German National Bank of Hastings v. First National Bank of Hastings

• Decision Date: 21 September 1899
• Docket Number: 10,645
• Citation: 80 N.W. 48,59 Neb. 7
• Parties: GERMAN NATIONAL BANK OF HASTINGS, APPELLEE, v. FIRST NATIONAL BANK OF HASTINGS, APPELLANT, ET AL
• Court: Nebraska Supreme Court

80 N.W. 48

59 Neb. 7

GERMAN NATIONAL BANK OF HASTINGS, APPELLEE, v. FIRST NATIONAL BANK OF HASTINGS, APPELLANT, ET AL

No. 10,645

Supreme Court of Nebraska

September 21, 1899

APPEAL from the district court of Adams county. Heard below before BEALL, J. Reversed and dismissed.

Judgment reversed, and petition dismissed.

J. B Cessna and Capps & Stevens, for appellant:

One of many creditors of an insolvent corporation can not sue alone to recover corporate assets wrongfully converted by defendants, without alleging that the corporation refused to sue. The corporation must be a party plaintiff. See Davenport v. Dows, 85 U.S. 626; McMullen v Ritchie, 64 F. 253; Hawes v. Oakland, 104 U.S 450; O'Conner Mining & Mfg. Co. v. Coosa Furnace Co. 10 So. [Ala.], 290; Doud v. Wisconsin P. & S. R. Co. 25 N. W. [Wis.], 533; Patterson v. Lynde, 106 U.S. 520; Moulton v. Connell, 27 S.W. [Tenn.], 672; Hornor v. Henning, 93 U.S. 231; Stone v. Chisolm, 113 U.S. 302; Pollard v. Bailey, 20 Wall. [U.S.], 520; Dimpfell v. Ohio & M. R. Co. 110 U.S. 209; City of Detroit v. Dean, 106 U.S. 541; Bill v. Western Union Telegraph Co. 16 F. 14.

The petition, not showing that suit was brought in behalf of plaintiff and all other creditors of the corporation, fails to state a cause of action. See Pullman v. Stebbins, 51 F. 10; Hornor v. Henning, 93 U.S. 228; Stone v. Chisolm, 113 U.S. 309; Childs v. Carlstein, 76 F. 86; Crease v. Babcock, 10 Met. [Mass.], 525; Cleveland Rolling Mill Co. v. Texas & S. L. R. Co. 27 F. 250; Hollings v. Brierfield Coal & Iron Co. 150 U.S. 371; Day v. Buckingham, 58 N. W. [Wis.], 254; Sleeper v. Goodwin, 31 N. W. [Wis.], 335; Cooper v. Adel Security Co. 30 S. E. [N. Car.], 348; Bethune v. Wells, 21 S. E. [Ga.], 230; Swan Land & Cattle Co. v. Frank, 148 U.S. 605; Van Pelt v. Gardner, 54 Neb. 701; Farmers Loan & Trust Co. v. Funk, 49 Neb. 353; Smith v. Hurd, 12 Met. [Mass.], 371; National Exchange Bank v. Peters, 44 F. 13; Howe v. Barney, 45 F. 668; Craig v. Gregg, 83 Pa. St. 19; Evans v. Brandon, 53 Tex. 56; Allen v. Curtis, 26 Conn. 455; Brinckerhoff v. Bostwick, 88 N.Y. 52; Davenport v. Dows, 18 Wall. [U.S.], 626; Wallace v. Lincoln Savings Bank, 15 S.W. [Tenn.], 448.

