Farmers' State Bank v. Weiland

168 N.W. 718, 41 S.D. 57, 1918 S.D. LEXIS 134

• Court: South Dakota Supreme Court
• Decided: September 3, 1918
• Docket: File No. 4365
• Status: Published

Opinion

M'ciCO'Y, J.

There was verdict and judgment in favor of plaintiff, and defendant appeals.

There is but one question presented by the record for determination, and that is: the validity for the contract sued upon,. It appears from the record that the appellant was a director and vice president of the respondent ¡bank, and as such was entitled to and did receive a salary from, said bank for such services, -and that, while he was so acting for said bank, ‘appellant also engaged in the real estate business, selling" real estate for others on commission, and used a part (of his time during banking hours in negotiating the sale of real estate on commission,, and also used the offices, rooms, stationery, postage, and other equipment and supplies of said bank, in- negotiating and carrying on said real estate business, and that by reason of and as compensation therefor he agreed with respondent bank to pay to it the sum of $1 per -acre on all real estate sold by him, while he was ithus connected with said bank, and that said bank agreed to accept the said sum as compensation for said things used! by appellant in said real estate business. It also appears- that, while s'aid contract was in effect, appellant, as such real estate broker or agent, sold 320 acres 'oif land, and received as commission therefor the sum of $800 and thereafter failed and refused to pay the said bank the- -said sum of $1 per acre in accordance with the terms of said- agreement.

[1] It is the contention of appellant that, under the laws of this state, the respondent bank was- prevented from engaging in the business of buying and selling real estate, in that -it was not authorized to engage in any other business than -that of -banking, and that therefore the said contract w-as ultra vires, against public policy, and wholly void. We are of the opinion that this contention is- not 'well grounded. It does not appear that -any of the moneys of the bank were in any, manner used, or ta be used, in this real estate transaction with, which appellant was so connected, or that the bank in any manner ever became or could become obligated, as debtor, contractor, or otherwise, in connection with such real e'state transaction. No fraud, collusion, or other matter appears, by reason of which the stockholders' or patrons of respondent could in any manner be .prejudiced) by the making o;f said agreement. As we view this matter, the bank w,as in no manner whatsoever connected' with or a party to the business of selling real estate. The only interest the bank had therein was in receiving a portion of the commission that might be earned by appellant as an. agent f'or third! parties, whoi were making real estate sales through appellant. The bank hadi nothing to do with, the making of -the sales or the transaction of the business in relation thereto. Incidentally, in connection with the banking business, a bank may legally .become -the owner of certain, property.

It is a matter of common knowledge that many banks own their banking buildings in which they transact their banking business andi that 'such buildings contain rooms therein which are not necessarily used in such banking .business, and that such rooms may be rented to lawyers, doctors, real estate agents, and others for offices. 'We apprehend that a bank might rent such office rooms to a lawyer, doctor, or real estate agent, and' agree to accept as compensation floor rent a portion of the earnings of such occupant, and that it could not he said that the bank was engaged in the practice of law or medicine, or engaged in- the real estate business. In such instances, the same as this, the bank would be interested in such other business only in so far as to' be entitled to' receive a portion of the earnings of the tenant after such earnings had become the property of the tenant who bad earned; them. In this case the bank had1 an agent in the person of appellant, who was an officer of said bank, receiving a salary, and isaid bank also had offices and' rooms and stationery which might be used by said agent and official in connection with his other agency of selling land on commission fiar third) parties, and in consideration of permitting its said! agent and official, the appellant, to use a portion of his time and said offices and rooms and stationery, in. connection •with his agency for others, in the sale of real estate, the said bank agreed to accept, and; appellant agreed toi pay, a pioirtiom of his earning’s as real estate agent to said bank. In the absence of anything tending to show that such, arrangement or agreement in any manner prejudiced tire said banking business, or w;as a fraudulent subterfuge by and through which; the bank in .fact transacted a real estate business, we are of the view! that the agreement in question was a perfectly legitimate, valid, and lawful transaction, anldi one which the bank and appellant liad the lawful right to enter inlto.

The judgment and order appealed from are affirmed.