Knoop, Hanneman & Co. v. Blaffer, 9755

CourtLouisiana Supreme Court
Writing for the CourtWATKINS, J.
Citation38 La.Ann. 23
PartiesKNOOP, HANNEMAN & CO. ET AL. v. J. A. BLAFFER ET ALS
Decision Date01 January 1887
Docket Number9755

38 La.Ann. 23

KNOOP, HANNEMAN & CO. ET AL.
v.
J. A. BLAFFER ET ALS

No. 9755

Supreme Court of Louisiana, New Orleans

January 1, 1887


APPEAL from the Civil District Court for the Parish of Orleans. Lazarus, J.

Judgment affirmed.

Henry Denis for Plaintiffs and Appellants.

T. J. Semmes & Legendre for Defendants and Appellees.

Braughn, Buck, Dinkelspiel and Hart on the same side.

OPINION

WATKINS, J.

Plaintiffs filed this suit on the 29th of January, 1886, against the defendants as directors of the Mechanics and Traders' Bank of New Orleans, organized under the banking laws of this State, claiming that, on the 19th of March, 1879, and before, they were depositors [38 La.Ann. 24] therein for large sums, for which they are indebted to them in solido.

They allege that, on the 19th of March, 1879, said bank was declared insolvent, its charter forfeited, and liquidating commissioners were appointed to close its affairs; and at that date their respective deposits were due and not been withdrawn.

They further allege "that, on January 1, 1878, the said bank did not have on hand an amount in specie equal to one-third of all its cash liabilities at that date, exclusive of its circulating notes; and did not have on hand for the other two-thirds of its cash liabilities an equal amount in specie, specie-funds, bills of exchange, on discounted paper maturing within ninety days and not renewable; that, at no time since the 1st of January, 1878, has the bank had on hand an amount in specie equal to one-third of its cash liabilities, exclusive of its circulating notes, nor has it had at any time in hand, for the two-thirds of its cash liabilities an equal amount of specie, specie-funds, bills of exchange or discounted paper maturing within ninety days and not renewable; that all these facts were to the knowledge of the said defendants, and each of them, while and during the time they were acting as directors of the said bank; that in violation of law, on every legal day since the first day of January, 1878, up to the 19th of March, 1879, the said bank made loans and discounts, and that each of said defendants, as directors of said bank, participated in or assented to each of said loans and discounts, knowing that said loans and discounts were made in violation of the law contained in sections 300 and 301 of the Revised Statute of the State of 1870; that by said violation of law the said directors and defendants herein rendered themselves individually liable for all debts and obligations of the said Mechanics and Traders' Bank."

They further allege that said directors in 1878 and 1879 furnished to the State Treasurer statements of the condition, assets and liabilities of said bank for publication, and which were published, and "that in every one of those statements the said * * directors wilfully misstated the condition of the bank, representing same to be solvent, when, in truth and fact, the said bank was and had long before been hopelessly insolvent," and that said directors caused and assented to said statements being published, and knew that the items thereof were falsely stated, and that by said false statements they gave the bank credit and reputation for solvency, when it was entitled to none; and that had they known the true condition of the bank, they would have with drawn their deposits. [38 La.Ann. 25]

They aver that by their tortious conduct, concealments and misstatements the said directors have made themselves liable in solido unto them for the various amounts due them by said bank," of about $ 50,000.

The defendants plead in the lower court the prescription of one year to the cause or causes of action set out in plaintiffs' petition; and from a judgment sustaining the plea plaintiffs have appealed.

In this Court defendants tender an additional plea of prescription of six months under the provision of R. S., 986,

I.

On the face of the petition, the demands of the plaintiffs, in so far as they are founded on the alleged false statement furnished to the State Treasurer, and the concealment from depositors of the alleged insolvent condition of the bank by defendants as its directors, the plea of prescription of one year is undoubtedly good.

The conduct and acts of the directors are charged to have been wrongful, wilful and tortious, and for the resulting damage suffered the plaintiffs asks judgment in solido.

II.

The plea, predicated on the charge that while in a condition of insolvency to the knowledge of the directors, the bank made loans and discounts with the acquiescence and participation of said directors, and in violation of law, is not free from difficulty.

This suit was brought under the provisions of Secs. 26 and 27 of Act 338 of 1853, it being an act "to establish a general system of free banking in the State of Louisiana." They were embodied in Secs. 300 and 301 of the Revised Statutes.

Under Sec. 2 of that Act, banking corporations created under its provisions were authorized to discount bills, notes, and other evidences of debt; to receive deposits; to buy and sell gold and silver bullion and foreign exchange; to loan money "and to exercise all incidental powers necessary to carry on said business."

Section 26 declares: "Every banker or banking company, doing business under this act, is required, in addition to securities for circulation deposited with the Auditor, to have on hands, at all times, in specie, an amount equal to one-third of their other cash liabilities; and for the other two-thirds of said liabilities, an amount equal in specie, specie-funds, bills of exchange, or discounted paper, maturing within ninety days, and not renewable." R. S. Sec. 300.

Section 27 provides: "If at any time the specie, specie-funds, and short paper held by such banker or banking company, should fall below [38 La.Ann. 26] the proportions to cash liabilities prescribed in the preceding section, and shall remain so for a space of ten days, it shall not be lawful thereafter for such banker or banking company to make any loan or discount whatever, until its or their position is re-established according to the terms of the preceding section.

"A violation of this provision shall be held to be an act of insolvency and the Auditor shall cause the necessary steps to be taken for the liquidation of the affairs of such banker or banking company as in cases of insolvency; and every director or manager of a banking company, who may participate in or assent to such violation, shall become individually liable for all its debts and obligations."

