Jones National Bank v. Charles Yates No 163 Bank of Staplehurst v. Charles Yates No 164 Utica Bank v. Charles Yates No 165 Thomas Bailey v. Charles Yates No 166 166 1915

• Decision Date: 21 June 1915
• Docket Number: Nos. 163,164,165,s. 163
• Citation: 240 U.S. 541,36 S.Ct. 429,60 L.Ed. 788
• Parties: JONES NATIONAL BANK, Piff. in Err., v. CHARLES E. YATES, D. E. Thompson, and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased. NO 163. BANK OF STAPLEHURST, Plff. in Err., v. CHARLES E. YATES, D. E. Thompson, and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased. NO 164. UTICA BANK, Plff. in Err., v. CHARLES E. YATES and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased. NO 165. THOMAS BAILEY, Plff. in Err., v. CHARLES E. YATES and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased. NO 166. , and 166. Argued April 5 and 6, 1915. Restored to docket for reargument
• Court: U.S. Supreme Court

240 U.S. 541

36 S.Ct. 429

60 L.Ed. 788

JONES NATIONAL BANK, Piff. in Err.,

v CHARLES E. YATES, D. E. Thompson, and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased.

NO 163.

BANK OF STAPLEHURST, Plff. in Err.,

v. CHARLES E. YATES, D. E. Thompson, and Louisa Hamer, Administratrix of the Estate of Ellis P. Hamer, Deceased.

NO 164.

UTICA BANK, Plff. in Err.,

v. CHARLES E. YATES and Louisa Hamer, Administratrix of

the Estate of Ellis P. Hamer, Deceased.

NO 165.

THOMAS BAILEY, Plff. in Err.,

v. CHARLES E. YATES and Louisa Hamer, Administratrix of

the Estate of Ellis P. Hamer, Deceased.

NO 166.

Nos. 163, 164, 165, and 166.

Argued April 5 and 6, 1915.

Restored to docket for reargument June 21, 1915.

Reargued January 12 and 13, 1916.

Decided April 3, 1916.

Messrs. John Jacob Thomas, Lionel C. Burr, and Arthur B. Hayes for plaintiffs in error.

Messrs. Frank E. Bishop and Frank M. Hall for defendants in error Charles E. Yates and Louisa Hamer.

Messrs. Halleck F. Rose, John F. Stout, and Arthur R. Wells for defendant in error D. E. Thompson.

[Argument of Counsel from page 542 intentionally omitted] Mr. Justice Hughes delivered the opinion of the court:

The Capital National Bank of Lincoln, Nebraska, suspended payment on January 21, 1893. The plaintiffs in error were unpaid depositors and brought these actions against directors of the bank to recover damages attributed to false representations of the bank's condition. With their denials of breach of duty, the defendants averred that their liability, if any, was to be determined by the provisions of the national bank act. Judgment in favor of the plaintiffs, upon the verdict of a jury, was affirmed by the supreme court of the state. Yates v. Jones Nat. Bank, 74 Neb. 734, 105 N. W. 287. It was held that the actions were for deceit, at common law, and the judgments were sustained upon that ground. Upon writ of error the judgments were reversed. 206 U. S. 158, 181, 51 L. ed. 1002, 1015, 27 Sup. Ct. Rep. 638. It was the view of the court, even if it were conceded 'that there was some evidence tending to show the making of alleged written representations other than those contained in the official reports made by the association to the Comptroller of the Currency, and published in conformity to the national bank act, that such latter statements were counted upon in the amended petition and were, if not exclusively, certainly principally, the grounds of the alleged false representations covered by the proof.' Id. p. 171. It was therefore concluded that the recovery had been based upon conduct of the defendants in the discharge of duties imposed by the Federal statute; that, with respect to such conduct, the statute (Rev. Stat. § 5239, Comp. Stat. 1913, § 9831) furnished an exclusive test of liability; and that this test had not been applied. It was held that responsibility, by the terms of the statute, arose from its violation 'knowingly,' and hence that 'something more than negligence is required; that is, that the violation must in effect be intentional.' Id. pp. 179, 180.

Upon remand, the petitions were amended, but there was no material change in the nature of the causes of action. By agreement, the several cases were tried together, and trial was had by the court without a jury. Official reports, as published, of the condition of the bank, were introduced in evidence. Two of these (of December 28, 1886, and December 9, 1892) had been annexed to the petition, and the allegations were broad enough to embrace others. It appeared that the official reports of December 28, 1886, December 12, 1888, September 30 1889, July 9, 1891, December 2, 1891, and December 9, 1892, had been attested by the defendant Yates; those of September 25, 1891, and September 30, 1892, by Ellis P. Hamer, the intestate of the defendant, Louisa Hamer; and those of December 28, 1886, August 1, 1887, October 2, 1890, December 19, 1890, and July 9, 1891, by the defendant, David E. Thompson. Each of these statements showed the capital stock intact and also surplus and undivided profits.

