Fahrenwald v. Spokane Sav. Bank, 24906.

• Decision Date: 20 September 1934
• Docket Number: 24906.
• Parties: FAHRENWALD et al. v. SPOKANE SAV. BANK et al.
• Court: Washington Supreme Court

35 P.2d 1117

179 Wash. 61

FAHRENWALD et al. v. SPOKANE SAV. BANK et al.

No. 24906.

Supreme Court of Washington

September 20, 1934

Department 2.

Appeal from Superior Court, Spokane County; Fred H. Witt, Judge.

Action by Frank Fahrenwald and others against the Spokane Savings Bank and another, in which C. S. Moody, supervisor of banking of the state of Washington, and another were substituted for named defendant as parties defendant. From a decree of dismissal, plaintiffs appeal.

Affirmed.

George W. Young and A. O. Colburn, both of Spokane, for appellants.

Bausman Oldham, Cohen & Jarvis and Simon Wampold, Jr., and of Seattle, for respondents.

HOLCOMB Justice.

This action was commenced in February, 1932, for the purpose of having the assets of the Spokane Savings Bank (hereinafter called the bank) impressed with a trust to the extent of the contingent fund and undivided profits of the Spokane Savings & Loan Society (hereinafter called the society) which were transferred to the bank on October 11 1929, and to have the amount prorated to the plaintiffs, and to all others similarly situated who were shareholders in the society at the time of the transfer. The bank having been closed on June 15, 1932, by order of the supervisor of banking for the state of Washington, and its business thereafter being in the process of liquidation, the supervisor of banking and his special deputy immediately in charge of the bank's affairs were substituted as parties defendant. After the issues had been joined, the case was tried to the court and resulted in a dismissal of the action from which decision plaintiffs have appealed.

The complaint alleges that the assets of the society were taken over by the bank without previous knowledge or consent of the society's depositors; that the officers of the society and of the bank were the same; that it was represented to the society members that the transfer of the assets of the society only involved a reorganization, but that in truth it constituted a conversion of the society's assets; that the society members were not advised as to their rights in the contingent fund of the society or that there would be a change in those rights by reason of the change in organizations, but on the contrary were lead to believe that their rights remained the same as Before ; that the transfer of the assets from the society to the bank constituted a conversion which amounted to a forced withdrawal entitling all depositors of the society to their pro rata share of the contingent fund and undivided profits of the society.

Respondents by their answer, denied the charge of conversion and set up as affirmative defenses the statute of limitations, laches in instituting the action; res judicata based on the case of Beutelspacher v. Spokane Savings Bank, 164 Wash. 227, 2 P.2d 729, 730,

and the dissipation of the contingent fund and undivided profits.

It may first be noted that the validity of the transfer of the assets of the society to the bank and the dissolution of the society were both sustained by this court in the Beutelspacher Case, supra, and that that action was instituted by a number of the shareholders of the society 'on behalf of all the other shareholders and members of the society similarly situated * * * as well as on behalf of plaintiffs.' Respondents therefore urge that, as this action is predicated upon the same alleged wrongful acts of the bank and the common directors of the bank and society and as it also calls for a determination of the legal effect upon all shareholders of the transfer of the society's assets, the decision in the earlier case is res judicata as to the plaintiffs in the instant case upon the doctrine of virtual representation. This doctrine involves an exception to the rule that all those interested and affected must be made parties and is applied when the representation is fair and the parties represented hava a common interest with those Before the court. 20 R. C. L. 669. It is particularly applicable if there by an identity of subject-matter. The Beutelspacher Case, supra, was one especially fitted in law for a representative or class action under section 190, Rem. Rev. Stat. Perkins & Co. v. Diking District No. 3, 162 Wash. 227, 298 P. 462. Cf., Elston v. King County (Wash.) 34 P.2d 906.

In State ex rel. Forgues v. Superior Court, 70 Wash. 670, 127 P. 313, 315, the court held that a judgment sustaining a demurrer and dismissing an action brought by a citizen and taxpayer against the city clerk to enjoin the holding of a local option election on the ground that the petition therefor was insufficient, is res judicata and a bar to a similar action brought for the same purpose by another citizen and taxpayer. It was argued in that case by the relator that he was the holder of a retail liquor license and an internal revenue license and therefore his rights were peculiar to himself and not shared by the general public or the one who instituted the first suit. But the court said that the stability of judgments is the basis of the doctrine of res judicata,' and held that there was an identity of subject-matter in the two suits for both presented the single question of the sufficiency of the petition.

The relief prayed for in the case at bar differs somewhat from that asked in the Beutelspacher Case, but this is unimportant for as we said in Bruce v. Foley, 18 Wash. 96, 50 P. 935, 936:

'It is true that in the former suit plaintiff sought the cancellation of the lease, as well as damages, whereas in the present action the claim is for damages only. But there is an identity of subject-matter. * * *'

Here as stated in the Beutelspacher Case, 'the principal and...