55 S.W. 1091 (Mo. 1900), Utley v. Hill
| Citation | 55 S.W. 1091, 155 Mo. 232 |
| Opinion Judge | MARSHALL, J. |
| Party Name | UTLEY, Appellant, v. HILL et al |
| Attorney | Leslie Orear and Alf F. Rector for appellant. Thos. Shackelford, W. M. Williams, John A. Rich, Syd. B. Burks and D. D. Duggins for respondents, except Field, administrator. |
| Judge Panel | MARSHALL, J. Robinson, J., absent. |
| Case Date | March 14, 1900 |
| Court | Missouri Supreme Court |
Page 1091
Appeal from Saline Circuit Court. -- Hon. Richard Field, Judge.
Affirmed.
(1) The finding of the referee in this case is a general finding and the law does not require the report of the referee to be in any particular form or that he shall incorporate special findings of fact with the general finding. R. S. 1889, sec. 2153. (2) The court erred in sustaining the exceptions to the referee's report marked 1, 3, 4 and 19, thereby erroneously eliminating from consideration, in determining the liability of the defendants under the first count of the petition, the effects of negligent ignorance or that knowledge with which the performance of a duty imposed by law would clothe the defendants, and conclusively charge them with such knowledge. 3 Thomp. on Corp., sec. 4107; Delano v. Case, 121 Ill. 249; s. c., 17 Bradw. 531; Solomon v. Bates (N. C.), 24 S.E. 478; Tate v. Bates (N. C.), 24 S.E. 482; Baxter v. Coughlan (Minn.), 72 N.W. 797. (3) The court also erred in sustaining the third exception to the referee's report and holding thereby that the referee found as a matter of fact that the defendant directors did not have knowledge of the insolvency or failing circumstances of the bank but was simply put upon inquiry, or by the exercise of reasonable diligence might have obtained knowledge of the insolvency of the bank. One of the express statutory duties of the defendants is to know the solvency or insolvency of the bank. The duties prescribed by the Missouri Statute for bank directors are personal duties and by express provision of the statute the directors are thus brought into direct relationship to the depositors and creditors, and the directors are, as a matter of law, conclusively bound to know: First. Those things which are necessary for them to know in order to properly perform their duties. Second, Those things which a proper performance of their duties would bring to their knowledge shortly after their occurrence. State v. Sattley, 131 Mo. 464; Finn v. Brown, 142 U.S. 72; Martin v. Webb, 110 U.S. 7; Bank v. Wolfkuhler, 19 Kan. 66; Marshall v. Bank, 85 Va. 676; Williams v. McKay, 40 N.J.Eq. 203; Seale v. Baker, 70 Texas 283; Kitchen v. Railroad, 69 Mo. 265; Morgan v. Skiddy, 62 N.Y. 319; Gillett v. Phillips, 13 N.Y. 117; Feld v. Railroad, 123 Mo. 618; Brannon v. Loving, 82 Ky. 375. Where there is a duty of finding out and knowing, negligent ignorance has the same effect in law as actual knowledge. 3 Thomp. Corp., sec. 4108; Kitchen v. Railroad, 69 Mo. 265; Loring v. Groomer, 110 Mo. 641; Alcorn v. Railroad, 108 Mo. 92; Vaughn v. Tracey, 22 Mo. 420; Drey v. Doyle, 99 Mo. 466; Abbe v. Justus, 60 Mo.App. 308. (4) The statute referred to, defining the duties of bank directors, makes such directors the active agents of banking corporations in directing and managing the affairs of such banks and these duties can not be delegated by them to any other agency so as to permit them to escape the effects of the knowledge of such facts as the personal performance of those duties would disclose. If they commit the performance of their statutory duties to another then his knowledge, acquired by the performance of that duty, is their knowledge and they are chargeable with it to the same extent as if they were the actors. 3 Thomp. Corp., secs. 4107, 4108; Mechem on Agency, secs. 185, 186; 1 Morawetz, Corp., sec. 536; 1 Perry on Trusts, secs. 287 and 402; Thompson v. Greeley, 107 Mo. 590. (5) The statute makes the failure of the bank prima facie evidence of both assent and knowledge on the part of the directors and they may be estopped from denying knowledge on the same principle of law as would work an estoppel to deny any other fact. Knowledge may be fastened upon a party by reason of his relation to the facts and to the other party. Denial of knowledge in this case is confession of duty violated and is, therefore, a confession of liability. Those who accept the position of bank directors and assume to know enough to represent its solvency, hold the bank open for business, represent it to be solvent and thus induce others to deposit their money in the bank in reliance upon the performance of the duty enjoined upon them by law, are, when such others have lost by reason of such misplaced confidence through failure of the bank, estopped from setting up a want of knowledge of the bank's affairs and are estopped from setting up their own ignorance, carelessness, or incapacity or breach of duty. Seale v. Baker, 70 Texas, 290; Williams v. McKay, 40 N.J.Eq. 201; Jenet v. Nims (Colo.), 43 P. 148; Bigelow on Estoppel, sec. 538; 1 Morse on Banks, sec. 