
    The Banks v. Poitiaux.
    January, 1825.
    Banks — Powers—Acquisition of Realty. — Under an act of Assembly, authorising a Bank to bold as much real property as may he requisite for itsimtnedi- . ate accommodation, in relation to the convenient transaction of its business. and no more, the Bank may purchase more ground than is necessary for the erection of a Banking-house. build fire-proof bouses on the vacant land, for the greater security of the Banking house, and sell them out to third persons
    Same — Same—Same—Violation of Charter — Quo War-ranto.  — Even if the Bank viola ted its charter in so doing, the only proceeding against it, would be by quo warranto: and the purchasers of the houses, cannot resist a specific performance of their contracts by alledgiDg that the Bank had exceeded its powers, in erecting and selling the houses.
    
      Corporation - Agreement for .Sale of Realty — Corporate Seal. — The seal oí a corporation, is not necessary to give validity to an agreement for the sale of real property.
    Appeal" from the Richmond Chancery Court.
    The Bank of Virginia, and Farmers’' Bank of Virginia, finding it expedient to erect buildings in the city of Richmond, for the transaction of their business, purchased a piece of ground for that purpose, and erected the *buildings. After this was done, there remained a vacant space on each side of the Bank buildings, on which they -determined to erect fire-proof brick houses, for the greater security of the Banks, and to sell them out to individuals. Before the houses were completed, the Banks agreed with Michaef B. Poitiaux, to sell him one of the tenements for the sum of $15500, payable at the end of 5 years with interest. The Banks also agreed to advance to the said Poitiaux the necessary sums to prepare the house as an auction store, and to build a small house, to be added to the cost of the tenement, and to be paid for in the same manner. Bond and security, and a trust deed on the property were to be given. Poitiaux did accordingly, take possession of the said tenement, and received from the Banks $5000, under the agreement, which was laid out by him in the manner contemplated. But he never executed the bond with security for $20500, (the whole sum due,) nor a deed of trust, according to the agreement.
    The Banks brought a suit against Poi-tiaux to compel a specific performance of this agreement.
    Poitiaux pleaded the statute to prevent frauds and perjuries; alledging that no memorandum or note in writing was ever signed by him or any other person author-ised by him, for the purchase of the tenement aforesaid.
    He also stated, in answer to the allegations of the bill, that he had no intercourse with the committees of the Banks, with respect to the sale in the bill mentioned that a parol agreement was made between him and John Brockenbrough, president of the Bank of Virginia, for the purchase of the said tenement, for $12500, and such further sum as should be necessary to complete the contemplated improvements; and that this sum should constitute a part of the purchase money: that under this arrangement, the defendant went into the house when it was nearly completed: that he has drawn from the Bank, the sum of $5000: that in addition to that sum, he has expended on the said improvements, large sums from his own pocket: that bond *and security and a deed of trust on the property, were to have been given: that in all these transactions, the defendant had no concern with the committees of the two Banks, or with any other person but the president of the Bank of Virginia, to whom, he presumes, the power to treat had been given by a subcommittee of the two committees appointed by the Banks; but of this he requires proof: that he conceives that lie has been fully released from his engagement by the said president of the Bank, by a subsequent agreement: that the defendant afterwards determined to part with his contract to some other person, and agreed with Tompkins & Murray that they should lake the property on the terms proposed to the defendant: that he communicated this matter to the president of the Bank of Virginia, who, as the defendant understood, consented to accept the said Tompkins & Murray as the purchasers of the property in question, and considered himself from that time, as having nothing to do with the business: that Murray afterwards employed a workman to finish the said house, advanced him $500, and deposited some of the necessary materials for that purpose; which, he believes was known to the said president: that the defendant has not been in possession of the premises in question, since May, 1819, up to which period he considered himself as owing rent to Tompkins & Murray: that Tompkins & Murray having failed, the president then told the defendant that he believed the Banks would have to look to him again: that no contract had been entered into under the common seal of the Banks: that the two committees of the Banks had no power to delegate their powers to a sub-committee, by a mere parol authority; and lastly, that the Banks had no power to deal in real estate, under the circumstances of that in question.
