Gerner v. Mosher

• Decision Date: 23 February 1899
• Citation: 78 N.W. 384,58 Neb. 135
• Parties: GERNER v. MOSHER ET AL.
• Court: Nebraska Supreme Court

58 Neb. 135

78 N.W. 384

GERNER

v.MOSHER ET AL.

Supreme Court of Nebraska.

Feb. 23, 1899.

Syllabus by the Court.

1. Where a cause has been removed from a state court to the federal court, and has been by that court remanded to the state court for want of jurisdiction, it is the duty of the state court, in subsequent proceedings, to treat as conclusive upon it the decision of the federal court on the question of jurisdiction.

2. Assuming it to be the right of a stockholder in a corporation to examine the books thereof, it is not, as a matter of law, his duty to do so, after becoming a stockholder, for the purpose of ascertaining whether or not he has been defrauded in the purchase of such stock; he not being aware of any fact leading to a suspicion that he may have been so defrauded.

3. The object of requiring publication by national banks of reports made to the comptroller of the currency, in pursuance of section 5211, Rev. St. U. S., is to afford information to all persons having or contemplating business transactions into which the condition of the bank directly enters as a material factor.

4. Therefore one contemplating the purchase of stock in the bank is entitled to rely on such publications equally with a depositor or note holder.

5. The statute referred to requires such report to be verified by the oath or affirmation of the president or cashier, and to be attested by the signature of at least three directors. To charge a director individually with the consequences of false reports, it must appear that he attested them, or that he in some manner participated in making or publishing them. The attestation is not the act of the whole board, but that of the individual directors signing it.

6. One who makes a false representation, under circumstances which would render him liable if it were made voluntarily, is not excused by the fact that the law required him to make a true statement of the character counted upon.

7. The president and cashier of a bank, shown to have personally conducted its business, cannot be presumed ignorant of the falsity of reports of the bank's condition, by them published, the books of the bank on their face disclosing the falsity.

8. The word “attest,” as used in section 5211, Rev. St. U. S., means something more than to witness the execution of the report by the president or cashier; it means to certify its correctness.

9. Where the directors of a national bank attest the reports made of its condition by its executive officers to the comptroller of the currency, under section 5211, Rev. St. U. S., they thereby certify that the statements contained in said report are absolutely true. Irvine and Ryan, CC., dissenting.

10. In an action for false representations, it is not necessary to aver or prove that the party making them knew they were untrue; and this rule is applicable to an action for deceit against the director of a bank for falsely stating the financial condition of the corporation. Irvine and Ryan, CC., dissenting.

11. The directors of an insolvent national bank are personally liable, at the suit of one purchasing the stock of such bank, for damages sustained by the reason of the insolvency of the corporation, when the plaintiff is induced to make such purchase by false representations of solvency, contained in reports made by the bank to the comptroller of the currency, and attested by the directors, and published in pursuance of law, even though the directors were unaware that such reports and representations were false or untrue, and were made without intention to defraud. Irvine and Ryan, CC., dissenting.

Error to district court, Lancaster county; Hall, Judge.

Action by Henry Gerner against Charles W. Mosher and others. There was a judgment for defendants, and plaintiff brings error. Reversed in part.Webster, Rose & Fisherdick, for plaintiff in error.

Chas. O. Whedon, J. W. Deweese, and F. M. Hall, for defendants in error.

IRVINE, C.

