Davis v. McCorkle
| Decision Date | 03 May 1879 |
| Citation | 77 Ky. 746 |
| Parties | Davis, & c. v. McCorkle. |
| Court | Kentucky Court of Appeals |
APPEAL FROM LOUISVILLE CHANCERY COURT.
This suit was commenced April 18, 1871, in the Louisville Chancery Court, by the Loretto Literary and Benevolent Institution and others, as stockholders, etc., in the Mechanics Bank, as plaintiffs, against the President and Directors and Henry L Pope, cashier of said bank, and the sureties of said cashier.
The petition alleged that the bank had closed in 1870 without causing its assets to be accounted for in full; that the President and Directors had failed to cause or make said cashier to account for and pay over the sum of $72,170.33 etc., and sought a judgment against him and his sureties for an alleged breach of the covenants of his bond as cashier. On the trial, after answer by all the defendants, and proof taken by plaintiffs and defendants, the chancellor rendered a judgment March 7, 1873, dismissing the petition " as against the defendants, Henry L. Pope," and his sureties.
From the judgment of dismissal an appeal was prosecuted, and that judgment was reversed November 17, 1873; and on petition for rehearing the opinion of the Court of Appeals reversing as aforesaid was extended April 16, 1874. The opinion and mandate of the Court of Appeals sent the case back to the lower court, with directions that the action should be " prosecuted in the name of the receiver, and that he be allowed to amend the prayer for relief," etc., etc.
On a final hearing, after the prayer had been amended as directed and additional evidence had been taken by both parties, the lower court rendered a judgment on 3d of December, 1875 against the cashier for $72,170.33, and against his sureties for the amount of the penalty of his bond, $30,000, with interest from June 17, 1870.
On the appeal of the sureties the foregoing judgment was affirmed September 26, 1877. On petition of counsel for appellants a rehearing was granted March 8, 1878. On the rehearing the former opinion was adhered to, and the following opinion was delivered, passing upon the questions discussed in the argument on the rehearing.
A. DUVALL AND I. & J. CALDWELL FOR APPELLANTS.
1. The appellees have failed to set out in their pleadings any valid cause of action against the sureties of H. L. Pope in his official bond, or to allege a breach thereof.
2. If, as the petition alleges, the President and Directors unlawfully failed or refused to make the necessary order upon or requirement of the cashier with respect to the money which was unaccounted for, they (the President and Directors) and not the sureties must answer for the wrong if there was any wrong.
" The liability of a surety is always to be measured by his covenant." (Warfield v. Brand's adm'r, 13 Bush, 77, and authorities cited therein.)
3. The sureties agreed to become bound for H. L. Pope, the cashier, on two conditions: First, if he should not faithfully perform his duties as prescribed in the charter and by-laws of the bank. Second, if he should not apply or pay over the moneys of the bank as the President and Directors might order or require. A breach of neither of these conditions having been alleged, no liability of the sureties has been shown.
In the argument on the former appeal the attention of this court was not called to this point, and it escaped the notice of this court, but it is not too late to urge the objection now.
This court will never allow a judgment to stand that does not rest upon a valid pleading. This is expressly provided in section 123, Code of 1854.
The amendment of the prayer of the petition by the receiver was insufficient, in that it failed to set out the facts showing his appointment and qualification, and that he had executed bond as required by section 331 of the Code. (Gillet v. Fairchild, 4 Denio, 80, and cases cited under sec. 331, Myers's Code.)
4. The act of a cashier of a bank in pursuance of authority from the board of directors, although in violation of the law of its existence, binds the bank. (3 Grant (Pa.), 135.)
5. On this second appeal the appellants are not precluded from raising any objection to the sufficiency of the pleadings by the former decision of this court on the first appeal wherein appellants were appellees. Being appellees in the first appeal from a judgment in their favor, appellants were not then bound to make any objection to the sufficiency of the petition, and now for the first time being appellants, they have a right to make and are not precluded from raising any legal objection to the sufficiency of the petition on which the judgment appealed from was rendered against them.
JAMES SPEED, A. BARNETT, AND W. P. D. BUSH FOR APPELLEE.
1. In reversing the judgment of dismissal on the first appeal, this court was bound to decide and did decide, first, that the petition presented a cause of action, and second, that that cause of action was sustained by the evidence.
2. Appellants have no right to raise or make any objection now for the first time in this court, or to ask this court to decide that the petition does not state facts sufficient to constitute a cause of action, because they are precluded from making such objection by the former decision of this court in this case.
