Utley v. Hill

• Citation: 155 Mo. 232,55 S.W. 1091
• Parties: UTLEY v. HILL et al.
• Decision Date: 14 March 1900
• Court: United States State Supreme Court of Missouri

55 S.W. 1091

155 Mo. 232

UTLEY v. HILL et al.

Supreme Court of Missouri, Division No. 1.

March 14, 1900.

REVIEW — WEIGHT OF EVIDENCE — INSOLVENT BANK — DIRECTORS — LIABILITY FOR DEPOSITS — KNOWLEDGE OF INSOLVENCY — ESTOPPEL TO DENY — ACTION OF DECEIT — DEPOSITOR'S RIGHT TO MAINTAIN — TRIAL TO COURT — REFERENCE — FINDINGS OF FACT — POWERS OF COURT.

1. The rulings of the trial court on the weight of evidence will not be reviewed.

2. Defendants to an action, under Rev. St. 1889, § 2760, imposing a personal liability for deposits on directors of a bank, who, with knowledge of its insolvency, receive or assent to their reception, are not, because of their duty to manage the bank's affairs, estopped to plead ignorance of its condition.

3. The knowledge of a bank's insolvency, which Rev. St. § 2760, requires directors to have to be liable for deposits to which they assent, means an actual knowledge, and not an innocent, bona fide ignorance, arising from their neglect to inform themselves of the bank's condition.

4. Bank directors are not liable in a common-law action of deceit for statements made to the secretary of state as to the bank's condition, as required, under penalty, by Rev. St. 1889, § 2752, which, though false, they honestly believed were true, and which were based in good faith on details furnished them by the cashier, whose reputation was good.

5. In cases tried to the court, it may set aside a referee's findings of fact, and make findings for itself.

Appeal from circuit court, Saline county; Richard Field, Judge.

Action by Thomas Utley against Phillip M. Hill and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Leslie Orear and Alf F. Rector, for appellant. Thos. Shackelford, W. M. Williams, John A. Rich, Syd. B. Burks, and D. D. Duggins, for respondents.

MARSHALL, J.

This is an action by a depositor in the Citizens' Stock Bank of Slater against the directors thereof to recover $8,000, lost by the failure of that bank. The petition is in two counts. The first count is predicated upon section 2760, Rev. St. 1889, which makes directors of a bank individually responsible for deposits accepted, with their assent, after they had knowledge that the bank is insolvent or in failing circumstances. The second count is an action for deceit, charging that the plaintiff was induced to make such deposit by reason of false and fraudulent representations that the bank was solvent, such representations consisting of the reports made to the secretary of state, as required by section 2752, Rev. St. 1889. All other such misrepresentations were withdrawn at the trial, and are therefore no longer in this case. The answers are general denials. On motion of the plaintiff, and over the objection of the defendants, the case was sent to a referee, "to hear and try the issues."

