Hart v. Evanson
| Decision Date | 24 November 1895 |
| Citation | 105 N.W. 942,14 N.D. 570 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Grand Forks county; Fisk, J.
Action by George W. Hart against P. S. Evanson and others. Judgment for plaintiff, and defendant Evanson appeals.
Tracy R. Bangs, for appellant.
Solvency or insolvency is an ultimate fact to be submitted to a jury and it was incompetent for a witness to give an opinion upon the subject. Minton v. Stahlman, 34 S.W. 222; State v. Stevens, 92 N.W. 420; Babcock v Middlesex S. B. & B. Assn., 28 Conn. 302; State v Myers, 38 P. 296; Brice v. Lide, 30 Ala. 647; Brundred v. Machine Co., 4 N.J.Eq. 295; Nuckolls v. Pinkston, 38 Ala. 615; Persee & Brooks Paper Wks. v. Willett, 24 N.Y.S. Ct. 131; Hall v. Ballou, 12 N.W. 475.
A director or stockholder of a bank is not chargeable with actual knowledge of the business transactions of the corporation. Briggs v. Spaulding, 35 L.Ed. (U. S.) 662; Rudd v. Robinson, 26 N.E. 1046; Dickey v. Leonard, 77 Ga. 151; Wakeman v. Dalley, 51 N.Y. 27.
When bank directors have in entire good faith selected a manager in whose competency and honesty they have reason to believe, being themselves without banking experience, they have acted prudently and with proper caution. Clews v. Bardon, 36 F. 617; Warner v. Pennoyer, 82 F. 181; Same v. Same, 91 F. 587.
Keeping a bank open for business does not constitute a representation of its solvency. 14 Am. & Eng. Enc. Law, 80; Cochrane et al. v. Hasley, 25 Minn. 52; Bell v. Ellis, 33 Cal. 620; Hotchkin v. Third National Bank, 27 N.E. 1050; 14 Am. & Eng. Enc. Law, 81.
The special verdict fails to support the judgment, in that there is no finding that appellant made any misrepresentation to plaintiffs or either of them with intent to deceive, or to induce them to sign the bond. Sections 3847, 3848, 3850, Rev. Codes 1899; 14 Am. & Eng. Enc. Law (2d Ed.) 21, 85, 102, 207; Feeny v. Howard, 12 Am. St. Rep. 162; Haven et al. v. Neal et al., 45 N.W. 612.
Where a jury is to find a special verdict, they must find the ultimate facts. Russell v. Myers, 7 N.D. 335, 75 N.W. 262; Louisville, N. A. & C. Ry. Co. v. Miller, 37 N.E. 343; Bartholomew v. Pierson, 14 N.E. 249; Humpener v. D. M. Osborne & Co., 50 N.W. 88; McKenna v. Whittaker, 69 N.W. 587; Bartow v. Nor. Assur. Co., 72 N.W. 86.
Fraud under our statute is a question of law. Nat. State Bank v. Sanford Fork & Tool Co. et. al., 60 N.E. 699; Cicero Township v. Picken et al., 23 N.E. 763; Phelps et al. v. Smith et al., 17 N.E. 602; Farmers Loan & T. Co. v. Canada & St. L. Ry. Co. et. al., 26 N.E. 784; Rose v. Colter, 76 Ind. 590; Owens v. Gascho, 56 N.E. 224; Wilson v. Campbell et al., 21 N.E. 893; Phillips v. Kennedy et ux., 39 N.E. 147; Monticell Bank v. Bostwich, 77 F. 123; Parks v. Satterthwaite, 32 N.E. 82; Elston v. Castor, 101 Ind. 426; State Bank v. Bachus et al., 66 N.E. 475; Fletcher et al. v. Martin et al., 25 N.E. 886; Hawkins et al. v. Fourth Nat. Bank et al., 49 N.E. 957; Maxwell v. Wright et al., 67 N.E. 267; McKibben et al. v. Ellingson, 59 N.W. 1003.
In the absence of a finding of intent to deceive, no such intent is presumed to exist. Cincinnati, O., St. L. & C. Ry. Co. v. Gaines, 5 N.E. 746; Meeker et al. v. Shanks et al., 13 N.E. 712; Bank v. Dovetail B. & G. Co., 40 N.E. 810; Vinton v. Baldwin, 95 Ind. 433; Hildman v. City of Phillips, 82 N.W. 566.
Frank B. Feetham and B. G. Skulason, for respondent.
An expert, after showing the facts, figures, computations, values and other tangible matters which can be explained to the jury, should then be permitted, as an expert, to give his opinion as to the result, as to the solvency or insolvency of a party. State v. Cadwell et al., 44 N.W. 700; Waterson v. Fuelhart, 32 A. 597; Crawford v. Andrews, 6 Ga. 244; Breckenridge v. State, 5 Dana. 114; Reggins v. Brown, 12 Ga. 273.
If the admission of opinion evidence was error, it was without prejudice; the point was fairly established by competent testimony. United States v. Adams, 9 N.W. 718; Comms. of Highways of Homer Township v. Riker, 44 N.W. 955; Taylor v. Neys et al., 79 N.W. 998; Parsons v. New York Central & Hudson River R. Co., 3 L. R. A. 683; Campbell v. Carnahan, 13 S.W. 1098; Jacksonville, Tampa & Key West R. Co. v. Peninsular Land, Transportation & Manufacturing Co., 17 L. R. A. 33; New Mexican R. Co. v. Hendricks et al., 30 P. 901, 2 Enc. Pl. & Pr. 556.
