First National Bank v. Messner

Bruce, J. (after stating the facts as above). It is unnecessary for us to consider the question of the authority of the bank to make real estate loans. Banks are more and more coming to be looked upon as quasi public institutions, and their solvency to be regarded as a matter of public interest. Actions which are brought by them to collect their loans and to realize upon their assets are, for this reason, looked upon as actions which are brought not merely for the benefit of the stockholders, but of the depositors, also. Such being the case, even though the officers of a national bank may make an ultra vires contract, and may make a loan upon real estate security which is prohibited by § 5137, U. S. Rev. Stat. ed. 1878, U. S.. Comp. Stat. 1901, p. 3460, the courts have held that the sovereign can, alone, interfere, and that the debtor will not be allowed to assert the invalidity of the mortgage or of the transaction. These rulings and considerations must, also, in logic apply where an officer or agent of the bank releases a debt for less than its face value, and is sought to be held liable therefor. He is not sued by the directors or officers of the bank, but by the bank itself, which, to all intents and purposes, is a trustee, as it were, for [267] the depositors as well as for its stockholders. The ultra vires nature of the security, therefore, and of the transaction, can no more be pleaded by him than it can be by the original debtor. Such loans are voidable and not void, and the sovereign alone can be heard to object. 2 Morse, Banks & Blcg. 4th ed. p. 1187, § 750; Warner v. Dewitt County Nat. Bank, 4 Ill. App. 305 ; Union Nat. Bank v. Matthews, 98 U. S. 621, 25 L. ed. 188 ; Fleckner v. Bank of United States, 8 Wheat. 338, 5 L. ed. 631 ; Franklin Co. v. Lewiston Inst, for Savings, 68 Me. 43, 28 Am. Rep. 9 ; 2 Morse, Banks & Bkg. 1184. Nor is there any merit in the contention that the complaint fails to allege why the bank, after discovering the fact of the unauthorized release, did not, by some proceeding in equity, seek to reassert the lien of the mortgage upon the real estate, or to collect the interest from the debtor. We do not understand the law to be that an agent who is sued by his principal for a violation of his duty, and for having accepted less than the face value of his principal’s claim, and for having released the debt and the securities, can compel his principal to undo or seek to undo that which he, the agent, has voluntarily done. There can certainly be no question that, prima facie, the principal is damaged to the amount of the interest which has not been collected. 1 Clark & S. Agency, §§ 402-d, p. 903, 402-g, p. 905; Kempker v. Roblyer, 29 Iowa, 274 ; Continental Ins. Co. v. Clark, 126 Iowa, 274, 100 N. W. 524. In this view of the case, also, the allegation as to the insolvency of the land company is mere surplusage, and the objection that such insolvency is not by the language of the complaint related to the time of the release is without merit. There is also no merit in the objection that the complaint fails to allege that the unauthorized release was not afterwards ratified by the bank. This was a matter of defense, and the ratification, if any, was not required to be negatived by the complaint. We have yet to learn that the law presumes a ratification of an unauthorized act. Nor is there anything in the contention that the complaint does not allege that the payment did not extinguish the obligation, or that the interest on the loan still remained due and unpaid. These facts are alleged with sufficient clearness to be paid to a lawyer of ordinary understanding, and such is practically all that is required. Under our Code of Civil Procedure, complaints are liberally, and not strictly, [268] construed (see § 6869, Rev. Codes 1905), and the old rule that pleadings are to be interpreted strictly against the pleader no longer obtains. Manning v. School Dist. No. 6, 124 Wis. 84, 102 N. W. 356 ; Duryee v. Friars, 18 Wash. 55, 50 Pac. 583 ; Sommer v. Carbon Hill Coal Co. 32 C. C. A. 156, 59 U. S. App. 519, 89 Fed. 54 ; Roberts v. Samson, 50 Neb. 745, 70 N. W. 384 ; Wenk v. New York, 171 N. Y. 607, 64 N. E. 509 ; Emerson v. Nash, 124 Wis. 369, 70 L.R.A. 326, 109 Am. St. Rep. 944, 102 N. W. 921 ; Finch v. Park, 12 S. D. 63, 76 Am. St. Rep. 588, 80 N. W. 155 ; Kidder County v. Foye, 10 N. D. 424, 87 N. W. 984 ; Busta v. Wardall, 3 S. D. 141, 52 N. W. 418 ; Donovan v. St. Anthony & D. Elevator Co. 7 N. D. 513, 66 Am. St. Rep. 674, 75 N. W. 809 ; Rev. Codes 1905, § 6869. The order of the District Court overruling the demurrer is sustained, and the cause is remanded to said court for further proceedings according to law. Goss, J., being disqualified, did not participate.