Cassius Thomas v. William Taylor

• Decision Date: 18 March 1912
• Docket Number: No. 171,171
• Citation: 56 L.Ed. 673,224 U.S. 73,32 S.Ct. 403
• Parties: CASSIUS B. THOMAS, William D. Eddy, and Edgar D. Starbuck, Plffs. in Err., v. WILLIAM C. TAYLOR
• Court: U.S. Supreme Court

224 U.S. 73

32 S.Ct. 403

56 L.Ed. 673

CASSIUS B. THOMAS, William D. Eddy, and Edgar D. Starbuck, Plffs. in Err.,

v WILLIAM C. TAYLOR.

No. 171.

Argued February 28, 1912.

Decided March 18, 1912.

Messrs. Nash Rockwood and L. B. McKelvey for plaintiffs in error.

[Argument of Counsel from pages 74-76 intentionally omitted] Mr. Edgar T. Brackett for defendant in error.

[Argument of Counsel from page 76 intentionally omitted] Mr. Justice McKenna delivered the opinion of the court:

Action against plaintiffs in error for attesting as directors a false report, as it is alleged, of the condition of the Citizens' National Bank of Saratoga Springs, New York, whereby the plaintiff in the action (defendant in error) was deceived and induced to purchase thirty shares of the stock of the bank for the sum of $160 per share, which would have been worth that sum had the report been true, but, on account of its being false, he was compelled to pay 100 per cent assessment on his shares, which was required to be made by the Comptroller of the Currency. Damages were laid in the sum of $4,800, for which, with interest, judgment was prayed.

The action was framed in deceit under the common law, the trial court stating that 'the defendant claims, and the plaintiff concedes, that this is not an action to recover upon any liability stated in the national banking act against a director or officer of a national bank.' And this was the ground of judgment, the trial court rejecting the contention of defendants (plaintiffs in error) that the only action, if any, available to the plaintiff (defendant in error), was under the national bank act. The court said: 'But here the liability set forth in the complaint is not created by statute; the action is not a statutory action. It is the common-law action to recover damages for deceit affecting the plaintiff only, not the bank or the stockholders generally, and must be considered as such. In the complaint the plaintiff has set forth a cause of action for deceit, and not a cause of action under the statute.' [55 Misc. 414, 106 N. Y. Supp. 538.] The court was also of the view that there was nothing in the statutes of the United States 'that destroys stroys the common-law action for deceit practised by the directors of a national bank;' and said, further, that if the plaintiff were attempting to enforce a liability under the statute against the directors of a national bank, there would be a different case. Considering that the evidence established all the elements necessary for the recovery in an action for deceit, the court rendered judgment against defendants (plaintiffs in error) for the sum of $4,800 and interest.

The appellate division, where the case was carried by defendants, and also the court of appeals, gave a broader effect to the action, and decided that its requirements under the common law of the state coincided with the requirements of the statutes of the United States, and satisfied the measure of responsibility of those statutes as expressed in Yates v. Jones Nat. Bank, 206 U. S. 158, 51 L. ed. 1002, 27 Sup. Ct. Rep. 638. 'The case,' the court said, 'both as to pleadings and proofs, meets the statutory requirements.'

The court, however, decided that by the realization of $97,000 of the assets condemned by the Comptroller, defendant in error's stock was not a total loss, as found by the trial court, but had a value of nearly $2,000, and required him to stipulate to deduct from the judgment the sum of $2,000 and interest, in which case the judgment so reduced was to be affirmed. The stipulation was filed.

The judgment was affirmed by the court of appeals, 'on opinion of Cochrane, J., in the appellate division.' We shall refer to the opinion as that of the appellate division, although it was adopted by the court of appeals.

A consideration of the pleadings need not detain us long. How the action should be denominated or regarded was for the appellate division and the court of appeals to decide, and those coutrs, considering the laws of the state, decided that it was the facts pleaded, and not the technical designation of the action, which constituted grounds of recovery; and we accept their decision. There is nothing in the national banking laws which precludes such view. Those laws are not concerned with the form of pleadings. They only require that the rule of responsibility declared by them shall be satisfied.

The attack made by the plaintiffs in error is as much directed against the evidence as against the ruling of the court; and it is well to consider the facts. They are stated in a general way in the opinion of the appellate division as follows:

'The defendants [plaintiffs in error here] are directors of the Citizens' National Bank, organized under the national bank law, and doing business in the village of Saratoga Springs, New York. Prior to March 1, 1904, the Comptroller of the Currency informed the directors of the bank by letter that certain specified assets, amounting to $194,107.02, must be regarded as doubtful, and that immediate steps should be taken for their collection or removal from the bank. Of such letter the defendants had knowledge. On April 8, 1904, pursuant to a call of the Comptroller, a report of the condition of the bank at the close of business on March 28th, 1904, made in regular form, verified by the cashier of the bank, and attested to be correct by each of the defendants, was published as required by law. In such report were included as a part of the resources of the bank the doubtful assets to which the attention of the defendants had been called by the Comptroller. The report also stated that the capital stock of the bank was $100,000; that there was a surplus of $50,000; and that there were undivided profits of $13,456.75. This published report was not seen by plaintiff, but its contents were communicated to him, and relying on the same he purchased, in the early part of June, 1904, thirty shares of the stock of said bank for the sum of $4,800. On June 27th, 1904, the bank received notice from the Comptroller that its capital had become totally impaired, and that the same must be supplied by assessment upon the stockholders. Immediately thereafter such assessment was ordered, and the plaintiff paid $3,000 on account of the stock he had recently purchased.' [124 App. Div. 54, 108 N. Y. Supp. 454.]

All...