48 L. Ed. 857, and subsequent interpretive decisions.
The Bank may not here question the validity of the lease. It has estopped itself by its solemn execution and recognition of the instrument in which the lease agreement is embodied. The Bank, 'having assumed by entering into the contract (of lease) * * * to have the requisite power, both parties (to the contract) are estopped to deny it.' Whitney v. Wyman, 1879, 101 U.S. 392, 397, 25 L. Ed. 1050. The Bank has reaffirmed the validity of the lease in its letter of April 1, 1955. If the Bank is estopped, as to the lessor, the efficacy of the estoppel to protect lessor's grantees (including plaintiff and his co-tenants), who purchased the fee of the reversion for value and in reliance upon the existence and validity of the lease, becomes the more conclusive. That the former president and some of its directors did not consider the sale-and-lease-back transaction advantageous to the Bank will not, in the absence of fraud or mistake, justify a rescission, cancellation or termination of the lease, nor a receovery by the Bank of rent money paid thereunder. If the Bank's entry into the transaction was ultra vires under 12 U.S.C.A. § 29, the Bank may not relieve itself of its commitment thereunder. Only the sovereign may be heard to object thereto. Kerfoot v. Farmers' & Merchants' Bank, 1910, 218 U.S. 281, 286, 31 S. Ct. 14, 54 L. Ed. 1042; National Bank v. Whitney, 1880, 103 U.S. 99, 103, 26 L. Ed. 443; Union National Bank v. Matthews, 1878, 98 U.S. 621, 25 L. Ed. 188. In Kerfoot the action was brought by the administrator and sole heir of the deceased grantor in a deed to a national bank, to set aside the conveyance 'upon the ground that under * * * (the) statutes of the United States * * *, relating to national banks, the bank was without power to take the property.' In reaching its conclusion that the deed was effective to pass title to the bank, the Supreme Court (218 U.S. at page 286, 31 S. Ct. at page 14) used the following language:
'But while the purpose of this transaction was not one of those described in the statute for which a national bank may purchase and hold real estate, it does not follow that the deed was a nullity, and that it failed to convey title to the property.
'In the absence of a clear expression of legislative intention to the contrary, a conveyance of real estate to a corporation for a purpose not authorized by its charter is not void, but voidable, and the sovereign alone can object. Neither the grantor nor his heirs nor third persons can impugn it upon the ground that the grantee has exceeded its powers.'
Recognition of the foregoing principle is disclosed in Noel Estate v. Commercial National Bank in Shreveport, 5 Cir., 1956, 232 F.2d 483 and in Langham's Estate v. American National Bank of Beaumont, Texas, 5 Cir., 1948, 165 F.2d 968. That principle governs the case at bar. Vid et., Brown v. Schleier, supra. Houston v. Drake, supra, relied on by the Bank does not reject the foregoing principle. It is factually distinguishable from the present case. If held that the liquidator of an insolvent national bank might disaffirm the unexecuted portion of a 99-year lease on property not occupied by the bank. The lease in that case covered premises occupied by a bank other than that represented by plaintiff as liquidator. The original lesses bank transferred its assets, less the lease, to plaintiff's bank, and the latter assumed all the obligations and liabilities of the former. Lessee bank gave its assignee an option to take over the lease. This option was exercised by an agreement of assignment to which the owner of the premises, the original lessee and plaintiff's (assignee) bank were parties. By the terms of this agreement the landlord reduced the rent reserved by the lease and plaintiff's bank agreed to assume the lease obligations as so modified. The assignor bank relied on Brown v. Schleier, supra, to support the validity of the lease assignment and of the assignee's assumption of liability thereunder, but the court refused to accept the Brown case as a precedent because (as stated in the opinion, 97 F.2d at page 865) 'the difficulty with these propositions is that there is no showing that the (assignee) Bank intended to use this property for the transaction of its business. On the contrary, the evidence shows that the (assignee) Bank owned the premises in which it was conducting its business and occupied them except for a period of nine months when it moved temporarily (emphasis supplied) to the leased premises in order to permit the construction of a new building on its property'. The same circuit court distinguished the Houston case in Frank v. Giesy, 9 Cir., 1941, 117 F.2d 122, in sustaining the validity of a lease under which a national bank assumed liability upon consolidation with the original lessee bank. The Court in the Frank case said (at page 125) that 'the lease did not become ultra vires simply because the lessee, upon its consolidation with another bank, no longer occupied the leased premises' (citing Brown v. Schleier, supra). As against Brodsky, in any event, the Bank has estopped itself to impugn the validity of the lease, and only the Comptroller of the Currency may assert that it was ultra vires the Bank.
The Bank also contends in this case that the Bank's entry into the lease was ultra vires under 12 U.S.C.A. § 371d,
because the leasehold constitutes an investment in bank premises aggregating in excess of the capital stock ($ 500,000) of the Bank. The Bank argues that the limitation prescribed in the quoted section has been exceeded because (in the language of its brief) 'the liabilities incurred under the lease were $ 80,000 times 21 years, plus all of the other carrying charges for each year.' In the year 1954 alone these charges were stated to be $ 56,000. Brown v. Schleier, supra, holds adversely to this contention. The Court of Appeals in Brown said (118 F. at page 985):
'We are furthermore of the opinion that the lease in controversy was not invalid because the gross rents payable during the term would have amounted to a sum exceeding $ 300,000, which was the amount of the bank's original capital. The gross rents that were to accrue and would have accrued at intervals during the 99-year term, if the lease had not been surrendered or cancelled, do not, in our judgment, constitute an indebtedness, within the fair intent and meaning of (the limiting statute).'
For the same reason Section 82 of Title 12 of the United States Code Annotated does not afford the Bank an effective defense against its continuing liability under the lease.
Further, as already indicated with respect to 12 U.S.C.A. § 29, the statement that only the sovereign may be heard to object to a transaction apparently in conflict with statutory regulations where a bank seeks to exercise its powers, is equally applicable to these two sections, it being the exclusive function of the Comptroller of the Currency to enforce such regulations. Inland Waterways Corp. v. Young, 1940, 309 U.S. 517, 524, 60 S. Ct. 646, 84 L. Ed. 901; Cooper v. O'Connor, 1938, 69 App.D.C. 100, 99 F.2d 135, 118 A.L.R. 1440.
Judgment will be entered in favor of the plaintiff, Irving Brodsky, dismissing the counterclaim of defendant, The Perth Amboy National Bank. Submit order.