WITTERS, 'V. SOWLES.
[)
borrowed by Edward A. Sowles to pay for stock of the bank for the purpose of securing harmony among the officers and stockholders, and it is said in evidence that the transaction was reported to the comptroller of the currency, and received his approval. Whether his approval extended beyond tbeorganization of the board of directors, who bad lately been constituted, does not appear. If it did, he could not, and probably did not attempt to, vary any liability imposed by express statutes. It is suggested, also, that the conduct of the receiver who preceded the plaintiff has contributed to increase the loss from the poor assets. SucH, however, 'does not appear to be the fact, and, if it did, it would not affect the liability of any of the defendants on account of this unlawful loan, unless some part of the loss resulting from the loan was due to it. When the directors let this sum of $36,000 of the money of the bank go into the hands of Edward A. Sowles, as money borrowed by him of the bank, they placed it outside of where the law authorized them to place it, and became liable, then and there, for the excess above the legal limit at least, and chargeable for it, if, in consequence, it should be lost. What occurred afterwards had no effect upon the liability, except as it may have varied the amount of the loss. The result is that the defendants Albert Sowles and Burton are chargeable for the amount of this loss. There is no occasion for an account of it, for the amounhdistinctly appears. The defendants Edward A. Sowles and Hall are not; upon these considerations, chargeable for any of the losses in this suit; but they are so connected with these matters that they do not appearto be entitled to costs. Let a decree be entered that the defendants Albert Sowles and B1.uton· are chargeable for the amount of the loss on the loan of $36,000 to Edward A. :Sowles, ascertained to be $32,559.33, and that they pay that sum to the orator, with costs to be taxed, within 20 days from the entry of the decree, and that the bill be dismissed as to Edward A. Sowles and Hall, without costs.
WITTERS,
Receiver, etc.,
'V. l:;OWLES
and bthers.
(O£rcu£t Oowrt, D. Vermont. :May 2, 1887.)
1.
Eq,UITY-OPENING DECREE FOR FURTHER TESTIMONY·
2.S.um.
.A party will not be allowed to open a case llnd have evidence retaken, ,where his motion papers fail to show newly-discovered evidence, or evidence of which the party could not avail himself at the first hearing, and where it appears that the party merely wishes to deny what he did not deny before, but which called for denial then as much as at the time of the application for a rehearing.
No mistakes of judgment, prwant of attention or capacity of counsel, alford any just or proper grounds for granting a motion to open a case.
In,Equity.
,6
REPORTER.
" Ohe.ster W.
Witters:, for. ora-tall; LukeP. Poland and Albert P . .Or088, for defendant BurWn.
WHEELER, J. Since the decision; and before entryofthe decree in this the defendant BUrton his moved, on the affidavits of himself, Albert Sowles, D. Noyes Burton; and Albert P. Cross, for leave to take further testimony upon the; question of his assent to the loan of $36,000 to Edward A. Sowles, for the loss upon which a decree has been directed to be entered charging him and Albert Sowles. · There were two boards of directors from January 13 to February 11, 1880, each claiming to be the rightful board, both of which included Albert Sowles and oneothel', and one of them Edward A. Sowles and - Burton. The stock of those not in the latter board, and some besides, ·was purch8$ed by Edward A; Sowles; and paid for with the proceeds of this loan, to settle the difficulty between the two boards. The orator took thetel3timony of Albert Sowles, in which he testified, April 12, 1886, distinguishing this loan from others not assented to by the direot·ors, that it waS approved by all the. directors,-the board that went out, and the board that came in, February 11, 1880. He was cross-examined. by. counsel for the defendabtBurton. at length, but was asked nothing on that subject. 'l'he defendant Burton testified.atlength in his own behalf. This. loan after a whiletbok the form of drafts and accommodation notes. He testified that be had no knowledge of these drafts or notes untill3hortly before the bank failed, but did not testify about his knowledge of the original loan. Edward A. Sowles testified that it was understood that he should have a loan of $36,000 from the bank in order to pay for the stock, and that the old board of directors approved of the loan by taking the avails of it.. Counsel for Burton were present, but did not him. The substance of the affidavits of Burton, in addition to what his testimony was, is that his principal counsel, on whom be most relied, was not present at the taking of the testimony, and that the counsel who was present for him was not familiar with the details of the case; that he had no knowledge of this original loan, but supposed that Edward A. Sowles purchased the st09k with his own means; that he was not at St. Albans on February 11, 1880, and did not know what was dohe there on that day; he was informed afterwards that the difficulty was settled by the purchase, by Edward A. SOWles, of the stock of three of the persons claiming to be directors who had got out of the way; that he does not recollect that he was informed thllt he was appointed a director on that day, but has always supposed thll:t he held the office during that year by the election by the stockh()lders in .January; that he has been told by one of the retiring directors that he was not at St. Albans on that day, and that this director did not think that he knew anything at that time about the. transactions which took place on that day there; that 'the retiring directors refused to resign until they had money for their stock, and it was taken from the bank and paid to them, and a bond of indemll1ity to them was required by them, and taken from Edward A. Sowles
WITTERS V. SOWLES.
