Gager v. Bank of Edgerton

• Decision Date: 10 January 1899
• Citation: 77 N.W. 920,101 Wis. 593
• Parties: GAGER ET AL. v. BANK OF EDGERTON ET AL. APPEAL OF HARTZHEIM.
• Court: Wisconsin Supreme Court

101 Wis. 593

77 N.W. 920

GAGER ET AL.

v.BANK OF EDGERTON ET AL.

APPEAL OF HARTZHEIM.

Supreme Court of Wisconsin.

Jan. 10, 1899.

Appeal from circuit court, Rock county; John R. Bennett, Judge.

Action by Henry Marsden against the Bank of Edgerton and others. C. M. Gager and others were substituted as plaintiffs, and from the decree Hartzheim appeals. Affirmed.

This is an appeal from an injunctional order made pendente lite. The facts upon which the order was made were as follows: On the 19th of October, 1897, the Bank of Edgerton was a state banking corporation which had been doing business at Edgerton for a number of years. On that day the bank closed its doors, and one Marsden, a stockholder in the bank, brought an action in equity against the bank alone, alleging it to be insolvent, and praying the appointment of a receiver, with the usual powers to collect and dispose its assets among the creditors. Upon this complaint, and upon the same day, one L. H. Towne was appointed receiver, and immediately entered on his duties. On November 1st following, upon the application of the receiver, an order was made by the court requiring all creditors of the bank to file their claims and become parties to the action on or before May 10, 1898; and the bank and its officers were enjoined from exercising any corporate rights and doing any banking business, and creditors were also enjoined from commencing any proceedings against the bank to collect their claims. On the 8th day of November, Marsden amended his complaint by adding an allegation to the effect that he was a creditor of the bank in the amount of $38.34, as well as a stockholder therein, and also adding to the prayer for relief, among other things, a prayer that all creditors be required to file their claims in the action and become parties thereto. On November 20, 1897, the appellant, Hartzheim, who was a creditor of the bank to the amount of $512.14, commenced an action in equity on behalf of himself and all others similarly situated against all the officers and directors of the bank, and on December 2d he amended his summons and complaint by making all the stockholders parties thereto. The amended complaint alleged insolvency of the bank since 1888, and that such insolvency was known to the directors of the bank. It also contained allegations charging the officers of the bank with misfeasance and malfeasance, consisting of gross neglect of duty, in allowing the funds of the bank to be squandered and loaned to irresponsible parties, in permitting the cashier to embezzle and steal large sums of money and to pay exorbitant rates of interest to depositors, in making fraudulent reports to the state treasurer as to the condition of the bank, and in declaring dividends, knowing the bank to be insolvent. It also contained allegations charging liability of the stockholders in not paying their subscriptions for stock, and for receiving dividends when the bank was insolvent. The amended complaint further alleged that the Marsden suit was collusive, and brought for the purpose of shielding the officers and directors of the bank from liability; and it prayed for a stay of proceedings in the Marsden case until the determination of the Hartzheim action, or that the two actions be consolidated, and that the defendants be adjudged to be indebted to the plaintiff, and to all creditors who may become parties to the action, to the amounts of their respective claims, and such further proceedings had as are in accord with the statute, and for an injunction against all other actions by creditors. On the 27th of November, 1897, C. M. Gager and about 20 others, who alleged themselves to be creditors of the bank to an amount aggregating nearly $60,000, made a petition to the court in the Marsden action, alleging their character as creditors, setting forth the names of the stockholders, and alleging that the bank had been insolvent since January, 1885, and was known so to be by the directors. This petition also alleged negligent management by the directors, and facts showing statutory and common-law liabilities on the part of the directors and stockholders, substantially like the charges contained in...