37 Neb. 197 | Neb. | 1893
The Bank of Commerce sued Hart on a note for $20,000, executed and delivered by him to the bank. The defense of Hart, so far as the same is material here, was, that on March 30, 1888, he paid on said note $14,105.46, with which' payment the bank has not credited him. Hart claims to have made this payment by the sale of certain shares of stock in an insurance company to the bank through one Johnson, its cashier, who promised at the time to credit the note when it should be returned from New York, where it then was. The bank claims that the sale of said stock, if made, was' to Johnson individually, and not to the bank; that it had no interest or part in said sale; that the same, if made, was without its knowledge or consent; and the purchase of the stock by its cashier, if made for the bank, was in excess of his authority, and void. The jury, by its verdict, allowed Hart the credit he claimed, thus, in effect, finding that the purchase of the insurance stock was made by t' e bank. Assuming for the purposes of this opinion that the evidence in the record supports this finding, we then proceed to inquire whether the cashier exceeded his authority in using funds of the bank in the purchase of this stock.
In Sandy River Bank v. Merchants & Mechanics Bank, 1 Bissell [U. S.], 146, the facts were: The cashier of the Mechanics Bank settled an account of $22,000 with the cashier of the Sandy River Bank by paying $10,000 cash and giving $12,000 private paper, which the cashier of the
In United States v. City Bank of Columbus, 21 How. [U. S.], 356, the facts were: The cashier of the Columbus bank gave to one of its directors, Miner, a letter to the secre
The power of this bank to purchase stock in an insurance company, if it exists at all, is an extraordinary power and.one not confided to the cashier, but belonging to the directory.
.In the Bank of Healdsburg v. Bailhache, 65 Cal., 329,
It has also been decided that, in the absence of special authority, the cashier of a bank could not release the surety from a note owned by the- bank. (Merchants Bank v. Rudolf, 5 Neb., 527; Conchecho National Bank v. Haskell, 51 N. H., 116.) That in the absence , of special authority or established usage.the cashier has no: power to compromise, claims due his bank. (Chemical National Bank v. Kohner, 8 Daly [N. Y.], 530.) That he had no authority to bind his bank by issuing a certificate of deposit, to himself. (Lee v. Smith, 84 Mo., 304.) Nor bind the bank by an official indorsement ■ of his own note. (West St. Louis Savings Bank v. Shawnee County Bank, 95 U. S., 557.)
The cashier of the Bank of Commerce, then, as the executive officer of the bank, was clothed with authority to collect all debts, due the bank, but this means collections in money. If a cashier may discharge the debts due his bank by exchanging the evidences of them for stocks of an insurance company or a gas company,, then he can, under the name and charter of the bank, conduct an entirely different business, and use the funds of his stockholders' for a purpose for which they were never subscribed and in vio-.lation of the law of the bank’s creation. The purposes fyr which the Bank of Commerce was organized, as expressed in its articles of incorporation, were to receive deposits of money and pay the same out on proper vouchers; to loan money on personal security; to issue.drafts or letters of. credit; to buy and sell securities of every kind, and do a general .banking business. Had this charter expressly; provided that the corporation might invest its funds in-stocks of insurance companies and deal generally in stocks-of, other corporations, such a provision would have been1
The next inquiry is as to the powers of the directory to ratify the purchase of the insurance company’s stock and bind the bank thereby.
In the Mechanics & Workingmen’s Mutual Savings Bank & Building Association v. Meriden Agency Company, 24 Conn., 159, it is said: “The first question is, whether the defendants, being a joint stock corporation, organized for a specific purpose, had power to become a stockholder in the association of the plai ntiffs. The purpose for which the agency company united, as expressed in their articles of association, was to do a general insurance agency, commission, and brokerage business, and such other things as were incidental to, and necessary in, the management of that business. So far as that business was concerned, the proper officers of the company had power to act, and bind the company; but. if they departed from that business, and entered into contracts not authorized by
In Franklin Co. v. Lewiston Institution for Savings, 68 Me., 43, it is said: “If a corporation can purchase any portion of the capital stock of another corporation, it can purchase the whole and invest all its funds in that way, and thus be enabled to engage exclusively in a business entirely foreign to the purposes for which it was created. A banking corporation could become a manufacturing corporation, and a manufacturing corporation could become a banking corporation. This the law will not allow, and it has been held that notes given by a manufacturing corporation for the purchase of shares in a bank are not collectible.”
In Cook, Stockholders, sec. 316, it is said: “A banking corporation has, at common law, no power to purchase or invest in the stock of another corporation, whether that other corporation be itself a bank or of a different business'. The bank is organized for the purpose of receiving deposits and loaning money, not for the purpose of dealing in stocks. Any attempt to engage in such transaction is a violation of its charter rights and of its duty towards the stockholders and the public.”
In Nassau Bank v. Jones, 95 N. Y., 115, Chief Justice Ruger said: “ The question involved in this case * * * is the right of a banking corporation, chartered under the laws of this state, to subscribe for the stock of a railroad corporation. * * * It is clear that a banking corporation cannot enter into a contract of this character, unless it
The learned judge who presided at the trial below charged the jury as follows :
“ a. In investigating the question as to how far, if at all, the bank was bound by the acts of Johnson in the premises, you will be governed entirely by the testimony which has been adduced before you on the trial. If you shall
“ b. If, on the other hand, you shall find from the testimony that Johnson did not have authority from the board of directors of the bank to negotiate for and purchase the shares of stock in the insurance company referred to in the testimony, and that the directors did not subsequently approve and ratify the acts of Johnson relating thereto, nor accept and retain the fruits of such negotiation and purchase, then, and in that case, the bank would not be bound by what Johnson did relating to such negotiation and purchase, and in such case the plaintiff would be entitled to your verdict for the amount of the note sued on and interest.”
This charge proceeded upon the theory that though the purchase of the insurance company’s stock by the cashier was unauthorized, yet the board of directors could have afterwards ratified and adopted, it and bound the bank by it. We do not assent to this doctrine as applied to this case. It is doubtless true that the bank could legally take the stock of another corporation as security for a debt previously contracted. Possibly it might make a loan on the strength of the stock as security at the time. On this point the authorities are not in harmony, and as it is not material here we do not decide it. An emergency might arise when a bank’s board of directors would be justified in taking the
We are constrained to say that the verdict of the jury is not supported by the evidence, and that the judgment of the court is contrary to the law of the case. The judgment of the district court is therefore reversed and the case remanded for further proceedings.
Reversed and remanded.