7
and Albert Sowles; that this director declined to make affidavit :>fthese facts, but, he believes, will testify to them if compelled; that soon after the dispute among the directors was settled there was an arrangement between him and Edward A. Sowles and his 80n, D. Noyes Burton, for the purchase of 100 shares of the stock, and that they examined the assets of the bank at that time and found no trace of such a loan, but the arrangement failed for other reasons. The substance of the affidavit of Albert Sowles is that about 190 shares of the stock were transferred to Edward A. Sowles, February 11, 1880, and $22,800 taken from the funds of the bank shown by a cash memorandum merely, and 100 shares about March 19th, and $12,350 taken from the funds of the bank,for which unaccepted drafts of Edward A. Sowles were given to pay for this stock; that these drafts were not entered on the books of the bank, but, with the cash memorandum, were carried to October I, 1880, \vhen new unaccepted drafts of Edward A. Sowles. to the amount of$37,600, were taken in place of them, and then entered on the books of the bank; that .he has no knowledge now that defendant Burton was informed by anyone that Edward A. Sowles procuradthe money from the bank to pay for the siock, or had any knowledge of the drafts; that, so {aras he knows now, Burton had no knowledge that drafts and notes to replace these drafts were given for the money taken by Edward A, Sowles to pay for the stock; that he did not intend to teStify in any maimer differently from this before, but had not then examined into the details of the loan as he has since, and got a little mixed in his account of it. The word "now," by which he limits his present knowledge of Burton's information and knowledge of the loan and draftS,was carefully interlined twice, at the time of making oath to theaffidil.vit, apparently; which indicates that his attention was called to it, and that he suggested or reoognized itll propriety. The substance of the affidavit,of D. Noyes Burton is that shortly after his father was elected director, February 11, 1880, he examined the assets of the bank with his father in view of the negotiation for 100 share.<;l of stock mthEdward A. Sowles, and found no indication that he had taken the moriey' of the bank to pay for stock then understood to have . been recently purchased by him. The substance of the affidavit of Albert P. Cross is that he was employed to attend the taking of the testimony in behalf of Burton; that he expected the seniorcounsel to be present and assist; that but little was taken before December, 1886, and then he was informed that the senior counsel could not atteRd, and that he must attend to it without that assistance; that Burtonstated to him his knowledge of this loan, as stated in his affidavit; that in vIew of the testimony taken by the orator he deemed the questions asked Burton, which elicited his testimony as to the drafts and notes and that testimony, as being all that was required to meet the case made by thaorator on this item; and that it was understood between him and the orator that there were securities held by the applicable to this loal1, and that there would be a reference to a master to a$certain the amount of the loss in case liability for it should
8 a11d
be decreed,andthat evidence on that subject would not then be proper, was omitted on that account., That BUJ'ton's attention was called .to the charge against him on account.of this loan is fully applitl!entfrom these affidavits, as well as from his former testimony.' Besides th3t, this Ipan specifically set out in the bill asa ground of his part on account of its unlawful to these allecharacter, with others, on the same ground. His gations was that,never,so far as he knew, and never with his consent, was the. limitation as to the sum to. be loaned to any perSon or corporation allowed to be violated by the bank or the directors of the bank. The eff'eet of this part of the Mswer, as evidence of any fact, is fully met by other instances. in which. the limitatio;n was violated by transactions in which he took part, and of which,by his own testimony, he had,full,knQwledge. Of this class is the cl;tse where D. Noyes Burton had, accotding to his testimony, used $20,QOO borrowed by Olliffe & Schmidt, D. Noyes Burton, and Edward A. Sowles, and became the bmrower of that, amount at this. bank, on paper indorsed by him and Sowles. to that amount, to R1::tij:e good what was so used. Also of.this Gloasswas the loan in May, 188B,to the Glens Falls Shirt Company of oV6r$16,000 on paper indorsed. :byhimself and Edward A. Sowles. And Albert Sowles testifies to his consent to a loan to him of $10,000, When he was already indebted to a large amount. This latter is, however, disputed by, Burton. He was not,charged for losses on account of these loans; foI' they were either shown 'to have been paid, or not shown to have resulted in loss. His answer may .have been morally respect, for he