Farmers' & Millers' Bank of Milwaukee v. Detroit & Milwaukee Railroad

By the Court, DixoN, C. J. We think the doctrine of Blunt vs. Walker, 11 Wis., 334, applicable to this case, and that the plaintiff might lawfully have acquired the title to the flour through the medium of a loan of money previously made. It might have done so as purchaser, bidding in order to realize its own debt at a sale upon execution, or at a sale under [375] a mortgage or pledge, if sucb security had been taken. One of the modes in which banking associations are expressly authorized to carry on business is, “ by loaning money on real and personal securities.” R. S., ch. 71, sec. 4. This necessarily carries with it the power to make such securities available according to the ordinary course of business in the country. Of the means usually resorted to for that purpose, that of bidding at judicial sales is considered of the greatest value and importance. And we do not think this implied power abridged or affected by the provisions of section eight. That section relates to a different subject, the power of such associations to purchase, hold and convey real estate, and affords no foundation for the maxim, that the express mention of one thing implies the exclusion of another. The maxim is applicable only where the express provision relates to the same subject matter. It would be very strange if the giving of express power to purchase, hold and convey real estate mortgaged in good faith by way of -security for loans, should be held to destroy or repeal a previous implied grant of power to purchase, hold and convey personal estate in like manner. The two subjects are so distinct and different in their nature, that the legislature cannot be supposed to hhve had in mind the latter, when making specific regulations with regard to the former. Ever since the enactment of statutes of mortmain, the power of corporations to take and hold real estate has been the subject of great care and jealousy on the part of legislators. They have guarded against the unlimited possession of such power with the utmost watchfulness, and it was to restrain and accurately define the power of banking associations in this respect, that section eight was introduced. It has no reference to personal estate. 'It follows from this view of the statute and of the power possessed by the plaintiff, that the court below was wrong in rejecting the evidence offered under the complaint. It was also wrong in holding that prima fade the plaintiff had no pow [376] er to deal in, or to become tbe owner and shipper of flour, and tbat witbont an allegation tbat it became possessed through the lawful exercise of its business of banking, the action could not be maintained. The complaint does not show that tbe flour was unlawfully acquired. Tbe answer does not allege it. It being competent for tbe bank to acquire it lawfully, tbe presumption of tbe law is tbat it was so acquired. Odiosa et inhonesta non sunt in legeprcesumenda. The illegality, if it exists, is matter of defense, to be averred and proved by tbe defendant. But farther than this, we are of opinion tbat tbe defendant is in no position to take advantage of tbe illegality, even tbougb it were conceded. If the purchase was unlawful — one which tbe plaintiff could not by its charter rightfully make— yet the defendant was no party to it. Tbe flour was not bought of tbe defendant; nor is this action brought to enforce any stipulation or agreement arising out of tbe unlawful purchase. The contract with the defendant, and which is the subject of. this action, in itself considered, is lawful and innocent. Having the flour, the plaintiff might well agree for its transportation and sale. The vice, if any, lies farther back, and relates to tbe source of tbe title, or tbe manner of acquiring it. It is well settled tbat corporations may err; tbat they have tbe capacity to do wrong, and may do so by overstepping tbe limits placed by law to their powers. They may violate their charters ; and when they do so their acts are illegal, but not necesarily void. Bissell vs. R. R. Companies, 22 N. Y., 263-4 and 283-4; Rock River Bank vs. Sherwood, 10 Wis., 230, and cases cited. They may acquire title to property in contravention of their charters, and transmit it to others ; and in such case it is no defense for the corporation against tbe claim of one who, knowing tbe facts, paid tbe price at its request, nor excuse for the latter in not crediting tbe proceeds of a mortgage given to secure the money advanced, that tbe transaction was ultra vires. Neither can tbe purchaser from a corporation defend against [377] an action for the price on the ground that the corporation exceeded its legal powers in acquiring the property. Parish vs. Wheeler, 22 N. Y., 494; Rutland & Burlington R. R. Co. vs. Proctor, 29 Vermont, 93. And the seller who transfers to the corporation and accepts the price, cannot question its right to buy, or reclaim the property. Burns vs. The Mil. & Miss. R. R. Co., 9 Wis., 450, and cases cited. To these might be added many other decisions of the same or similar principles, such as that the purchaser of merchandize on credit from a corporation cannot, in an action for the price, object that .the corporation was prohibited by law to carry on such trade (Chester Glass Co. vs. Dewey, 16 Mass., 94); that the question of misuser by a foreign corporation will not be investigated or decided by way of setting aside or refusing relief upon Iona fide contracts (Silver Lake Bank vs. North, 4 Johns. Ch., 370; Steam Nav. Co. vs. Weed, 17 Barb., 378; Steamboat Co. vs. McCutcheon, 13 Pa. St., 13); that the party contracting with a corporation is precluded from denying its corporate existence, or that it is organized as required by law (Naragansett Bank vs. Atlantic Silk Co., 3 Met., 282; Worcester Med. Inst. vs. Harding, 11 Cush., 285; Congregational Society vs. Perry, 6 N. H., 164; Manufacturing Co. vs. Davis, 14 Johns., 238; Savings Bank vs. Ford, 27 Conn., 282); and that a corporation is answerable for the contracts of its officers, even though not expressly authorized, when such contracts are entered into publicly and in such manner as to be within the knowledge of the corporators. Alleghany City vs. McCluskan, 14 Pa. St., 81. If the plaintiff’s vendors, having received the price, cannot question its title to the flour, it is difficult to perceive upon what principle the defendant is to be allowed to do so. Indeed, it is difficult to perceive how the law is to distinguish between . a corporation plaintiff and a natural person plaintiff in such circumstances. Both may have violated the law; both may have acquired the property fraudulently or illegally, and deserve punishment; but no one would say that it constituted a [378] defense as against the natural person. Let tbe shareholders proceed by injunction, or the state by forfeiture, if they see fit; but it is not a matter which concerns strangers. We have already said enough to distinguish this case from that of Madison Plk. Rd. Co. vs. Watertown Plk. Rd. Co., 7 Wis., 59. There the action was founded upon the illegal agreement It was executory in its nature, and the suit was brought to enforce it. Here the illegality, if it exists, was anterior to and wholly disconnected with the contract upon which the plaintiff brings suit. There is a vast difference between refusing to enforce an illegal contract in a direct proceeding, and turning aside from legitimate transactions for the sake of impeaching it collaterally, at the beck of a stranger, whose sole object is to escape the performance of his own lawful engagements. Judgment reversed, and a new trial awarded.