Roxana Petroleum Co. v. Covington State Bank

1924 OK 413, 225 P. 375, 98 Okla. 266, 35 A.L.R. 774, 1924 Okla. LEXIS 1207
CourtSupreme Court of Oklahoma
DecidedApril 8, 1924
Docket12578
StatusPublished
Cited by9 cases

This text of 1924 OK 413 (Roxana Petroleum Co. v. Covington State Bank) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Roxana Petroleum Co. v. Covington State Bank, 1924 OK 413, 225 P. 375, 98 Okla. 266, 35 A.L.R. 774, 1924 Okla. LEXIS 1207 (Okla. 1924).

Opinion

Opinion by

LOGSDON, C.

This proceeding involves only the correctness of the action of the trial court in sustaining a general demurrer to the second amended petition of plaintiff and separately as to each of the four counts thereof. That only one cause of action was attempted to be stated is agreed by plaintiff and defendant. Plaintiff thus states the scope and purpose of its second amended petition at page 39 of its brief:

“Plaintiff in error incorporated in its second amended petition four separate counts or causes of action, each advancing a .distinct theory upon which it contends that a recovery may be had. For the purpose of demurrer each of these’ separate causes of action must stand or fall upon its own merits.”

Defendant, with more prolixity, makes the same estimate of its scope and purpose at page IS of its brief;

“While the plaintiff has separated its petition into four separate counts, it is apparent that the plaintiff only could have or claim one cause of action against the defend *268 ant bank and which under any possible theory advanced by the plaintiff, would only be the right to recover from the bank for the oil which the plaintiff claims it sold to the Superior Oil Refining Company and payment of which it claims was guaranteed by the defendant bank; so that the plaintiff’s petition does not set forth or attempt to set forth, four separate causes of action but attempts to set forth four separate counts which, taken together or singly, would state, or attempt to state, a cause of action against the derenclanc bank.”

With this clear understanding of the scope and purpose of the pleading assailed by the demurrer it should not be difficult to reach a correct conclusion upon the sufficiency of any of the counts to state a cause of action, all facts well pleaded being admitted.

By the first count plaintiff relied upon an express written guaranty made to it by defendant bank, being the culmination of extended negotiations between the bank, the defendant refining company, and the plaintiff. At the inception of the negotiations the refining company sought to purchase oil which plaintiff was producing from a certain lease. Plaintiff refused to sell to the refining company without a guaranty of payments. Thereafter, on June 4, 1918, the defendant bank wrote plaintiff a letter guaranteeing the semimonthly settlement of the accounts of the refining company to the amount of $2,500. Three days later, June 7, 1918, the defendant bank wrote plaintiff another letter guaranteeing the accounts of the refining company to the amount of $4,-000, and canceling the previous guaranty. Thereafter the oil runs taken by the refining company increased in amount, and plaintiff demanded of it a correspondingly increased guaranty. On July 19,1918, the defendant bank sent to plaintiff the written guaranty sued on, which was unlimited as to amount and conditioned only that plaintiff should notify the bank at any time that the refining company failed to make payments within 25 days, and providing that the guaranty was subject to revocation on due notice to plaintiff. That plaintiff relied upon the written representations and guaranty of defend-; ant bank and delivered to defendant refining company oil to the value of $16,384.S4, and that payment thereof has been refused. That defendant bank received certain benefits and advantages by reason of these transactions. That defendants are therefore liable to plaintiff for the amount of oil so furnished.

Clearly this count of the petition states a cause of action in favor of the plaintiff and against defendant bank, unless the doctrine of ultra vires operates in favor of the bank to render its contract void. Defendant bank contends, in effect, that this count is insufficient because it is not shown that it received all of the profits derived from the oil by the refining company. The extent of its benefits is a matter of proof rather than of allegation. On demurrer it is admitted that it did receive benefits as alleged. Whether those benefits are sufficient to preclude the defense of ultra vires must depend upon the facts shown by the evidence. The rule in this state was announced by this court in the case of Crowder State Bank v. Aetna Powder Co. et al., 41 Okla. 394, 138 Pac. 392, thus:

“Where a cashier of a bank makes a contract which is beyond his power and authority, but the bank by reason thereof secures a benefit or beneficial effect, it will not thereafter be heard to urge nonliability thereunder on the plea of ultra vires.”

In the body of the opinion, on page 400, the rule is applied in this language:

“And it seems to us that, whether a contract is ultra vires or not, if the corporation has permitted its execution and allowed innocent parties to surrender property or other things of value thereunder without objection, and it is impossible to restore their status quo and at the same time itself receive and keep the benefits or beneficial effects, it will not then be heard to plead ultra vires or lack of authority of one of its principal officers to bind it in that particular respect.”

The rule and its application announced in the above case has been expressly followed in Ewing et al. v. Board of Commissioners, 53 Okla. 250, 156 Pac. 229; Parker Gordon Cigar Co. v. First Nat. Bank of Claremore, 55 Okla. 468, 154 Pac. 1153; First Nat. Bank of Ada v. Womack, 56 Okla. 359, 156 Pac. 207; Western & Southern Fire Ins. Co. v. Murphy, 56 Okla. 702, 156 Pac. 885; Oklahoma City Nat. Bank v. Ezzard, 58 Okla. 251, 159 Pac. 267 (aff. 243 U. S. 631) ; Rainbow Oil & Gas Co. v. Barton, 70 Oklahoma, 173 Pac. 1135; Bennett v. W. A. Gage & Co., 74 Oklahoma, 176 Pac. 744.

Defendant bank seeks to distinguish the instant case from some of the above cited cases on the facts. But it must be borne in mind that in each of the casesi sought to be so distinguished this court was passing upon the facts shown by the evidence after trial upon the merits, while in the instant case the question is presented upon facts admitted by demurrer to the petition. Certain benefits are alleged to have been received by the bank by reason of the transactions which it guaranteed. Whether the proof will sustain these allegations is not before this court. The allegations are sufficient to admit proof-

It follows tnat the order sustaining the- *269 (general demurrer to the first count of the second amended petition was error, unless the general demurrer to the petition as a whole was correctly sustained. Defendant hank seeks to sustain this action of the trial court upon the theory that the first and fourth counts of the second amended petition are so inconsistent and irreconcilable as to be mutally totally destructive of the cause of action stated in each. This fourth count alleges all of the facts concerning the transactions substantially as in the first count, an]d then states a cause of action in tort as follows:

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Cite This Page — Counsel Stack

Bluebook (online)
1924 OK 413, 225 P. 375, 98 Okla. 266, 35 A.L.R. 774, 1924 Okla. LEXIS 1207, Counsel Stack Legal Research, https://law.counselstack.com/opinion/roxana-petroleum-co-v-covington-state-bank-okla-1924.