United Society of Shakers v. Underwood, &C.

• Decision Date: 07 September 1875
• Citation: 74 Ky. 265
• Court: Kentucky Court of Appeals
• Parties: United Society of Shakers v. Underwood, &c.

74 Ky. 265

United Society of Shakers v. Underwood, &c.

Court of Appeals of Kentucky.

September 7, 1875.

APPEAL FROM FRANKLIN CIRCUIT COURT.

JOHN MASON BROWN, M. C. JOHNSON, THOS. H. HINES, For Appellants.

J. R. UNDERWOOD, T. N. & D. W. LINDSEY, CRADDOCK & TRABUE, For Appellees.

JUDGE LINDSAY DELIVERED THE OPINION OF THE COURT.

Counsel have argued this case upon the hypothesis that the appellees, if liable at all, are to be held to account for all the bonds sold by Calvert, the cashier of the bank, whether their proceeds were or not applied to the uses and purposes of that institution. Such is not the case.

The gist of the action is that the bank, through its officers, fraudulently converted to its use and emolument certain of the appellants' bonds, which it held on special deposit, and that the conversion took place under such circumstances as to render the appellees (the president and directors of the bank) answerable therefor.

In the opinion of this court^* rendered upon a former appeal in this cause it was said: "But the liability of the bank does not depend alone upon the averment of want of care and fidelity upon the part of the directors. It is specifically charged that the deposits were sold by its officers and the proceeds thereof converted to its use and emolument with the knowledge of the directors." And again: "These appellants allege that their bonds were sold by the officers of the bank and the proceeds paid out in the satisfaction of claims against it and in the payment of dividends to its stockholders; and that of all this appellees had notice."

"Having notice, it was their duty, and they had full power in the premises, to prevent the sale. Failing in this, their subsequent action in directing the proceeds, or some portion thereof, to be paid out in the shape of dividends to the stockholders, including themselves, was a ratification of the conversion which they had theretofore wrongfully permitted."

The petition was held to be good "upon the ground that if the officers of the bank sold the special deposits and used the proceeds in the business of and for the uses and purposes of the bank, and the proceeds were so used through the active agency of the directors, then they are personally liable by reason of their participation in the tort, and they can not escape liability, because they were not aware that they were wrongfully using the proceeds of a depositor's property, when this want of information was the result of their willful inattention to and gross negligence in the discharge of their official duties." (Ray's adm'rs v. Bank of Kentucky, 10 Bush, 355.)

We regard it as plain that appellants' petition does not authorize a recovery for a greater sum than the value of such of their bonds on special deposit as were sold and appropriated to the uses and purposes of the bank.

It is proper before proceeding further to consider the effect of the plea in bar, based upon the adjudication in bankruptcy of appellants' claim against the Bank of Bowling Green. It is averred by Underwood, one of the appellees, that after the Bank of Bowling Green was declared a bankrupt by the District Court of the United States for the district of Kentucky, the appellants herein appeared in that court and set up their claim against said bank for the appropriation and conversion of the identical bonds in controversy in this action, and that they succeeded in said district court in obtaining judgment against the assignee of the bank for the sum of $35,734.21, for and on account of said bonds, and that a large portion of said judgment has been paid by the assignee. Afterward, by a joint amended answer, all the appellees set up the same facts and charged that the sum paid on the judgment by the assignee amounted to $26,875.

Before the filing of this amended answer appellants demurred to so much of Underwood's answer as set up said recovery and payment. As the demurrer was general in its nature, and as the plea was undoubtedly good to the extent that it averred payment or partial satisfaction of the claim, it was properly overruled. But as appellees now insist that the plea presents a complete defense to the action, and as appellants claim that the judge presiding at the trial in the court below was of that opinion, and in consequence thereof gave the peremptory instruction to the jury to find for the appellees, it is proper that we shall consider it in that view.

This court, in the case of Elliott v. Porter (5 Dana, 299), expressly dissented from the doctrine of the English cases commencing with Brown v. Wotton (Cro. Jac. 73), and stated the rule to be that a judgment against one co-trespasser or wrong-doer will not per se bar a subsequent action against a different defendant for the same, or a different asportation or conversion of the same property, and that in such a case to make out a bar it is necessary to show not only the first judgment, but also that it has been satisfied or released. The rule as thus stated has never been questioned in this state. It is in harmony with the decided weight of American authority, and its enforcement is calculated to secure the ends of justice, and is demanded by sound public policy.

In the late case of Lovejoy v. Murray (3 Wallace, 1) the Supreme Court of the United States carried the doctrine even further, and held, as we think correctly, that a judgment for a wrongful conversion of property against one co-trespasser, even when partly satisfied, will not bar an action against another. In the last-named case, as in the leading cases of Elliott v. Porter and Sheldon v. Kibbe (3 Conn. 214), the doctrine that the judgment alone vests the title of the property converted in the defendant is repudiated as not sustained by authority, and as incapable of being maintained on principle.

But in the case before us for adjudication we have another, and, it seems, an unsettled question.

When a party sues one of several wrong-doers for a conversion or destruction of his property and recovers a judgment which he elects to enforce, and which is in part satisfied, is he not estopped in a subsequent action against a different defendant to claim a greater sum in the way of damages than was adjudged to him in the first action?

In the case of Elliott v. Porter the court said: "A few old cases might be understood as assuming the true doctrine to be that the title passes by operation of law in consequence of the judgment for damages. Some more modern decisions, contra, require satisfaction of the judgment, and others the issuing of an execution upon it as necessary for making the initiate election to take the assessed value in lieu of the property itself perfect and irrevocable." And further: "But there can be but one satisfaction for the same wrong. When several judgments have been obtained on the same cause of action the plaintiff must elect which he will enforce, and when he shall have once elected perhaps he may be enjoined from proceeding on another."

In the case of Knott v. Cunningham (2 Sneed, 210) the Supreme Court of Tennessee says: "The more reasonable doctrine, on the other hand, is, that as each of the wrong-doers is liable for his own act, separate actions may be brought at the same time, or successively, against each of the several trespassers, in each of which the plaintiff may proceed to judgment. But as he can claim or enforce only one satisfaction for the same injury, he must elect against which of the several he will proceed to execution for the satisfaction of his damages. If the several assessments vary in amount he may elect to take the larger sun, or if the defendants be not all solvent he may elect to proceed against the solvent party; and such election followed by actual satisfaction of that particular judgment will preclude the plaintiff from proceeding against either of the other defendants upon the judgments recovered against them, except for the costs in the respective cases, which he may enforce the collection of by execution."

In Lovejoy v. Murray the Supreme Court says: "It is said that the judgment represents the price of the property, and as the plaintiff has the judgment, the defendant should have the property. ...