Constable v. Duke

• Decision Date: 07 July 1927
• Docket Number: 20395.
• Citation: 144 Wash. 263,257 P. 637
• Parties: CONSTABLE v. DUKE, Former State Supervisor of Banking, et al.
• Court: Washington Supreme Court

257 P. 637

144 Wash. 263

CONSTABLE v. DUKE, Former State Supervisor of Banking, et al.

No. 20395.

Supreme Court of Washington

July 7, 1927

Department 1.

Appeal from Superior Court, Lewis County; Simpson, Judge.

Action by Archie Constable against John P. Duke, former Supervisor of Banking of the State of Washington, and others. From a judgment of dismissal, plaintiff appeals. Affirmed.

Frank L. Walters, of Seattle, for appellant.

John H Dunbar and L. B. Donley, both of Olympia, and Hugh M Caldwell and John Phycette, both of Seattle, for respondents.

FULLERTON J.

To the complaint in this action a demurrer was sustained in the court below, and, upon the election of the pleader to stand upon the complaint, a judgment dismissing the action was entered. The appeal is from the judgment so entered.

Briefly it was alleged in the complaint that the respondent Duke was formerly the supervisor of banking of the state of Washington; that the respondent Vanderpoel was the bank examiner, and the respondent National Surety Company was surety on their official bonds; that the Southwestern Washington Bank of Ilwaco was a corporation doing a banking business within the state, and that it was the official duty of Duke and Vanderpoel to make a full examination as often as once in each year of the financial condition of the bank; that they did make such an examination of the bank on November 11, 1922, at which examination it was discovered, or ought to have been discovered, that the bank had been violating the banking laws of the state, and was wholly and hopelessly insolvent; that it was the legal obligation and duty of the respondents Duke and Vanderpoel on the discovery of of these facts, to close the bank and take it into their possession and liquidate its assets, but that they 'in bad faith, and in dereliction of their duties, willfully, maliciously, wrongfully, and fraudulently, neglected and refused' to close the bank, and suffered it to continue its banking business as a solvent and going concern, finally closing it and taking it into possession for liquidation on September 4, 1923. It is then alleged that the appellant, and others who have assigned their claims to the appellant, believing that the respondents had performed their duties, and believing that the bank was a solvent concern, made deposits with the bank between the time the respondents examined the bank and the time it was closed, all of which were lost to them, save a small percentage which has been paid them from funds derived by the liquidation of the assets of the bank. It was further alleged that the appellant did not discover the fraudulent acts of the defendant until a stated date which was but a short time prior to the commencement of the action. There is no allegation that the bank refused to honor the checks of the appellant, or the checks of his assignors, drawn upon the deposits prior to the time the bank was closed by the respondents.

The action was commenced on July 28, 1926, which time, it will be observed, was less than three years but more than two years after the bank was closed and taken over for liquidation, and less than three years after the time, it is alleged, discovery was made of the acts of misconduct charged against the respondent officers.

The demurrer was sustained on the ground that the action was barred by the statute of limitations, and whether it is so or not, is the only question discussed in the arguments of counsel. The appellant argues against the bar and points out, as the applicable statute, subdivisions 3 and 4 of section 159 of the Code (Rem. Comp. Stat.). These subdivisions read as follows: '3. An action upon a contract or liability, express or implied, which is not in writing, and does not arise out of any written instrument;

'4. An action for relief upon the ground of fraud, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.'

The respondents relied upon section 165 of the Code ( Id.), and it was this section that the trial...