An officer of a corporation is chargeable with notice of all matters relating to its affairs which he actually knows, or which it is his duty to know, and which by diligence he might have known, whether known or not. 21 Am. & Eng. Enc. Law, 896; Finn v. Brown, 12 S. C. R. 140; German Bank v. Wulfheimer, 19 Kan. 60; Martin v. Webb, 3 S. C. R. 428; United States v. Underwood, 15 Am. Rep. 735; State v. Myers, 38 P. 299.
Good faith, exact justice and public policy unite in requiring of one voluntarily taking the position of trustee or director of a corporation, ordinary care and prudence, and it is a gross breach of duty not to bestow them. Hun v. Cary, 82 N.Y. 65, 37 Am. Rep. 546; Ackerman v. Halsey, 37 N. J. E. 356; same case, 38 N. J. E. 501; Society v. Underwood, 15 Am. Rep. 735; U. S. v. Means, 42 F. 599; Warren v. Penoyer, 91 F. 287; Warren et al. v. Robinson et al., 57 P. 287; Rev. Codes 1899, sections 7529, 7532, 7524.
When a bank is insolvent, it should not only decline deposits but close its doors, and it is a fraud upon its depositors not to do so. 3 Am. & Eng. Enc. Law, 847; Higgins v. Hayden, 73 N.W. 280; Craigie et al. v. Hadley, Receiver, etc., 1 N.E. 537; American Trust & Savings Bank v. Gueder & Paeschke Manufacturing Co., 37 N.E. 227; Peck v. Bank, 43 F. 357; Wasson v. Hawkins, 59 F. 233.
Ultimate facts found by a jury in a special verdict, if sufficient to state a cause of action, will support a judgment. 9 Enc. Pl. & Pr. 696; Ginson v. Fristoe, 1 Am. Dec. 502.
If the directors have been guilty of neglect of duty amounting to a tort, they are liable to account. United Society v. Underwood, 15 A. 735; Gibbons v. Anderson, 80 F. 345; Hun v. Cary, 82 N.Y. 65; Solomon v. Bates, 181 N.C. 311; Cassidy v. Uhlmannet et al., 63 N.E. 554; Carr v. State, 16 So. 150; San Pedro Lumber Co. et al. v. Reynolds, 53 P. 410; Marshall v. Farmers' & Mechanics' Savings Bank, 8 S.E. 586; Craigie et al. v. Hadley, Receiver, etc., 1 N.E. 537; Cummins v. Winn. 14 S.W. 512.
Defendant P. S. Evanson appeals from a judgment for plaintiff and from an order denying a motion for a new trial. The complaint states, in substance, the following facts: The defendants were directors of the State Bank of Northwood. On or about February 20, 1901, the bank's application to the county commissioners of Grand Forks county to be designated a depositary of the funds of that county under article 8, c. 26, Pol. Code, had been accepted and the directors authorized Mr. Lough, the president of the bank, to cause to be executed and delivered to the county, in behalf of the bank, a bond, with sureties, as required by the county depositary law, to indemnify the county against loss of the funds received by the depositary. At the solicitation of Mr. Lough, this plaintiff and his assignors became sureties on such depositary bond, and the same was delivered to and accepted by the county. County funds were thereupon deposited in the bank, and on July 23, 1901, the bank was closed by the state authorities by reason of its insolvency. The plaintiff and his assignors paid to the county the sum of $ 1,990.20 in satisfaction of their liability on the bond. It is alleged that the bank had been insolvent more than two years before the bond was procured, and had been insolvent ever since, and that the defendant knew of its insolvency during all of said time; but that notwithstanding such knowledge, the defendants, contrary to law, kept the bank open and paid dividends, "and did carry 10 per cent of the face of the stock of said bank to a fund which they designated a surplus, did make and publish false statements of the condition of such bank, did accept upon deposit funds of said county and did in all things so conduct the affairs of said bank in the same manner as if it were a solvent institution, and did deceive the public, and especially the sureties, who at the solicitation of the said Sidney C. Lough, signed the said bond to the county of Grand Forks as to the true condition of the said bank, and that by reason of such false and fraudulent and unlawful representations made at the direction of the defendants herein and by them, and in reliance thereon this plaintiff did sign said bond to the said county of Grand Forks aforesaid." It is alleged that the condition of the bank is such that nothing will be realized for the creditors from the assets. The plaintiff's two co-sureties assigned their claims to him, and he demands judgment for $ 1,990.20, the aggregate amount paid by the three sureties; each claim being set forth in a separate cause of action.
The appellant's answer, aside from certain admissions unnecessary to particularly mention, was in effect a general denial. The evidence was submitted to the jury for a special verdict. In response to the interrogatories the jury in effect found that the allegations of the complaint with respect to this appellant were true, except in certain particulars which will be hereafter mentioned Judgment was ordered and entered for plaintiff and against the defendant for the sum demanded in the complaint. A motion for a new trial, upon a statement of the case, was made and denied. We are agreed that neither the complaint, the...
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