Millett v. MacKie Mill Co.

The facts are correctly stated in the prevailing opinion. It cannot be questioned that the Virginia Mason hospital furnished services to Edward Oddson of the reasonable value of $278.55 upon the written promise of appellant to pay for such services. The account was duly assigned to respondent.

This decision overrules not only the decision by this dissenter in United States Fidelity Guaranty Co. v. CascadeConst. Co., 106 Wash. 478, 180 P. 463, but also several others. It is also contrary to the weight of the most reputable authorities.

In Tootle v. First Nat. Bank, 6 Wash. 181, 33 P. 345, we held:

"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."

To the same effect are: Allen v. Olympia Light Power Co.,13 Wash. 307, 43 P. 55; Wheeler, Osgood Co. v. Everett LandCo., 14 Wash. 630, 45 P. 316; Creditors Claim AdjustmentCo. v. Northwest Loan Trust Co., 81 Wash. 247, 142 P. 670, Ann. Cas. 1916D, 551, L.R.A. 1917A, 737.

Under the facts in this case, there is no question that the hospital suffered detriment relying upon the promise of appellant and cannot now be placed in statu quo.

In Creditors Claim Adjustment Co. v. Northwest Loan TrustCo., supra, which apparently is not overruled although distinguished in the prevailing opinion, we quoted with approval from the following very respectable authorities:

"`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.

"`Although there may be a defect of power in the corporation to make a contract, yet if a contract made by it is not in violation of its charter or of any statute prohibiting it, and the corporation has by its promise induced a party relying on the promise, and in execution of the contract, to accept money and perform his part thereof, the corporation is liable on the contract.' State Board of Agriculture v. Citizens'St. R. Co., 47 Ind. 407.

"`Where a corporation has entered into a contract which has been fully executed on the other part and nothing remains for it to do but to pay the consideration promised, it will not be allowed to set up the plea of ultra vires.' Oil Creek A.R.R.Co. v. Pennsylvania Transportation Co., 83 Pa. 160.

"`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 a fraud upon the plaintiff to allow this to be done; he having entered into the transaction relying upon said contract.' Bushnell v. Chautauqua County Nat. Bank, 10 Hun 378."

All of those cases were approved in Hutchins v. Planters'Nat. Bank, 128 N.C. 72, 38 S.E. 252.

Executed dealings of a corporation must be allowed to stand for and against both parties when the plainest rules of good faith require it. Parish v. Wheeler, 22 N.Y. 494.

"The principle is so well settled in this country, that a further citation of authorities in support of it is unnecessary. Such is also the rule of the English law. . . . When a contract is not on its face necessarily beyond the scope of the power of the corporation by which it was made, it will, in the absence of proof to the contrary, be presumed to be valid. Corporations are presumed to contract within their powers. The doctrine of ultravires, 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. Union Water Co. v. Murphy's Flat Fluming Co.et al., 22 Cal. 620; Morris Railroad Co. v. Railroad Company,29 N.J. Eq. 542; Whitney Arms Co. v. Barlow et al., 63 N.Y. 62. " Railway Co. v. McCarthy, 96 U.S. 258, 24 L. Ed. 693.

To the same effect is San Antonio v. Mehaffy, 96 U.S. 312,24 L. Ed. 816.

In the majority of jurisdictions, the rule is that an ultravires transaction when executed by one of the parties may become enforceable by estoppel. 14a C.J. 323, § 2170.

Since the contract in question is neither illegal nor immoral and was freely made by appellant, good faith requires that it be enforced. To deny its enforcement is to work a legal wrong and an injustice upon respondent and the hospital.

Moreover, the overruling of the case in 106 Wash. 478, is unjustified and again unsettles the substantive law.

For these reasons, I dissent.

GERAGHTY, J., and STEINERT, C.J., concur with HOLCOMB, J.