    Depositions were taken, going to establish the following facts; the sale of 1he premises to Tompkins & Murray, as slated in the answer of Poitiaux, and the ability of Tompkins & Murray, at the time, to meet their engagements: *that no communication was had between the Banks and Tompkins & Murray about the purchase of the latter of the property in question; that the object in building the houses adjoining the Banks, was to protect the Banks by fire-proof buildings contiguous to them; that Poi-tiaux was a director of the Bank of Virginia, and present at the board, when a report was made by a committee appointed for that purpose, stating that they had agreed to sell the property in question to the said Poitiaux, subject to the confirmation or rejection of the board: that Poitiaux expressed no dissent, though according to the practice of the board, he had a right to enter a protest if he pleased; and that the said sale was confirmed by the board of directors.
    The Chancellor decreed, that the Banks had exceeded their powers in purchasing and selling the property in question, it not being necessary for their immediate accommodation in relation to the convenient transaction of their business; and referred the accounts to a commissioner.
    Prom this decree the plaintiffs appealed.
    Nicholas and Leigh, for the appellants.
    Wickham, for the appellee.
    On the part of the appellants, it was said, that the statute of frauds did not apply, because there was part, performance, and Poitiaux took possession of the property. Clinan v. Cooke, 1 Scho. & Lefr. 41; 1 Fonb. 169; Sugd. 63, 73. Besides, Poitiaux was present at the board, saw the entry made, and did not object. Keemys v. Proctor, 1 Jac. & Walker, 349. The agreement is admitted by the answer. As to the objection that the corporate seal is not affixed to the agreement, the cases of the Bank of Columbia v. Patterson, 5 Cranch, and Legrand v. Hampden Sydney College, 5 Munf. 334, afford a full answer. *The Banks had power under the charter to purchase and sell the property in question. The terms are general, and certainly authorise the Banks to do what they may think necessary for their accommodation, in relation to the convenient transaction of their business. The security of the Banks from fire, is undoubtedly comprehended within the meaning of the charter. Some latitude must necessarily be allowed in, the interpretation of such indefinite words as convenience and accommodation; and, if the Banks have a bona fide intention to attain those objects only, their acts ought not to be too severely scrutinized. The buildings erected were evidently calculated to accomplish these purposes.
    For the appellee, it was said, that the Banks could possess no power which they did not derive from their charters: that the power to hold real property was confined to the single case of property “requisite for their immediate accommodation in relation to the convenient transacting of their business,” &c. 3 Rev. Code, 73, sec. 8, Rule 8: that the acts of a corporation, beyond its powers, are utterly void. Wilson v. Spencer, 1 Ran. 76: that if they cannot hold, they cannot acquire; because, if they acquire, they must hold, at least for a moment; and, if they cannot hold, they cannot convey, Calvin’s Case, 5 Co.: that the only question is, whether this house was requisite for their “immediate accom-dation in relation to the convenient transacting of their business;” and, this object is disproved by their parting with it even before it was finished. The- bill states, that they bought to sell again. Parol proof cannot be introduced by the Banks, although it might by the defendant. The Banks are plaintiffs in equity, and in possession of all the documents. As to security from fire, this object would be as well attained by leaving the ground vacant. If the Court entertain a doubt of the title, they will- not decree a.specific performance. Stapleton v. Scott, 16 Ves. 272; Sloper v. Fish, 2 Ves. & Beam. 145.
    *January 28.
    