3. While section 123 of the old Code provides that the right to make the objection " that the petition does not state facts sufficient to constitute a cause of action," shall not be deemed to have been waived by failure to make such objection by demurrer or answer, it does not provide that such waiver shall not be made in some other way, as by going into trial on the merits, or by verdict or judgment; nor does it prescribe what question shall be raised by making the objection at any time after answer. Such a waiver is expressly provided for by the last paragraph of section 400 of the same Code, and such a waiver is expressly made by a plea of confession and avoidance. (1 Chitty's Pl. 671, 672.)
That part of section 123 on which appellants rely is omitted entirely from the Code of 1877. (See Code of 1854, secs. 123, 400; Code of 1877, secs. 118, 371.)
4. Defects in pleadings are aided, first, by pleading over as by plea of confession and avoidance (1 Chitty's Pl. 671-673); second, by verdict aided by the common-law intendment (1 Chitty's Pl. 337, 673-682); third, by the statute of jeofails (1 Chitty's Pl. 682-684).
Defective pleadings have been held by this court to have been cured by answer, by pleading over, by verdict, and by judgment. (Barbour's Digest, pp. 1163-1165.)
5. When the objection to the sufficiency of the petition is made before answer, the question raised is, " Does the petition state facts sufficient to constitute a cause of action in the plaintiff?"
If made after answer and before trial on the merits, the question raised is, " Do the pleadings state facts sufficient?" etc.
If made after trial on the merits and judgment in favor of the plaintiff, the question raised is, " Do the pleadings state facts sufficient to sustain or support the judgment?" or, " Does the record state or exhibit facts sufficient to sustain or support the judgment?" (1 Chitty's Pl. 337, 528, 671, 672, 673; Riggs v. Maltby & Co., 2 Met. 88; Escott & Son v. White, & c., 10 Bush, 175; L. & P. Canal Co. v. Murphy, 9 Bush, 527; Francis v. Hazelrig, 1 Mar. 94; Keyes v. Powell, 2 Mar. 253; Barbour's Digest, pp. 1163-1165.)
6. On a second appeal " nothing is brought up but the proceedings subsequent to the mandate." ( Ex-parte Sibbald v. The United States, 12 Peters, 488, 491; Himely v. Rose, 5 Cranch, 314, 316; The Santa Maria, 10 Wheaton, 431, 439, 440; Wells on Res Adjudicata and Stare Decisis, secs. 613 to 623; Herman on Estoppel, pp. 95, 165; Bigelow on Estoppel, pp. 16, 17, 22; Aurora City v. West, 7 Wallace, 82, 102, 106.)
The foregoing rule was adopted in this state at an early day, and has never been questioned or doubted by this court, but has been adhered to up to this day. (Meredith v. Clarke, Sneed, 189; Brown v. Crow's heirs, Hardin, 443, 448; Morgan v. Dickerson, 1 Mons. 20; Kennedy's heirs, & c. v. Meredith, 4 Mon. 408, 410; Legrand v. Baker, & c. 6 Mon. 244; Bryan, & c. v. Beckley, Littell's S. C. 91, 93; Nelson's heirs v. Clay's heirs, 7 J. J. Mar. 139; 5 Littell, 150, 155; Ford v. Gregory's heirs, 10 B. Mon. 175, 183; Mason v. Mason, 5 Bush, 193.)
The same rule prevails in other states. (Resing, & c. v. Carr, 70 Ills. 596; Ogden v. Larrabee, 70 Ills. 510; Matthews v. Sands, 29 Ala. 136-140.) This list of cases might be extended almost without limit.
This suit was instituted by certain stockholders of the Mechanics Bank against the late cashier of that institution and the sureties on his bond as such, to recover an alleged balance unaccounted for by him of more than $70,000, which it was alleged the president and directors failed and refused to require him to account for.
The plaintiffs prayed for the appointment of a receiver, and that he be required to investigate the condition of the bank and to collect its assets; that the cashier and his sureties be compelled to account for the balance unaccounted for, that the affairs of the bank be closed, and the surplus assets distributed among the shareholders.
Answers were filed, the cause heard on the merits, and the petition dismissed. From that judgment the plaintiffs appealed to this court. The judgment was reversed, and the cause remanded with " instructions to cause the action to be prosecuted in the name of the receiver, and that he be allowed to amend the prayer for relief" so as to authorize a judgment in his name.
Upon the return of the cause the court below ordered that it " be prosecuted in the name of R. C. McCorkle, the receiver,...
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