(OC:.;.i:uit Oourt;, :E. D.: Missouri,' E. D. ,. ;
NATtONAL BANXs---EXCEBBIVlI LOANs---LuBILITY, OF DIRECTORS..
2. SAME-RimEDY AT LAw. " , An action by a receiver of a bank whose charter has been forfeited under above statute against a director is properly brought ,at, law;' there bei"g for invoking the aid of a court of chancery either because of the nature of the issues involved, or to avoid a multiplicity of actions.
The rig1;lt to nlaintain an actl,on llnder Rev., ,St. U. 8. § 5239, to recover ,of a bank director the sustained by his bank in consequence of excessive loans made by him while servmg in the capacity 6f director, is not affected by the fact that the cOlnptroller has"or has not forfeit:Qre,oftb.e bank's c;barter.
In such action, piainti1f may state the aggregate amount of the excessive loans made toeach party, and the damage resUlting therefrom in each case, accompanying each allegation with' an exhibit showing the dates aud amounte of 'the fieveral loans go to m$ke up the aggregate sum stated in the petitiQn, and is not pelled to declare in a separate count for each loan m a d e . ' ,, '
'I " '"-;).'
At Law. :: This'was Ii suit by a receiver of an insolvent natioI1al bank; 'dul:t' appointed under the provisions of section 5234 of the Revised Stattites of the United States, against the executrix of a deceased president and directoriof the bank, to recOVerdll.111ages alleged to have been sustained by the bank in consequence of loans knowingly made by the deceased,in his capitcity as president and director, to four different customers of'the bank, to each in excess of one-tenth of the amount of- its capital stock actuauy paid in. The action was founded on sections 5200 and 5239 of the Statutes of the United States. The dec1aration,or " petition," it is termed under the Missouri Code, recited the organization of the insolvent bank, the fact that defendttot's testator was its president and one of its directors from its organization until it became insohrent, that plaintiff was duly appointed receiver of its affairs, etc., and then averreq., in substance, that the testator in his life-time, and while acting in the capacity of president and director, "participated in and knowingly assented to the making oHoans" of the.funds of said bank to Nathah Goldsmith & Co., to the amount of $99,591, in excess of one-tenth of the capital stock of the bank j $54,591 whereof was thereby wholly lost, and that the bank was damaged to that extent. Similar allegations, ,differing only in amounts and dates, were made in separate graphs with respect to excessive loans to the John Meyer Lumber Company, the St. Louis Planing Mill Company, and the Elliottville MiHs. The petition showed the total amount of the excessive loans made to each. of the four concerris above mentioried, and the amount of the loss Attached to the petition were thereby and in each instance four exhibits" showing the dealings between the bank and said companiesfor, the period of several years, from which it appeared that the excessive'lbil.ns in question were not made in one sum to either of-the sev'" eral debtors, but that each of them borrowed from time to time, ahd.in different'm:noUnts, money in excess of the sum 'authori:l:ed by law to be
loaned. The petition also showed that the insolvent bank was ousted of its charter before this suit was begun, in a proceeding brought by the comptroller of the currency under the provisions of section 5239, BUpra, and that in the cOnlptroller counted upon the excessive loans to Nathan Goldsmith & Co., to the John Meyer Lumber Company, and to the St. Louis Planing Mill Company as a violation oflaw, and that, 'inconsequence ,of such loans and, other violations Of law, the court decreed a forfeiture of the bank's charter. . Draffen & Williams, Lubke & Muench, and Geo.D. Reynolds, U. S. Atty., for plaintiff. Ohester H. ((rum; for defendant.
THAYER, J. We have heretofore held in this -case that the cause of action did not abate with the death of the director, but survives against his exeoutrix. Since then the petition Las been amended, and a rlem.urrer, and also motioDs to compel an election as between causes of action, have been filed and argued, which present some questions not explicitly decided on the former hearing. Fi.Il&tjn order ofimportance is the demurrer, and it presents two propositioll$ in the alternative. , said, in the first place, that the remedy under section 5239 is statutory, in the sense that, before a recovery can be had against a bank director. under that .section, On account of an excessive loan, it must be proven. that the charter of the ,bank has been forfeited in a proeeeping taken', by ,thecomptrqller, because of the excessive loan in questipn, and that, inasmuch as the Elliottville Mill's loan was not counted upon in the proceeding, there can be. no recovery of the damage sustained by that.loan. On the hearing of the demurrer, wejexpressed the,opinion, and further consideration oUhe subject has strengthened the conviction, that the right to recover, under section 5239, of a bank director the damagessuatained in consequence of an excessive loan .pnde;rsection5200, is in no wise affected by the fact that the has or hali! notprocure<:i a forfeiture of the cOarter. Accordingl·t9/our view ,of section 5239:, two results, in no respect dependent uponeat;lh other, may follow the making of an excessive loan; that is to Sl,\y, tpecomptroHer may I if he thinks proper, proceed to have the charter ;revoked, aHegingthe exce!;l$iv.e loan as. a of law; but, ,so or not, a of the bank, who knowingly partipipates in or assents to the loan, may be compelled to make good whatever, damage resulk. to the bank froIp. making the This to US to:be the obvious meaning of the la,w. Failing on the proposition last mentioned, that the action is statutory in the. sense above indicated, counsel forthe executrix next insists that, iftlw right of action is nqt statutory in that sense, then· the remedy for the wrongful!J.cts is i,n equity, and not at law jand that the de1X):urrer ,should be susta:ined for that reason. This we regard as the most important point presented for statutes imposing a or stocltholders of cor-
STEPHENS fl. OVERSTOLZ.