      
      Banks - Acquisition of Realty Violation of Charter —Effect—If a bank buvs land outright, and in violation of § 1163 of Virginia Code, third persons can derive no benefit from that circumstance. The law imposes no forfeiture for its violation, and ' the only effect of its transgression, in that respect would be to subject the bank to proceedings in behalf of the state to vacate its charter. Litchfield v. Preston. 98 Va 534, 37 S. E. Rep. 6, citing principal case as authority.
      A cause of forfeiture cannot be taken advantage of, or enforced against a corporation, collaterally or incidentally, or in any other mode than by a direct proceeding, for that purpose, against a corporation, so that it may have an opportunity to answer. And the government creating the corporation can alone institute such proceedings; since it may waive a broken condition of a contract made with it as well as an individual. Greenbrier Lumber Co. v. Ward. 30 W. Va. 50, 3 S. E, Rep. 181. quoting from Angelí and Ames ou Corporations doth Ed.) § 777, and citing the principal case to sustain the proposition.
      See principal case also cited in Fayette Land Co. v. Louisville, etc., R. Co.. 93 Va 286. 292. 24 S. E. Rep. 1016; Chesapeake, etc., R. Co. y. Walker, 100 Va. 85, 40 S. E. Rep. 633.
      See further, monographic note on “Banks and Banking” appended to Bank y. Marshall, 25 Gratt. 378.
    
    
      
      Corporations — Agreements—Corporate Seal — Necessity for. — A corporation, like a natural person, can grant or convey land only by deed: yet there are many things which it has power to do otherwise than by deed. It is now firmly established, both iu England aud America, that a corporation may be bound by promises, express or implied, resulting-from the acts of its authorized agents, although such authority be conferred only by virtue of a corporate vote unaccompanied with the corporate seal. Pennsylvania Lightning Rod Co. v. Board of Education. 20 W Va. 365. citing principal case and Bank of United States v. Dandridge. 12 wheat. 64.
      See further, monographic note on “Corporation& (Private)” appended to Slaughter v. Com., 13 Gratt. 767.
    
   JUDGE GREEN:

The contract, in this case, is distinctly proved, and has been so far executed as to entitle the appellants to a decree for its specific performance, unless the Banks are unable to give to the appellee a perfect and indefeasible legal title; or, unless a Court of Equity ought to refuse its aid to the appellants, upon the ground, that the purchase and sale of the property in question, was contrary to the policy of the law, as declared in the charter^ of the Banks.

The creation of a corporation, gives to it, amongst other powers, as incident to its existence and without any express grant of such powers, that of buying and selling. 10 Co. 306. This power may be limited, restrained or prohibited, either by the charter creating the corporation, or by a general law, as in England, by the statutes of mortmain; which provide, that if lands be conveyed to a corporation, without license, the next lord may enter for a forfeiture: and, if he do not enter within a limited time, that then the King may; but, until entry, the estate continued in the corporation. 15 Vin. Abr. 491. The charters of the Bank of Virginia and of the Farmers’ Bank, after authorising them to purchase, hold and enjoy lands and tenements, goods and chattels, to a specified value, and sell and dispose of them, provide, that the lands which it shall be lawful for them to hold, shall be only such as shall be requisite for their immediate accommodation, &c. or acquired in satisfaction of debts, &c.; and, that they shall not, directly or indirectly, deal in, or trade in any other thing, except bills of exchange, gold or silver bullion, &c.

It is insisted, that the lands which the Banks sold to the appellee, were not acquired in satisfaction of debts, &c. and were not requisite for their immediate accommodation, &c. according to the charters; and that, therefore, the Banks could not acquire any title_ to such land, and could not convey any title to the purchaser from them; or, if they could, that as the purchase and sale were contrary *to the policy of the law, a Court of Equity ought not to assist them, by enforcing the contract.

It seems to me, that the charters are only directory in this respect. They impose no penalty in terms. They do not declare the purchase by, or conveyance to, the Banks, to be void, nor vest the title in the Commonwealth, or any other than the Banks, in consequence of such purchase and conveyance. The legal title passed to the Banks by the conveyance to them, and their conveyance would effectually transfer that title to any other. If, in making the purchase of the land in question, the Banks violated their charters, the corporation might, for that cause, be dissolved by a proceeding at the suit of the Commonwealth; and even in that case, it seems to be the better opinion, that the property, if not previously conveyed to some other, would revert, upon the dissolution of the corporation, to the grantor, and not to the Commonwealth. Co. Litt. 13, b. But, any conveyance, made by the corporation before its dissolution, would be effectual to pass their title. 1 Fonb. Eq. 298, note (si and the cases there cited. The Banks have, therefore, a title which they can convey to the appellee, and which would, in his hands, be indefeasible. If, in this case, the Banks violated their charter, by the purchase of the land in question, the maxim, “factum valet quod fieri non debet,” seems to apply. It would be extremely inconvenient, if every contractor with one of these Banks could, for the purpose of avoiding his contract, -institute the enquiry whether tire Bank had violated its charter. They have' a right to insist, that the que'stion should be tried by a jury, in a proceeding having that single, object in view. In England, a tenant of lands conveyed in mort-main, cannot, in a replevin against the corporation^ its bailiff, plead the fact of the conveyance in mortmain, to bar the corporation of its right to distrain. 15 Vin. Abr. “Mortmain” E.

