Orlansky v. Johnson

• Decision Date: 26 February 1917
• Docket Number: 18490
• Citation: 113 Miss. 320,74 So. 113
• Court: Mississippi Supreme Court
• Parties: ORLANSKY v. JOHNSON ET AL

74 So. 113

113 Miss. 320

ORLANSKY v. JOHNSON ET AL

No. 18490

Supreme Court of Mississippi

February 26, 1917

Division A

APPEAL from the chancery court of Leflore county, HON. JOE MAY Chancellor.

Suit by A. Orlansky against W. T. Johnson and others. From a decree sustaining demurrers, complainant appeals, and from a decree overruling other demurrers, defendant cross-appeal.

The facts are fully stated in the opinion of the court.

Case affirmed on direct appeal, reversed on cross-appeal, and remanded.

M. B Grace, for appellant.

The demurrers sustained to the original bill were sustained upon the theory, and upon the ground that no petition had been filed with the court praying the permission of the court to sue the alleged receiver of the said bank, on the grounds he was an officer of the court. Then when the amended bill was filed, it was demurred to by the officers and directors of said bank on the ground, the original bill had annexed to it a copy of a decree of the chancery court which gave to the receiver the power to release each of the said parties from further civil liability, upon paying to the receiver so much money. This original bill was not before the court. The court had to reach back to the allegations of the original bill, a bill which was dead, for the purposes of this suit, to get this information.

If we are in error as to our contentions in this respect, we then insist that the matter of release cannot be raised by demurrer. A release is a contract by which a party is forgiven and released in a matter, and in order for a party to get the benefit of a release, he must set same up in his answer, or plead it by plea to the bill. The demurrer tests the sufficiency of the amended bill; that is, granting all the allegations in said amended bill to be true, yet there is no equity on the face of the bill and the allegations do not show a right in the appellant. We think if what we set up in the amended is true, there is a cause of action in the appellant and the appellant has the right to file this bill. The court said so in the case of Ellis v. Gates Mercantile Co., in 103 Miss. 560. This case is before this court on a question of pleading, pure and simple. If the decree of the lower court is reversed and the demurrer overruled, then it will be up to the appellees to answer the bill. The appellees may, in their answers set up the decree of the court giving them the right to pay to the receiver a certain amount of money and be released. If they do, they will be required to file a copy of the bill praying for the appointment of R. V Pollard receiver for the said bank, the notice and the return of the officer serving it, a copy of the decree of the court appointing R. V. Pollard receiver, a copy of this bond, etc and by their answer, they will be required to show that they complied with the decree and did pay to R. V. Pollard the amounts of money set forth in the decree, and he executed to each of them a release or acquittance from further liability. They will be required to set up the release executed by Mr. Pollard, and show he was the proper party for them to pay said money to and to receive the said release. If when they make their answer, and that their answer does not show Mr. Pollard was the right man and that the court had jurisdiction to appoint him as receiver for this bank, and all the parties had notice as required by the statute, especially that this appellant had notice, or that he expressly waived notice, their release would not be worth the paper it is written on. A court cannot say to a man, you take certain medicine, when that man has no notice that the court is going to give him a certain kind of medicine. If there was a sufficient cause of action alleged to require Walton and Swift to answer the amended bill, there was a sufficient cause of action to require all the other defendants to answer it.

Sustaining the demurrer of W. T. Johnson et al., to the amended bill in this case is, we think, equivalent to saying to the complainant; by the court: You should have been before the chancery court and registered your objections there at the time Mr. Pollard filed his bill and asked for instructions, or, when Mr. Pollard was appointed, whether you had any notice or not, and because you were not there, you have lost all your rights against these parties. It is equivalent to taking his property without due process of law.

The amended bill in this case makes out a case against each of these defendants, and if the complainant proves the allegations of his amended bill, and the defendants do not offer some defense, that is, facts, not law, to off-set this proof, then the court should enter a decree for the complainant. So we say, when the release is offered as a bar, or as a defense, its validity is bound to be called into question, and sustaining this demurrer on this ground, cuts the complainant off from showing to the court that the release, if one was ever granted, was void; and too, from showing that the defendants never complied with the alleged decree and paid the money to the alleged receiver.

