South Carolina Nat. Bank v. Mortgage Loan Co.

• Decision Date: 02 October 1930
• Docket Number: 12988.
• Citation: 157 S.E. 74,159 S.C. 359
• Parties: SOUTH CAROLINA NAT. BANK et al. v. MORTGAGE LOAN CO. et al.
• Court: South Carolina Supreme Court

157 S.E. 74

159 S.C. 359

SOUTH CAROLINA NAT. BANK et al. v. MORTGAGE LOAN CO. et al.

No. 12988.

Supreme Court of South Carolina

October 2, 1930

On Petition for Rehearing March 3, 1931.

Appeal from Common Pleas Circuit Court of Charleston County; M. M Mann, Judge.

Action by the South Carolina National Bank and others against the Mortgage Loan Company, Henry H. Ficken, and others. From an order overruling a demurrer of the defendant Ficken, he appeals.

Affirmed.

Logan & Grace and John I. Cosgrove, all of Charleston, for appellant.

Julian Mitchell and J. N. Nathans, both of Charleston, for respondents.

COTHRAN J.

This is an appeal from an order of his honor, Judge Mann, overruling a demurrer of the defendant Ficken, to the amended complaint in this action.

The action was originally commenced against the Mortgage Loan Company alone. By order of Court, the individual defendants Ficken, Chisolm, and Johnston, subsequently were made parties defendant, and an amended complaint was served upon them. To the amended complaint, each of the individual defendants filed demurrers. The demurrers of Johnston and Chisolm were sustained, while that of Ficken was overruled. From the order of Judge Mann overruling the demurrer of Ficken, this appeal is taken.

It appears that upon the closing of the South Carolina Loan & Trust Company, South Carolina Loan & Trust Company's Bank, and the Security Corporation (formerly Security Savings Bank) in December, 1926, a private corporation known as the Mortgage Loan Company was organized for the purpose of liquidating these institutions and to it was assigned by A S. Fant, as receiver, all of their assets, and that the Mortgage Loan Company assumed, to the extent of such assets the liabilities of said corporations.

The complaint alleges, in substance, in addition to the foregoing facts, as follows, stated in narrative form:

George W. Egan died in 1902, leaving a will which has been probated in Charleston county; by it he appointed, as executors and trustees, his sons John G. Egan, Edwin E. Egan, his son-in-law, J. O. Skinner, and Security Savings Bank, the corporate name of which was subsequently changed to that of Security Corporation.

By an agreement between the Security Savings Bank and the other trustees, the bank, in January, 1910, became the sole managing trustee, and it assumed the active management and control of the trust estate.

The testator after certain dispositions of parts of his estate, not relevant to the present inquiry, devised the remainder to his named executors as trustees under elaborate provisions, also not relevant to the present enquiry, and vested them with the following powers: "I authorize and empower my said Trustees or such of them as shall act herein and the survivors or survivor of them to sell all or any part of my estate real and personal for the purpose of executing the trusts herein, when and as often as they may deem expedient and to execute proper conveyances in fee simple therefor, and to reinvest the proceeds subject to a similar power of sale when and as often as they may deem expedient in the interest of the cestuis que trustent."

He provided for the distribution of his estate after the death of his wife, which has long since occurred.

It does not distinctly appear in the complaint the manner in which the estate was handled, how or to what extent the managing trustee came into possession of the assets of the estate, in money; which, however, appears to have been a very large sum of money, certainly in excess of $80,000.

In the fifth paragraph of the complaint it is alleged: "That said Security Savings Bank, the corporate name of which was subsequently changed to Security Corporation, in breach of its duties as managing Trustee, as aforesaid, invested said trust estate in improper and illegal securities so that serious loss was incurred by said trust estate as hereinafter specifically set forth and in connivance with the South Carolina Loan & Trust Company, through H. H. Ficken the President of said Company, so acted with the bond and mortgage known as 'Indian Realty Company Bond and Mortgage' as to cause the loss to the trust estate as particularly hereinafter set forth; which said losses so incurred are as follows." Then follows a detailed statement of losses amounting to $83,821.35 in 16 separate items. After the assets of the three banks were taken over by the defendant Mortgage Loan Company a claim was filed with it for the payment of the above losses caused by the South Carolina Loan & Trust Company and the Security Corporation.

The sixth paragraph of the complaint is as follows: "That during the times hereinbefore mentioned the Defendant Henry H. Ficken was the President of South Carolina Loan and Trust Company, and as such had the management and control of its affairs; and up to, on or about the 6th day of January, 1926, was President of the Security Savings Bank; that on January 6th, 1926, he became Chairman of the Board of Directors of Security Corporation, to which name by amendment of Charter the name of Security Savings Bank had been changed, and as such President of South Carolina Loan & Trust Company and of Security Savings Bank, and as such Chairman of Board of Directors, respectively, had the management and control of said Corporations, and the matters and things hereinabove set forth were done under his direction, for which said illegal acts, in conjunction with the said Corporations, he is responsible. ***"

The complaint prayed judgment against the defendants for the losses, $83,821.35.

After the closing of said banks and before the commencement of the present action, under proceedings in the court of common pleas, the plaintiff herein, the South Carolina National Bank of Charleston, was substituted as trustee under the will of George W. Egan in the place of the Security Corporation.

As stated above, the personal defendants, Ficken, Chisolm, and Johnston, demurred, it seems separately, to the amended complaint; upon the hearing of which his honor, Judge Mann, sustained the demurrers of Chisolm and Johnston, from which there is no appeal, and overruled the demurrer of Ficken, from which this appeal comes.

Counsel for the appellant have not argued the first and second exceptions, which are the same as the first and second grounds of demurrer. It is assumed that they have been abandoned; at any rate the court is justified, for the reason stated, in dismissing them.

The third, fourth, and fifth exceptions, the same as those grounds of demurrer, are as follows:

"III. The presiding judge erred in overruling the Demurrer to the Amended Complaint herein; the error being that said Amended Complaint shows on its face that the alleged acts of this defendant were in his representative capacity as an officer of the Bank and corporations referred to in said Amended Complaint so that said banks and corporations and not this defendant are liable, if there be any liability in the premises.

"IV. The presiding judge erred in overruling the Demurrer to the Amended Complaint herein; the error being that said amended Complaint shows on its face that the alleged acts of this defendant were as an officer or agent of said banks and corporations referred to in said Amended Complaint so that said banks and corporations, and not this defendant are liable if there be any liability in the premises.

"V. The presiding judge erred in overruling the Demurrer to the Amended Complaint herein; the error being that said Amended Complaint improperly unites and joins several distinct

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