract—Pleading—Intervention.—In an action by the assignee of an ultra vires contract with a bank, where an intervener has merely the right of an attaching creditor of the assignor, though it would be better practice to plead the invalidity of the contract in answer to the complaint in intervention, yet where it was pleaded in the answer to the amended complaint served on the intervener, and the court treated the question of invalidity as properly in issue as to all parties, the intervener, whose rights depended on its validity, and who had as full notice and opportunity to meet the question of invalidity as if it had been twice pleaded, could not have been injured by the omission, and cannot claim that he was taken by surprise by such defense.
Id.—Specifications of Insufficiency of Evidence.—Where the testimony is all in the record, and the specifications of insufficiency of the evidence pointed to each of the probative facts contained in the findings attacked upon appeal, and were sufficient fairly to notify the respondent of the contention that would be urged against the finding upon appeal, the specifications of particulars are sufficient.
THE COURT.
Two appeals, each independent of the other,—one being from the judgment and the other from the order denying the Pacific Bank a new trial,—are before us in this case. The appeal from the judgment has been heretofore considered, but a rehearing was granted, and the two appeals will now be disposed of in one opinion.
On the appeal from the order denying a new trial it is contended that the finding of the court to the effect that the appellant, the Pacific Bank, on or about the twenty-second day of June, 1893, became indebted to plaintiff's assignor, R. H. McDonald, in the sum of $97,003 for money theretofore paid, laid out. and expended by said McDonald for the use and benefit of said defendant, and at its" request, is not- supported
[394]
by the evidence. • "We think this contention is well founded. From the evidence it appears .that the People’s Home Savings Bank was a depositor in the defendant bank to the extent of $150,000, and was pressing for payment, but defendant could not pay the same from its own means at that time; that thereupon, at the request of the Pacific Bank, the amount of the $150,000 was secured to the People’s Home Savings Bank by a mortgage given it upon 16,000 acres of land in San Luis Obispo County belonging to R. H. McDonald, the plaintiff’s assignor. This was accomplished in the following manner: Said real property was conveyed by said R. IT. McDonald, acting through his attorney in fact, R. H. McDonald,,Jr., to one A. L. Jenkins, an employee of the defendant, without any consideration being paid therefor by said Jenkins, and Jenkins then mortgaged the property to the savings bank. Jenkins received nothing on account of it, but on the execution of the mortgage as aforesaid the savings bank credited the Pacific Bank with said amount, and the Pacific Bank charged it to the savings bank and gave R. H. McDonald credit for the same. About four days later the Pacific Bank closed its doors, and some four months thereafter, on October 16, 1893, after due proceedings, it was adjudged insolvent under the act of March 30, 1878, creating a board of bank commissioners, and was prohibited from the further transaction of business, and ever since has been in process of liquidation under said act. It has since paid dividends amounting to forty per cent on the unsecured claims of its non-stockholding depositors and other creditors, and the remaining assets are of sufficient value to enable it to pay forty per cent to plaintiff and intervener upon the claim involved in this action, provided no other creditor is paid. McDonald was credited as a depositor by the Pacific Bank with the said $150,000, and was charged with amounts drawn out by him so as to reduce the credit to the $97,003 sued for herein. The Pacific Bank was incorporated under the act of April 11, 1862, (Stats. 1862, p. 199). This act provides (in section 10) that “it shall not be lawful for the corporation, or the directors, to contract any debt or liability against the corporation, for any purpose whatever, but the capital stock and the assets of the corporation shall be a security to depositors who are not stockholders, and the by-laws may provide that the same security shall extend to deposits made by stockholders.” The by-laws of the Pacific Bank do
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