porations Without prescribing the form of remedy, the question has frequently arisen whether the appropriate remedy was at law or in equity i and the decisions on that point have usually turned on the nature of the liability imposed, the difficulties standing in the way of the enforcement of the liability in a strictly legal proceeding, and on other considerations of a similar chl1racter. Thus in the case of Hornor v. Henning, 93 U. R. 228, an act of congress authorizing the organization of savings banks in the District of Columbia provided, Rmong other things, that, "if the indebtedness of any company organized under the aut, should at any time exceed the amount of its capital stock. the trustees of such company assenting thereto should be personally and individually liable for such excess to the creditors of the company." A suit at law having been brought under this statute against several trustees of a savings bank by a single creditor, the court held that, notwithstanding the literal reading of the statute, congress did not intend to make the trustees liable beyond the debts of the bank which it failed or refused to pay, that the act was intended for the common benefit of all the creditors of the bank, and that the liability of the trustees for an excessive indebtedness at any time created was in the nature of a trust fund, in which all the credit-ors were entitled to share in proportion to the amount of their debts, so far as it might be necessary to resort to the fund to pay the same. Viewing the statute in that light, the court further held that the remedy for its· enforcement was in equity rather than at law, inasmuch as it was necessary to take an account of all the liabilities and assets of the bank. to determine to what extent it was necessary to resort to the fund in question, and for the further reason that a proceeding in equity would avoid a multiplicity of suits, and prevent one creditor from absorbing a greater portion of the fund than he was entitled to. In the case of Stone v. Chwolm, 113 U. S. 302,5 Sup. Ct. Rep. 497, which was a suit brought to enforce the sa\De kind of statutory liability last described, the doctrine announced in HornfYr v. Henning was applied and reaffirmed. It was also held in the case of Cmwn v. Brainerd, 57 Vt. 625, under a statu:te making the directors of a corporation liable to its creditors for any loss resulting from their "incompetency, unfaithfulness, or remissness in discharge:of their official duties," that the remedy for the enforcement of the liability was in equity, because the remedy afforded by that forum would, be more" complete, convenient, and comprehensive," and because the machinery of a court of law was not adequate to the enforcement of the liability in an equitable manner. On the other hand, the right to sue at law has been sustained in a class of cases where the liability imposed was of such a nature that it was thought to be conveniently enforceable in a legal proceeding. In New York and Missouri, and haps in some other states, it is held that an action at law will lie under a statute declaring, in substance, that if a corporation becomes dissolved leaving debtaunpaid, the persons then composing it shall be individually responsible to the extent of their stock. Bank v. Ibbotson, 24 Wend. 479 1 (opinion by NELSON, C. J.;) Perry v. Turner, 55 ,Mo. 418, (opinion by NAPXOlii, J.) In Maryland and Illinois it is also hel<i that a suitnt
law will: makingJloockllolders:1iaple, t6' the extent qf stock" fl>l!': debts contracted prior to theHme the whole amount :of the capitaL-ill; }intiu in. Oul'l:Cl'v. Bank, .64111.. '528; Matthews v. Albert, 24 Md. 527;: :.Norriav. Joh'll8on, 34 Md. 485. Our conclusionis;that,for thepnrpose of determining whether an action at law will lie in the CRseat bar, consideration' ought to be given chiefly ,to .· the question whether· the, remedy at law,as compared with the,l'ernedy.iu,equity, isas,coJwenientand adequate, and Dotmore burd,-ensC?me to the pRrty. proceeded against· The suit before us is to recover whatever damages the FiftbNational Bank maiyhave sustained in con- , sequence of e;xcessive loans knowingly made or.