thereby occasioned the proceeds realized upon a note belonging to the bank’s customer to be paid and invested in a worthless mortgage the bank is liable for the fraud and deceit practised although it received no benefit, and its officer’s acts were ultra vires.
Opinion filed June 6, 1921.
Action in District Court, Case County, Cooley, J. From a judgment of dismissal the plaintiff has appealed.
Reversed.
Lawrence, Murphy & Nilles, for respondent.
Pierce, Tenneson, Cupler & Stambaugh, for appellant.
National banks have power to receive special deposits and their officers have authority to bind the bank by agreements made in relation thereto. First Nat'l. Bank of Carlisle v. Graham, 100 U. S. 699; 25 L. ed. 750; 36 Am. Rep. 592; McCormick v. Market Nat’l. Bank; 165 U. S. 538; 41 L. ed. 817 Minn. Mutual Life Ins. Co. v. Tagus, 34 N. D. 566; 158 N. W. 1063; L.R.A. 191%A 519; Citizens Nat’l. Bank v. Davisson, 229 U. S. 213.
The lending of money for its customers is an every day transaction with all banks, and it has been held that for negligence or for fraud and deceit in selection of investments for its customers, the bank is liable for the acts of its officers who represented it in. the transaction. 7 C. J. 719 and cases cited in notes go to 95.
It is well settled that a corporation cannot escape liability upon a plea that the tortious acts were ultra vires.
“It is the policy of the law to look with disfavor upon the defense of ultra vires, especially when interposed by a corporation to avoid an obligation otherwise legal and equitable. It has been said by an English judge that “the safety of men in their daily contracts requires that this doctrine should be confined within narrow bounds.” 3 Fletcher Cyclopedia Corporations, § 1520, p. 2581. Seeber v. Commercial Nat. Bank, 77 Fed. 957, 960.
Corporations have been held liable in these cases by attributing to them the conduct of their agents:
Assault and battery with a deadly weapon by a railroad company.
