Security Sav. & Loan Ass'n v. Buchanan

• Decision Date: 05 February 1895
• Docket Number: 226.
• Citation: 66 F. 799
• Parties: SECURITY SAVINGS & LOAN ASS'N v. BUCHANAN et al.
• Court: U.S. Court of Appeals — Sixth Circuit

66 F. 799

SECURITY SAVINGS & LOAN ASS'N v. BUCHANAN et al.

No. 226.

United States Court of Appeals, Sixth Circuit.

February 5, 1895

As shown by the bill, the complainant in this case is a corporation organized under the laws of Minnesota, having its home office there, and is engaged in the business of a building, savings, and loan association. It was doing business in Tennessee; and for the purpose of receiving applications for loans, and transmitting such applications to the home office with such necessary information as would be required to determine the value of the security offered for the proposed loans, it had appointed a local board at Dayton in that state. This local board consisted of five members all of whom were shareholders in the corporation, and are defendants in this suit. Thomas was president; Buchanan treasurer; Crabbs, secretary; and Petty and Hutsell, ordinary members. On December 17, 1892, the defendants Buchanan and Crabbs made an application to the complainant, through the local board, for a loan of $4,000, and proposed to secure it by a mortgage on a lot in Dayton, on which, as they stated they were building a two-story brick building 50 feet wide and 100 feet long, with stone foundations. They stated that the lot without the building was worth $1,500; that at the last assessment it was valued at $1,000; that the value of the building they were then erecting was $8,000; and that it was at the business center of the town. The local board forwarded the application and statement to the home office of the company, and sent therewith a 'confidential appraisal of property,' in which the board confirmed, as of matters within their personal knowledge, the statements above mentioned of the proposed borrowers, and stated that they considered 'this a good risk.' This appraisal was signed by all the five members of the board who are above named. On the faith of these statements made by the defendants Buchanan and Crabbs, and by the local board, the complainant granted the application, and agreed to pay the $4,000 in three installments,-- one of $1,000, in January, 1893; another of $1,000, in February; and the other $2,000, in May following. On January 6, 1893, Buchanan and Crabbs and Anna Crabbs, the wife of the latter, executed and delivered to complainant a note for $4,000, and the proposed mortgage on the Dayton lot to secure the same, in the form of a deed of trust to the defendant Thomas for that purpose. There were some minor details about the time and mode of application of the payment to be made by the borrowers, but they are not material to the decision. On January 28, 1893. Buchanan and Crabbs, with the defendants Swabey and Jenkins as their sureties, executed and delivered to the complainant a bond in the sum of $4,000, conditioned that the building on the mortgaged lot should be completed at a cost of $8,000, and that all claims for which liens might be filed should be paid. The complainant paid the January and February installments of $1,000 each to Buchanan and Crabbs as agreed. It turned out that all the statements made as above by Buchanan and Crabbs and by the local board to the complainant were false. The lot was not worth more than $100; had never been assessed for $1,000, nor for any sum whatever separately from other land; no building was ever constructed or ever begun on said lot; the lot was a mile away from the business center of the town, and surrounded by vacant town lots; Buchanan and Crabbs were insolvent, and failed in April following; and it likewise developed that Swabey and Jenkins, the sureties on their bond, were insolvent, and that nothing could be collected from any of the four. No part of the loan was ever repaid, and, according to the terms thereof, all is now due. All these things are set out in the bill with much amplification. And it is further alleged that the above-mentioned application, appraisal, note, and bond have, without the fault of the complainant, been lost, and cannot now be found; that it has copies of the application and appraisal, but not of the note or bond. The prayer of the bill is for the recovery from Buchanan and Crabbs of the money loaned, for the foreclosure of the deed of trust, for the setting up of the lost instruments by the establishment of copies, for a recovery from Swabey and Jenkins on their bond of the amount of the loan, and for a decree against Petty, Thomas, and Hutsell, 'on account of their fraudulent representations and actions,' for the amount of said loan.

The defendant Hutsell appeared, and demurred to the bill, and set down the following causes of demurrer: (1) That it appears from the complainant's own showing, in and by said bill, that it is not entitled to the relief prayed by the bill against this defendant. (2) That the citizenship of the parties to said bill is not properly set forth or stated, it appearing from the allegations of the bill that the plaintiff is, under the laws of the state of Tennessee, a citizen of said state, and not of the state in which it was incorporated. (3) That it appears from the plaintiff's own showing that it was chartered under the laws of a foreign state, and that it has attempted to do business in the state of Tennessee, and has done business therein, yet it nowhere appears or is alleged that the plaintiff has complied with the acts of the general assembly of Tennessee, with respect to foreign corporations transacting business in said state, being the act of 1891, c. 122. (4) That said bill is multifarious, in joining several distinct and separate causes of action in one and the same suit. (5) That there is a misjoinder of parties defendant in said bill. (6) That said bill seeks to enforce several separate and distinct liabilities against this defendant. (7) That there are no sufficient allegations in said bill to charge this defendant, in this court; but, if the plaintiff has any remedy, it is by action at law for damage. The court below sustained the demurrer, founding its opinion upon the seventh cause assigned therein. The bill was dismissed, and the complainant appeals.

T. M. Burkett, W. B. Miller, and F. L. Mansfield, for appellant.

Pritchard & Sizer, for W. H. Hutsell, appellee.

Before TAFT and LURTON, Circuit Judges, and SEVERENS, District Judge.

Having stated the case as above SEVERENS, District Judge, .

Although the demurrer was sustained in the circuit court upon the one ground stated in the opinion of that court, the question for us is whether it should have been sustained for any of the causes therein shown. There can be no doubt that, upon the facts stated in the bill, ...