## Facts

- In June 1934, Citizens National Bank at Brownwood (Citizens) was organized to purchase the closed Citizens National Bank in Brownwood, which was then in the hands of a conservator.
- In June 1934, Wise and Citizens’ board of directors agreed that Wise would serve as vice president for the period July 1934 through September 1934 at a salary of $300 per month.
- At the time Wise served as vice president, Citizens had applied to the United States Office of the Comptroller of the Currency for a certificate authorizing it to conduct national bank business, and the application was still pending.
- The Comptroller issued Citizens a certificate of authority on September 28, 1934.
- Citizens did not pay Wise the salary called for by the employment agreement.
- Wise sued Citizens to recover his unpaid compensation.
- The trial court concluded the employment contract was ultra vires under the National Bank Act and therefore void, and Wise appealed.

## Issues

1. Whether a newly organized national bank, before receiving the Comptroller’s certificate authorizing it to commence business, has authority to enter an employment contract to pay a vice president for services during the organizational period.
2. Whether the National Bank Act renders such a pre-certificate employment contract ultra vires and unenforceable.

## Decision

- The court of civil appeals reversed the trial court’s judgment that treated the contract as void for ultra vires.
- The court held that an organized national bank may bind itself to reasonable contracts connected to completing organization and preparing to begin operations, even if the Comptroller’s certificate has not yet issued.
- The case was remanded for further proceedings on Wise’s claim for the salary promised under the agreement.

## Legal Principles

- After a national bank is organized under the National Bank Act, it possesses powers—express and implied—needed to complete its organization and prepare to open, even though it may not yet conduct general banking business without the Comptroller’s certificate.
- Contracts made in furtherance of legitimate organizational purposes (including employing and compensating officers to perform preparatory services) are not treated as ultra vires solely because they were made or performed before the certificate of authority issued.
- An ultra vires defense does not apply where the contract relates to lawful organizational activity rather than unauthorized banking transactions.

## Conclusion

Wise held that a newly organized national bank could enter and be bound by a salary agreement employing a vice president during the pre-authorization period while its application to the Comptroller was pending; the agreement was not void as ultra vires merely because the bank had not yet received its certificate to commence business, so the judgment against Wise was reversed and the case remanded.


Wise v. Citizens National Bank at Brownwood, 107 S.W.2d 715 (1937)