Appleton v. Citizens' Central National Bank ( 1906 )

Houghton, J. (dissenting):

I agree to the proposition that national banks cannot engage in the business of guaranteeing obligations of third parties, and that stick contracts are ultra vires. I think, however, by.fair intendment and inference, plaintiff’s complaint alleges that the Cooper Exchange Bank loaned $12,000 to Samuels, at theijoint request of himself and this defendant, for the purpose of enabling him- to pay to defendant $10,000 of such amount on an indebtedness owing by him to defendant, which was done as a part of the agreement of guaranty. The ground of demurrer is that the. complaint states no cause of -action! I think it states facts sufficient to permit a recovery of the $10,000 which the defendant received.

’ If the note had been for only $10,000 and all of the avails had "been paid to the defendant, and defendant had guaranteed the payment of the note, the transaction would have been wholly completed and the defendant would not have been permitted to plead that its contract of guaranty was ultra vires. "After performance and acceptance of benefits a defendant corporation is estopped from interposing the defense that it had no power to make the contract which it benefited by. (Vought v. Eastern Building & Loan Assn., 172 N. Y. 509 ; Bowers v. Ocean Accident & Guarantee Corp., Ltd., 110 App. Div. 695.) The fact that the note was for $12,000 and that judgment is demanded for that sum, less payments made by Samuels, I do not think changes the situation. The defendant cannot keep the fruits of its act and insist that it had no right to act at all.

The plea of ultra vires is ordinarily a defense. If there be instances in -which the plea can be invoked to sustain a demurrer, I do not think this is one of them.

• The interlocutory, judgment should be affirmed.

Interlocutory judgment reversed, with costs, demurrer sustained, with costs, with leave to plaintiff to amend the amended complaint on payment of costs in this court and in the court below. Order filed.