Niven v. Peoples

• Decision Date: 19 April 1912
• Citation: 136 N.W. 73,23 N.D. 202
• Court: North Dakota Supreme Court

136 N.W. 73

23 N.D. 202

NIVEN et al. v. PEOPLES et al

Supreme Court of North Dakota

April 19, 1912

Appeal from the District Court of Eddy county; Coffey, J.

Action to set aside a transfer of stock, and for an accounting. Defendants demurred to the complaint, and from an order overruling such demurrers, defendants appeal.

Reversed.

Reversed and remanded.

Maddux & Rinker, for appellants.

Equitable actions and law actions joined are fatal on demurrer. Jasper v. Hazen, 2 N.D. 401, 51 N.W. 583; Mares v. Wormington, 8 N.D. 329, 79 N.W. 441; Disbrow v Creamery Package Mfg. Co. 104 Minn. 17, 115 N.W. 751; Davis v. Novotney, 15 S.D. 118, 87 N.W. 582; Pietsch v. Krause, 116 Wis. 344, 93 N.W. 9; Grant v. McCarty, 38 Iowa 468.

Complaint fails to state a cause of action. Stutsman County v Mansfield, 5 Dak. 78, 37 N.W. 304; VanDyke v. Doherty, 6 N.D. 263, 69 N.W. 200.

C. S Buck, for respondents.

Plaintiffs are entitled to the relief demanded. Gore v. Day, 99 Wis. 276, 74 N.W. 788; Commercial Bank v. Chatfield, 121 Mich. 641, 80 N.W. 712; Sigwald v. City Bank, 74 S.C. 473, 55 S.E. 109; Clews v. Bardon, 36 F. 617; Wheeler v. Aiken County Loan & Sav. Bank, 75 F. 781; Elliott v. Farmers' Bank, 61 W.Va. 641, 57 S.E. 242; Gibbons v. Anderson, 80 F. 345; Prather v. Kean, 29 F. 498, 1 Am. Neg. Cas. 593; South Bend Chilled Plow Co. v. George C. Cribb Co. 97 Wis. 230, 72 N.W. 749.

OPINION

BRUCE, J.

This is an appeal from an order overruling four demurrers to a complaint. The complaint set out and joined four or five causes of action, and was filed by four stockholders of the Bank of New Rockford against H. Peoples, a former director and president of said bank, E. S. Severtson, a former director and cashier of said bank, W. C. Tubbs, a director of said bank, the Bank of New Rockford itself, and the Tallman Investment Company, a banking corporation. It alleged, among other things, that the defendant Peoples, and the defendant Severtson, from the year 1898 to the 1st day of June, 1910 had full control of the affairs of the defendant bank, and that none of the other directors had any voice or management in it; that although the plaintiff Niven was a director during such time, said Peoples and Severtson failed to give him any information concerning the affairs of the bank; that the said Peoples and Severtson had been grossly negligent in the performance of their duties, and had knowingly allowed large sums of money to be loaned to irresponsible parties, and had been so negligent as to cause the assets of said bank to be dissipated; that the said Peoples and Severtson had used the assets of said bank for their own benefit and use, and not for the use of said bank or its stockholders; that they had rendered no account of their acts and transactions; that the bank had not paid any dividends whatsoever; that $ 63,000 or more had been dissipated and lost through the negligence and mismanagement of said Peoples and Severtson; that said defendants had listed and carried as assets of said bank, fraudulent and worthless notes and securities, and had converted the assets and funds of said bank to their own benefit, and had failed to account to said bank therefor; that on or about the 10th day of April, 1910, the state bank examiner found among the assets of said bank worthless notes and securities to the amount of $ 63,000, and informed the defendants, Peoples and Severtson, that unless said worthless securities were replaced with approved securities, he would have a receiver appointed; that at said time the defendant Peoples told the examiner that the defendant Severtson was to blame, but that the defendant Peoples would guarantee said bank and its creditors against loss, and at that time gave to said examiner a bond to that effect, taking at the same time a transfer and assignment from the defendant Severtson of $ 30,000 or more; that on or about the 28th day of April, 1910, the said Peoples entered into an agreement with the defendant Tallman Investment Company, to turn over to said company 230 shares of the capital stock of the defendant bank and guarantee the value of all securities in said bank, which he did on the 6th day of May, 1910, the said Tallman Investment Company paying into said bank the sum of $ 47,000; that on the 1st day of June the said Investment Company took possession and control of said bank; that on or about the 28th day of April, 1910, and before the turning over to the Tallman Investment Company of the said shares of stock, "defendant Peoples represented to the plaintiffs that if they would surrender to said Peoples their stock in defendant bank without consideration, that the said Peoples could make an arrangement with defendant, the Tallman Investment Company, to take over said bank and its assets, and that the plaintiffs would not be liable for an assessment on said stock as provided by law; and that if they did not turn over said stock to said Peoples, that they would assess the full value of their stock to make good the loss of the bank; that the defendant Peoples represented to the plaintiffs that the defendant Severtson had dissipated the funds and assets of said bank, and that the said Peoples had taken an assignment and transfer from said Severtson to said bank of said Severtson's property, including his shares of stock in said bank, to so far as possible make good the losses caused by the actions of the defendant Severtson; that these representations made by Peoples were false and fraudulent, and made with intent to defraud and deceive the plaintiffs, and to induce plaintiffs to surrender their stock in said bank without consideration; that in fact said Peoples has had full control and charge of said bank since 1898, and has so fraudulently and negligently managed the affairs of said bank as to cause the loss of said bank's assets in the sum of $ 63,000 or more; that in fact said Peoples took from said Severtson an assignment of more than $ 30,000 worth of property to himself, the said Peoples, personally, and refuses to transfer said property to said bank; that plaintiffs were induced to surrender, and did surrender, their stock without consideration by reason of the fraudulent representations of said Peoples; that they have demanded of said Peoples that he return to them said shares of stock, but said Peoples has refused and still refuses to return or account for said stock; that the stock of the plaintiffs Lawrence Buck and Margaret Buck, who were minors at the time, was transferred without the knowledge, consent, or authority of the judge of the county court." The prayer asks that the defendants, Peoples and Severtson, account for their official conduct in the mismanagement of the funds and property of the defendant Bank of New Rockford during all the period of their mismanagement; that the Tallman Investment Company account for the transfer of the stock of the...