Tootle v. First National Bank, 6 Wash. 181

Tootle v. First National Bank

6 Wash. 181 | Wash. | 1893

Lead Opinion

The opinion of the court was delivered by

Dunbar, J.

We think there can be no question that the bill of sale of the property of the Mercantile Company was intended as a mortgage to secure the payment of the *183notes. This is apparent both from the testimony and from the answer, and the only serious question in the case to consider is whether the bank is bound by the action of its officers in the transaction upon which this suit is based. This fact seems certain from the testimony, viz., that the bank has received property worth about §7,000, when its claim was only §2,000. It is not necessary to decide whether or not the contract was ultra vires, for it was not immoi’al; it was fully performed by the other party, and the bank received and retained the benefits, and in such a case the plea of ultra vires is unavailing. 2 Morse on Banks and Banking (3d ed.), § 740.

‘‘The doctrine of ultra vires as a defense has died so hard that it is well to repeat the proposition which seems to be fully established by the more recent decisions, that where a contract has in good faith been fully performed either by the corporation or the other party, the one who has thus received the benefit will not be permitted to resist its enforcement by the plea of mere want of power. Time and again corporations have been held estopped to plead ultra vires to an action on the contract performed by the other parties where the corporation has received the benefit, although clearly beyond its powers. ’ ’ 2 Beach, Private Corp., §425.

' To the same effect is 2 Morawetz on Private Corporations (2d ed.), §688, and Green’s Brice’s Ultra Vires, p. 729, note a.

The doctrine of ultra vires, when invoked for or against a corporation, should not be allowed to prevail where it would defeat the ends of justice or work a legal wrong. Railway Co. v. McCarthy, 96 U. S. 258. This rule is so well established that it is the work of supererogation to quote authorities to sustain it.

"While it is not shown that the contract to pay this indebtedness was entered into by resolution of the trustees of the bank, it does plainly appear to our minds from the *184testimony that the trustees were in consultation about the matter; that the business was done in the bank, through its president and cashier, the men who practically do the business of the bank; and even if it did not authorize the transaction it has endorsed it by receiving and appropriating the benefits flowing from the transaction, and it would be against conscience and right to allow it to repudiate the contract and still retain the benefits.

We think the plaintiffs made out a prwna facie case, and were entitled to a judgment thereon, and that the court erred in sustaining defendant’s motion for judgment. The judgment will, therefore, be reversed, and the cause remanded for a new trial in accordance with this opinion, with costs to appellants.

Stiles, Scott and Anders, JJ., concur.

Dissenting Opinion

Hoyt, J.

(dissenting). — I am unable to find from the record that the respondent has received and retained the goods, or that it received any goods in consideration of its alleged promise to pay the debts of the corporation or partnership. I am, therefore, compelled to dissent. I think that the judgment should be affirmed..