Kemper v. First Nat. Bank in Newton

• Decision Date: 10 March 1981
• Docket Number: No. 80-323,80-323
• Citation: 49 Ill.Dec. 799,94 Ill.App.3d 169,418 N.E.2d 819
• Parties: , 49 Ill.Dec. 799 Billy C. KEMPER, Plaintiff-Appellant, v. FIRST NATIONAL BANK IN NEWTON, A Banking Corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 819

418 N.E.2d 819

94 Ill.App.3d 169, 49 Ill.Dec. 799

Billy C. KEMPER, Plaintiff-Appellant, v. FIRST NATIONAL BANK IN NEWTON, A Banking Corporation Defendant-Appellee.

No. 80-323.

Appellate Court of Illinois, Fifth District.

March 10, 1981.

William A. Sunderman and Janett S. Winter-Black, Anderson Law Offices, Charleston, for plaintiff-appellant.

Robert L. Douglas, Law Offices of Robert L. Douglas, LTD, Robinson, for defendant-appellee.

KARNS, Justice:

At a meeting of its Board of Directors, held on February 14, 1978, the defendant First National Bank in Newton, Illinois, hired the plaintiff, Billy C. Kemper, as its president and trust officer "for the ensuing year." Kemper states that during his service with the bank, he fulfilled all the duties required by those offices. In April of 1978, the Board of Directors voted to discharge the plaintiff as president and trust officer because he purchased stock in the First National Bank in Newton without telling members of the Board. According to Kemper, the Board subsequently agreed "that the said termination of employment was without just cause or provocation," and the Bank solicited the resignation of the plaintiff, which he refused to tender.

Kemper brought suit in the Circuit Court of Jasper County, in which he alleged the facts detailed above. In three counts, he requested damages which he claimed to have resulted from his wrongful dismissal. His first count sought an award of $46,316.67, although the basis for requesting this amount is unclear in view of his allegation that he was appointed president at a $39,000.00 annual salary. The statement of facts in Kemper's brief on appeal indicates that this was a claim for " * * * salary for the remainder of the term." The second count asked for $8,848.00, alleged to be the amount of plaintiff's "vested" interest in a pension plan, and the third count requested $5,000.00 damages for lost life insurance coverage.

The defendant moved for judgment on the pleadings, and arguments were had. The trial court held that the National Bank Act provided in 12 U.S.C. § 24, par. 5 that the Board of Directors of a national bank may dismiss an officer at pleasure without incurring any liability to that officer for wrongful discharge. The plaintiff has appealed to this court, where he argues that (1) the National Bank Act does not prohibit damages for wrongful discharge of an officer, (2) if it does, then that judicial construction of the Act should be changed, as it is against public policy, and (3) the trial court erred in entering judgment for the defendant without hearing evidence on compensation earned by the plaintiff, but not paid to him, before his discharge. We need only consider the first two arguments, for, as defendant points out, the complaint did not allege that compensation for the period prior to discharge remained unpaid or seek an award on a theory of quantum meruit and unjust enrichment of the defendant. Rather, the complaint sought damages following as a consequence of his dismissal.

The issue presented by this appeal is whether the board of directors of a national bank may dismiss an officer before the expiration of his stated tenure, without incurring liability for wrongful discharge or for breach of contract. It is agreed that this case is governed by the National Bank Act, which provides that a national banking association shall have the power "(t)o elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places." 12 U.S.C. § 24, par. 5.

The bank urges that the phrase "at pleasure" allows the board of directors to dismiss officers at any time without liability. The plaintiff argues that he has a common law right of action stemming from the breach of his contract. He points to a ruling of the Comptroller of the Currency that the board of directors of a national bank, pursuant to paragraph fifth of 12 U.S.C. § 24, may enter into employment contracts with the officers and employees upon reasonable terms and conditions. He claims that this ruling shows that national banks may enter into employment contracts of definite duration and that, therefore, they may be held liable for discharging an officer before his term has expired.

As both parties note, this issue has been addressed by several courts since the National Bank Act was enacted during the civil war. The provision for dismissal of officers at the pleasure of the board of directors has been construed consistently to allow a national bank to discharge an officer without liability. Rankin v. Tygard (8th Cir. 1912), 198 F. 795; Van Slyke v. Andrews (1920), 146 Minn. 316, 178 N.W. 959, 12 A.L.R. 1068; Copeland v. Melrose Nat. Bank of N.Y. (1930), 229 App.Div. 311, 241 N.Y.S. 429, aff'd., w'out opn., 254 N.Y. 632, 173 N.E. 898; In re Paramount Publix Corp. (2d...