The referee's report, omitting formal preliminary recitals, is as follows: "That in said cause I find the issues upon the pleadings and evidence as follows: I find the issues in said cause, from the evidence, in favor of plaintiff; that is, I find the facts stated in the petition in both counts are true as therein alleged, except as herein otherwise indicated. I find especially the following facts: First, that one Joseph Field acted as cashier of the Citizens' Stock Bank of Slater, Mo., from 1882 until the assignment thereof, December 17, 1894; that during all that time he was elected at each annual election in December of each year a director of said bank, and was annually appointed cashier [here follows a finding as to the terms for which the defendants were elected directors, covering the periods involved in this case]; that defendant Hill was elected annually as president of said bank from the time of its organization, in September, 1882, being elected annually by the board of directors, and that he continued to act as its president until the assignment of said bank. I further find from the evidence that the statements made to the said secretary of state, and signed by said president and cashier, were attested as correct by defendants J. W. Field, R. B. Eubank and W. I. Garnett, by their signatures as directors to the one purporting to show the condition of said bank February 20, 1894, and referred to in evidence; that the statement in evidence made to said secretary of state, and purporting to show the conditions of said bank June 2, 1894, was signed and attested by defendants P. C. Storts, R. B. Eubank, and W. I. Garnett as directors; that the statements in evidence made to said secretary of state, showing the condition of said bank January 17, 1891, and May 16, 1891, were signed and attested by defendants Wm. I. Garnett, J. W. Field, and R. B. Eubank as attesting directors; that the statements to said secretary of state in evidence, showing the condition of bank January 2, 1892, and May 16, 1892, were signed by the defendants Wm. I. Garnett and J. W. Field; that the statements in evidence to said secretary of state showing the condition of said bank October 31, 1892, and April 22, 1893, were signed by defendants Garnett, Eubank, and Field as attesting directors; that the statement in evidence showing the condition of said bank September 16, 1893, made to said secretary of state, was signed by defendants Storts and R. B. Eubank; that at the time of signing said statements said defendants knew that the same would be published and were being published in the newspapers published and circulated in Slater, where said bank was situated; that the statements aforesaid represented and showed said bank to be in a good and solvent condition, whereas, in fact, I find from the evidence that said bank was insolvent at the dates mentioned in said several statements, and had been insolvent from December, 1887, until its close, December 15, 1894; that said several defendants, when they signed said several statements, did so without any examination of the books, notes, and securities claimed to be in the possession of said bank, and without knowing whether the statements contained therein as to the condition of said bank were true or not; that they severally signed said statements relying on said cashier's statement or representations that the same was true, and without knowing whether the same was true or not; that they signed said statements with the knowledge and expectation that the same would be published in the newspapers published and circulated among the people where the said bank was situated; that said statements were signed by said defendants without any order of the board of directors of said bank as such board; that said defendants signed said statements with full knowledge on their part that they had not examined the cash, notes, or books showing the condition of said bank, and which purported to be in the possession of said bank. I find further from the evidence that the directors of said bank only held annual meetings, and then for the election of cashier and other officers; that these meetings were just after the annual election of directors by the stockholders; that they never at any time required the cashier or any of the officers of said bank to give any bond; that the reputation of said Joseph Field while acting as cashier of said bank was that of a good business man, as well as a man of integrity and wealth, up to the time of said bank's assignment, and that defendants had knowledge of and relied on said reputation of said cashier for integrity and wealth. I further find from the evidence that during the said time said defendants were acting as directors of said bank they were frequently about the bank, and had access to the books, papers, notes, and securities belonging to said bank, and that they could, by the exercise of ordinary care and diligence, have known the true condition of said bank at the time of said several statements so made to the secretary of state as aforesaid, or could, with the means of knowledge at their command, have known that said bank was insolvent at the dates of said several statements so signed by them as aforesaid, by examination. That the books of said bank, which were accessible to said defendants, and could have been examined by them if desired, showed that one Mead Mercantile Company was constantly indebted from December 30, 1887, to the date of said assignment to said bank, in divers large sums of money, evidenced by notes and overdrafts, ranging from about $4,500, November 7, 1887, up to $77,000, December 15, 1894, with an overdraft of $7,825.97 at last-named date. That said indebtedness, December, 1888, amounted to over $60,000; June, 1889, to about $44,000; December, 1890, $45,000; December, 1891, to over $74,000; June, 1892, over $75,000; December, 1892, $73,000, with overdraft for $10,787.42 in addition; June, 1893, over $73,000; December, 1893, $73,000, with overdraft for $12,474.49; June, 1894, $64,500 in notes, with overdraft of $14,483.29; December 15, 1894, note for $77,000, with overdraft for $7,825.97. That one firm, composed of W. B. Storts and J. D. Eubank, styled `Storts & Eubank,' were constantly indebted to said bank in notes and large overdrafts from December 30, 1887, to February 13, 1892, in amounts ranging from $52,000 at the former date in notes (and overdrafts for $1,895.11) to $117,294 at the latter date. That between said dates the amount of indebtedness gradually increased, until June, 1891, it amounted in notes to $146,691, and overdraft for $10,778.32. That their overdraft alone amounted, June 30, 1888, to $16,401.19, with notes at over $52,000. That their indebtedness in June, 1889, was over $90,000; June, 1890, over $122,000; December, 1890, over $136,000. That said firm continued indebted to said bank, according to the books at the time of the assignment of the bank, for $117,294. That said book showed an individual indebtedness of said W. B. Storts of over $8,000 in June, 1891; over $19,000, December, 1891; nearly $25,000, June, 1892; over...