Colorado Sav. Bank v. Evans

• Decision Date: 12 December 1898
• Citation: 56 P. 981,12 Colo.App. 334
• Parties: COLORADO SAV. BANK et al. v. EVANS et al. [1]
• Court: Colorado Court of Appeals

56 P. 981

12 Colo.App. 334

COLORADO SAV. BANK et al. v. EVANS et al. ^[1]

Court of Appeals of Colorado

December 12, 1898

Appeal from district court, Arapahoe county.

Action by the Colorado Savings Bank and others against William G Evans and others. There was a judgment for defendants, and plaintiffs appeal. Affirmed.

James H. Brown, for appellants.

Benedict & Phelps, Robert W. Bonynge, Thomas J. O'Donnell, W.S Decker, Doud & Fowler, and S.E. Marshall, for appellees.

BISSELL J.

On demurrer the defendants had judgment. Many issues of law were presented, some dozen in number. The principal ones concern the misjoinder of parties plaintiff, the misjoinder of parties defendant, the union of causes of action, and the want of sufficient facts to constitute a cause of action. Counsel have supported their respective contentions with briefs of unusual and extraordinary length, and by the citation of hundreds of cases which were supposed in a greater or less degree to uphold the complaint or demonstrate its insufficiency. It cannot be said that the issues directly raised some, and not others, of the matters suggested, and under other circumstances the court might feel obligated to consider and determine each one of them. What this labor would amount to may be seen from a few suggestions. The suit was brought against the directors of the Colorado Savings Bank, to compel them to replace a large amount of money which had been lost in the conduct of the business. Originally the complaint was divided into upward of 100 causes of action, each preceded by the general allegation necessary to state an independent cause of action. By amendment this particular averment was struck out, and it left a statement of a cause of action against the various defendants on 140 different items, as counsel for the plaintiff designate them. When it came to the prayer, the pleader prayed judgment against specifically named defendants for definite amounts, with no prayer for judgment for the sum total of all the items. There was likewise a concluding phrase, common to equity bills, "for such other and further relief as should be meet and proper." The statement of the first item or cause of action was substantially that between certain dates--February, 1890, and July, 1892--the defendants were directors of the bank, and invested a portion of its assets and deposits, to wit, the sum of $1,440, in the purchase of a personal obligation of three persons named. Evidently, this was the purchase of the promissory note of the makers, payable to the order of another, and indorsed to the bank, and it was alleged that the obligation was not evidenced by a bond, or secured by mortgage on unincumbered real estate, although it was secured by trust deed on real property worth less than the amount of the loan, and on sale only about $400 was realized. It was further averred that the makers and the indorser had not paid the $1,440, nor any part of it, except the $400, and then it was charged this act of the directors in thus loaning and investing the funds was in violation of the statutes and to the injury of the plaintiffs. While in some of the other 103 causes of action the facts are differently charged, sometimes as the discount of paper, sometimes as a loan on insufficient realty, and in various other ways, all of them substantially represent what in law is a precisely similar cause of action or item, and the prayer with reference to each is identically the same. The amounts are stated definitely, were known to the plaintiffs, required no discovery from the defendants, and were easily and clearly traceable and the default, if any, might be proved without difficulty, and without aid from the directors. The bank had become insolvent, made an assignment of all of its property, and whatever right, title, or interest the bank had in its assets vested in Thomas B. Stuart, the assignee. The pleader brought suit in the name of the bank and the assignee jointly. The defendants named were all of the directors who had served in that capacity from 1890 to the failure of the institution. Some of these directors had held office during all the time, and part of them at different portions of the time, during which these loans were made and the losses sustained.

This clearly shows that these various grounds of demurrer are all involved, and are legitimate subjects of argument. We find no fault with counsel for attempting to maintain the bill by the discussion of these various propositions, nor with the counsel for the appellees, who have attacked the complaint on these various bases. The only trouble is that the discussion has taken such an uncommonly wide range, and the citation of authorities is of such an overwhelming character, that it is scarcely permitted to any court to examine, comment on, or do more than express a general opinion respecting all these propositions. I am very frank to say that I have read and examined, either casually or completely, but a very small percentage of the cases cited. The labor is evident, when we consider that to determine the question of the misjoinder of parties plaintiff and misjoinder of parties defendant compels a consideration of a long line of authorities, which in turn are modified by the inquiry whether this is an action at law or a suit in equity, and, collaterally, whether, for the breach of the obligation of the directors, the corporation or its assignee may file a bill to compel the directors to account and respond, and a different rule will prevail in the two different cases. There are many cases cited to us from New York and other states which hold that a bill in equity may be brought by a stockholder, and a few cases which incline to the opinion that a bill may be filed by the bank against its directors, where an accounting or a discovery is necessary, or such procedure may be upheld on the theory of preventing the multiplicity of suits. To properly resolve all these questions would be an enormous task, and consume many days. We should also be compelled to decide whether there is in the complaint any allegation whatever which would tend to uphold the jurisdiction of a court of equity. There is not within the four corners of the complaint a solitary allegation ordinarily deemed requisite to give a court of equity jurisdiction of such matters, other than the statement of so many items or causes existing, some against all, and others against part, of the defendants. We cannot gather from the circumstances and facts contained in the complaint anything from which we could conclude that such courts would have had jurisdiction under this form of practice. While we do not intend to decide whether equity has jurisdiction, putting the decision on other grounds, I have thought it best to throw out what I say on this subject more by way of suggestion and personal opinion than as the mature conclusion of the court, based on an examination of the proposition. So far as may be gathered from the complaint, no more suits would be requisite in a case of this sort than if they had been brought on so many promissory notes, where different aggregations of defendants had made themselves liable by signature or indorsement of the paper. It is equally true that the complaint demonstrates, from its own terms, that an accounting is not necessary, and that in no sense in which that term is used in the books is the matter of an account presented. It is not a case, nor does it resemble a case, where the agent, representing his principal and carrying on a long course of dealings, has fraudulently or negligently misapplied and misappropriated the funds of his principal, rendering an accounting between the parties requisite to the ascertainment of the sum due from the agent to the principal by reason of his misconduct. It is nowhere charged that the defendants, as directors, have been guilty of any fraudulent or other misappropriation of the funds of the bank, which would amount to any of the various kinds of misfeasance, otherwise than as it is alleged the defendants loaned the money, as I think it may be accurately put from the phraseology of the pleading, "contra formam statuti." Such is the only act charged against the defendants. Under these circumstances we feel wholly justified, and believe that we are completely discharging our duty to litigants in this case. If we can find any one point or any one question on which the judgment may be upheld, because, as the case now stands, our conclusion will not be an absolutely final determination of the controversy. This we believe we have found, and found under the one general ground of demurrer for want of facts sufficient to constitute a cause of action.

The liability of directors of banking corporations, whether savings banks or banks of deposit and discount, for the loss of their deposits, must be, and always is, predicated either on the violation of some statute, or on a misconduct negligent or willful, of the officer. Damages which come to corporations or depositors by reason of a violation of restrictive legislative acts, or by some of the several sorts of misfeasance, or, possibly, nonfeasance, give rise to a cause of action. With the latter inquiry we have nothing to do. It is wholly unnecessary, therefore, to consider whether what the directors did was done in good or bad faith, or the degree of care which trustees or directors must exercise in the discharge of their duty. We are relieved from the necessity to enter the...