Dietrich v. Rothenberger

• Decision Date: 17 June 1903
• Citation: 75 S.W. 271
• Parties: DIETRICH v. ROTHENBERGER et al.
• Court: Kentucky Court of Appeals

75 S.W. 271

DIETRICH v. ROTHENBERGER et al.

Court of Appeals of Kentucky.

June 17, 1903

Appeal from Circuit Court, Jefferson County, Law and Equity Division.

"Not to be officially reported."

Action by William Dietrich against Gus F. Rothenberger and others. From a judgment sustaining a demurrer to the petition plaintiff appeals. Affirmed.

Wallace & Miller, for appellant.

W Pratt Dale, for appellees.

HOBSON J.

The plaintiff, William Dietrich, deposited in the German-American Title Company the sum of $300, for which it delivered to him the following: "No. 104. Certificate of Deposit. $300.00 German-American Title Company. Louisville, Ky. December 9 1895. This is to certify that William Dietrich has now to his credit at the office of this company the sum of three hundred dollars, which the German-American Title Company agrees to pay to said William Dietrich in twelve months after this date with interest at the rate of six per cent. from date until paid on return of this certificate endorsed by William Dietrich. Gus F. Rothenberger, Secretary. A. J. Speckert President." The German-American Title Company was a corporation organized under chapter 56 of the General Statutes of Kentucky, and was not authorized to do a banking business. It became insolvent. Dietrich then filed this suit against the directors of the corporation, charging that at the time he made the deposit, and long prior thereto, it was engaged in the banking business, and, while so engaged, received his deposit, with the knowledge and authority of the defendants, as its directors. Personal judgment was prayed against them on the ground that they were engaged in a business which the corporation was not authorized to follow. The court sustained a demurrer to his petition, and he appeals.

It is immaterial, so far as the plaintiff is concerned, what business the corporation engaged in with other persons. If the transaction with him was within its corporate powers, the directors are not personally liable to him, although at other times, and with other persons, they may have done business not authorized by their charter. The plaintiff's cause of action rests on the transaction had with him. The fact that in other transactions other persons might not have reason to complain of the directors for exceeding the powers conferred upon them by law would subtract nothing from the plaintiff's right to complain, if in the transaction with him the legitimate powers of the corporation were exceeded and if, in his transaction, these powers were not exceeded, he cannot, to make out his cause of action, show that they were exceeded in other transactions with other persons. The question presented, then, simply is whether the transaction with the plaintiff was within the powers of the corporation. The corporation was authorized to borrow money, and give notes therefor, or other evidences of indebtedness. Stripped of its form, the transaction with the plaintiff was, in effect, that he lent the corporation $300, which it agreed to pay him in 12 months, with interest at the rate of 6 per cent. The paper not only contains a promise to pay, but sets out fully the consideration; and the fact that it is called a "certificate of deposit," instead of a "promissory note," does not affect its legal character. In the American & English Ency. of Law, vol. 5, p. 803, it is said: "A certificate of deposit drawn in the usual form seems to fulfill in every particular the definition of a promissory note, to wit, an unconditional promise in writing for the payment of a certain sum of money absolutely and at all events. It is therefore held in all the states of the Union, except Pennsylvania, that the instrument is, in substance and in legal effect, a promissory note, and governed in most respects by the same general rules." In Citizens' National Bank v. Brown, 45 Ohio St. 39, 11 N.E. 799, 4 Am.St.Rep. 526, where a similar paper was before the court, it was said: "The certificate was in effect a promissory note. It possessed all the requisites of a negotiable promissory note, and as such was governed by the rules and principles applicable to that class of paper. In Howe v. Hartness, 11 Ohio St. 449 , it was held that a certificate of deposit substantially the same as that under consideration was a negotiable promissory note. And in Miller v. Austen, 13 How. 218 , where the amount deposited with the bank was payable only to the order of the depositor, at a future day certain, upon the return of the certificate of deposit, it...