Pieratt v. Young

• Decision Date: 07 March 1899
• Citation: 49 S.W. 964
• Parties: PIERATT v. YOUNG et al. [1]
• Court: Kentucky Court of Appeals

49 S.W. 964

PIERATT v. YOUNG et al. ^[1]

Court of Appeals of Kentucky.

March 7, 1899

Appeal from circuit court, Montgomery county.

"Not to be officially reported."

Action by J. M. Pieratt against Johnson A. Young and others for deceit. Judgment for defendants, and plaintiff appeals. Affirmed.

O'Rear & Bigstaff, for appellant.

Edward W. Hines, Tyler & Apperson, and J. M. Benton, for appellees.

PAYNTER J.

The New Farmers' Bank, a banking corporation, did business at Mt Sterling, Ky. It is averred in the petition that the appellee Johnson A. Young was one of its directors from January 1 1893, until July 27th of that year, at which time it made an assignment for the benefit of its creditors; that on January 1, 1893, the plaintiff had on deposit in the bank to his credit $12,913.65; that thereafter, before the assignment, he made other deposits; that the deposits, with the accrued interest, at the time the bank assigned, amounted to $13,135.53. It is further averred that on January 6, 1893 the directors "caused" and "permitted" to be published in the Mt. Sterling Sentinel Democrat, a newspaper having general circulation in Montgomery and adjacent counties, a statement purporting to exhibit and show the condition and affairs of the bank at its close of business on December 31, 1892, intending and permitting the general public to read and rely upon the published statement as true. It is also averred, in substance, that on July 6, 1893, the directors caused and permitted to be published a statement of the same general import as the January statement, and for the same purpose. Without going into details as to what the statements contained, it is sufficient to say that from them it appeared the bank was solvent. From the additional facts averred, it appears that it was insolvent at the time each of the statements was made. It is also averred that the plaintiff "saw and relied upon said published statements as being true, not knowing otherwise, and, because of said reliance, permitted his said money to remain on deposit in said bank until the time and with the result named hereafter; *** that each and both of said published statements were untrue and false and misleading; *** that, *** by reason of their position as directors of said bank, they knew of its faulty and insolvent condition at each and all of the times and dates named hereinbefore, or by the exercise of ordinary diligence and care could have known of same; that one of the said statements is true, though plaintiff does not know which is true." Plaintiff claims that he has been damaged by reason of the alleged false statements and misrepresentations.

This is not an action by the corporation to recover damages against the directors for the negligent administration of their offices as directors. This court has held that such an action will lie against directors only where the institution suffers damages by reason of their gross negligence or gross inattention to their duties. Jones v. Johnson, 86 Ky. 530, 6 S.W. 582; Brannin v. Loving, 82 Ky. 379. If an action was maintainable against the directors by general depositors of a banking institution for negligence they could not do so by showing a different and less degree of negligence than would be necessary for the bank or its stockholders to show in order to maintain an action against...