Henry Gerner brought this case against Charles W. Mosher, Richard C. Outcalt, Charles E. Yates, David E. Thompson, Rolla O. Phillips, Ambrose P. S. Stuart, and Ellis P. Hamer. Homan J. Walsh and Emma H. Holmes, the latter as administratrix of the estate of William W. Holmes, were also named as parties defendant, but as to them the proceedings seem to have been abandoned. The petition alleges that Mosher was the president of the Capital National Bank, Walsh its vice president, and Outcalt its cashier, and that the other defendants named, together with Mosher, constituted its board of directors. The petition is in two counts. The first alleges that on May 18, 1887, a report was made by the defendants to the comptroller of the currency of the resources and liabilities of said bank as they existed May 13, 1887; that said report was sworn to by Outcalt, as cashier, and attested as correct by Mosher, Holmes, and Yates, as directors; that the defendants caused said report to be published in the State Journal, a newspaper published in Lincoln, “for the purpose of inducing others, and particularly this plaintiff, to deal with said corporation, and to repose in it and them, its directors and managing officers, and to induce others, and particularly this plaintiff, to purchase its capital stock, and make investments therein, and represented and held out said statement to be a true statement of the financial condition of said corporation.” The report is then set out in terms, and it is alleged that said report was false, in that it overstated the mortgages, stocks and bonds held by the bank to the amount of $30,000, the amount due the bank from reserve agents about $76,000, and its loans and discounts about $50,000; that said report and false representations were made by said four defendants with the knowledge, assent, and co-operation of all the other defendants, and the same were, as they and each of them well knew, wholly false and untrue; that plaintiff believed said representations to be true, and on the faith thereof purchased from Charles Hammond, on the 11th of July, 1887, 50 shares of the capital stock of said corporation, for the sum of $6,250; that it would have been worth said sum had the said report been correct, but in fact the bank was insolvent and the stock worthless; that January 22, 1893, the bank failed; that the stockholders have been assessed 100 cents on the dollar on their stock, and judgment rendered against the plaintiff for said assessment; that, notwithstanding the bank had no net earnings, dividends were from time to time declared, and suit has been brought against the plaintiff to recover dividends by him received. The second cause of action is, substantially, pleaded in the same manner, charging a false report of the condition of the bank, September 30, 1889, and the purchase by the plaintiff, in reliance on that report, in November, 1889, of 50 shares of stock from Henry E. Lewis, for the price of $7,250. The defendants filed separate answers, denying the material averments of the petition, pleading the statute of limitations, and also pleading that the action was one whereof the federal courts had exclusive jurisdiction, and that it had been removed to the circuit court for the district of Nebraska. At the close of the trial, the district judge peremptorily instructed the jury to return a verdict for all the defendants. The plaintiff brings the case here for review.

The plaintiff contends that he was entitled to relief under the provisions of section 5239 of the Revised Statutes of the United States, relating to the liability of directors of national banks. It, however, partly appears from the record, and is stated in both of the briefs, that the action was at one time removed to the federal court; that a motion to remand was overruled, but that subsequently, the case arising in that court, Judge Shiras presiding, on a demurrer to the petition, it was found that the federal court had no jurisdiction, and the case was therefore remanded to the district court of Lancaster county. The opinion of Judge Shiras, remanding the case, is found in Gerner v. Thompson, 74 Fed. 125, and proceeds on the ground that an action under section 5239 of the Revised Statutes may be maintained only by the receiver of the bank, so that an action by a private individual against directors for making false reports must be maintained, if at all, as an action at the common law for deceit, and therefore presents no question under the laws of the United States. Judge Shiras also expresses his opinion to the effect that, in order to maintain an action under the federal statute, it must appear that a forfeiture of the bank's charter has been adjudged at the suit of the comptroller of the currency. Plaintiff vigorously attacks this opinion, especially the latter part. But, under the circumstances, we would not be free, if we were so disposed, to give the statute a construction different from that which was given it by the federal court in this very case. The construction of the statute was necessary for the purpose of the demurrer, and as leading to the order remanding the case; and it being a federal statute, construed by a federal court in determining its own jurisdiction, we are bound to accept the result of that construction, and are not at liberty to here review it. Railroad Co. v. Fitzgerald, 16 Sup. Ct. 389.

The defendants, to sustain the action of the trial court, contend that the action was barred by the statute of limitations; the first cause of action arising in 1887, the second in 1889, and the suit not having been brought until 1894. It is evident that, if the action may be maintained at this late date, it must be by virtue of section 12 of the Code of Civil Procedure, providing that actions may be brought “within four years * * * for relief on the ground of fraud, but the cause of action in such case shall not (be) deemed to have accrued until the discovery of the fraud.” In order to bring the case within the...