Gores v. Day
| Decision Date | 12 April 1898 |
| Citation | 99 Wis. 276,74 N.W. 787 |
| Parties | GORES v. DAY. |
| Court | Wisconsin Supreme Court |
Directors of corporations, independent of any statute on the subject, are liable for corporate property misapplied or lost through their culpable neligence or fraud and under section 3237, Rev. St., and section 3239, Id., any creditor of such corporation can maintain an action in equity against such directors to enforce such liability.
Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.
Action by Fred W. Gores against Frederick T. Day, impleaded with others. A demurrer to the complaint, interposed by defendant Day, was sustained, and plaintiff appeals. Reversed.
The substance of the complaint is that the Plankinton Bank, a corporation that had existed for upward of six years prior to the 1st day of June, 1893, in the city of Milwaukee, Wis., and there conducted a large banking business, on that day made an assignment to William Plankinton for the benefit of its creditors; that there were about 800 of such creditors, representing claims aggregating over $1,400,000, $220 of which was due the plaintiff; that the defendants, for several years prior to such assignment, owned a majority of the stock of the corporation, controlled its affairs and constituted its board of directors; that they gave out and represented, in various ways set forth in detail in the complaint, that the bank possessed $200,000 of unimpaired capital, and $150,000 of surplus, and was a safe banking institution, and that, relying thereon, plaintiff and other creditors vested money therein and became creditors thereof; that such directors were grossly negligent in the performance of their duties; that they knowingly allowed large sums of money to be loaned to irresponsible persons without adequate security therefor, including some $367,000 to Frederick T. Day, one of their own number, and the president of the bank; that such directors, knowing that Day was incompetent for the trust, elected him to the position of president of the corporation, and allowed him to practically control its affairs, and to withdraw, from time to time, assets by way of loans to himself, altogether to the large amount stated, and also allowed him to purchase stock of the bank when it was insolvent, pay for the same out of its assets, and take the title thereto in his own name; that the directors, through a long period of time, were culpably negligent in the management of the affairs of the bank, thereby permitting its assets to be dissipated and lost, causing the insolvency which rendered the assignment for the benefit of creditors necessary, and which caused a loss to plaintiff and the other creditors, of 50 per cent. of their claims; that such creditors have no remedy for the wrongs stated, except by this action against the defendants as directors and managers of the corporation, for the abuse of their trust. The complaint further stated that the remaining assets of the corporation are still in the hands of William Plankinton, as assignee, and that application to the corporationor its officers, to institute the action, would be useless.
The prayer for relief is, among other things, that judgment be rendered in favor of the plaintiff and all creditors participating with him:
(1) That defendants are severally liable for the deficiency of assets necessary to pay such creditors, and that they be adjudged to pay the entire amount of such deficiency, with the costs and disbursements of this action.
(2) That an accounting be had to determine the amount due the creditors participating in this action.
(3) That upon such accounting being accomplished, the defendants pay into court, or to a receiver appointed for that purpose, the amount found due the plaintiff and all participating creditors.
Defendant Frederick T. Day demurred to the complaint upon several grounds, upon which...
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Beloit Liquidating Trust v. Grade
...that necessary, independent of any statute on the subject." Id., 77 Wis. 2d at 257, 252 N.W.2d at 378 (quoting from Gores v. Day, 99 Wis. 278, 280, 74 N.W. 787, 788 (1898) (emphasis added)). Thus, quoting from an established corporate-law treatise, McGivern "Where, however, an officer, dire......
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McGivern v. AMASA Lumber Co.
...286.32) does not materially add to the jurisdiction of the court; that existed under its general equity powers." Gores v. Day, 99 Wis. 278, 280, 74 N.W. 787, 788 (1898). We have viewed sec. 286.32, Stats., 9 as largely declarative of equitable jurisdiction. An action by a creditor under thi......
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Lindemann v. Rusk
...of action for the winding up of the bank's affairs, is properly enforceable as a part of such proceeding. It was held in Gores v. Day, 99 Wis. 276, 74 N. W. 787, that “directors are liable to be charged as trustees of property fraudulently misapplied or wasted by them, independent of any st......
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State v. Milwaukee Elec. Ry. & Light Co.
...the court. In this state, apparently, Chancellor Kent's doubt of the power of the court has not been considered serious. In Gores v. Day, 99 Wis. 276, 74 N. W. 787, it is said: “Section 3237, Rev. St. 1878, does not materially add to the jurisdiction of the court, that existed under its gen......