This case does not fall within the principle of Wilson v. Spencer, 1 Rand. 76. In that case, an association of *individuals dealt in a manner utterly prohibited by law, and a contract, founded on those unlawful dealings, was declared to be void. In this case, the statutes do not prohibit the purchase of real property by the Banks; but, only limits the extent of such purchase; and, the question, whether they have or have not exceeded the limits prescribed to them, is not fit to be tried in this suit, and at the instance of this party. In that case, the judgment of the Court was calculated to promote, decisively, the policy of the law which was violated. In this case, a refusal to enforce the contract, would seem to counteract the policy of the law, alledged to be violated, by compelling the Banks unwillingly to continue to hold lands, the holding of which constitutes the alledged violation of the law. But, if it were the duty of the Court to enquire, in this case, whether the Banks had, in the purchase in question, exceeded the limits prescribed by fheir charters, I should say that they had not. If they had kept the ground not covered by their banking-houses, for gardens, they could not have been charged with a violation of their charters; and, using it in a way to secure the banking-houses against fire, was equally innocent, although they combined with that object the other, of getting a re-imbursement, in part, of the cost of the land.

The objection, that the contract was invalid, because not made under the common seals of the Banks, is also unfounded. This objection was made and over-ruled in the Bank of Columbia v. Patterson, 7 Cranch; and in Legrand v. Hampden Sydney College, 5 Munf. 324; in the last of which, the contract was for the sale of laud.

The decree should he reversed, and the contract specifically executed.

JUDGE CABELL:

The contract stated in the bill, if not admitted by the answer, is clearly established by the proofs in the cause: *and, having been partly performed, it is taken out of the statute of frauds and perjuries. The appellee, however, seeks to escape from the payment of the purchase money, on the ground, that the appellants cannot make a g'ood title to <he land; and, for the purpose of shewing this inability on the part of the Banks, he relies on that clause in their charters, which declares that the lauds, tenements and hereditaments which it shall be lawful for them “to hold,” shall be only such as shall be requisite for their immediate accommodation, in relation to the convenient transacting of their business. He contends, that the land sold to him by the Banks, was not such as was requisite for their accommodation in the convenient transaction of their business, as is proved by the fact of their selling it: that the Banks, therefore, could not hold the land themselves, and that, not being able to hold, they could not convey.

There is another clause in the law, chartering the Banks, which declares, that they shall be “able and capable in law, to have, purchase, receive, possess, enjoy and retain, to themselves and their successors, lands, rents, tenements, hereditaments, goods, chattels and effects,” to the amount of the sums on which they are allowed to trade; and, both of these clauses must be taken into consideration, in determining the rights and disabilities of the Banks.

Without deciding the point, let it be conceded to the appellee, that it is competent to him to enquire, in this cause, whether the appellants violated their charters, in the purchase of the land in controversy. For, if their purchase was lawful, it will hardly be contended that they cannot sell it, and make a good title.

