Ryan v. Ray

• Decision Date: 19 January 1886
• Docket Number: 10,801
• Citation: 4 N.E. 214,105 Ind. 101
• Parties: Ryan et al. v. Ray et al
• Court: Indiana Supreme Court

4 N.E. 214

105 Ind. 101

Ryan et al. v. Ray et al

No. 10,801

Supreme Court of Indiana

January 19, 1886

From the Marion Superior Court.

The judgment is affirmed, with costs.

A. C Harris, W. H. Calkins, C. F. Rooker and A. W. Hatch, for appellants.

T. A Hendricks, C. Baker, O. B. Hord, A. W. Hendricks, R. B Duncan, C. W. Smith, J. S. Duncan and J. R. Wilson, for appellees.

Mitchell J. Elliott, J., did not participate in the decision of this case.

OPINION

Mitchell, J.

This action was brought by Mattie J. Ryan, Emma Keller and Margaret Thornton, who aver in their complaint that they sue for themselves and two thousand other depositors in the Indianapolis Savings Bank.

The suit is against the officers and trustees of the savings bank. The auditor of state and the bank are also named as defendants in the complaint. The action is to charge the officers and trustees, and make them personally liable for alleged misconduct and violation of duty in the conduct of the bank.

It is averred that the bank was organized and opened for business about the 28th day of September, 1871, and that it continued to do business until the 20th day of December, 1878. That at the last mentioned date it was found to be insolvent, and that the auditor of state instituted proceedings in the Marion Superior Court to wind up its affairs. That a receiver was appointed who was administering its assets when this action was commenced.

It is averred that the officers and trustees had, in various ways, neglected their duty, and mismanaged the business of the bank.

Numerous specifications of misconduct, deception and negligence are set out in the complaint, and it is averred that by means of the several acts specified the assets of the bank were wasted and diminished in a large amount, to the damage of depositors, and of the plaintiffs particularly.

It is alleged that the defendants were the officers in control of the bank, and that they would not permit the action against themselves to be brought by and in the name of the bank; that the action which was brought by the auditor of state was brought at the request of the officers and trustees of the bank, the complaint in that case alleging the insolvency of the bank, but charging no fraud or neglect on the part of the trustees, nor any loss, arising out of any dereliction of duty or violation of trust on the part of any of the officers or trustees of the bank, and claiming no damages against any of the trustees for dereliction of duty or violation of trust; that the complaint in that action prayed for the appointment of a receiver, and that the assets might be converted into cash, and that the bank might be wound up; that the trustees themselves appeared to the action on the same day the complaint was filed, confessed the insolvency of the bank, and consented to the appointment of a receiver, and that thereupon the defendant, John W. Ray, the former secretary and treasurer of the bank, was appointed receiver; that from the condition of the pleadings in that cause the auditor of state will not and can not attempt to recover for the losses caused by the trustees, nor in any manner protect the depositors from such losses. But that on the contrary the auditor of state maintains the former action, which is yet pending, for the purpose of enabling the defendants, bank officers and trustees, to screen themselves and their several acts of omission and commission from investigation and scrutiny.

The prayer of the complaint in the cause now before us is, that the plaintiffs, on behalf of themselves and other depositors for whose benefit they sue, may be permitted to maintain this action, the same (so it is alleged) not being intended in any way to interfere with any of the matters or proceedings involved, or which could be presented, heard or adjudicated upon, in the action theretofore begun by the auditor of state, and that the plaintiffs may have judgment for an accounting and may recover against the trustees the sum of two hundred and sixty thousand dollars, to be distributed among all depositors according to their rights, and that a receiver be appointed by the court.

The trustees and officers demurred to the complaint. The demurrer was sustained at special term, and on appeal to the general term this ruling was affirmed.

The decision of two questions presented by the record and argument is all that is necessary to determine whether the rulings of the Superior Court were correct. These questions are aptly stated as follows:

1. Can any person other than the auditor of state, under any circumstances, maintain an action against officers and trustees of savings banks for a violation of their statutory duties?

2. If, under any circumstances, the plaintiffs might maintain the present action, can they maintain it, when, as the record shows, the auditor of state has now pending an action against the trustees of the bank in another court, and when such other court has a receiver in charge of the assets of the bank?

An examination of the statute under which savings banks may be organized, gives rise to the suggestion at once that it was the purpose of the Legislature to embrace in its provisions a complete and adequate scheme for the organization, regulation and winding up of all institutions which might come into existence under it. Accordingly the qualifications and duties of trustees are prescribed with much minuteness, and the general course and conduct of the business is marked out with particularity and in unusual detail.

From the beginning of their existence until they are closed and their assets distributed, they are subject in many respects to the control and scrutiny of an officer of the State. Finally, it is provided in section 2757, R. S. 1881 substantially, that, whenever a savings bank fails for thirty days to pay depositors, as required by law, or whenever it shall appear to the auditor of state that the trustees or officers of a bank are mismanaging its affairs, and the same is insolvent, or in imminent danger of insolvency, the auditor shall forthwith file a complaint against such savings bank, and the trustees and officers thereof, asking for the dissolution of the corporation and the winding up of its affairs. "If it shall be established, upon the trial of the cause, that any trustee or other officer has been guilty of any wilful or fraudulent misconduct, whereby the assets of the corporation have been wasted or lost, the court shall render judgment against him to make good all such losses as his...