· assented to' by the defendant's testator, while serving in the capacity of director. The suitis by It receiver duly appointed, in whom are now vested aHclaims of the bank; and, as whatever injury resulted from making the excessive loans in, questionwlts a. done"to,' and recoverable by, theb.ank,it is not apparent that any stockholder or creditor of the insti,tution can maIntain a suit .against the executrix for the .alleged excessive during the pendency or after the termination of the present action. There is no necessity, therefore, to resort to equity to avoid a of suits. Furthermore, the issues to, be tried' appear to be such as can be convenienUY d\spolled .o£by a court of law.,· They are simply whether certain speCified loans, made to fourdHferent parties, were made at a time when tb,e several parties were already indebted to the ,bank in a sum equal to olle"tenth ofitseapital actually paid in, and wht'ther such loans were knowingly made or assented to by tbe testator, and what portion of the moneys so loaned· were lost. We can foresee no inherent difficulty in trying all of these issues intelligently and fairly in a court of law·. The case appears to be one in which there is no necessity for, invoking the aid of a court of chancery I either because of the nature of the issues involved, or to avoid a mUltiplicity ofactiQns. The demurrer will be overruled, in accordance, with these views. The several motions to compel an . election between causes of action laisemerely a question of pleading. In support of the motions, the contention is that plaintiff should be compelled to declare in a separate !Jount for each excessive loan made to the sevel'al parties named in the petition, .on the ground that each loan constitutes an independent cause of action. On the other hand, it is contended that plaintiff is -entitled to state the aggregate amount oftheexcessive,loans made to each party; and the dama.ge resulting therefrom in each case, accompanying each alwith an exhibit, showing· the dates and amounts of the several loans that :go tonlake up the aggregate sum stated in the petition. We think the latter view is BU pported by the, better reasons. The rule !Jontended.for by the executrix,would render the complaint very prolix, without$ecUring evell to her any substantial advantage. Thf:) !exhibits ,tathe petition fully ad vise the defendant of the dates and amounts c:>i'the several unlawful loans, and"in any event, the burden will; :be on: ;the .plaintiff to show that the several loans so specified were
CAMPIOB V. CANADIAB PAC. BY.
each made with the knowledg·e and assent ofthe deceased director. The case will also bar any further projudgment ultimately rendered in ceedings oli account of ally oithe Ibans :mentioned in the exhibits. We' fail to see, therefore, how the' method of pleading that has been adopted will put the defense to any disadvantage. Furthermore, in view of the fact that the statute creates a right of action for making advances be" yond a given limit, we think it is sufficient to aver that loans were ingly made to certain parties by the deceased director to a given amount beyond that limit, which resulted in a loss to the bank, and that no ob-' ligation rests on the pleader to count upon each loan as a separate cause: of action. The dates and amounts of the several loans are matters of idence to be established at the trial. In support of this view; we may fairly invoke the rule of pleading under the Missouri Code; 'which permits a plaintiff in a suit on a bond or a contract to assign any number of breaches,' 'although they occurred at different times, in one and the same count ofthe declaration. ' State v. DaviB, 35 Mo. 407. Upon the whole, we conclude that the motions to compelanelectiOl'l should be overruled, and it is so 'ordered. Justice. I fully concur in the foreg,oing opini()n.
CAMPION t1. CANADIAN:
(O-LreuUCourt, ,N. D. Illtno1.B. Septem1;ler 29, 1800.)
OI.BBmR OP GooDs-LIABILITY FOR Loss.
Wbere a carrier, after informing tbe owner of goods delivered to, it for traI)50 portation tbat theY will be at place of receipt till the freight charges are paidJ ships the goods without payment, and without notil18 to the owner, it is lial)le for aamages resulting from such prematureallipmellt.. ' .' ,
John S. Oooper, for plaintiff. ,Walker «- Eddy, for defendant:.
GRESHAM, J. Having determined to remove from Chicago to Seattle with her family, (two daughters,) the plaintiff,on May 14, 1888,visiited the office of the defendant to arrange for the shipment of' heltfur. niture,books, pictures, clothing, and other household goods. . The ·de-. fendant's agent agreed to receive and forward the goods, and informeq the plaintiffth'at from Chicago to St. Paul they would be cimied"(l)",er the Chicago; St·. Paul & Kansas City road, thence to Vancouver o:vertl:!e defendant's road, and thence to their destination bY' the Nonhern Pacific Navigation Oompany. 1'he defendant knew tbat the plaintiff desirecl..td receive andcarfl for her good!! when they reached their destination, that she expected to start 09 her journey that day. 'Alter deliveringihar