128; 3 Wait, Action and Defenses, 43; Kinkler v. Juraker, 19 S.W. 359; State v. Buck, 108 Mo. 622. (6) They can not say that they did not know what the law required them to do; they can not say that they were incapable of knowing what the law required; they can not say that they were negligent; they can not say they left everything to the cashier; all such so-called excuses do not excuse. Williams v. McKay, supra; Gordon v. Bruner, 49 Mo. 572; Railroad v. Alexander (Ky.), 27 S.W. 982; Oakley Bank v. Wilcox, 60 Cal. 133; Thompson v. Greeley, supra. (7) There is a manifest difference recognized by the authorities in charging a man with knowledge of facts, which a proper performance of a statutory duty imposes upon him, and cases where no such duty is involved. Abbe v. Justus, 60 Mo.App. 308; Rhodes v. Outcalp, 48 Mo. 367; Speck v. Riggin, 40 Mo. 405. (8) Where the defendants in an action for deceit are charged with the duty of knowing the condition of the banking corporation and managing its affairs, and are conscious of the fact that they have the means of knowledge at their command, publish such statements as to the financial condition of such corporation showing the same to be solvent without knowing whether such statements are true or false, but publish them as true as of their own knowledge when they were conscious of the fact that they had no knowledge on the subject, such statements, if false, and intended to be relied upon by the public, are fraudulent. Hamill v. Abell, 120 Mo. 188; Cooper v. Schlesinger, 111 U.S. 148; Brookes v. Hamilton, 15 Minn. 14; Hubbard v. Ware, 79 Ia. 678; Graves v. Bank, 10 Bush 23; Cooley on Torts, sec. 494; Bolles on Bank Officers, p. 48, sec. 87; Prewitt v. Trimble, 92 Ky. 180; Cook on Stock and Stockholders (2 Ed.), secs. 353 and 354; Cole v. Cassidy, 138 Mass. 437; Morse v. Swits, 19 How. Prac. Reps. 275; Cazeaux v. Mali, 25 Barb. 583; Meyers v. Amidon, 23 Hun 553; Litchfield v. Hutchinson, 117 Mass. 187; Fisher v. Mellen, 103 Mass. 506; Cen. R. R. Company v. Kish, Law Rep. Eng. & Irish App. 100; 2 Addison on Torts, sec. 1184; Solomon v. Bates, 24 S.E. 478; Caldwell v. Bates, 24 S.E. 481; Tate v. Bates, 24 S.E. 482; Seale v. Baker, 70 Tex. 283; Bigelow on Estoppel, sec. 538; Nevada Bank v. Portland National Bank, 59 F. 345; 3 Sutherland on Damages, secs. 587 and 588; Caldwell v. Henry, 76 Mo. 254. (9) The court in a law case must either accept or set aside altogether the finding of the fact made by the referee. The court can not substitute other findings of fact for those made by the referee and render judgment thereon. Lingenfelder v. Brewing Co., 103 Mo. 579; Wiggins Ferry Co. v. Railroad, 73 Mo. 389; Berthold v. O'Hara, 121 Mo. 97; Voght v. Butler, 105 Mo. 479; McCreery v. Ellis, 60 Mo.App. 144.
(1) The abstract of the record presented to this court by the appellant does not show that any exceptions were properly preserved to the rulings of the trial court, and hence only the record proper is here for review. (2) The findings of fact are not sufficient to sustain an action of deceit. It is not enough that statements in regard to the condition of a bank are published and that the directors by the exercise of ordinary care and diligence might have discovered that the bank was insolvent at the time that they were made. Pieratte v. Young, 49 S.W. 964. (3) The court did not err in refusing to consider declarations of law in this case as declarations were not proper. The report of the referee stands as a special verdict and declarations of law need not be given after the facts have been found. Ford v. Cameron, 19 Mo.App. 467; State v. Mackey, 55 Mo. 54; Henry v. Bell, 75 Mo. 199; Young v. Coleman, 43 Mo. 179. (4) The first count in plaintiff's petition is based upon the statute. Knowledge of the insolvency, or failing condition of the bank, and assent to the creation of the indebtedness with such knowledge, are absolutely necessary to defendants' liability, under said statute. This is a highly penal statute, and nothing is to be taken by intendment. Negligence on the part of directors in the discharge of their duties will not supply the absence of a finding that they had knowledge of the insolvency or failing condition of the bank. The duty or opportunity to know does not constitute the cause of action given by the statute. Knowledge of the insolvency or failing condition is necessary to constitute the crime denounced by the Constitution and Statute, out of which this civil liability arises. Constitution of Missouri, art. 12, sec. 27; 1 R. S. 1889, sec. 3581; State v. Tomblyn, 48 P. 145; Patterson v. Minnesota Manf. Co., 4 L. R. A. 751; Deadrich v. Bank of Commerce, 45 S.W. 786; Minton v. Stahlman, 34 S.W. 222; Eads v. Orcutt, 2 Mo.App. 467; State v. Sattley, 131 Mo. 464; Fusz v. Spaunhorst, 67 Mo. 256; Fischer v. Tamm, 13 Mo.App. 110. (5) "It is one thing to say that knowledge may be inferred from facts and circumstances sufficient to put a person upon inquiry; but it is a different thing to say that...
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