Johnson v. Shuey

• Citation: 82 P. 123,40 Wash. 22
• Parties: JOHNSON et al. v. SHUEY.
• Decision Date: 06 September 1905
• Court: United States State Supreme Court of Washington

82 P. 123

40 Wash. 22

JOHNSON et al. v. SHUEY.

Supreme Court of Washington

September 6, 1905

Appeal from Superior Court, King County; R. B. Albertson, Judge.

Action by John Johnson and others against H. O. Shuey. From a judgment for defendant, plaintiffs appeal. Reversed.

Walter S. Fulton, for appellants.

H. R. Clise and John B. Hart, for respondent.

FULLERTON J.

This is an appeal from a judgment rendered on the pleadings. The appellants, as assignees of the depositors of the Bank of Ballard, commenced this action to recover from the respondent the difference between the amounts the depositors had to their credit at the time of the failure of the bank and the amounts thereafter paid them by the receiver of the bank's assets. The appellants are the holders of some 165 different claims, and their complaint contains that number of separate causes of action. The substance of each cause of action is that at the time the depositors who assigned their claims to the appellants opened accounts with the Bank of Ballard the bank was owned and conducted by the respondent H. O. Shuey, individually, and that he fraudulently, and for the purpose of inducing the assignors of the appellants to open accounts with him, representated to them and the public generally that the bank was incorporated, and that the amount invested in it as capital thereof was $25,000, whereas in truth and in fact the bank was not incorporated, and no sum in excess of $3,500 was invested in the business thereof. It is further alleged that the respondent, after receiving sums of money from the several assignors of appellants, afterwards, and without notice to such depositors, attempted to sell all his interests in the bank and its business to one W. W. DeLong for the sum of $12,000; that the said DeLong was inexperienced in the banking business; that he had no means with which to purchase the bank, and was financially irresponsible and without money or means with which to carry on such banking business, all of which was well known to the respondent, who, notwithstanding his knowledge, fraudulently secretly, and for the purpose of escaping liability to said depositors, attempted to constitute DeLong the owner and operator of said banking business, and allowed DeLong to handle the funds of the bank as he saw fit; that in part payment of the purchase price agreed upon at such pretended sale, the respondent directed and caused DeLong to take out of the funds belonging to the depositors and pay him $7,500 which money he received on account of the purchase price at the pretended sale, and that the respondent thereupon, without the knowledge or consent of the depositors, withdrew from the bank his credit, personal attention, and control, and thereafter refused it financial aid, credit, or assistance; that as a result of those acts the bank became insolvent, and on the 30th of January, 1905, closed its doors and suspended payments; that thereafter a receiver was appointed for it, its affairs wound up, and a certain per cent. only of the amount the several depositors had on deposit at that time were repaid them, and judgment against respondent is demanded for the amount remaining unpaid.

The respondent interposed a demurrer to the complaint, which the trial court overruled, whereupon he answered, admitting that he owned the bank previous to the 12th day of March, 1902, and averring that on that day he sold the same, together with the good will of the business, certain real estate and fixtures, to W. W. DeLong for $12,000, and that DeLong wnet into possession of the property, and from thereafter had sole charge of it. He also admitted that the bank became insolvent and closed its doors on January 30, 1903; that a receiver was appointed to wind up its affairs, and did so wind them up; paying the several depositors the sums credited to the several causes of action set out in appellants' complaint. All other allegations of the complaint were denied.

Two affirmative defenses were interposed. In the first it is alleged that the respondent sold the bank on the 12th day of March, 1902, to W. W. DeLong, giving him a deed of the real estate and a bill of sale of the personal property, which were at that time duly recorded in the auditor's office of the county of King--the county in which the bank was situated; that DeLong immediately entered into the possession of such property, and continued in such possession until January 31, 1903, when a receiver was appointed for the bank at the suit of a depositor; that thereafter the receiver gave notice to all persons having claims against W. W. DeLong and the Bank of Ballard to present them, duly verified; that all the persons named in the several causes of action set out in the appellants' complaint presented to the receiver their written claims for the amount which they had on deposit which amounts included the sums sued for in this action, each claim being duly verified by its claimants, and collected all of the assets of the bank, and paid to each person named in the complaint his due proportionate part thereof. The second affirmative defense, after repeating the matter contained in the first affirmative defense, alleged that the respondent was a creditor of DeLong and the Bank of Ballard, and held as security certain property; that a question arose between the respondent and the receiver as to a settlement of these matters, whereupon the questions were submitted to the court, and the receiver was directed to pay the respondent $3,892.77, on condition that the respondent convey to him the property held as such security, and that when this was done, 'the same shall be a final and complete determination of all matters between said receiver and the said Shuey.' This order, it is alleged, is a complete and final bar and adjudication of the right of the depositors to assert a liability against the respondent. In reply the appellants admitted that duly-verified claims were presented to the receiver of the Bank of Ballard for the claims sued upon, and that the receivership case had been wound up and settled. They also admitted that the settlement between the receiver and the respondent took place, as alleged, but denied the legal effect imputed to it, or that they or any of their assignors were parties thereto or had knowledge thereof. The other allegations contained in the affirmative defenses were also denied. On the filing of the reply a motion for judgment on the pleadings was interposed by the respondent and sustained by the court, on the ground that the assignors of the appellants had, by presenting their claims to the receiver of the property of DeLong, and receiving dividends thereon from the receiver, elected to make DeLong their debtor for the amount of their deposits in the Bank of Ballard, and were now estopped from asserting an indebtedness against the respondent for any part of such deposits. In this court, to sustain the judgment entered by the court below, the respondent makes...