Scott v. Saunders

¶11. Conspiracy <®==>I7 — All conspirators need not be joined in suit to recover fund obtained through the conspiracy.

¶2A complainant, defrauded of a fund through a conspiracy, may maintain a suit for its recovery against the conspirator having possession of the fund without joining the others.

¶32. Banks and banking <3^63*/2 — State superintendent, in possession of assets of insolvent bank, may be required to restore trust fund.

¶4A state superintendent of banks, who is in possession of the assets of an insolvent bank, in which is included a sum fraudulently acquired by the bank and held in trust for complainant, is in no better position than the bank to defend against a suit for its recovery, and may be required to restore it from the assets.

¶53. Appeal and error <©=>l87(3) — Decree will not be reversed for absence of party, not indispensable, whose joinder was not asked.

¶6An appellate court will not reverse a decree, otherwise correct, because of the absence of a party who might have been brought in for the protection of a defendant, but for which no application was made, and upon which error is not assigned.

¶7Appeal from the District Court of the United States for the Eastern Division of the Northern District of Ohio; D. C. Westenhaver, Judge.

¶8Suit in equity by Helen M. Saunders against H. E. Scott, Superintendent of Banks of the State of Ohio, and others. Decree for complainant, and defendant Scott appeals.

¶9Affirmed.

¶10Helen M. Sanders brought an action in equity against Clara M. Saunders, John S. Wilson, administrator of the estate of Robert M. Saunders, deceased, R. W. Healey, the Mutual Life Insurance Company of New York, and H. E. Scott, superintendent of banks of the state of Ohio, to recover specific funds in the possession of the state banking department of Ohio. She averred in her petition that Robert M. Saunders, a resident of the state of Pennsylvania, died intestate on or about the 1st day of February, 1920, leaving surviving him the plaintiff, his mother, and Clara M. Saunders, his widow; that he left no father or children surviving; that under the law of Pennsylvania his widow was entitled to $5,000 and to one-half part of the remaining real and personal estate; and that she, as the mother of the deceased, was entitled to one-half the estate in excess of the first $5,000 to the widow. She further averred that at the time of his death her son owned two policies of life insurance, issued by the Mutual Life Insurance Company of New York, aggregating $25,000; that these policies were originally made payable to the Struthers Savings & Banking Company, of Struthers, Ohio, to secure the payment of money borrowed by Robert M. Saunders from said bank, but that prior to his death he had fully discharged his obligation to the bank; that the policies had been delivered to him, and by him transmitted to the defendant insurance company for the purpose of having them changed, so that they would be made payable to his estate; that before such change could be made Robert M. Struthers died,, and Wilson was appointed his administrator; .that thereupon the agent of the defendant insurance company, in possession of these policies, transmitted the same to Wilson, administrator, with the statement that the same was payable to him as trustee of said estate; that the administrator, disregarding his duty as trustee, and co-operating with the defendants, Healey, Clara M. Saunders, w’dow, and the Struthers Savings '& Banking Company, delivered these policies, which belonged to the estate of Robert M. Saunders, deceased, to the Struthers Savings & Banking *31Company, and procured and induced its treasurer fraudulently to represent to the defendant insurance company that the Struthers Savings & Banking Company was legally entitled to receive the entire amount payable thereon; that thereupon the Struthers Savings & Banking Company, acting by and through its treasurer, made out and presented a claimant’s certificate, and the defendant insurance company negligently paid to the Struthers Savings & Banking Company the sum of $25,000 upon these policies; that upon the receipt of this money the Struthers Savings & Banking Company issued to Clara M. Saunders passbooks for said amount, with the full knowledge that the money so received and retained by it was money belonging to the estate of Robert M. Saunders; othat said banking company knew, at the time it received and retained this money, that it was insolvent; that shortly after the receipt of this money the bank was ordered closed by the state banking department of Ohio as an insolvent banking company, and the assets thereof, together with the $25,000 belonging to the estate of Robert M. Saunders, passed into the hands of H. E. Scott as superintendent of banks of the state of Ohio.