Counsel intimates, if they do not contend, that the appellees in this suit are not liable because they were not officers and directors during the time the appellant was a stockholder in the banking concern. We invite the attention of the court to the amended bill on this proposition. Each of the appellees were either an officer or director in this bank during all the while that appellant was a stockholder in the said bank. Certainly it would have to be by and because of the negligence and mismanagement of the officers and directors of the bank, while the appellant was a stockholder, in reference to the affairs of the bank, that he lost his stock, for them to be liable to him. We are unable to understand the reason for raising this proposition in this case, and citing the cases of Bank of Mutual Redemption v. Hill, 56 Me. 385, 96 Am. Dec. 470; Emerson v. Gaither, 104 Md. 464, 64 A. 26, 7 Ann. Cas. 1114, 8 L. R. A. (N. S.) 738. Neither of these cases are in point, and have no bearing upon the real question at issue in this case.

Hill & McBee, for cross-appellants.

This is a case which comes to this court on appeal from the chancellor sustaining the demurrers of all the defendants named in the bill except the demurrer of H. L. Walton and W. A. Swift, which was filed by them jointly, as their case was identical, and from this decree sustaining these demurrers the appellant, who was complainant in the court below, has appealed, and H. L. Walton and W. A. Swift have filed their petition for cross-appeal.

So far as the cross-appellants are concerned, we rely on the bill and the demurrer, and think that the grounds of the demurrer are valid, and should have been sustained. The bill filed by Orlansky was against the directors and officers of the Bank of Leflore, and charged them with fraudulently selling him certain stock in said bank on the 14th day of February, 1901, representing that the stock was valuable and that the bank was in good condition, when, as he alleges, the bank was insolvent and not in good condition, and, according to the allegations of the bill, was a "mere shell" and not a bank, and that the officers of the bank fraudulently sold him worthless stock, which he seeks to recover the value of in this suit.

There is no allegation in the bill that Walton and Swift were officers of the bank at the time this stock was sold, or that they had anything to do with the management of the bank prior to or at the time Orlansky bought the stock, or had anything to do with the sale of stock. On the other hand, it is positively alleged that Walton and Swift became directors of the bank in the year 1912, about two years after the stock was sold to Orlansky, and it is not alleged that they were even stockholders in the bank at the time Orlansky's sale was perfected, and is not alleged that they had any connection with the bank.

We contend that under the allegations of the bill Walton and Swift are clearly exonerated from any wrongdoing or liability, and that the demurrer which they filed should be reversed as to them on their cross-appeal for the same reasons stated and set forth in the demurrer and which have heretofore been set forth.

Gwin & Mounger, for appellees.

The directors named in the bill were not all of the directors of the bank. The original bill names Young and Reiman and Lomax as directors; and the directors for whom this brief is filed may have been in the minority and may have voted against the alleged dividends. There is no charge that these particular directors voted for or participated in or consented to any of the acts or omissions complained of. It is probable that they did not and they should have specific charges, so as to meet them. One director is not chargeable with another's fault or action. Each is chargeable only with his own acts and negligence.

"Directors are, of course, liable only for the official mismanagement which occurs during the time of their directorship; they cannot be held liable for the mismanagement of either of the directors preceding them or of those following them." 3 Ruling Case Law, Banks, sec. 87, p. 459; Bank of Mutual Redemption v. Hill, 56 Me. 385, 96 Am. Dec. 470; Emerson v. Gaither, 103 Md. 464, 64 A. 26, 7 Ann. Cas. 1114, 8 L. R. A. (N. S.) 738.

The original bill had as Exhibit B. a decree of the chancery court of Leflore county, Mississippi, the court administering the assets of the bank of Leflore, and in which the receivership is pending; and this decree is in the record in this cause and before this court. This decree shows that the receiver was authorized to make settlement with grant an acquittance and release to all of the defendants...