may not have known that these things were a violation ofuny law. If so, the' same maybe true.as to the loan to Edward A, Sowles in question. The fact that D. Noyes Burtpn found no trace of the loan among the assets of the bank would have no direct bearing upon the question whether his father ,assented to it or not, even if he made that examination after the loan was made. But his father testified that the negotiation Jot the 100 shares()f stock was had in Deeember, 1879, when he purchased 10 sbares of Edward A. SoWles for the purpose of becoming eligible as director in contemplation of the. electioll then approaching. An examination shortly after that would probably have been prior to the loan. Neither would the fact that he was not at St. Albans on the eleventh of February, 1880, and did not know of the transactions of that day as they were taking place, if shown by testimony of the outgoing director intArviewed, have any immediate bearing upon the question of his assent. That he knew of a proposed purchase of the stock before that day is shown by his own testimony, given as of his own knowledge, that it was advised by the bank examiner. ,Edward A. Sowles is named in the motion as a witness whose testimony is desi'redtobe taken further. There is no affidavit, or anything, from him to show whether there is anything to; which he can testify further than he has already testified or not. rfhe orator is also named in the motion as a witness whose testiniony is desired, but it is not understood that anything is expected from him but what appelJ,}"s from the
9
records ·of the bank in his handsj as stated from the affidavit of Albert Sowles.· Albert P. Cross isal80 so named. It is shown, however, that he has no kDowledge on except what has been acquired since his employment as counsel. There remain Albert Sowles, and the defendant Burton, whose further examination is desited.Therois nothing set forth from them which can in'anysenso be considered as newly discovered, except that a bond wasreqliired and had by the outgoing directors to indemnify them agaibStlia.bility; and that $22,800 of the loan was taken from the bank before they retired; and that the loan was not shown on the books of the bank ilntil October 1st after. The only apparent importance in the existencEfof1such a bond is that the taking of it would show thatthose who tdokitHad,orthought they had, incurred some liability against which 'they wlinifJedindemnity. If assenting to this loan: was that liability, it would· tendency to show that they were the 'ones who assented .to -it. .That,fitct ,.however, is' altoRdy shown in the: cllSe, and ha.s appeared ever sinoo' Albert Sowles' testified; land appea.red again in the testimony of Edw8}rd: A. Sowles. That'themoney w8s:takenbefore they retired would' not 'show that this' defendant did not assent· to the loan· before H was Mkel1; and assent to: it tt6 It director. He claimed':to be a director from his election by the stockholders at thebeginningofthe year, as appears' by 'his testimony,and it is understOod ,that he took the oath of office,: and :entered upon his duties as director,: so far as he was permhted, from that time· forward. That others claimed to be, and ·were recognized by still others,wh6 undoubtedly were directors, as the directors, would'not relieve hitn from what he did and claimed todoRs a directur that was prohibitedbyexptess law. The form of the loan and the manner of its entry on the books of the bank are wholly immaterial. There:isno question but that Edward A. Sowles, became indebted to thebnnk.to the amount about $36,000 as a borrower, and that is what the prohibited; and the a88e11t to the violation of that pr(}hibition is, what .creates the liqbility... Of course tpereis nothing in the defendaJ;lt'sown testimony. which he desires to give that is newly disc()Yered, although newly-discovered facts might make. it material whE)n it did not appear to be so before. There isjhowever, no such fact shown now, not known to him when he testified, as to make it newly material. Apparen,tly, he now merely wishes to deny what he did not deny before, but whicb;'Cl!'lled for denial then as much as now. It is not understood from'tl:)jilaftidavit.of Albert Sowles that he intends to say that .whll-t he got a little mixed about indudedthe assent oiall the directors of b9th boards to this loan. He says he had not examined into the details when he testified ,before as, he,has now, and gives that as a reason for getting mixer!. But when he testified about the assent, he 'did not go into the details at all, but testified to that as a distinct fact. He does nohay then to anything which he did not recollect, nor,that.anything was taken down by the examiner as testified to by him that he did not teatifyto. What is desired to be asked of him now was proper mat,tel' of cross-examinationtnen, or of examination in chief when the:de. ofendanttook his testimohy,if deemed desirable, and there has been
10
li'EDEItAI,. REPORTER.
