38 S.E. 252 | N.C. | 1901
The defendant demurred on the ground that "being a National Bank it had no power under the National Banking Act creating it to guaranty the debt sued upon." *54
The Judge sustained the demurrer and dismissed the action. The plaintiff's appeal presents only the correctness of that ruling for review.
The allegation in the complaint, which is admitted by the demurrer, is that the defendant, by letter, agreed that a draft drawn by plaintiff, not to exceed $300, upon Chalkley Co. for hides to be shipped them by plaintiff should be paid, and that in consideration of that guarantee the plaintiff (73) shipped the hides to Chalkley Co., but "defendant failed and refused to pay the draft as it had contracted and agreed to do, and the same was protested for nonpayment," etc.
The National Banking Act contains no prohibition against such banks guaranteeing paper, but it is contended that the terms of the statute do not authorize a National bank to make a contract of guarantee. In Bank v.Bank,
In R. R. v. McCarthy,
"Even if a contract is ultra vires, yet if it is not illegal the defendant is estopped from setting up that defense, as it would be fraud on the plaintiff to allow this to be done, he *55
having entered into the transaction relying upon said (74) contract." Bushnell v. Bank,
Here if it be conceded that the guaranty was ultra vires it was not expressly prohibited nor illegal, the plaintiff acted on it and relying on it he parted with his property and shipped the hides. The defendant is estopped on both reason and precedent to aver that it was not empowered to give the guarantee. It does not lie in the defendant's mouth to say that it had no authority to do what it did, after the plaintiff has shipped his hides relying upon the defendant's promise that the draft should be paid.
In the preface to 4 Ed., Cook on Corporations, it is well said: "The doctrine of ultra vires is disappearing. The old theory that a corporate act beyond the express and implicit corporate powers was illegal and not enforceable, no matter whether actual injury had been done or not, has given way to the practical view that the parties to a contract which has been wholly or partially executed will not be allowed to say it was ultravires of the corporation."
The judgment sustaining the demurrer is
Reversed.
Cited: Victor v. Mills,
(75)