Dunbar v. Fant

• Decision Date: 24 August 1933
• Docket Number: 13682.
• Citation: 170 S.E. 460,170 S.C. 414
• Parties: DUNBAR v. FANT et al.
• Court: South Carolina Supreme Court

170 S.E. 460

170 S.C. 414

DUNBAR v. FANT et al.

No. 13682.

Supreme Court of South Carolina

August 24, 1933

Appeal from Common Pleas Circuit Court of Spartanburg County; W. H Grimball, Judge.

Action by Claude R. Dunbar against Albert S. Fant and another.Judgment for defendants, and plaintiff appeals.

Reversed and remanded.

Johnson & Johnson, of Spartanburg, for appellant.

Nicholls Wyche & Russell and Evans & Galbraith, all of Spartanburg and R. E. Whiting, of Columbia, for respondents.

BLEASE Chief Justice.

Basing his action upon the statutory enactments now contained in sections 7844and7852 of the Code, the appellant sought to recover of the respondents Fant, formerly the state bank examiner, and the surety on Fant's official bond, damages alleged to have been sustained by the depositors and creditors of the Cowpens Security Bank, because of the failure of Fant "to well and truly perform the duties of his office."The complaint alleged that Fant "failed to perform his duties, in that he failed to remedy or discontinue" certain violations of the banking laws, discovered by him in the conduct of the bank, and that, "after the said bank became insolvent and the dishonest conduct of the bank continued, he failed to take and retain possession of the assets of said bank, and place the affairs of same in the hands of a receiver"; and that "said nonfeasance on the part of the defendantAlbert S. Fant and failure to well and truly perform his duties as required by law constitute a breach of the condition of the bond."

After the evidence in chief of the appellant had been received, and without any evidence on the part of either of the respondents having been offered, the trial judge, Hon. W. H. Grimball, directed a verdict in favor of both of the respondents.He placed his order on these grounds: First, the state bank examiner was not required, under the provisions of section 7844, to remedy or discontinue any violation of the banking laws, discovered by him, his duties in that regard being only to give notice of such violations to the officers and directors of the bank.Second, the examiner, under the provisions of section 7852, was given discretionary power in the matter of taking over the assets of a bank found to be insolvent, or when its business was so dishonestly and fraudulently conducted as to jeopardize the interests of the depositors, creditors, or stockholders.Third, that the examiner was not liable for damages to those for whose benefit the appellant sued, except upon proof of bad faith or corruption on the part of the examiner, and there was no evidence to show such bad faith or corruption.

The provisions of section 7844 were enacted in 1906.Thereby, it was made the duty of the examiner to make a thorough examination of a bank's affairs.For that purpose, he was given authority to summon and examine, under oath, any person connected with the bank.He was required to make and file a full report of his findings in the office of the State Treasurer, setting forth therein any violation of the banking laws, and such full summary of the bank's affairs as would be necessary for the protection of the rights of the depositors, stockholders, and creditors, and the bank so examined was to be furnished a copy of the report.

The sentence in the section, depended upon by the appellant to sustain his position that the examiner was required to remedy, or have discontinued, violations of the banking laws, discovered by him, is, because of apparent failure to be properly punctuated, somewhat confusing.It reads thus: "It shall also be the duty of said bank examiner to forthwith bring to the attention of the said banks all such violations of the banking laws of this State and that the same be remedied or discontinued."If the word "and" is eliminated from the sentence, and in its place a comma is inserted, the meaning intended would be entirely clear.The sentence would then read as follows: "It shall also be the duty of said bank examiner to forthwith bring to the attention of the said banks all such violations of the banking laws of this State, that the same be remedied or discontinued."We may properly consider the sentence so rearranged, for it is the duty of the court, by such change, to properly seek the legislative intent.

A careful examination of all the statutes pertaining to the duties of the state bank examiner support the conclusion of the circuit judge that the duty did not rest upon the examiner, under section 7844, to correct or remedy violations of the banking laws discovered by him, but that it was the legislative intent that the directors of the bank should correct and remedy the violations reported to them by the examiner.

The fact that the examiner was to report such violations to the bank is an indication that the Legislature intended the board of directors to act in such matters.The examiner, supposed to be well acquainted with the banking laws, and informed as to when they had been violated, was, naturally, looked upon as the proper person to call attention of such violations to the directors, who, as it is well known, are not always familiar with the banking laws.

Surely, if the General Assembly intended that the examiner should perform the difficult task of correcting and remedying the violations of the banking laws, some effective means or method would have been bestowed upon him, that he might have accomplished the desired ends.We have not seen where such powers were given that official.Nowhere was he given power to enter a criminal prosecution, or to direct that one be instituted; no authority to enter a civil suit was vested in him; no power was given to remove the offending officer or employee; and he was not authorized to close a bank, or to take steps to have it closed, simply because some one or more of the banking laws had been violated.All the suggested methods of correcting and remedying violations, which the lawmakers could have placed in the hands of the examiner, rested with the directors.

Another very significant thing, tending to support the stated view, appears to us.The provisions of section 7844 superseded that part of the Act of 1896, appearing later as section 1770 of volume 1 of the Code of 1902.In that law, the examiner did have a little power toward correcting and remedying some violations of the banking laws, for, therein, he was authorized to report such violations to which any penalty was attached to the Attorney General, "with instructions to enforce such penalty by the proper proceedings."In the act of 1906, later section 7844, that little power, for some reason, was taken from the examiner.

We are aided in ascertaining the legislative intention, in the language used in section 7844, by a recent act of our General Assembly, that of 1929(36 Stats. 127), set out as section 7877 of the Code, which relates to the duties of certain officers and the directors of a bank after the examiner has sent to the bank a copy of the report of his examination.Obviously, the former law, section 7844, was deficient in certain respects, necessary to advise the directors of a bank of law violations occurring in their institution.Under that law, the examiner was only to send his report to "the bank," and, so far as the law stated, that procedure on his part ended the matter.Naturally, if the officer of the bank who received the report was the offending official, and he desired his law violations not to be known to the directors, they did not receive the information contained in the examiner's report.There was no provision in the old law either that the directors were required to review the report, or to take any action thereon.The act of 1929 directed the examiner to send the report of his examination to the "cashier of the bank," a specified official, who was required, within thirty days of its receipt, to call a meeting of the directors for the purpose of reviewing the report, and for taking such action as was necessary.The president or cashier of the bank was charged with the duty of acknowledging to the examiner that the report had been received, and had been submitted to the directors at a board meeting, and that the same had been duly considered and the record of the action taken made upon the minutes.The directors were required to inform the examiner that they had reviewed the report, but they were not required to even tell the examiner what action thereon they had taken.No provision was made as to the examiner following up any action taken by the directors.Again, there was failure to vest in the examiner any power to remedy, or to have discontinued, law violations.Clearly, then, the General Assembly, in its very last enactment with reference to the subject, looked to the directors, and not to the examiner, for the remedying and discontinuance of violations of the banking laws.

We are also of the opinion that the trial judge properly construed the law now contained in section 7852 of the Code, enacted in 1911, in his holding that the duties imposed upon the state bank examiner, as to taking over and retaining possession of the assets of a bank, under certain circumstances, were discretionary.The effect of the holding was that, in the performance of such duties, the examiner was to act in a judicial, and not in a ministerial, capacity.The position of the appellant would require a holding that, under the provisions of the law, the acts of the examiner were merely ministerial.

It is well recognized, of course, that the same official may have duties both ministerial and judicial; an officer with both duties being usually termed a quasi judicial officer.In some instances, under the laws relating to the duties of the state bank examiner, that officer...