Karn v. Andresen, 9369.

• Court: U.S. Court of Appeals — Eighth Circuit
• Writing for the Court: STONE and KENYON, Circuit , and OTIS
• Citation: Karn v. Andresen, 60 F.2d 427 (8th Cir. 1932)
• Decision Date: 28 June 1932
• Docket Number: No. 9369.,9369.
• Parties: KARN v. ANDRESEN et al.

60 F.2d 427 (1932)

KARN v. ANDRESEN et al.

No. 9369.

Circuit Court of Appeals, Eighth Circuit.

June 28, 1932.

E. V. Cliff, of Ortonville, Minn. (F. L. Cliff, of Ortonville, Minn., and Daly & Barnard, of Renville, Minn., on the brief), for appellant.

James H. Hall, of Marshall, Minn. (Hall & Catlin, of Marshall, Minn., on the brief), for appellees.

Before STONE and KENYON, Circuit Judges, and OTIS, District Judge.

OTIS, District Judge.

The Citizens' National Bank of Ortonville, Minn., having become insolvent, was taken over by the Comptroller of the Currency December 23, 1926, and one William Ryder was appointed receiver. Ryder served as receiver until April 1, 1929, when he was succeeded by Carl M. Andresen. Andresen, as receiver, and the bank are the appellees. The appellant, a stockholder and director of the bank, had certain claims against the bank, which had been allowed and on which dividends had been declared. These dividends had been retained by the receiver. It was contended by the receiver that the appellant had entered into an agreement of settlement with the receiver by the terms of which he surrendered his claims in consideration of a covenant not to sue him on his liability as a director. It had been asserted by the receiver that the directors, including the appellant, by negligence in the discharge of their official duties, had caused the bank a loss in the amount of $123,691.55 and that they were jointly and severally liable therefor. Appellant brought the present action to enforce his claims in so far as dividends had been declared and to require the receiver to pay him such further dividends as might be declared. The defense was the alleged settlement. The trial court found for the appellees, decreed they were the lawful owners of dividends declared and to be declared on appellant's claims, and dismissed appellant's bill.

While there are several assignments and specifications of error, all of which have been considered, this appeal really presents a single question and that a question of fact. Undoubtedly there were negotiations between the parties looking to the settlement of their conflicting claims. Following these negotiations a covenant not to sue appellant, which had been approved by the Comptroller of the Currency and a state district court, was delivered to the appellant. Conceding there were negotiations between the parties looking to the settlement of their claims, the appellant contends that his offer was the surrender of his claims in consideration of a release of all liability growing out of his connection with the bank as a director, that that offer never was accepted, that the tendering to him of a covenant not to sue was not an acceptance, since the effect of that was only to release him from liability to the bank and to the receiver and not from liability to other directors should they be sued by the receiver, recovery had from them, and contribution from appellant sought by them. Appellees contend that the appellant offered to surrender his claims against the bank for the release of the bank's and receiver's claims against him and that that offer was accepted and fully met when a covenant not to sue was tendered to him.

In resolving this issue of fact in favor of appellees, the trial court said:

"I find * * * from the evidence that the offer made by the plaintiff (appellant) to the receiver in settlement of all claims made against him by the receiver, growing out of his acts as a director of the bank, was accepted by the receiver, approved by the Comptroller of the Currency, approved by the state district court and Dr. Karn (appellant) notified of its acceptance, * * * and that all that remained to be done were the formal and ministerial acts of signing the covenant not to sue and transferring the receiver's certificates. These documents would only be evidence of the agreement, and not the agreement itself.

"The only real question in this case is whether the minds of the parties actually met upon the settlement. If the plaintiff was bargaining for a release not only of his own liability, but of that of his co-directors as well, there was no agreement. If he was bargaining for his own release, there is an agreement. A release of a joint tortfeasor is a very different thing than a covenant not to sue, which reserves the right to proceed against other joint tortfeasors. Davis v. Moses, 172 Minn. 171, 215 N. W. 225; Musolf v. Duluth Edison Electric Co., 108 Minn. 369, 122 N. W. 499, 24 L. R. A. (N. S.) 451 and note. So far as I am aware, the only way that one joint tortfeasor can be released without releasing the others is by the method proposed. The evidence does not warrant a finding that the plaintiff was interested in anything except the release of his own several liability. He was bargaining for that. His offer was accepted. After having secured the approval of the settlement and having delivered the covenant, at the plaintiff's request, to his counsel, it is scarcely conceivable that the receiver could have successfully maintained a suit against the plaintiff on his liability as a director. If the receiver could not have maintained a suit against the plaintiff, the plaintiff could not have successfully sued the receiver upon the plaintiff's claim against the bank. There is nothing to indicate that the plaintiff was bargaining for any particular form of...