The Banks are unquestionably author-ised to purchase such lands as may be requisite for their immediate accommodation, in relation to the convenient transacting of their business; and, it must have been intended, that on this subject they should have been allowed to exercise a reasonable discretion. In determining what their convenient accommodation may require, it would surely be very proper *!o look to those circumstances which may be necessary to guard against losses or destruction by fire, and to regulate their purchases accordingly. It is impossible to read tire evidence in this cause, and not to perceive that this was the great object of the Banks. The whole joint purchase embraced only one acre; a quantity which, it is believed, no person would contend was too great, provided they had permitted that portion of it to remain vacant and unimproved, which was not covered by the Bank buildings. The Banks, however, thought that their great and lawful object, security from fire, would be sufficiently, if not better promoted, by occupying the whole space with fire-proof buildings; and, having thus accomplished their object, they then sold out such as were no longer necessary to be held by them. The object for which the purchase was made, rendered the purchase legal; and, it would be a most mistaken idea to suppose, that a purchase lawfully made ceases to be legal, or that the Banks cease to have a right to hold or to convey lands lawfully acquired, merely because the object which induced the purchase lias been accomplished, or no longer affords an inducement to hold it. If this were the case, the consequence would be, that the Banks could not change the site for carrying on their business, by acquiring new houses or lands for that purpose, however convenient, and even necessary the change might be, without forfeiting their right to the lands and houses, which they now lawfully hold. An argument leading to such consequences, cannot be sound; and, yet this is, in truth, the only argument on which the pretensions of the appellee arc founded.

I am of opinion, that the decree be reversed, and the cause remanded to be further proceeded in.

The PRESIDENT:

If the contract in this case had been entered into by natural persons only, there would be no doubt, on the facts *in the record, that a part performance is so proved as to take it out of the statute of frauds and perjuries. Possession and improvements have always been held to take the contract out of the statute. The objection, that the charters of the two Banks do not authorise them to make a joint contract, seems to me to be without reason. Though there is nothing in the charters to authorise them to make a joint contract, I cannot perceive that a joint contract in behalf of two or more separate and distinct corporations, to attain an object which, severally, they might attain in virtue of their charters, can be considered an infraction of them, because not expressly provided for therein. The same ends are to be obtained as by several contracts, and there is nothing in a joint contract that is either forbidden by the charters, or against their policy.

The question, whether the appellants were authorised to purchase the lot in controversy, under the restrictions in the charter, which prohibits them to purchase lands to a greater amount than the given sum stated in each charter, including their capital, is not made, I think, by the pleadings; and, if made, would not be examinable in ihis case. It would be difficult to ascertain, whether the excess in the purchase would Call on the lot in question, or on other property held by the appellants; and, if it would, a sentence of forfeiture could not be pronounced in this cause. Such sentence could only be pronounced upon a writ of quo warranto, or some other proceeding in behalf of the Commonwealth; and, in that case, the lot having been sold before the emanation of the process, the title would pass to the vendee. 1 Fonb. 298, and the cases cited in note (s.) But, if the excess in the purchase would be fixed on the lot in question in this suit, the eighth sections in the two charters seem to imply that it might be sold by the appellants. The words are, “the lands, tenements and heredi-taments, which it shall be lawful for the corporation to hold, shall be only such as- shall be requisite for its immediate accommodation, in relation to the convenient transacting of its business.” The denial of the right to hold more lands, &c. than for the purposes recited in the act, does not limit the right to purchase more, if within the amount prescribed by the previous section, and seems to admit the right to sell, whenever any of the purposes for which they are authorised to hold, no longer exists.

As to the manner in which the contract was made, it not being under the seals of the corporations, that objection was overruled in the cases of Hampden Sydney College v. Legrand, 5 Munf. 324, and the Bank of Columbia v. Patterson’s adm’r., 7 Cranch.

I think, therefore, that the decree must be reversed, and such decree entered, as has been agreed upon by the Court. That decree is, that the said decree is erroneous; therefore, it is decreed and ordered, that the same be reversed and annulled, and that the appellees pay to the appellants, their costs, &c., and that the cause be remanded to the Superior Court of Chancery for further proceedings, in which an account is to be taken, for the purpose of ascertaining what sums of principal and interest are due from the appellee to the appellants, upon the contract and loan in the proceedings mentioned, and that the said contract may be specifically executed, under the direction of the said Court of Chancery. 
      
      Judge Coalter, absent. Judge Carr declined sitting because he was a stockholder.
     