240 S.W. 679 | Tex. App. | 1922
The appellant first insists that a judgment should have been entered for it because, even if it be true, as found by the jury, the appellant did in fact orally agree to warrant the title and quality and condition of the mortgaged property, yet such warranty did not legally bind appellant, for it was ultra vires and void and exceeded the powers and authority granted a state bank under article 376, R.S. If the contract of the bank was outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the Legislature, it is wholly void and of no legal effect. On the other hand, a contract of a bank is legal if it is not expressly prohibited, and if it has a natural and reasonable tendency to aid in the accomplishment of the objects for which it is created. Accordingly, if a contract is made by a bank within its legal power, express or implied, it may make such character of contract to aid in the accomplishment of the object for which it is made, as an individual is authorized to do. Therefore whether or not a particular act is ultra vires is dependent upon the particular contract and the power of the bank to make it.
The precise contract in suit here is a contract of warranty of the title and quality or fitness of chattels mortgaged to the bank for the particular purpose of securing the payment of indebtedness to the bank. The warranty, it appears, was a term forming a part of the contract between White, appellees, and the bank, in which it was agreed that appellees should take over and pay to the bank the past-due indebtedness of White to the bank and on which the bank had entered suit for collection. The bank was not the owner of the chattels. White was the owner of the chattels, and had previously mortgaged them to the bank to secure a debt owing by him to the bank, and was selling such chattels to the appellees upon the agreement that appellees would, as a part of the consideration, take over and pay his debt to the bank, if the bank would consent to such substitution of debtors. The bank agreed to this substitution of debtors, with new notes for the amount of the unpaid debt, and with a new chattel mortgage on the identical property to secure same executed by the appellees. It does not appear, we think, that the contract of warranty of guaranty was not binding upon the bank by reason of its being ultra vires and void. The guaranty was not, it is clear, for the sheer accommodation of either Mr. White or the appellees, for their sole benefit and advantage; and neither was it an agreement, in substance or effect, on the part of the bank to answer for the debt or undertaking alone of Mr. White. If it had been such a contract, it would have been illegal and void. Fidelity Deposit Co. v. Bank of Commerce,
We see no reason to doubt that, under the circumstances of the instant case, it was competent for the bank to give the guaranty here in question. It was beneficial for the bank to better secure its debt by taking new debtors with the security. That was a consideration sufficient to support the guaranty. To deny the bank the right to contract a guaranty of quality, if necessary, as it was here, to secure a better securing of the past-due debt for which the mortgage was partly security, would operate to disable it from properly performing its function respecting securing its loans in a necessary or essential way deemed advisable. But it does not follow that, because the contract of warranty is valid and the appellees may enforce the same upon proof of its breach, the judgment as rendered against appellant is such a one as could have been rendered in view of the pleadings and evidence.
The appellant insists that the judgment in favor of appellees is unwarranted in the record, and we think the contention should be sustained. The appellees pleaded as a defense a total failure of the consideration, or, in effect, a rescission of the contract under which the notes and chattel mortgage in suit were executed for breach of the warranty. Appellees also by cross-action sought to recover damages for the breach of the warranty in the sum of $200 and the $30.65 note paid. Evidently appellees did not seek compensation in damages merely for the breach of the warranty of the fitness or quality of the chattels. There is no evidence tending to show that the chattels were utterly worthless and of no value whatever. Also the finding of the jury is substantially to that effect. There is some evidence to show that the chattels were of inferior quality or fitness, and performed their functions badly. There is no evidence to prove the difference between the real value of the chattels and chattels of the fitness and quality such as warranted to be. Consequently it must be said that the appellees manifestly relied upon their answer as a defense against the payment of the notes, predicated upon, the alleged right to rescind the contract for breach of the warranty. That was not the proper legal remedy authorized in this case. In some jurisdictions it has been held that a party may treat a breach of warranty ass a rescission or discharge of the contract and resist payment of the purchase price. In, other jurisdictions including Texas, it is held that the party can only recoup damages, such breach not amounting to a discharge. In the case of Wright Clark v. Davenport,
Because the judgment is not warranted by the evidence and the pleading on which it was rendered, it is reversed, and the cause is remanded. *683