253 F. 722 | 7th Cir. | 1918
For many years the bankrupt, organized as a building and loan association under a statute of Indiana, conducted its affairs in the usual and prescribed way. Eater, under a resolution of the board of directors, certificates of indebtedness, having the face characteristics of general corporation negotiable bonds, payable to bearer ten years after date, were directed to be signed by the president and
In the bankruptcy court all claims that were based on such certificates, wherein the money had reached the bankrupt, were allowed. No money ever came to the bankrupt from the certificates presented by appellants, a tul their claims were disallowed. In all these appeals but one the certificates were received by the holders from the hands of the secretary as collateral security for his alleged debts, and in that one the manner of obtaining possession is not shown. The secretary had simply embezzled these certificates and applied them to his own use.
If a corporation is to be treated as having a natural person’s freedom of action in all directions except those prohibited, it would be senseless for a Legislature to enumerate granted powers; it would be necessary only to list the prohibitions. But the fundamental principle is the converse. A corporation has only the powers that are expressly named and such others as are necessary to the exercise of the named powers. Silence is itself a prohibition. Lor if a particular power is necessary to the exercise of a named power, it by that necessity becomes itself a named power.
Indiana had various separate incorporation statutes, railroad, mining, manufacturing, commercial, etc. These corporations as a rule were given express authority to bundle up their credits in the form of negotiable bonds and sell them in the money markets. But building and loan associations were not; and the members of this bankrupt association did not themselves undertake to exercise the ungranted power. Are they and the creditors whose money or property actually went into the association bound by the recited actions of the directors and officers? Not unless the power to sell the association’s credit by floating negotiable bonds was necessary to the exercise of some granted power.
Building and loan associations have been well characterized as “corporate partnerships.” Towle v. American B. & L. Society (C. C.) 61 Fed. 446; Security Ass’n v. Elbert, 153 Ind. 198, 54 N. E. 753. Because the business of such a corporate partnership is confined to its
Undoubtedly a building and loan association has the implied power to use its credit .to the extent necessary to carry out its express powers. It may incur debts for furniture, office supplies, rent, wages, and salaries of employés, and the like. Having incurred “a debt, it may of ■course give a written acknowledgment and promise to pay. But the recovery in such a case should be limited to the debt, and not be based upon the negotiable form of the promise to pay. Towle v. American B. & L. Ass’n (C. C.) 78 Fed. 688; Standard Savings & L. Ass’n v. Aldrich, 163 Fed. 216, 89 C. C. A. 646, 20 L. R. A. (N. S.) 393; Marion Trust Co. v. Crescent Loan Co., 27 Ind. App. 451, 61 N. E. 688, 87 Am. St. Rep. 257; North Hudson Loan Ass’n v. Hudson First National Bank, 79 Wis. 31, 47 N. W. 300, 11 L. R. A. 845.
In each case the decree is affirmed.