81 F. 45 | 7th Cir. | 1897
after making the foregoing statement, delivered the opinion of the court.
We are of opinion that, under the law of its creation, the American Building, Loan & Investment Society had power to execute negotiable paper. The rule is well established that corporations authorized to. do a particular business, unless especially denied the power, have implied authority to contract debts in the legitimate transactions of the business authorized; and the right to contract debt, it is the equally well settled American rule, carries with it the power to give negotiable notes or bills in payment or security for the debts, unless that power is expressly denied. Rees, Ultra Vires, § 100; Green’s Brice, Ultra Vires, p. 253; Daniel, Neg. Inst. §§ 381, 382; Mor. Priv. Corp. §§ 350, 351. The decisions upon the subject are numerous, and many of them are cited in the footnotes to the texts referred to. With respect to municipal corporations the supreme court of the United States has established a different doctrine (Police Jury v. Britton, 15 Wall. 566; Merrill v. Monticello, 138 U. S. 673, 11 Sup. Ct. 441); but for further exception to the rule as stated there seems to be no authority in this country.
In the usual course of its business the American Building, Loan & Investment Society was empowered, expressly or by implication,
The power of the society to execute notes or bills for the various purposes suggested being conceded, and there being no ground for questioning the authority of Módica as vice president to sign the name of the society to such obligations executed in the regular course of business, the case comes within the rule that, when a corporation has power — “under any circumstances,” as some of the cases say, and certainly when it has power under ordinary circumstances, or in the usual course of its business — to execute negotiable obligations, the bona fide purchaser of a particular obligation has a right to presume that it was executed under circumstances which gave the requisite authority. Gelpcke v. City of Dubuque, 1 Wall. 175; Railway Co. v. McCarthy, 96 U. S. 258-267; County of Macon v. Shores, 97 U. S. 272-279; Bissell v. Railway Co., 22 N. Y. 258; Monument Nat. Bank v. Globe Works, 101 Mass. 57; Webster v. Machine Co., 54 Conn. 394, 8 Atl. 482; Bank v. Young, 41 N. J. Eq. 531, 7 Atl. 488. It is admitted in the answer that the appellants received the acceptance in question of Montgomery “for a bona fide indebtedness,” and, whether that be regarded as meaning in discharge of or only as collateral security for the debt, it made the appellants purchasers for value (Swift v. Tyson, 16 Pet. 1-18; Railroad Co. v. National Bank, 102 U. S. 14); and, in the absence of proof that they purchased with knowledge or notice that the acceptance was without consideration, or was otherwise wrongfully obtained, gave them the rights of good-faith purchasers. King v. Doane. 139 U. S. 166, 173, 11 Sup. Ct. 465; Bank v. Holm, 34 U. S. App. 472, 19 C. C. A. 94, and 71 Fed. 489.
The chief contention of the appellee is that the American Build
It follows that the decree below must be reversed, and, accordingly, it is ordered that the decree entered be set aside, and a decree given for the interveners for the amount of the acceptance, with interest.