On behalf of the defendants Yates and Hamer, the following special findings among others were requested:

'III. That neither the defendant Charles E. Yates nor Ellis P. Hamer, the deceased, knowingly violated or knowingly permitted any of the officers, agents, or servants of the Capital National Bank to violate any of the provisions of the national banking act under which said bank operated.

'IV. That neither the defendant Charles E. Yates nor the deceased, Ellis P. Hamer, knowingly participated in or assented to any violation of any of the provisions of said national banking act by any of the officers, agents, or servants of said Capital National Bank.'

'IX. That the defendant Charles E. Yates, in attesting said reports of date December 28, 1886, and December 9, 1892, did not, with actual knowledge thereof or intentionally, make an untrue statement or representation of the assets or liabilities of said Capital National Bank, nor of any of the items of either its assets or liabilities.

'X. That neither the defendant Charles E. Yates nor the deceased Ellis P. Hamer, with actual knowledge or intentionally, made any untrue statement or representation of any or all of the assets of the Capital National Bank in any or all of the statements or reports made to the Comptroller of the Currency and published by said bank, as required by the national banking act, which reports are shown in the testimony in this case.'

The trial court found 'against each of the defendants and in favor of the plaintiff' respecting the third and fourth requests. On the ninth request, the court answered 'in the negative' as to the report of December 28, 1886, and 'in the affirmative' as to the report of December 9, 1892; and on the tenth request, the court found 'in the affirmative.' These rulings 'in the affirmative' were taken to be findings against these defendants, each of whom at once (on a motion to set aside the findings and for a new trial) filed exceptions,—the defendant Yates stating that the court 'erred in finding against defendant on the ninth request as to report Dec. 9, 1892,' and each of the defendants Yates and Hamer stating that the court 'erred in finding against defendant on the tenth request.'

Among the requests for findings submitted by the defendant Thompson were the following:

'4. Whether this defendant at any time prior to its failure or suspension had actual personal knowledge that any of the official statements made by the Capital National Bank to the Comptroller of the Currency, and referred to in the petition or the evidence, were in any material respect false and untrue.

'5. Whether this defendant in fact participated in any of the official reports made by the Capital National Bank to the Comptroller of the Currency other than the five several reports dated respectively, December 28, 1886, August 1, 1887, October 2, 1890, and December 19, 1890, and July 9, 1891.

'6. Whether in attesting such of the official reports of the Capital National Bank to the Comptroller of the Currency as are shown to have been attested by him, the defendant acted in good faith.

'7. Whether in attesting such of the official reports of the Capital National Bank to the Comptroller of the Currency as are shown to have been attested by him, the defendant acted fraudulently and with actual personal knowledge that such reports or any one of them were in any material respect false and untrue.'

As to the fourth request, the trial court found 'in the affirmative,' and the defendant Thompson filed his objection that the finding was 'not sustained by sufficient evidence' and was 'not consistent with the findings made in response to the sixth and seventh requests.' As to the fifth request, the trial court found 'that the defendant attested only five reports mentioned in said request.' As to the sixth and seventh requests, it was found:

'Respecting the sixth and seventh requests of the defendant, the court finds that the defendant had no actual personal knowledge of the truth or falsity of the reports made to the Comptroller, attested by him, but in attesting such reports the court finds that the defendant relied upon the statements made to him by the president and cashier of the bank, and without any investigation, and that at the time of attesting such statements the defendant knew that he had no personal knowledge of the truth or falsity of such reports, and that the same were attested recklessly and without performing his duties as a director to ascertain the truth or falsity of such reports before the same were attested by him, and in this respect the court finds that the same were not made in good faith.'

The trial court, upon its own motion, found in each case, as to all the defendants, as follows:

'The Capital National Bank, at the time it assumed that name and at the time it increased its capital stock to $300,000, had sustained losses greatly in excess of its purported capital stock, and that it never, in fact, had any capital stock, undivided profits, or surplus, and that it was at all times insolvent and so continued up to the time it ceased to do business, on January 21, 1893, at which time its liabilities exceeded its assets by more than a million dollars.

The court finds that from and after September, 1891, the said Ellis P. Hamer, and the defendants Yates and Thompson, and each of them, had knowledge and knew that the statements, advertisements, and representations of the bank's financial condition and capital stock, both official and unofficial and voluntary, shown by the evidence, were being published in the newspapers and sent to the plaintiff, by the officers of the bank, as alleged in the amended petition, and that they contained the names of all the directors, including said Ellis P. Hamer, and the defendants Yates and Thompson, and purported to be made and published under and by their...