The herald., 1897-10-10

for the bank. in which Morrison had no
interest or enforceable right
The present action was instituted to
enforce the statutory liabilities attach
ing to stockholders on account Of own
ership of these shares Of stock by the
savings bank. defendant.
1.-The German American Savings
bank" says Judge Allen. being a COR
poration organized under the savings
bank law of California, and restricted
in its powers as by that act provided,
1t Is insisted that, conceding it to be
true that the savings bank Is stock
holder in the Moneta Water company.
no liability attaches to the defendant
corporation under the doctrine laid
down by the supreme court Of the United
States in California National bank VS..
Kennedy, decided May "a, 1897 in which
case the supreme court of the United
States reverses the supreme court of
California. I am unable to agree with
defendants in this contention. In the
case above cited it is determined that the
tions constitute the measure OF author
ity of such corporations, and that they
cannot rightfully exercise any powers
are incident to carrying on the business
for which they are established; that the
contract of corporation which is ultra
wires in the proper sense, that is to say,
outside the object of its creation as de-
fined in the law of its organization. and
therefore beyond the powers conferred
upon it by the legislature, is not voida-
bic only but wholly void and of no legal
effect, cannot be ratified, nor can any
acts of the corporation in connection
Herewith estop it from setting up the
ultra wires character of the tran saction.
But in the same case is cited approving
ly Germsnia National bank VS.. Case. 9S
L. s.. 62S. in which case the same court
held that bank has, as incidental to the
power to loan money on personal secur
ity. the additional power to accept
stock of another corporation as col
lateral, and by its enforcement as
Pledge, to acquire the stock and be-
come subject to liability as other stock
holders. In the Kennedy case the stock
in the corporation was not taken > Sc
curity but was an attempt to deal in
stocks. Such are not the facts of this
case. Here there is no dispute but that
the bank had the right to acquire the
real estate and hold it, taking it in pay
ment of an antecedent debt Connected
with this real estate forming large part
of its value. was the right to the use of
the water from the Moneta Water CON-
pany, which right could only be acquired
by and through ownership of stock in
the corporation, hence the taking of this
stock and the title thereto in the savings
-
stock of another corporation, but
was the taking of stock in an
other corporation in payment Of
a previous obligation from a party
unable to pay his debts, and which stock
was incident to or connected with the
real estate owned by the bank. 1t IS not
disputed that one of the powers in cident
to a savings bank is to take ard hold
real estate acquired as in this in.s tance.
These water rights were part of this
real estate, that is to say, part Of its
value, part of the security a part Of
the thing which they had a right to take
and hold. Admitting their right, then
they can only be permitted to take and
hold it subject to the obligations which
would be imposed upon any other indi-
vdual holding under similar circum-
stances. That obligation by our consti
tuition ard laws is fixed. The debt of
plaintiff was contracted while this saw
ings bank was the equitable owner of
this stock, and was, under the definition
of our civil code, a Stockholder, and, in
our opinion, as such was liable to the
plaintiff for the pro rata share of the
Indebtedness which 377 shares bears to
the total issue
Findings and judgment will be en-
tered for plaintiff in accordance here
with"