Vroom v. Thompson
| Decision Date | 21 November 1932 |
| Parties | JOHN VROOM, APPELLANT, v. MAUD THOMPSON, EXECUTRIX OF THE ESTATE OF MILTON THOMPSON, DECEASED, RESPONDENT |
| Court | Kansas Court of Appeals |
Appeal from the Circuit Court of Jackson County.--Hon Ralph S Latshaw, Judge.
AFFIRMED.
Judgment affirmed.
Henry S. Julian for appellant.
Charles M. Bush for respondent.
In July, 1926, plaintiff deposited $ 5400 in the Federal Trust Company, a banking corporation located in Kansas City Missouri. On November 12, 1926, said trust company failed and its assets were placed in the hands of S. L. Cantley, State Commissioner of Finance, for liquidation. Before, at the time, and continuously after the deposit was made, Milton Thompson was a duly elected, qualified and acting director of said company and remained so until the failure occurred. In the process of liquidation, plaintiff received from the Finance Commissioner the sum of $ 1134, leaving due said depositor a balance of $ 4266.
On August 20, 1930, more than three, but less than five, years after the Trust Company failed, plaintiff brought this suit against said Director Thompson to recover the balance of the deposit remaining due and thus lost to him, alleging that said Director Thompson, at and before the time of the deposit and thereafter, "knew, or by the exercise of reasonable care could have known, that said Federal Trust Company was in fact insolvent and in failing circumstances," and alleging further that "because of the knowledge of said insolvency, on the part of this defendant as director thereof, a cause of action has accrued in favor of this plaintiff and against the defendant for said sum of money so lost to plaintiff as aforesaid."
Demurrer to the petition was filed based on two grounds, (1) that the petition did not state facts sufficient to constitute a cause of action, and (2) that the cause of action, if any, set forth in plaintiff's petition, accrued more than three years before the filing of the petition and is barred by the three-year Statute of Limitations. The trial court sustained the demurrer upon the theory that the action was for a penalty and hence the three-year Statute of Limitations (Sec. 1318, R. S. Mo. 1929, now Sec. 863, R. S. Mo. 1929), governed the case.
Upon the sustention of the demurrer, the plaintiff stood upon his petition and refused to plead further. Whereupon the court dismissed the petition, and plaintiff appealed. After the appeal was taken, the defendant, Milton Thompson, died, and the cause was revived against the estate in the name of his executrix.
The second clause of the three-year statute, section 1318, now 863, covers "an action upon a statute for a penalty or forfeiture, where the action is given to the party aggrieved."
Plaintiff, however, contends that the action is on a "liability created by statute other than a penalty or forfeiture" and consequently the five-year Statute of Limitations (Sec. 1317, R. S. Mo. 1919, now 862, R. S. Mo. 1929), controls. The correctness of the ruling on the demurrer, therefore, depends upon whether the statutes upon which the action is based, are penal, as defendant claims, or merely remedial as plaintiff contends. If penal, the three-year statute governs; if remedial, the five-year statute controls.
The original source of authority for the cause of action herein is in section 27, Article 12, of our State Constitution, which is as follows:
"It shall be a crime, the nature and punishment of which shall be prescribed by law, for any . . . director . . . or other officer of any banking institution to assent to the reception of deposits . . . by such banking institution, after he shall have had knowledge of the fact that it is insolvent or in failing circumstances; and any such officer . . . shall be individually responsible for such deposits so received . . . with his assent." (Italics ours.)
In Fusz v. Spaunhorst, 67 Mo. 256, the above constitutional provision was held not to be self-enforcing and therefore needed legislative assistance. In so holding, Judge SHERWOOD, speaking for the court (p. 268), said: "The provision under discussion is highly penal, and is therefore to receive a more guarded construction than should otherwise be accorded to it." He further says (p. 269) that this would certainly be a correct rule of construction were a penal statute to be construed, and that a similar rule of construction is applicable here, where it is to be determined whether a constitutional provision is to be immediately operative, "when if so operative, heavy penalties and forfeitures will attend such operation." Consequently, section 21, Laws 1877, p. 33, was enacted which has since become section 3365, Revised Statutes of Missouri 1919, now section 4116, Revised Statutes of Missouri 1929 (said section makes such reception of a deposit a felony punishable as for larceny of the amount of money so deposited), but this section has been repealed (Laws 1931, p. 201); also section 1, Laws 1877, p. 35, which later became sections 11763 and 11764, Revised Statutes of Missouri 1919 (now Sections 5381 and 5382, R. S. 1929), was enacted to carry section 27, Article 2, of the Constitution, into effect.
The first of these, section 11763, Revised Statutes of Missouri, 1919, or which is the same, section 5381, Revised Statutes of Missouri, 1929, reads as follows:
Provisos follow allowing a director who has paid more than his share the proper remedy at law against such as shall not have paid their share of such liabilities and where some are insolvent the same shall be paid for the time being by those who are solvent.
Hence in this case, the cause of action accrued on November 12, 1926, when the bank failed and went into the hands of the Finance Commissioner. [State ex rel. v. Haid, 22 S.W.2d 1045.] So that if the statute or the cause of action given thereby is penal, then the suit, not having been brought within the time allowed by the statute, section 863, Revised Statutes of Missouri 1929, dealing with "an action upon a statute for a penalty or forfeiture," was not brought in time, and in that event, the demurrer was properly sustained.
It is argued that section 27, Article 12, of the Constitution, which, as stated, is the foundational authority for the cause of action involved, deals with the matter in two branches, (1) that part saying that it shall be a crime which is penal, and (2) that part which makes the bank officers individually responsible, and this creates a mere statutory civil liability purely remedial in its nature. It might seem so, and yet this feature making him responsible can well be an additional penalty instead of a mere civil liability other than a penalty or forfeiture. The term "penalties" and "forfeitures," as used in the various Statutes of Limitation, have been construed to have reference to those created by statute alone, and inflicted for dereliction of duty, or failure to perform specific acts, or for the commission of acts prohibited by statute. The effect and not the form of the statute determines whether it is penal or not. [37 C. J 788-9.] A civil liability imposed upon a corporation officer as a consequence of doing a forbidden act is a penalty, and it is held that an action on a statute giving "exemplary damages" in addition to damages covering actual loss is an "action upon a statute for penalty or forfeiture." [37 C. J. 789.] Judge SHERWOOD, in Fuzz v. Spaunhorst, supra, was speaking of section 27, Article 12, of the Constitution, as a whole or in its entirety, when he said of the section that, if operative, heavy "penalties and forfeitures" would attend such operation. A part of the penalty is the punishment for larceny, while the forfeiture is the liability to pay for the loss sustained. There is nothing of contract or of trust existing in the relation between the depositors of a bank and its directors, nor was there, at common law, any personal liability...
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...have compelled a conclusion that the claim was not time-barred because it was filed within six years. Likewise, in Vroom v. Thompson, 227 Mo.App. 531, 55 S.W.2d 1024, 1025–27 (1932), the court held that a claim against [685 F.3d 743]the directors of a moneyed corporation was time-barred by ......
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...and the fact that a civil personal liability was imposed upon the defendants was in and of itself "a penalty". In Vroom v. Thompson, 227 Mo.App. 531, 55 S.W.2d 1024 (1932) this Court considered the three-year limitation statute as bearing upon the personal statutory liability of a bank dire......
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