Opinion
No. 29300.
March 23, 1930.
1. BANKS AND BANKING.
Bank president's knowledge of asserted invalidity of notes which president sold to bank acting solely through committee was not knowledge of bank.
2. BILLS AND NOTES.
Violation of Blue Sky Law constitutes no defense to negotiable instrument in hands of innocent purchaser for value without notice (Code 1930, sections 4178-4198).
APPEAL from circuit court of Sunflower county; HON. S.F. DAVIS, Judge.
Frank E. Everett and Oscar B. Townsend, both of Indianola, for appellant.
Every contract made for, or about, any matter or thing which is prohibited and made unlawful by any statute is a void contract, though the statute itself does not mention that it shall be so, but only inflicts a penalty on the defaulter; because a penalty implies a prohibition, though there are no prohibitory words in the statute.
Bohn v. Lowrey, 77 Miss. 424; Quartette Music Company v Haygood, 108 Miss. 755; Cowan v. London Assurance Co., 73 Miss. 321; Goodman v. Swett, 108 Miss. 224.
A note, obligation, or security of any kind given or transferred by any subscriber for stock in any corporation shall not be considered, taken, or held as payment of any part of the capital stock of the company.
Section 4148, Code of 1930.
Commercial paper cannot be based on any consideration expressly forbidden by a statute.
8 C.J. 243; Montjoy v. Delta Bank, 76 Miss. 402, 24 So. 870; Ellis Jones Drug Co. v. Williams, 139 Miss. 170, 103 So. 810.
The president of the plaintiff bank, having knowledge of the infirmity the bank was also charged with such knowledge.
Bank v. Leeton, 95 So. 445.
Denman Breland, of Sumner, for appellee.
Knowledge which comes to an officer of a corporation through his private transactions, and beyond the range of his official duties, is not notice to the corporation, although he is, at the time, the managing agent of the corporation, or the president thereof.
7 R.C.L., sec. 656, page 654.
The giving of a promissory note in payment of stock in violation of the statute is no defense to a bona fide purchaser for value without notice.
Perkins v. Merchants' Farmers' Bank, 103 Miss. 179, 60 So. 131, Ann. Cas. 1915B, 788; 10 Cyc. 425 and 439; Breland v. Barnett, 126 So. 386; Bank v. Leeton Bro., 131 Miss. 324, 95 So. 445; Noel v. Hough Drug Company, 123 Miss. 598, 86 So. 359; Allen v. Edwards, 93 Miss. 719, 47 So. 382; Longbeach Canning Co. v. Clark, 141 Miss. 177, 106 So. 646, Sec. 60 of Uniform Negotiable Act.
Appellants executed their three promissory notes in the principal sum of $500 each, payable to bearer. The notes do not disclose on their faces for what they were given, but it is shown by the evidence that they were for the purchase price, in part, of certain stock in a foreign corporation; and it is further shown that the said foreign corporation had not, at the time of the sale of the stock aforesaid, complied with the so-called Blue Sky Law of this state (Code 1930, sections 4178-4198). Before the maturity of said notes, they were transferred by the original holder thereof to N.R. Rice, the latter being then and at all times since, the president of appellee bank; and later, but before maturity, the said notes were sold and transferred for cash by said Rice to appellee bank.
It is alleged that Rice, the president of appellee bank, knew of the asserted invalidity of said notes, that is to say, that they were taken in violation of the said Blue Sky Law, and the knowledge of the said president is, therefore, attempted to be imputed to appellee bank. The proof shows that in the transaction, wherein the bank purchased the notes, the bank was represented by, and acted solely through, an executive committee of three directors of the bank, of which committee the president was not a member; that the president had no part in behalf of the bank in the acceptance of said notes, and in the purchase thereof, by the bank; that the alleged information possessed by the said president was not communicated by him to the said discount committee; and that said committee did not otherwise know or have notice of said asserted invalidity, if any there were.
In a case such as above stated, the knowledge of the president does not become notice to, or the knowledge of the bank. Cooper v. Robertson Investment Co., 117 Miss. 108, 77 So. 953; National Bank v. Feeney, 9 S.D. 550, 70 N.W. 874, 46 L.R.A. 732; First National Bank v. Leeton Bro., 131 Miss. 324, 95 So. 445, 448. And in the latter case it is also held that the violation of the Blue Sky Law does "not constitute a defense to a negotiable instrument in the hands of an innocent purchaser for value without notice." See also Brannan Negotiable Instruments, pp. 382, 383, 432.
Affirmed.