nothing to: vary the desirability but the decision of the. case. So far as appears there was nothing to prevent the attendance of the seniorcounsel at the examination of Albert Sowles in April, 1886.. The testimony of the defendants was not taken until January, 1887; and that of Albert Sowles on this point lay on the surface of the case, in plain sight, during all the intervening time, for consideration as to should be done in respect to having it explained, or attempting to contradict it. And the defendant's counsel was: present to cross-examine Edward A. Sowles, when he testified, if that was deemed advisable. The defendant and.his counsel in charge did as they deemed best as to all of these things. In view of what they :knew about the facts of the case, their course may have been the wisest one to take; and may not. The real question is whether what was done .then should be allowed .to be done over again, because it is thought now that it ·:Ql!.n be dope in abetter manner. That it is within thepQwerofthe court to allow. this to be done now, is yondquestiob; But this is nota.power to be exerciSed arbitrarily, or otherwise than iaccording to the of procedure in such cases, as establisbad'and other course would tet;ld. to the confusion ofpar.tiesi as,to when and ,how their cases. should be made up and presented;.i and thereby make administr!lotion. of j.l,lStice less certain, and increase the chancellof.injustice. In Ruggles v. EddYi:llBlatchf.524,the defendant's counsel admitted .that their.l!ltovE$infringed·the plaintiff's patent, Hit was v.alid. The defendant6 moved to open the cas6 l Mter an interlocutory)decree, and to be permitted to contest the questi'oll of infringement, pt\,the ,ground that .if their caunsel had sufficiently studied the pa tent and examined their stoves, the admission would not have been made. "Upon. this Judge ,.WooDRUFF said: (.... ' "Iam.constt'ained to hold the defendants concluded. Their case, as made by themselves, testseitber upon thair..Qwn want of due or .the want "Qf due. .iJ?tellig!IDq60n the .part, .of counsel. By complainant ,mIght not tobe so far prejudiced as, decree, refel"ence, a.nd report of the .elled' to go a.goain through the litigation, on a point' dismaster, to. be comp 'tinctly presented al)d propel' tobethet at the outset·. Their case, 8spresented bytheconnsel whtimthey have employed for tljepurposes of this motion, and who ,regards it as clear tihat, as to most of the'stoves which they had made, they.bad avoideo. :the operatiOn of the patent, sooms, at first view, one ,of. if: that is so, the dof!lndants have brought it upon themselves J?y theirO'Yn negoligence, on a deg:ee of vigilance; an.d'accuracy on the part of several counsel whlCh they noW thInk was mM'equate to their protection. No case lnas been referred to which, in any degree, tends tosanetion the latitude of in!luigence which the defendants here seek. Cases are nUmerous tElUdingin, the other direction, ,of which India Rubber '00. '". Ph(1lps, 8 Blatchf. 85; Hitehqook v. Trema 9 Blatcb,f; 550; Prevost ne, y,,, (Jratz, Pet. O. C. 864; and. LiVingston v. Hubbs, 8 JO,hns. Oh. 124,-c-are .. . ': ., . A similar decision was made by"JudgeJoHNsoN, in Webster Loom· 00. Higgins, 13 Blatchf. 349 .. In De Florez v. Rayrwlch, 16 Blatchf. 397, the defendant's counsel, aftetexad:l'ination of a prior patent, omitted to. put it in as evidence. After an interlocutory degree the defendants' moved, by othercQJ.lllsel,
v.
WITTERSV.
sowtEs.
