Lantry v. Wallace

• Decision Date: 30 October 1899
• Docket Number: 1,221.
• Citation: 97 F. 865
• Parties: LANTRY v. WALLACE.
• Court: U.S. Court of Appeals — Eighth Circuit

97 F. 865

LANTRY v. WALLACE.

No. 1,221.

United States Court of Appeals, Eighth Circuit.

October 30, 1899

This suit was brought by Theodore B. Wallace, as receiver of the Missouri National Bank of Kansas City, Mo., the defendant in error, against Charles J. Lantry, the plaintiff in error, to recover an assessment, in the sum of $20,000, which had been therefore duly assessed by the comptroller of the currency against said Lantry as the owner of 200 shares of stock in the Missouri National Bank of Kansas City, Mo., which had previously become insolvent. The complaint was in the usual form, and alleged that said bank was duly incorporated under the act of congress of the United States relative to national banks; that it had become insolvent; that Theoderic B Wallace was duly appointed receiver of said bank by the comptroller of the currency on December 3, 1896; that an assessment of $100 per share had been made by the comptroller of the currency on July 30, 1897; that the defendant Lantry was the owner of 200 shares of the stock of said bank; and that by virtue of the aforesaid assessment he was obligated to pay to the receiver the sum of $20,000, with interest at the rate of 6 per cent per annum from August 30, 1897. The defendant below filed an answer containing two defenses separately stated, and a counterclaim. In the first defense it was alleged, in substance, that the defendant on April 18 1896, purchased 200 shares of stock in the aforesaid bank and received a certificate therefor; that the stock so purchased was represented by D. V. Rieger, the president of the bank, to be the property of the bank at the time of the sale, which the bank had theretofore lawfully acquired; that he was induced to make the purchase by certain false and fraudulent representations which were made by said president and other officers of the bank concerning its financial condition, which false representations were set out at great length in the answer; that the stock was held by the defendant from the date of its purchase on April 18, 1896, until December 3, 1896, when a receiver of the bank was appointed on account of its insolvency; that after the appointment of a receiver that officer had exclusive control of all the books, papers, and assets of the bank, and repeatedly assured the defendant when he applied for information that the bank was solvent, and would pay all of its debts and liabilities without recourse against the stockholders; that the defendant was lulled into security by such statements of the receiver, and by reason thereof did not gain access to the books and papers of the bank until on or about September 1, 1897, at which time he was given access to the books and records of the bank by direction of the comptroller of the currency; that thereafter he discovered the falsity of all of the statements and representations on the faith of which he had been induced originally to purchase the aforesaid stock, and that he thereupon, on or about October 27, 1897, called at the prior place of business of said bank, and there tendered to the receiver, who was in charge of said bank, the certificate for the 200 shares of stock which he had received, and demanded of said receiver that he should repay to him the sum of $20,000 which he had paid for said stock, or such proportionate part thereof as he would be entitled to receive as a creditor of the bank for that sum. For a second defense the defendant repeated all of the averments which were contained in his first plea, and in addition thereto he averred, in substance, that the president and cashier of the Missouri National Bank of Kansas City had acquired the stock which was eventually sold to him in the following manner, that is to say: That they had purchased the stock with the funds of the bank from other shareholders when the bank was insolvent, to prevent such other shareholders from throwing the stock on the market at ruinous prices, and thereby disclosing to the public the true condition of the bank; that the stock, when so purchased with the funds of the bank, had been transferred to clerks and other agents of the bank, to conceal the character of the purchase; that such pretended purchasers had then given notes to the bank representing the amount of money that had been expended by the bank to acquire the stock; that the persons who thus gave notes to the bank representing the money that it had so expended were totally insolvent, and never intended to pay their said notes; that all of these facts were concealed from the defendant until long after his purchase of the 200 shares of stock in question; and that the stock so as aforesaid sold to him was a part of certain stock, amounting at its par value to $80,000, which the bank had so unlawfully acquired, whereas at the date of his said purchase, and long afterwards, he believed it to be stock that the bank had lawfully acquired, and had a good right to sell. The counterclaim which the defendant interposed was in the nature of a cross action against the Missouri National Bank to recover the damages which the defendant had sustained by reason of the fraudulent representations that had been made by its officers to induce the sale of the aforesaid stock, and such damages were pleaded as an offset against the comptroller's assessment. These defenses were adjudged insufficient on demurrer (C.C.; 89 F. 11, 1023), whereupon a judgment by default was rendered against the defendant below in the sum of $21,550; he having declined to plead further. The writ of error which was sued out by the defendant below presents the question whether the demurrer to the answer was properly sustained.

C. N. Sterry (Eugene Hagan and I. E. Lambert, on the brief), for plaintiff in error.

William C. Cochran (J. McD. Trimble and W. H. Wallace, on the brief), for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge, after stating the case as above, .

While the defendant's answer is unusually lengthy, and contains many allegations showing that he was grossly deceived as to the financial condition of the Missouri National Bank by the false and deceitful statements of its officers when he was induced to become a purchaser of its stock, and that he was not guilty of negligence up to the time the bank failed, in failing to discover that he had been defrauded, yet, when the answer is carefully analyzed, it is manifest that the defendant seeks to escape from the assessment on two...