242 F. 813 | 8th Cir. | 1917
This was a suit brought by Lloyd England, receiver for the State National Bank of Little Rock, Ark., against Murray Phillips and Annie M1. Phillips, to recover the sum of $10,000, together with interest, upon a promissory note dated June 25, 1913, signed by Murray Phillips and Annie M. Phillips. The note by its terms became due one year after its date, and drew interest at the rate of 8 per cent, per annum. It was made payable to the order of the makers, and by them indorsed in blank. Murray Phillips and Annie M. Phillips filed an answer in which they admitted that they executed the note in controversy and delivered the same to the Commercial Bank of New Madrid, Mo. They further alleged that the Commercial Bank of New Madrid had notified them that it was the owner of the note, and that the receiver of the State National Bank had no right, title, claim, or interest thereiri, and that they should not pay the amount due upon the note to the receiver or to anjr other person except to the Commercial Bank of New Madrid. They further alleged in their answer that they were ready and willing to pay the note, and that they had deposited the funds for the payment thereof in the Commercial Bank of New Madrid, the place of payment designated in the note, and that they had, prior to the suit, asked that the note be forwarded to the State Bank for delivery to them; that they had no interest whatever in the funds except toi pay the same to the party to whom the same was due; that they did not know who was the proper party to whom the money should be paid, and asked that they be permitted to pay into court the amount due on the note, and that the receiver and the Commercial Bank of New Madrid be required to interplead therefor for the purpose of determining to' whom the money should be paid. Upon the written stipulation of the parties in interest, consenting thereto, the court entered an order directing Murray Phillips and Annie M. Phillips to pay the sum due upon the note into court, and directed that the Commercial Bank of New Madrid interplead in the suit, and show cause, if any, why the money placed in the hands of the court by Murray Phillips and Annie M. Phillips to. take up the note should not be paid to the receiver. . Pursuant to the terms of the order of the court, the Commercial Bank of New Madrid filed an interplea, in which it admitted that Lloyd England was the duly appointed and acting receiver of the State National Bank of Little Rock, Ark., and then alleged that it was a corporation duly organized, existing, and doing business at New Madrid, Mo., under and by virtue of the laws of the state of Missouri. It further alleged that on the 22d of September, 1913, and at the time the in-terplea was filed, it was the owner of the note in controversy. It further alleged that the State National Bank of Little Rock, Ark., had possession of the note under and by virtue of an agreement made and entered into between that bank and the Commercial Bank, by the terms of which the State National Bank of Little Rock was to take possession of the note and hold the same until requested by the Commercial Bank ■ to return it, and to deliver to the Commercial Bank a note, the property of the State National Bank, of equal value, to be held by the Commer
To this plea the receiver filed an answer denjdng the agreement between the State National Bank and the Commercial Bank to re-exchange the notes, and alleging that the State National Bank was the owner of the note in suit. He further alleged that the contract and agreement set out in the plea filed by the Commercial Bank, if made, was wholly ultra vires of the powers conferred upon both the State National Bank and the Commercial Bank.
At the final hearing the court found the facts as set forth in the in-terplea filed by the Commercial Bank, and ordered the moneys deposited in the registry of the court by Murray Phillips and Annie M. Phillips paid to the Commercial Bank, and directed that the note of the State Trust Company and the collateral be delivered to the receiver.
We think the evidence supports the finding made by the trial court. The record shows that at the time the notes were exchanged the mak-ex*s of the note in controversy were indebted to the Commercial Bank of New Madrid in the sum of $40,000. This was in excess of the amount the bank could loan to any one person or party under the laws of Missouri. The State Bank Examiner had complained of this excess loan, and had directed the bank to- reduce it, and in order to meet the requirement of the State Bank Examiner it was agreed between the State National Bank, through Mr. Garantió, its president, acting for it, and the board of directors of the Commercial Bank, acting for it, tha.t the banks would exchange notes, the Phillips note here in suit to be sent to the State National Bank; and the State National Bank to send from its notes to the Commercial Bank a note of like amount to be substituted for the Phillips note, with the agreement that upon de
“A contract ultra vires being unlawful and void, not because it is in itself immoral, but because tbe corporation, by tbe law of its creation, is incapable of malting it, the courts, while refusing to maintain any action upon tbe unlawful contract, have always striven to do justice between the parties, so far as could be done consistently with adherence to law, by permitting property or money, parted with on the faith -of the unlawful contract, to be recovered back, or compensation to be made for it. In such ease, however, the action is not maintained upon the unlawful contract, nor according to its terms; but on an implied contract of the defendant to return, or, failing to do that, to make compensation for, property or money which it has no right*817 to retain. To maintain such an, action, is not to affirm, but to disaffirm, the unlawful contract.”
And in Pennsylvania R. R. v. St. Louis, etc., R. R., 118 U. S. 317, 6 Sup. Ct. 1106, 30 L. Ed. 83, Mr. Justice Miller, in discussing a similar question, said:
“But we understand the rule in such cases to stand upon the broad ground that the contract itself is void, and that neither what has been done under it, nor the action of the court, can infuse any vitality into it. Looking at the case as one where the parties have so far acted under such a contract that they cannot be restored to their original condition, the court inquires if relief can be given independently of the contract.” Logan County National Bank v. Townsend, 139 U. S. 67, 11 Sup. Ct 496, 35 L. Ed. 107, and eases there cited.
The rule is very clearly stated by Mr. Justice Harlan in the case last cited. That was a suit to recover bonds held by a bank under an agreement to replace them at a fixed price, upon tender back of the amount it had paid for them. The bank, upon the amount being tendered, refused to carry out the terms of the agreement and suit was brought by the vendor to recover possession of the bonds. The court, in the course of its opinion, said:
“From the time of such demand and its refusal to return the bonds to the vendor or owner, it becomes liable for their value upon grounds apart from the contract under which it obtained them. It could not rightfully hold them under or by virtue of the contract, and at the same time refuse to comply with the terms of purchase. If the bank’s want of power, under the statute, to make such a contract of purchase may be pleaded in bar of all claims against, it based upon the contract — and we are assuming, for the purposes of this case, that, it may be — it is bound, upon demand, accompanied by a tender back ol the price it paid, to surrender the bonds to its vendor. The bank, in this case, insisting that it obtained the bonds of the plaintiff in violation of the act of Congress, is bound, upon being made whole, to return them to him. No exemption or immunity from this principle of right and duty is given by the-national hanking act. ‘The obligation to do justice,’ this court said in Marsh v. Fulton County, 10 Wall. 676, 684 [19 L. Ed. 1040], ‘rests upon all persons, natural and artificial, and if a county obtains the money or property of others without authority, the law, independently of any statute, will compel restitution or compensation.’ ” Citizens’ National Bank v. Appleton, 216 U. S. 196, 30 Sup. Ct. 364, 54 L. Ed. 443.
“That there were no entries in the books of the State National Bank showing that the Trust Company note sent to the Commercial Bank was the property of the Stare National Bank at the time that it was sent to them, and that there was nothing on the books of the State National showing any liability on. the part of that bank to the Commercial Bank on account of the purchase of the Phillips noto.”1
That being true, there was no consideration passing from the State National Bank to the Commercial Bank for the Phillips note, and common honesty requires that the State National Bank return either the note or its proceeds to the Commercial Bank. Pullman’s Palace Car Co. v. Central Transp. Co., 171 U. S. 138, 151, 18 Sup. Ct. 808, 43
The decrfee of April 21, 1916, made and entered by the district court, directing that the money deposited in the registry of the court pursuant to the stipulation of the parties and order of court be paid to the Commercial Bank, is affirmed.