Moss v. Goodhart

• Decision Date: 15 April 1913
• Citation: 131 P. 1071,47 Mont. 257
• Parties: MOSS v. GOODHART ET AL.
• Court: Montana Supreme Court

131 P. 1071

47 Mont. 257

MOSS v. GOODHART ET AL.

Supreme Court of Montana

April 15, 1913

Appeal from District Court, Yellowstone County; Geo. W. Pierson Judge.

Action by P. B. Moss against Richard W. Goodhart and another. From a judgment for plaintiff, the defendant named appeals. Reversed and remanded.

W. M Johnston and H. J. Coleman, both of Billings, for appellant.

O. F Goddard and F. L. Tilton, both of Billings, for respondent.

HOLLOWAY J.

On July 2, 1910, P. B. Moss was president of and principal stockholder in the First National Bank of Billings, when by order of the comptroller of the currency the bank was closed. Richard W. Goodhart was appointed receiver and immediately took possession of the bank's books and assets, and continued to act as such receiver until superseded by Philip Tillinghast, on October 25, 1910. When Goodhart took possession, C. D. Prather was indebted to the bank upon a promissory note for $15,000. The indebtedness was secured, in part at least, by a chattel mortgage upon certain range horses and cattle. Prior to the maturity of the Prather note, and about September 19, 1910, a sale of the mortgaged property to R. D. Currier was effected for $5,000, which amount was paid to the receiver and by him credited on Prather's note. After Tillinghast succeeded to the receivership, this action was commenced by Moss against Goodhart and Currier. The complaint recites the facts above more in detail, and alleges that the mortgaged property was reasonably worth $11,700; that Goodhart and Currier entered into a conspiracy to force Prather to sell the property to Currier for a sum much less than the fair value; and that Goodhart, by threats and menaces, succeeded in compelling the sale, to the injury of the stockholders and creditors of the bank in the sum of $6,700. It is further alleged that on or about November 22, 1910, the plaintiff "made demand upon the said Tillinghast, as receiver of the said bank, to bring suit against the said defendant Goodhart and the said defendant Currier to set aside said sale of said property, and for an accounting to the said trust for the value thereof, which demand was by the said Tillinghast, receiver of the said bank as aforesaid, then and there refused." The concluding paragraph of the complaint and the prayer read as follows: "This suit is brought and prosecuted in the interests of this plaintiff and of the other stockholders of said bank, as well as in the interests of all of the creditors of said bank, to the end that justice and equity may be done in the premises. Wherefore the plaintiff demands that the said sale, or pretended sale, of the said horses and cattle made by the said C. D. Prather to the said Currier be declared null and void, and that the bill of sale executed on such sale by the said C. D. Prather to the said Currier be declared null and void and of no effect, and that the defendant herein be required to account to, and pay over, to the said Philip Tillinghast, the receiver of the said First National Bank of Billings, and to said trust, the said sum of $6,700, to be by the said Tillinghast treated as other funds and assets of the said trust, and for such other and further relief as the court may find meet and agreeable to equity, and for costs of suit." To this complaint a demurrer, general and special, was interposed and overruled, and the defendants then answered, denying all the allegations of conspiracy, intimidation, or wrong conduct on the part of either of them, and alleging that the sale of the mortgaged property was made in good faith for the reasonable value thereof and for the best interests of the bank and its creditors. The affirmative allegations of the answer were put in issue by reply.

The cause was tried to the court sitting with a jury. At the close of the testimony, instructions upon the questions of law involved were settled and submitted to the jury. A general verdict in favor of the plaintiff and against the defendants for $3,312.50, and also 12 special findings, were returned. Counsel for the defendants moved the court to adopt four of the findings as made, to reject the general verdict and the other special findings, and also to find in favor of the defendants upon some eight questions which were presented. The court denied the request, rejected the first two special findings made by the jury, adopted the others and the general verdict as against defendant Goodhart, but in favor of defendant Currier, and further found: "That the defendant Richard W. Goodhart carelessly, negligently, and wantonly failed to represent the best interests of his trust, the said plaintiff, the First National Bank of Billings and its stockholders and creditors, and sold the property described in the complaint for a sum less than its reasonable market value to the damage of the said First National Bank, its creditors, and the said P. B. Moss in the sum of $3,312.50." The conclusion of the trial court was that the plaintiff should recover the amount of the verdict for the benefit of the bank, its receiver, creditors, and stockholders. The judgment rendered recites that: "P. B. Moss do have and recover of and from the said defendant Rich ard W. Goodhart the sum of $3,312.50 together with interest thereon at the rate of 8 per cent. per annum from the date hereof until paid, and together with costs and disbursements incurred in said action, amounting to the sum of $______." It is from that judgment and from an order denying him a new trial that defendant Goodhart appeals.

1. The errors assigned upon the instructions given and refused, and upon the rulings of the court admitting evidence, are not available to appellant. It is unnecessary for us to determine the character of this action; whether it is a suit in equity to set aside the sale of the mortgaged property, or for an accounting, or an action at law for damages. It appears from the record that the cause was tried upon the theory that it is a suit in equity, and appellant is bound by the theory he adopted in the court below. Cohen v. Clark, 44 Mont. 151, 119 P. 775; Galvin v. O'Gorman, 40 Mont. 391, 106 P. 887; Dempster v. Oregon Short Line Ry. Co., 37 Mont. 335, 96 P. 717. Upon that theory no error can be predicated upon the giving or refusal to give instructions. No instructions except the formal ones should be given; no general verdict should be submitted; and, if evidence be admitted which should not be, the presumption prevails that the trial court disregarded it, unless it appears that it influenced the decision in some material aspect. Bordeaux v. Bordeaux, 43 Mont. 102, 115 P. 25; Rumping v. Rumping, 41 Mont. 33, 108 P. 10; Sanford v. Gates, 21 Mont. 277, 53 P. 749.

2. The principal controversy is over the right of plaintiff Moss to maintain this action. The plaintiff's allegation that before commencing this action he demanded of Tillinghast that he bring it and that this demand was refused is denied in the answer. There was not any proof whatever offered in support of the allegation. Counsel for respondent concede the general rule to be, as heretofore stated by this court, that a stockholder cannot prosecute an action for redress for an injury to a corporation, unless it appears that a demand has been made and refused or a situation is disclosed from which it is manifest that an appeal to the corporate authorities would be useless. Brandt v. McIntosh, 47 Mont. 70 130 P. 413. If the corporation is in the hands of a receiver, the demand should be made upon that officer. Boston & Mont., etc., Co. v. Montana Ore Pur. Co., 24 Mont. 142, 60 P. 990. This is the rule applicable to ordinary, private corporations. If, however, the corporation which is in the hands of a receiver be a national bank, the demand and refusal are still necessary, though there is some diversity of opinion as to whether the demand should be made upon the corporation (Bank of Bethel v. Pahquioque Bank, 14 Wall. 383, 20 L.Ed. 840), or upon the receiver, or the comptroller of the currency. Brickerhoff v. Bostwick, 23 Hun (N. Y.) 237. Our Code declares that every action must be prosecuted in the name of the real party in interest. There is not any right in Moss to act for the creditors of the bank, and he can only act for the bank itself by showing that he has made demand upon the corporation (that is, upon the board of directors) or the receiver in charge, or the comptroller of the currency, and that his demand has been refused. 4 Thompson on Corporations, 4180, 4181; 10 Cyc. 965. The complaint in this instance does not proceed upon the theory that demand was excused, but upon the theory that a demand was necessary and was actually made. Whenever a demand is necessary, the allegation that such demand was made and...