Hurlbut v. Strong's Bank of Green Bay

• Decision Date: 31 March 1885
• Citation: 22 N.W. 852,62 Wis. 590
• Court: Wisconsin Supreme Court
• Parties: HURLBUT v. STRONG'S BANK OF GREEN BAY AND OTHERS.

62 Wis. 590

22 N.W. 852

HURLBUT

v.STRONG'S BANK OF GREEN BAY AND OTHERS.

Supreme Court of Wisconsin.

Filed March 31, 1885.

Appeal from circuit court, Brown county.Vroman & Sale and Ellis, Greene & Merrill, for respondent.

Hudd & Wigman and Tracy & Wheeler, for appellants.

ORTON, J.

Two of the defendants demurred to the complaint separately, and both demurrers were overruled and stricken out as frivolous, on the motion of the plaintiff, and each of said defendants has appealed to this court from the order so overruling and striking out his demurrer. The two demurrers involve the same questions, and both appeals will be disposed of together. As to the first point made in the respective briefs of the learned counsel of the appellants, and urged with great force of argument and pungency of criticism, it is sufficient to say that this court is perfectly satisfied with the ruling in Diggle v. Boulden, 48 Wis. 477;S. C. 4 N. W. REP. 678;Lerdall v. Insurance Co. 51 Wis. 426;S. C. 8 N. W. REP. 280;Magdeburg v. Uihlein, 53 Wis. 165;S. C. 10 N. W. REP. 363;Krall v. Libbey, 53 Wis. 292;S. C. 10 N. W. REP. 386;Straka v. Lander, 60 Wis. 115;S. C. 18 N. W. REP. 641; and Hoffman v. Wheelock, ante, 713, “to make no distinction between an order striking out a demurrer as frivolous and one overruling it on argument.”

The following is a concise statement of the allegations of the complaint as substantially made in the excellent brief of the learned counsel of the appellant Kelley, and proper to be reproduced here in elucidation of the objection made to the complaint on the demurrers:

(1) Strong's Bank of Green Bay is a banking corporation, with banking powers, doing business as such in the city of Green Bay, under and by virtue of the laws of this state.

(2) That it owes the plaintiff $101.56, a balance of deposits made by him in the usual course of business between May 3 and May 23, 1884, and that payment thereof has been demanded and refused; that it owes other persons, whose names and the respective amounts due each are unknown to the plaintiff, more than $200,000; and that this action is brought in behalf of plaintiff and all other creditors who choose to become parties thereto or become interested therein.

(3) That said bank has closed its banking office and is insolvent; has assets unknown in amount, but less than the aggregate indebtedness, which ought to be applied to the payment of the indebtedness.

(4) That said bank has been insolvent ever since January 1, 1878, during all of which period the defendants Strong, Neese, S. M. Marshall, D. M. Kelley, and M. P. Skeels had been its directors, owning stock in the bank.

(5) That the capital stock of said bank is $50,000, in shares of $100 each.

(6) That these directors, including the appellants, knowing of the insolvency of the bank, semi-annually from January 1, 1878, to January 1, 1884, voted, paid, and each received a dividend of five per cent. of the par value of the stock held by him, without having reason to believe that there were sufficient net profits properly applicable to such payments.

(7) That said votes of said directors declaring said dividends, when said corporation was insolvent as aforesaid, diminished and impaired the capital and capital stock of said bank, and that there was never any net profits of said bank or its business applicable to the payment of said dividends, or either of them.

(8) In a schedule, which forms a part of the complaint, is stated the amount of stock held by each defendant stockholder, and the amount of dividends so received by each, and it is stated therein that the demurrants each owned ten shares out of 500 of stock, and had regularly so received dividends, amounting in all in each case to $650.

(9) That when these dividends were so declared and received, a large portion of the debts of the bank now existing, existed and was due to the same creditors as now, such claims having exceeded $100,000 ever since January 1, 1879.

(10) That during all the time since January 1, 1878, to the commencement of this suit, said Henry Strong was president and said Louis Neese was cashier of said bank, and that Strong fraudulently converted more than $100,000 of the funds of the bank to his own use, and replaced the same with worthless securities, known to the president and cashier to be so worthless, and that they reported to the state treasurer, etc., said worthless securities as of par value.

(11) That during all the time from January 1, 1878, to the commencement of this suit, said directors of the bank grossly neglected to perform their official duties, and negligently permitted the money and effects of the bank to be stolen, wasted, and squandered; that they allowed insolvent and irresponsible persons and corporations to overdraw their accounts, and negligently allowed the moneys of the bank to be loaned to irresponsible persons without adequate security, whereby said money was lost, and that they negligently permitted the president of said bank to steal and embezzle the funds and securities of the bank, by which $100,000 of the funds of the bank were lost, and the bank thereby became insolvent, and unable to pay its creditors more than 20 cents on the dollars of their claims.

The prayer for relief is appropriate to these several causes of complaint.

The brief of the learned counsel of the respondent is elaborate and very able, and should be preserved in the report of the case as a complete vindication of the complaint in all particulars. It would seem, however, that every point made in the brief of the learned counsel for the appellants is answered by the nature of this suit under the statute, and...