Tate v. Bates

• Decision Date: 14 April 1896
• Citation: 24 S.E. 482,118 N.C. 287
• Court: North Carolina Supreme Court
• Parties: TATE, Treasurer. v. BATES et al.

24 S.E. 482

118 N.C. 287

TATE, Treasurer.

v.BATES et al.

Supreme Court of North Carolina.

April 14, 1896.

Action—Joinder op Causes—Banks—Liability of Directors—Pleading—Necessart Parties.

1. A cause of action against bank directors for the loss of a deposit, caused by their neglect and mismanagement, is in tort, not in contract; the contract of deposit being with the corporation, and not with the directors. Solomon v. Bates, 24 S. E. 478, and Caldwell v. Bates, 24 S. E. 481, followed.

2. A cause of action against bank directors for the loss of a deposit, caused by their neglect and mismanagement, even if ex contractu, may be joined with a cause of action for fraud and deceit, arising out of the same subject-matter.

3. A single depositor may maintain in his own behalf alone an action against the directors of a bank for the loss of a deposit, caused by their fraud, neglect, and mismanagement.

4. A complaint charging bank directors with fraud and deceit in making false statements of the bank's solvency need not allege that defendants knew or believed the bank to be insolvent, such knowledge being conclusively presumed.

5. Bank directors, who, by false and fraudulent statements to the state treasurer as to the condition of the bank, in order to conceal its insolvency, induce him not only to make new deposits of the state's money, but also to permit a portion of the money deposited by his predecessor in office to remain, are liable to such treasurer for any loss, either of the old or new deposits.

6. In an action against the directors of an insolvent bank for the loss of a deposit, caused by their fraud, neglect, and mismanagement, neither the bank nor the receiver are necessary parties. Solomon v. Bates, 24 S. E. 478, followed.

7. In an action by a depositor against the directors of an insolvent bank, an allegation that the vice president permitted the president and cashier to borrow large sums "upon inadequate security, " and fraudulently suppressed such loans in making up the official reports, and that the directors knew of such conduct, states no cause of action; there being no averment that the loans were lost, or could not be collected, or that their loss in any way injured plaintiff.

Appeal from superior court, Wake county; Starbuck, Judge.

Action by Samuel McD. Tate, as treasurer of North Carolina, against Isaac Bates and others, to recover for the loss of a deposit, caused by the alleged fraud and neglect of defendants, as directors of the Bank of New Hanover. Prom the judgment both parties appeal. Affirmed.

J. W. Hinsdale, for appellants.

F. H. Bus-bee and W. R. Allen, for appellee.

CLARK, J. The grounds of demurrer, which were not cured by the amendments allowed to the complaint, and which were overruled by his honor, are, in substance:

1. "That a cause of action for the negligence and mismanagement of the defendants is ex contractu, and cannot be joined in an action against them for fraud and deceit." The same point was raised in Solomon v. Bates, 24 S. E. 478, and Caldwell v. Bates, 24 S. E. 481, at this term, and it was there held that the plaintiff's contract of deposit was with the corporation, not with the defendant directors, and hence the cause of action against the directors for the loss of the deposit, caused by their neglect and mismanagement, was necessarily in tort, not in contract; but, if it had been in contract, it could have been joined with the causes of action for fraud and deceit, because all the causes of action "arose out of the same subject-matter."

2. "That the plaintiff, a single depositor, cannot maintain the action in his own name, but must bring a creditor's bill." The directors being trustees for creditors and stockholders, as well as for the corporation, any creditor or stockholder who has been misled, to his hurt, by their fraud and deceit, or injured by their misconduct and gross neglect, in discharge of the trust, can maintain an action for such injury against them personally, in his own behalf. If this were a proceeding to wind up the affairs of the corporation and apply its assets to the debts, then a creditor's bill would have been eminently proper, but such is not the object of this action. There is no fund to be taken in hand, to be administered and disbursed.

3. "That the allegation of a cause of action for fraud and deceit is not sufficient unless it is specifically charged that the defendants knew or believed the bank to be insolvent." The allegation of the complaint is that the defendants willfully and fraudulently made false and misleading statements of the condition of the bank,...