135 Ga. 614 | Ga. | 1911
-The defendants in error, hereinafter called the plaintiffs, in a suit to recover npoh the guaranty hereinafter referred to, and for other purposes, made substantially the following allegations: The First National Bank of Tallapoosa, one of the plaintiffs in error, through its cashier, had loaned one of its customers, the Southern Car Wheel Iron Company (a private corporation) an amount in excess of the amount permitted by law to be loaned to one person, and the debtor was unable to make any payment thereon: The cashier of the bank stated to the plaintiffs, who had in the bank the “sum of $20,000 on. a deposit of twelve months,” that the bank would “readily let said Iron Company have whatever money it needed, but for the fact that the bank had already loaned said Iron Company more money than was authorized by its charter, and the only way it could extend any further credit to said Iron Company was by procuring a loan from petitioners to be secured by said bank;” and that if the loan was made, he and the bank would guarantee the payment thereof; “that the entire management of the bank was left with him; that he had frequently made such guarantees for the bank; and that he had full authority to make such guaranty.” On or about May 3, 1907, the cashier stated, that he had become the secretary and treasurer of the Iron Company, that he was then in position to make the loan for- the plaintiffs of $15,000, and that if the loan was made, “the same would be sufficient to pay off all the urgent and pressing debts and would afford said Southern Car Wheel Iron Company a sufficient working capital for one month’s run in advance.” The statement as to the amount of urgent and pressing debts was false, and known by the cashier to be false when made. Such debts amounted to $50,000. The plaintiffs relied upon such statements as true. “Statements of the said cashier that he was allowed by the officers and directors of said bank to have the entire control and management of said bank was true.” The cashier’s object, in making statements to the plaintiffs to induce them to make the loan, “was to procure to said bank the payment to it of the said amount so diie said bank by said Southern Car Wheel Iron Company, and to release Eowe Price from his liability as cashier in making said excessive loan.” Hpon the statements of the cashier, and relying upon the guaranty as a valid and sufficient security, the plaintiffs, on May 14, 1907, made the loan of $15,000 to the Iron Company, and took the latter’s several notes therefor and the guar
1. Corporations are creatures of the law, and their powers are limited. Every person is presumed to know the law, and is charged with notice of the limitations on the powers of a corporation fixed thereby. The Revised Statutes of the United States, § 5136, give to a national bank the power to “make contracts” and “to exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes, according to the provisions of this title.” The provisions referred to do not give power to a national bank to-guarantee the payment of the obligations of others solely for their benefit, nor is such power incidental to the transaction of the business of banking. A bank can lend its money, but not its credit. See McGee on Banks & Banking, § 248; 1 Morse on Banks & Banking, §§ 65, 169; 1 Bolles on Law of Banking, § 25; Bolles’ National Bank Act Annotated (4th ed.), 40, § 10. A national bank, in negotiating its paper, can bind itself for the payment thereof by its indorsement thereon, but it can not guarantee the payment of the paper of others, or become surety thereon, solely for the benefit a£ the latter.
It has been ruled in many eases that one who received from a corporation a benefit under a contract involving merely an ultra vires act of a corporation can not defeat the enforcement of the contract, though the commission of ultra vires acts by a corporation subjects it to a forfeiture of its charter by the government. 1 Clark & Marshall on Private Corporations, § 225(b), p. 600; 1 Bolles on Law of Banking, § 24; 2 Morse on Banks & Banking, § 732. But an ultra vires act of a corporation is not binding upon it, and it can not ratify such an act or be estopped from claiming it to be void, under the decisions of the Supreme Court of the United States. In First National Bank v. American National Bank, 173 Mo. 153 (72 S. W. 1059, 1060), it was said: “The powers of a national bank under the national banking act are essentially matters for Federal construction and interpretation, and, whatever rules may obtain in the several States as to the powers of corporations under State stat
The petition in this case; properly construed, is to recover solely on the guaranty of the'national bank. In an amendment the plaintiffs prayed, if it be determined that the guaranty was not legal and binding, that they recover $7,131.02 with which their twelve months time deposit was debited and the account of the Iron Company credited some time before the loan was made, and $400 interest due on the time deposit, which amount of interest they had agreed to release the bank from paying, by reason of certain facts alleged. No recovery of either of these amounts could be had, under all the allegations of the petition and amendments. Mere unauthorized entries on the books of the bank, whereby the time deposit of the plaintiffs was debited with $7,131.02 did not change the existing liability of the bank to them, nor create any new liability as to them. Viewing the transaction from any standpoint, the guaranty of the national bank was one which the bank could not ratify, or estop itself from having declared void; and the petition, for the reasons hereinbefore set forth, was subject to the first and third grounds of the demurrer, which were grounds of general demurrer. Whether the petition was subject to general demurrer for any reason other than the ones we have based our decision on, or to the second, fourth, and fifth grounds of the demurrer, or either of them, is left open without prejudice to any of the parties.
Judgment reversed.