All defendants in a judgment are necessary parties to a proceeding thereon. Where a judgment has been assigned, the assignee is a necessary party to a suit in equity to enforce the judgment as against assets belonging to defendant. Plaintiff, one of many cestuis que trust, can not split a joint judgment, and enforce action for his benefit, without making the trustee and joint beneficiaries parties. See Curtin v. Atkinson, 29 Neb. 612; Andres v. Kridler, 42 Neb. 784; Grain v. Aldrich, 38 Cal. 514; Gibson v. Cooke, 20 Pick. [Mass.], 15; Dean v. Chandler, 44 Mo.App. 338; Wayman v. Cochrane, 35 Ill. 111; Wann v. McNulty, 2 Gil. [Ill.], 355; Burditt v. Porter, 21 A. [Vt.], 955; Sammis v. Wightman, 12 So. [Fla.], 536; Chew v. Brimagen, 13 Wall. [U.S.], 497; Heavenridge v. Mondy, 34 Ind. 28; Varney v. Bartlett, 5 Wis. 276; Hobson v. McCambridge, 22 N. E. [Ill.], 823; McCormick v. Fulton, 19 Ill. 570; Atkinson v. Foster, 25 N. E. [Ill.], 528; Triplett v. Scott, 12 Ill. 137; Wilson v. Keisel, 35 Pac. [Utah], 491.

Plaintiff's execution issued for part of the Slaker judgment was void. See Bain v. Chrisman, 27 Mo. 293; Hunt v. Loucks, 38 Cal. 372.

Directors of a corporation may ratify an act without taking a formal vote. See Allis v. Jones, 45 F. 148; Scofield v. Parlin, 61 F. 804; Murray v. Nelson Lumber Co. 143 Mass. 250; First Nat. Bank of Springfield v. Fricke, 75 Mo. 178; Beach v. Miller, 22 N. E. [Ill.], 464.

Ratification may be assumed from absence of dissent. A corporation may ratify acts of its agents, and ratification may be inferred from informal acquiescence in such acts. See Follansbe v. Kilbreth, 17 Ill. 522; Twin-Lick Oil Co. v. Marbury, 91 U.S. 587; Jessup v. Illinois C. R. Co. 43 F. 483; Paige v. Fazackerly, 36 Barb. [N.Y.], 392; Currie v. Bowman, 35 Pac. [Ore.], 848.

A principal can not ratify a portion of a contract, and reject the remainder. See Gow v. Collin, 66 N. W. [Mich.], 676; Nelson v. Bevins, 14 Neb. 153. McKeighan v. Hopkins, 19 Neb. 33; Joslin v. Miller, 14 Neb. 91; Tooker v. Sloan, 30 N.J.Eq. 394; Baer v. Lichten, 24 Ill.App. 311; Clark v. Hyatt, 23 N. E. [N.Y.], 891.

A. M. Post, also for appellant:

Plaintiff, when suing as a creditor or stockholder for the enforcement of a corporate right, is required to state with particularity the efforts made by him to induce the desired action by the managing board, and to show that he exhausted available means to secure redress through the agency of the corporation itself. See Doud v. Wisconsin P. & S. R. Co. 25 N. W. [Wis.], 533; Brewer v. Boston Theatre, 104 Mass. 378; Dunphy v. Travelers' Newspaper Ass'n, 146 Mass. 495; Boyd v. Sims, 11 S.W. [Tenn.], 948.

Plaintiff's claim, with those of other creditors, had been merged in the judgment in favor of Slaker, who is a necessary plaintiff in a suit in equity to enforce the judgment in the interest of creditors. See Minnesota Thresher Mfg. Co. v. Heipler, 52 N. W. [Minn.], 33; Allen v. Brown, 44 N.Y. 228.

Although Slaker might have prosecuted a suit for an accounting without the presence of parties beneficially interested in the judgment, the right in that regard is not reciprocal, since to a suit by one of the judgment creditors for an accounting all parties interested therein are necessary parties plaintiff, unless, of course, they refuse to join as such, in which they may be defendants, the reason therefor being stated in the petition. See Keeler v. Keeler, 11 N.J.Eq. 458; Gregory v. Stetson, 133 U.S. 579.