In effect the statute declares that if a banking corporation shall permit its specie, specie-funds and short paper to fall below the standard fixed, and to so remain for a period of ten days, "it shall not be lawful" for said corporation to make any loan or discount whatever, until its position is re-established and its affairs are put in line again.

"A violation of this provision" is per se an act of insolvency on the part of the corporation, and its effect upon any director of said corporation "who may participate in or assent thereto," is to make him "individually liable for all * * the debts and obligations" of the corporation.

The statute under consideration conferred the power upon such corporations as might be organized under it, "to name and appoint such managers and directors to administer the affairs of the corporation as they may think necessary and proper." R. S. Sec. 277.

No additional or more specific duties or responsibilities were therein prescribed for directors than had heretofore existed, in respect to private corporations generally, other than those indicated in R. S. sec. 301.

Under the general law, "no stockholder shall ever be held liable or responsible for the contracts or faults of the corporation, in any further sum than the unpaid balance due to the company on the shares owned by him." R. S. 690.

This provision certainly includes the directors of a corporation.

Thus, it is perfectly clear that, by the "free banking law" of 1853, the legislature intended to place additional restrictions around corporations that should be created under it, and to impose upon persons who might be chosen to direct and administer their affairs a greater responsibility.

Hence it denominated any violation of the quoted provisions an unlawful act on the part of the corporat...

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13 practice notes
  • State ex rel. Stewart v. Blair and Smith, No. 40316.
    • United States
    • United States State Supreme Court of Missouri
    • 10 Noviembre 1947
    ...50 La. Ann. 449, 23 So. 503; State v. Collins, 104 La. 629, 29 So. 180; People v. Kurant, 331 Ill. 470, 163 N.E. 411; State v. Simpson, 38 La. Ann. 23; McArver v. State, 114 Ga. 514, 40 S.E. 779; Reliford v. State, 140 Ga. 777, 79 S.E. 1128; Dunmas v. State, 16 Pac. (2d) 886; Blackman v. St......
  • Powell v. State of Alabama Patterson v. Same Weems v. Same 8212 100, Nos. 98
    • United States
    • United States Supreme Court
    • 7 Noviembre 1932
    ...165 Ga. 460, 464, 141 S.E. 196; State v. Moore, 61 Kan. 732, 734, 60 P. 748; Page 71 State v. Ferris, 16 La.Ann. 414; State v. Simpson, 38 La.Ann. 23, 24; State v. Briggs, 58 W.Va. 291, 292, 52 S.E. 218. In the light of the facts outlined in the forepart of this opinion—the ignorance and il......
  • Robinson v. State, 609
    • United States
    • United States State Supreme Court of Wyoming
    • 10 Enero 1910
    ...of counsel, must have sufficient time for her counsel to prepare for trial. (State v. Pool, (La.) 23 So. 503; State v. Simpson, 38 La. Ann. 23; State v. Lewis, 74 Mo. 222.) A new trial will be granted if a reasonable time, according to the circumstances of the case, has not been allowed. (J......
  • Colbert v. Rickmon, Civ. No. 89-2192.
    • United States
    • United States District Courts. 8th Circuit. Western District of Arkansas
    • 6 Agosto 1990
    ...This power was later occasionally extended so as to include civil cases for absentee parties and minors. See Louisiana v. Simpson, 38 La.Ann. 23 (1886); House v. Whitis, 64 Tenn. 690 (1875). The colonial distrust of lawyers, however, led litigants to frequently plead their own causes in the......
  • Request a trial to view additional results
13 cases
  • State ex rel. Stewart v. Blair and Smith, No. 40316.
    • United States
    • United States State Supreme Court of Missouri
    • 10 Noviembre 1947
    ...50 La. Ann. 449, 23 So. 503; State v. Collins, 104 La. 629, 29 So. 180; People v. Kurant, 331 Ill. 470, 163 N.E. 411; State v. Simpson, 38 La. Ann. 23; McArver v. State, 114 Ga. 514, 40 S.E. 779; Reliford v. State, 140 Ga. 777, 79 S.E. 1128; Dunmas v. State, 16 Pac. (2d) 886; Blackman v. St......
  • Powell v. State of Alabama Patterson v. Same Weems v. Same 8212 100, Nos. 98
    • United States
    • United States Supreme Court
    • 7 Noviembre 1932
    ...165 Ga. 460, 464, 141 S.E. 196; State v. Moore, 61 Kan. 732, 734, 60 P. 748; Page 71 State v. Ferris, 16 La.Ann. 414; State v. Simpson, 38 La.Ann. 23, 24; State v. Briggs, 58 W.Va. 291, 292, 52 S.E. 218. In the light of the facts outlined in the forepart of this opinion—the ignorance and il......
  • Robinson v. State, 609
    • United States
    • United States State Supreme Court of Wyoming
    • 10 Enero 1910
    ...of counsel, must have sufficient time for her counsel to prepare for trial. (State v. Pool, (La.) 23 So. 503; State v. Simpson, 38 La. Ann. 23; State v. Lewis, 74 Mo. 222.) A new trial will be granted if a reasonable time, according to the circumstances of the case, has not been allowed. (J......
  • Colbert v. Rickmon, Civ. No. 89-2192.
    • United States
    • United States District Courts. 8th Circuit. Western District of Arkansas
    • 6 Agosto 1990
    ...This power was later occasionally extended so as to include civil cases for absentee parties and minors. See Louisiana v. Simpson, 38 La.Ann. 23 (1886); House v. Whitis, 64 Tenn. 690 (1875). The colonial distrust of lawyers, however, led litigants to frequently plead their own causes in the......
  • Request a trial to view additional results

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