John A. Newsom, as Liquidator of The Citizens Bank & Trust Company, Plaintiff in Error, vs. Fred B. Gill, as Receiver of the American State Bank of Zephyrhills, Defendant in Error, 107 Fla. 458

Davis, J. Each count of the amended declaration in this case showed that the Citizens Bank & Trust Company of Tampa, in the execution of certain notes which were signed by it as follows: “Citizens Bank & Trust Company, a corporation, as Trustee, for Albert H. Lieberman, By W. H. Trice, V. Pt. ’’ was acting for the benefit of a third person. To hold that the bank thereby bound its own assets to the absolute payment of the notes in question, would be to say that the bank had power to, and did, lend its credit for the benefit of another.

And such holding would be in direct contravention of the decision of this Court in Cottondale State Bank v. Oskamp Nolting Co., 64 Fla. 36, 59 Sou. Rep. 566, Ann. Cas. 1916D 564. The power of a bank existing under the laws of the State of Florida to lend its credit has been directly referred to by the Circuit Court of Appeals of the Fifth Circuit in Sponge Exchange Bank of Tarpon Springs v. Commercial Credit Co., 263 Federal 20, where the Court said: “The law under which the Bank exists does not permit it to lend its credit to paper which it does not own, and in which it has no beneficial interest.

General Statutes of Florida, 2707; Cottondale State Bank v. Oskamp Nolting Co., 64 Fla. 36, 59 South. 566, Ann. Cas. 1916D, 564. The Florida law oh this subject, with notice of which parties dealing with the Bank are chargeable, is in conformity with the generally prevailing law governing banks. To permit banks to have and exercise the power of lending their credit for the sole benefit and advantage of others would be detrimental to the interests of depositors, stockholders, and the public generally. Commercial National Bank v. Pirie, 82 Fed. 799, 27 C. C. A. 171; Bowen v.

Needles National Bank, 94 Fed. 925, 36 C. C. A. 553; Merchants’ Bank of Valdosta v. Baird, 160 Fed. 642, 90 C. C. A. 338, 17 L. R. A. (N. S.) 526; Note Ann. Cas. 1916D, 554.” The rule that courts will of their o'wn motion take notice of illegal contracts coming before them for adjudication, as applied to unauthorized assumptions of contractual liabilities by State banks, was recently discussed by ME. CHIEF JUSTICE BUFORD in Citizens Bank & Trust Co. v. Mabry, 102 Fla. 1084, 136 Sou. Rep. 715, and applied in that case.

The recovery which was allowed in the recent case against the statutory liquidator of the Citizens Bank & Trust Company violates the principle of law that a claim of contractual liability will not be upheld and enforced against a State Bank on an agreement or undertaking by the bank to lend its credit to a third party. This rule is applicable whether the agreement or undertaking was direct or indirect, or arises by reason of attempted unauthorized execution of promissory notes on behalf of third parties, or otherwise.

To hold the bank liable in this case on the notes executed by the Citizens Bank & Trust Company purportedly on behalf of Lieberman, on the theory that the bank in contemplation of law bound itself, by reason of the fact that it failed to obtain authority under seal to bind Lieberman on a sealed instrument, would be to impute a contractual liability to the bank, which would have been beyond its express or implied powers to assume had it directly attempted to have done so. Therefore the recovery had was on a contractual liability which could not and did not exist and the judgment awarding it was erroneous.

The judgment is reversed.