Ames v. Am. Nat. Bank Of Portsmouth

• Decision Date: 20 September 1934
• Citation: 176 S.E. 204
• Parties: AMES et al. v. AMERICAN NAT. BANK OF PORTSMOUTH.
• Court: Virginia Supreme Court

176 S.E. 204

AMES et al.

v.AMERICAN NAT. BANK OF PORTSMOUTH.

Supreme Court of Appeals of Virginia.

Sept. 20, 1934.

[COPYRIGHT MATERIAL OMITTED]

Appeal from Hustings Court of Portsmouth.

Suit by Kate Walker Ames and others against the American National Bank of Portsmouth, wherein other persons filed petitions praying to be admitted as parties complainant. From a decree dismissing complainants' bill of complaint on demurrer and refusing to permit filing of an amended bill, complainants appeal.

Reversed and remanded for further proceedings to be had on the amended bill.

Argued before HOLT, EPES, HUDGINS, GREGORY, and CHINN, JJ.

Jas. E. Heath and Wm. G. Maupin, both of Norfolk, for appellants.

Vincent L. Parker, of Portsmouth, and Tazewell Taylor, of Norfolk, for appellees.

EPES, Justice.

Approximately the first third of this opinion is taken up with a statement of the case and excerpts from the opinion of the chancellor stating his reasons for sustaining the demurrer and dismissing the bill. Following that will be found our reasons for reversing the decree and overruling the demurrer.

At first February rules, 1933, Kate Walker Ames and a large number of other persons, all who are stockholders of the First National Bank of Portsmouth (who sue for themselves and all other stockholders of the bank who shall come in), filed their hill against the American National Bank of Portsmouth. Nine other persons filed petitions praying to be admitted as parties complainant in the suit, and stand on the same footing as the original complainants.

The case was submitted on the bill (and the exhibit filed therewith) and the demurrer of the defendant. On July 13, 1933, the court sustained the demurrer.

Thereupon the complainants tendered and asked leave to file an amended bill which the court, by its decree of July 13, 1933, refused to permit to be filed, stating in the decree that it did so for the same reasons given in its opinion for sustaining the demurrer tothe original bill. The cause stands here in practically the same situation as if the amended bill had been filed and a demurrer thereto interposed and sustained; and we shall so consider the case. Omitting one ground which has no application to the amended bill, we shall treat the demurrer to the original bill as being filed as a demurrer to the amended bill. When we hereafter use the word "bill, " amended bill will be understood.

With some immaterial omissions and some slight changes in language made by us to shorten it somewhat, the bill reads:

"1. On the 15th of July, 1920, they [the complainants] were stockholders of the First National Bank of Portsmouth, Virginia, a national banking association in the city of Portsmouth, Virginia, and have remained such to the present time. This bank ceased to do business on the 15th of July, 1929, and a receiver for it was appointed by the acting Comptroller of the Currency on the 24th of October, 1932. Since that time its directors have wholly given up and abandoned its management, and, although specifically requested so to do prior to the institution of this suit, have refused to institute, in the name of the bank, a suit to accomplish the objects for which this suit has been brought, and the said receiver, although similarly requested, has likewise refused.

"2. Prior to the 9th of July, 1929, the State Bank of Portsmouth was also doing banking business in Portsmouth, and on the 9th of July, 1929, it was closed by order of the State Banking Commissioner of Virginia, and shortly thereafter it became generally known that its cashier had embezzled a large amount of money therefrom and that it was hopelessly insolvent. * * * Because of the excitement and unrest caused by the closing of the State Bank numbers of the depositors of the First National Bank withdrew their deposits from it, though it was entirely solvent and able to meet its obligations in the ordinary course of business, but was unable to withstand a sustained run. Accordingly, on the 12th of July, 1929, a meeting of the Board of Directors of the First National Bank was called and held, at which the executive vice-president and the cashier of the American National Bank of Portsmouth, a national banking association doing business in Portsmouth, were invited to be and were present. At said meeting the following resolution was unanimously adopted:

" 'Resolved, that it is the belief of this board of directors that an emergency of such grave proportions exists that it is necessary to take any action for the protection of the depositors that may be required by such banking institution as will agree to accept a sufficient amount of its assets to guarantee all liabilities of every nature except the stockholders' liability.'