Ratification, although in practice generally established by proof of an estoppel, operates retroactively, and being equivalent to authority in the first instance is provable even under the general allegation of a contract duly executed by an agent or trustee, and need not be specially pleaded. See Bigler v. Baker, 40 Neb. 325; Hoyt v. Thompson, 19 N.Y. 207; Hubbard v. Town of Williamstown, 61 Wis. 397; Long v. Osborn, 59 N. W. [Ia.], 14; Hoosac Mining & Milling Co. v. Donat, 16 Pac. [Colo.], 157.

Tibbets Bros. & Morey and Frank Irvine, contra:

Plaintiff properly sued in its own behalf. See Hoagland v. Van Etten, 22 Neb. 681; Tatum v. Rosenthal, 30 Pac. [Cal.], 137; 5 Ency. Pl. & Pr. 534.

The suit need not be brought by the corporation, nor need the petition show that the corporation refused to act. See Hudson v. Plets, 11 Paige [N.Y.], 180; City of Cincinnati v. Hafer, 49 O. St. 60.

Misjoinder or defect of parties was waived, and objection otherwise invalid. See Culbertson Irrigating & Water Power Co. v. Wildman, 45 Neb. 663; Beeler v. First Nat. Bank, 34 Neb. 348; Stephens v. Harding, 48 Neb. 659; Mills v. Miller, 2 Neb. 299; Lederer v. Union Savings Bank, 52 Neb. 133; Pottinger v. Garrison, 3 Neb. 221; Harral v. Gray, 10 Neb. 186; Dorrington v. Minnick, 15 Neb. 397; Buck v. Reed, 27 Neb. 67; Phoenix Mutual Life Ins. Co. v. Brown, 37 Neb. 705; Ainsworth v. Taylor, 53 Neb. 484; Troup v. Horbach, 57 Neb. 644.

The judgment and execution were a sufficient basis for the suit. See Harlan v. Harlan, 14 Lea [Tenn.], 107; Snavely v. Harkrader, 30 Gratt. [Va.], 487; McCollum v. Hubbert, 13 Ala. 282; Commercial Nat. Bank v. Gibson, 37 Neb. 750.

The hardware company did not ratify the sale. See Butts v. Wood, 37 N.Y. 317.

OPINION

The opinion contains a statement of the case.

SULLIVAN, J.

At a former term a judgment in favor of the First National Bank of Hastings was reversed, and the cause remanded to the district court for further proceedings. See German Nat. Bank of Hastings v. First Nat. Bank of Hastings, 55 Neb. 86, 75 N.W. 531. Thereupon the plaintiff filed an amended petition and brought John Slaker and the Burger-Alexander Hardware Company into the case as parties defendant. The hardware company answered, alleging that it had ratified the sale to Carson Hamot, and had also ratified the application of the proceeds of the sale upon its indebtedness to the defendant bank. The second amended petition was framed on the theory that Clark and Oliver had converted the stock of hardware and that the appellant was, therefore, liable, either for the value of the property or for the proceeds of the sale. The court found against the First National Bank, and made no finding as to Clark and Oliver. As the bank could not possibly be liable for conversion unless Clark and Oliver were also liable, this action of the court can be accounted for only on the hypothesis that there was a ratification of the sale, but not of the application of the proceeds. The sale to Hamot was an act entirely distinct from the disposition of the purchase price. The directors and stockholders of the hardware company might, of course, have been quite willing to sanction the sale, but unwilling to give the whole sum realized therefrom to a single creditor. It would seem that the learned trial court, having this obvious distinction in mind, found against the plaintiff on the charge of conversion, but nevertheless gave judgment in its favor on the assumption that the sale had been ratified, and that the defendant bank had, without right or authority, became possessed of the vendor's money. The evidence undoubtedly justifies the conclusion that there was a ratification of the sale, but it is, in our opinion, plainly insufficient to warrant a finding that the payment to appellant was not ratified. It appears that at the time the Burger-Alexander Hardware Company effected a consolidation with the Denver Hardware Company there was an understanding among the officers of the former corporation that the stock retained in Hastings should be sold at the first favorable opportunity, and...