11
to operithe case to adniit itin eVidence,orithe groundthattheir former counsel had misjudged as to the scope of the prior patent, and that they had relied upon his .skill and fidelity as an attorney of the court, when in fact he was not at that time, although assuming to be, an attorney of the court at all. Judge BLATCHFORD denied the motion, after a · very careful review of the case and grounds of the motion. In doing so he said: .. This is not a caae of newly-discovered evidence. 'fhe gravamen of the application is the laches, and inexperience and incompetence, of Mr. Whitney. If such grounds were to be admitted as reasons for opening cases, there would never be an end of a suit, so long as new counsel could be employed who could allege and show that pilior counsel had not beensufliciently diligent, 'or experienced, or -learned." show tbat no mistakes of judgment, or want of attention, of counsel, if there were any such, whioh is not intended to be affitmed or implied, affords any"just or proper gtonnds for granting this motion and opening the case. The judgments and decrees of courts should rest upon such solid .bases of fact. as may. beqad by the usual modes-Qfprocedure, and the rules of evidence established by law and usage. At first sight, it might appear that the retaking of evidence, .or the taking of new evidence, could justly wrong no one, for .the making of m()reP'uth to appear would afford greater opportunity for just judgment. But affording chances for retaking testimony after judgment might not always, and probably wo.uldnot often, tend tathe elucidation of tp#h:"Temptations would be furnished which it is the policy ofthe law to avoid. .. The' testimony of Albert Sowles, as taken and filed in this case, is apand fair. The defendant'had, parently straightforward, canaid, and availed himself of, fuU opportunity to cross-examine him upon it, and,after months to conf>ider it in, a further opportunity to examine to any facts that might be him, and to testify himself with elicited. Hdoes not satisfactorUyappear now that truth and justice would. be any more to be reached. in this cause by affording another oPPQ1tunity, w1.licbcannot be dohe without breaking over wellsettled rules and established modes of procedure. .These views are not intended to reflect upon the testimony of any of 'the witnesses taken and filed, nor upon the course taken by client or counsel in making and preSellting this motion; but they lead inevitably to the conclusionthat this motion must be denied. It is admitted by the orator that there are securities held by him, from the avails of which there may be something to apply on this debt, and thereby lesseh the lossincohsequence of this loan; and that it was understood tJ1at,if the abl.Quht of the loss should be necessary to be ascertained, a reference to a Irtasterfor that 'purpOStfWould be· necessary. The directions for a decree should be modIfied accordingly. Motion to reopen case denied. And let a decree be entered that the defendants Albert Sowles and Burton are chargeltble for the amount of the loss on the loan of $36,{)OO to Edward A. Sowles; that an account
1;2
FEDERAL REPORTER.
be taken olthe amount of that loss, and that they pay the amount when costs j and that the bill be dismissed as ascertained to the to the defendants Edward A. Sowles and Hall,without costs.
WARD V. VOSBURGH.
(Oircuit Goure, E. D. Wisconsin. May.1887.) 1. CiONFLtci 'OF LA
itoriJlfapp¢ar that 'the, cop.t,ract was made with an actual view to the delivery ·an4,rllcelpt of grltin. and n9t as Itn evasion of ·the Wisconsin,statute against galtjing; or a cover for 3 gambling transaetidil, " does not apply to an action in, the federal courts in tliiatstate by a broker; resident in Illinois, to recover and commissions growing out of orQers given him by a citizen, of Wisconsin. to be executed on the floor of the Chicago Board of Trade. The rights of'the parties to suCh '11 suit are governed by the laws of Illinois. ' ,
graril at a future date fo1' a'price certain, it must' afflrIJ1atively and satisfac-
The rule laid down in Barnard v. Backhau8. 52 Wis. 598; 6 N. W.' Rep. 252, and 9 N. W. 595, uphold ,a contract, for,a sale and delivery of
2. 'CON'1".RACTs-GAMINa-OPTIONS-1N'1'ENT--'-BuRDEN OF PROO}lL-;LU'BILITYFOR COld:MlIilSIONS AND ADV ANMS.
, ,UnQ-,er,thellIinois statutes. a simple option, reserved by theseUerto himwithin certain limits,ahd the settleself, lilt·tt> time of deliver}' of 'ment:.of aifferencesuponsuch 8. contraot, does not render the contract void all a ,ttansactjop,., The, burden of proof,.in an action OD, such a contract, b;Y' a broker for commissions and advances for settlements made by the '''ringing up" process, is'therefore upon the defendant to show the gambling intent; and it does not follow, from the fact that he himself intended no de-_ ,livery, !InCh was the intention of the broker and of ,the other principal, or that deliveries were not made as a matter of fact. , The custom 'of "ringing up," in vogue among brokers and commission 'JIlerchants, is. founded in qommercialconvenience, and when not adopted to transaqtion, is not in contravention of the law. A speculator'who is familiar with the' methods and usltges of the Chicago Board:ofTrade is presumed, upon giving orders to his broker, a meinber of that body, to contrac,t withreference thereto; and he will not be heard to set up, as a defense to a suit py the broker for commissions and advances, that the cust'om prevailing there, in 'obedience to which the advances were made, enlarged his liability u,nder the contract. O;F-EsTOPPEL. . .
8. CttsT6MANDUSAGE-"RmGlNG UP"-GA:MING.
4.
At L a w . , Joseph, Wright and Shepard & for plaintiff. QuarlqJ i& Spence, for defendant.
DYER,J. ',['his is a hard case for the defendant, and, if the court could see clear to relieve him from the liability which is sought ,to be against ;him, it would be glad to do so. So many decisione have rendered by various courts,upon the particular q1J.estionwe have here to decide, in which may be found the expression of conflicting views, that it is not easy to arrive at a conclusion unattende4,:wi$ doubts. One proposition, is well settled, namely, that