"Thereupon the executive vice-president and cashier of the American National Bank of Portsmouth assured the directors of the First National Bank that the American National would make an examination of the assets and liabilities of the First National, beginning the next day, June 13, and would advise the directors of the First National whether the American National would purchase the assets of the First National and assume its liabilities, except to stockholders.

"3. On the 15th of July, 1929, a meeting of the board of directors of the First National was duly called and held, at which meeting a contract between said First National and American National, which contract had been prepared at the direction of American National Bank and approved by its board of directors, was submitted for the approval of the board of the First National Bank, and the following action was unanimously taken, as disclosed by the minutes of said meeting:

" 'Contract with the American National Bank selling to it the assets of this bank and the assumption by it of this bank's liabilities, except to stockholders, was read, ratified and approved in a motion put and carried by a unanimous vote.'

"The said contract had already been presented to the Board of Directors of the American National for approval and had been approved and authorized by language substantially identical with the language of the resolution of the Board of Directors of the First National. The Board of Directors of the American National thereby specifically authorized the purchase by the American National of the assets of the First National and the assumption of all the liabilities of said First National except to its stockholders, by the American National. The contract was thereupon executed by the First National Bank of Portsmouth and by the American National Bank of Portsmouth by the appropriate officers respectively of both banks, and was signed and acknowledged by the directors of both banks. A true copy of said contract is herewith filed, marked exhibit 'A, ' as a part of this bill.

"The true intent and meaning of this contract, as disclosed by its terms, and as construed by the First National Bank and by the American National Bank, was a purchaseby the American National of all of the assets of every nature and description of the First National and the assumption by the American National of all of the liabilities of the First National except its liabilities to its stockholders. This interpretation of said contract is evidenced by both of said banks as follows, to-wit:

"On the 15th of July, 1929, the same day said contract was executed, the American National inserted in the public press an advertisement in the following words and figures, to-wit:

"'American National Bank Effective today, has purchased the assets of and assumed all liability to the Depositors of the First National Bank We Pride Our Success On The Service We have rendered our customers, and we promise this same courteous and efficient service to every patron of the First National Bank. American National Bank Portsmouth's Largest Bank Not Too Large For the Smallest Customer Resources Over $6,000, 000.00.'

"On the 19th of July, 1929, the Board of Directors of the First National mailed to each of its stockholders a letter, which letter had been authorized and approved by said board in meeting assembled, which contained the following language:

" 'Your Board of Directors has sold to the American National Bank of Portsmouth, Va., all of the assets of your bank, and the American National Bank of Portsmouth, Va., has assumed all of the liabilities except to stockholders of your bank.'

"On the 25th of July, 1929, the American National, through its president, vice-president and cashier, acting under authority of its Board of Directors, wrote and mailed to each stockholder of the First National a letter containing this language:

" 'This is to confirm our purchase of all of the assets of the First National Bank and the assumption of all of the liabilities except to stockholders.'

"On the 24th of January, 1930, the action of the Board of Directors of the First National Bank in selling to the American National its assets in consideration of the assumption of its liabilities by the American National was duly ratified by the stockholders of the First National Bank in meeting assembled.

"4. Pursuant to this contract the First National Bank immediately conveyed, assigned, turned over and delivered to the American National Bank as and for its own property all of the assets, real and personal, of every kind and description of the First National, and went out of active business; and the American National Bank, pursuant thereto, accepted said assets as and for its own property, and immediately thereafter, by public advertisement, notified each and every depositor of the First National that it had assumed all the liabilities of the latter and would pay on presentation any and all checks drawn by them against their respective balances, whether said checks should be drawn upon the First National or upon the American National Bank. In addition, it at once took possession of all of the business of the First National Bank, removed all its books and documents to its own...