Kennedy v. Cal. Sav. Bank

Citations

• 101 Cal. 495
• 35 P. 1039
• 1894 Cal. LEXIS 1063

Syllabus

<p>Corporations—Ultra Vires—Estoppel.—The defense of ultra vires is looked upon by courts with disfavor whenever it is presented for the purpose of avoiding an obligation which a corporation has assumed merely in excess of the powers conferred upon it, and not in violation of some express prohibition of the statute; and courts are inclined to treat the corporation as estopped from setting up such defense in all cases where it has received and retains the benefit of the transaction, and seeks by this plea to avoid its correlative obligation.</p> <p>Id.—Banks—Ownership of Stock—Liability for Indebtedness.—A national bank which has received the stock of a savings bank, and still retains it, and has received dividends thereon, is estopped from denying its liability for its proportion of the indebtedness of the savings bank contracted during the time of its ownership of stock therein.</p> <p>Id.—Power of National Bank—Shares in Another Corporation.—A national bank is not expressly prohibited from becoming a stockholder in another corporation, and may take shares in another corporation as collateral security for a loan made by it, or in satisfaction for a loan for which it had been pledged to it as security.</p> <p>Id.—Notice to Third Persons—Presumptions.—The national hank having registered itself upon the books of the savings bank as a stockholder, a person dealing with the savings bank will be justified in assuming that the national bank has become such stockholder by virtue of a transaction within its power rather than in violation of the laws of its creation, and strangers having no notice in fact of an unlawful purpose are entitled to rely upon the presumption of law that the stock was held for the lawful purposes of the corporation.</p>