¶11*30other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

¶12*31Plaintiff further averred that Scott, superintendent of banks, in the course of the liquidation of the affairs of this insolvent bank, allowed the claim of Clara M. Saunders, evidenced by her passbooks, as a valid claim against, this bank, and paid to her two payments aggregating about 50 per cent, of the total amount; that the balance of said fund is in the possession and control of Scott as such liquidating officer; that the defendant John S. Wilson was appointed administrator of the estate of said decedent by the orphans" court of Allegheny county, Pa.; that he' proceeded to administer the estate in that court, and on the 27th day of June, 1921, filed a final account of his administration with the orphans’ court of Allegheny county, Pa.; that the same was approved and confirmed on the 13th day of July, 1921, by a decree of that court, and that in the process of administering said estate he paid and distributed to Clara M. Saunders, widow, $4,945.75, to apply upon the $5,000 which she was entitled to receive first out of the estate of her deceased husband, and that nothing whatever was paid to the plaintiff, and prayed for an equitable judgment, order, and decree against tne defendant Clara M. Saunders, John S. Wilson, as administrator of the estate of Robert M. Saunders, the Mutual Life Insurance Company of New York, and defendant H. E. Scott, superintendent of banks of Ohio, for the sum of $12,500, and for other relief.

¶13The defendant Scott, for answer to this petition, admitted his official capacity, the insolvency of the Struthers Savings & Banking Company, that he was in possession of its assets, that in the ordinary process of liquidation he had allowed and paid to the defendant Clara M. Saunders dividends aggregating $11,977.78, and, for want of knowledge, denied all the other allegations of the petition; and, further answering, he averred that he had no interest in the controversy other than in his official capacity, and prayed the court’s guidance and instruction in the payment of future dividends. The Mutual Life Insurance Company of New York by answer admitted the issuing of the policies upon the life of Robert M. Saunders; that in good faith it had paid $23,955.55, the full amount due on these policies, to the Struthers Savings & Banking Company, as provided by the terms of the policies, and without any knowledge or negligence on its part, but upon the representations, claims, and demands made upon it by the Struthers Savings & Banking Company, and for want of knowledge denied all other matters set up in the plaintiff’s petition. The other defendants were not served with summons.

¶14Upon the trial of the issues joined by the petition of the plaintiff and the separate answers of H. E. Scott, superintendent of banks, and the Mutual Life Insurance Company, the District Court found on the pleadings and evidence that all of the allegations and averments of the petition were true, save that the amount due on said policies of insurance was $23,955.55, and ordered and decreed that the defendant H. E. Scott, as superintendent of banks, pay to the plaintiff, from the funds in his possession, the sum of $11,950.67, with interest thereon at 6 per cent, from the 23d day of March, 1920, and that said defendant pay the costs. Thereupon H. E. Scott, superintendent of banks of the state of Ohio, filed a petition for appeal, which appeal was al*32lowed by tbe trial court. With tbe petition for appeal defendant Scott filed tbe following assignments of error: “Because tbe evidence showed that the defendant the Mutual Life Insurance Company knew, or by tbe exercise of ordinary diligence and care and prudence ought to have known, of all of tbe facts set up in tbe plaintiff’s complaint herein, and was jointly responsible for tbe things complained of in said complaint, and not entitled to be freed and discharged from liability by reason of tbe facts stated in said complaint, but, on tbe contrary, was and ought to have been held liable in contribution to this defendant.”

¶15Before tbe hearing and submission of this appeal to this court tbe Mutual Life Insurance Company, by and with tbe consent of tbe appellant, H. E. Scott, superintendent of banks of Ohio, was-dismissed as a party defendant to this appeal.

¶16Herbert D. Palmer, of Cleveland, Ohio (Charles C. Crabbe, Atty. Gen., of Ohio, and David E. Green, of Cleveland, Ohio, on the brief), for appellant.

¶17Daniel P. Conway, of Youngstown, Ohio (James Kennedy, of Youngstown, Ohio, on the -brief), for appellee.

¶18Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.