Source: https://www.legalcrystal.com/case/89527/national-bank-loan-co-vs-petrie
Timestamp: 2019-04-18 18:51:26+00:00

Document:
Appellant National Bank and Loan Co.
Where a national bank has sold certain bonds and the vendee has obtained a judgment for the purchase money in a state court on the ground that the sale was induced by false representations of the president of the bank, the judgment will not be reversed on the ground that the sale of the bonds was without the authority of the bank and was illegal and void. The fraud is prior to the sale and authorizes a rescission; nor can the bank claim that the fraud was perpetrated by an agent who did not represent it for illegal purposes. The bank must adopt the whole transaction or no part of it.
of fraud than is allowed to vendors in the way of praising their wares.
As we are of opinion that the defendant in error is entitled to keep his judgment, it does not matter so much as otherwise it would whether the result is reached by a dismissal of the writ, on the intimation of Walworth v. Kneeland, 15 How. 348, 56 U. S. 353 , see Conde v. York, 168 U. S. 642 , 168 U. S. 649 , or by an affirmance of the judgment. We shall assume that the defense under the statute was such a claim of immunity as to entitle the plaintiff in error to come here. Logan County National Bank v. Townsend, 139 U. S. 67 , 139 U. S. 72 ; McCormick v. Market Bank, 165 U. S. 538 , 165 U. S. 546 . On that assumption, however, we do not perceive how the defense is made out on the record. The complaint, to be sure, alleges that the bank was acting unlawfully in selling the bond, but it does not appear that Petrie knew the fact, and it would be a strong thing to charge him with notice or a duty to make inquiries as to how the bank was conducting its business, or to make the validity of the sale depend upon the fact alone, irrespective of the purchaser's knowledge. See Miners' Ditch Co. v. Zellerbach, 37 Cal. 543, 578, 579; New York & New Haven Railroad v. Schuyler, 34 N.Y. 30, 73; Madison & Indianapolis Railroad v. Norwich Savings Society, 24 Ind. 457, 462. The sale might have been lawful. It was not necessarily wrong. First National Bank of Charlotte v. National Exchange Bank of Baltimore, 92 U. S. 122 , 92 U. S. 128 . However, we need not stop at this preliminary difficulty or another suggested by the answer, on which no point was made. The answer alleges that the sale was without the authority or consent of the bank, and was not within the course of its regular business, which looks a good deal like an attempt to deny that there ever was an effective sale, and yet to keep the price.
an action of this character in respect of a sale on commission by the bank. We express no opinion as to an action of that kind. See Thompson v. Saint Nicholas National Bank, 146 U. S. 240 , 146 U. S. 251 ; Concord First National Bank v. Hawkins, 174 U. S. 364 . But when a right is claimed to repudiate it, the party who denies the right is the one who relies upon the contract, and that party must take it as it was made. The record discloses no error reexaminable here.
MR. JUSTICE McKENNA took no part in the consideration and disposition of this case.

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