Full text
El Dorado Improvement Company v. Citizens' Bank
Hart, J., (after stating the'facts.) The appellant bases error on the first instruction given by the court at the instance of the plaintiff as follows.: “If you find that the El Dorado Improvement Company, or its owners, derived any benefit from the same, then you will find for the plaintiff.” This instruction was erroneous.
The uncontradicted testimony in the case shows that the El Dorado Improvement Company is a corporation, and that the note sued upon was issued as accommodation paper by E.'* H. Smith to secure a personal loan to himself, and that the corporation never authorized or ratified his action in that behalf. Therefore the contract was ultra vires and void. Texarkana & Ft. S. Ry. Co. v. Bemis Lumber Co., 67 Ark. 542; Stiewel v. Webb Press Co., 79 Ark. 45; Klein v. German National Bank, 69 Ark. 140.
The note sued on being accommodation paper, and that fact being known to the bank when it took the note, coupled with the further fact that the action of Smith in issuing the note was never authorized by the board of directors of the Improvement Company, and was not ratified by it, there is no theory under which plaintiff can recover under the state of facts presented in the record. Reversed and remanded.