71 So. 643 | Miss. | 1916
delivered the opinion of the court.
I. S. Joseph, as receiver of the hank of Woodville, an, insolvent banking establishment, the estate of which is. being administered by the chancery court of Wilkinson, county, exhibited his bill of complaint in this cause against, the directors of the bank, seeking to recover losses alleged to have been sustained by reason of certain loans made by the directors to Chas. Cohen, a fellow director,, in excess of one-fifth of the capital stock of said bank. The bill avers that the suit is brought by authority of the-chancery court, appointing and having jurisdiction of the-receiver, names and sets out the directors serving each, year from February 12,1903, until January 16, 1907, and. details various loans made to Mr. Cohen while he was. a director, and charges that the bank suffered losses aggregating fifteen thousand, one hundred and thirty-two-dollars and seventy-six cents. It is averred in the bill that Mr. Cohen was indebted to the bank in the sum of five thousand dollars when he became a director for money loaned to him; that the capital stock of the bank was twenty thousand dollars; that other loans, statement of which is filed as an exhibit to the bill, were made to Mm Cohen from the time he was elected a director until January 16, 1907, when he resigned from the board of directors ; and that at the time of his resignation he was-indebted to the bank in the sum of twenty thousand, eight hundred and sixty-five dollars and sixty-four cents-for money so loaned. It appears from the statement, filed as Exhibit A, that certain loans were made Mr. Cohen after he resigned as director, and that total payments or credits aggregate seven thousand, eight hundred and nineteen dollars, and forty-four cents. The bill charges that on or about January 20,1909, the officers and directors of the-bank abandoned all efforts to collect the balance of fifteen thousand, one hundred and thirty-two dollars and seventy-six cents then remaining due and unpaid, and caused to be entered on the books of the bank, in the bills receivable account, under the name of “Jonas Cain and others.’*
Separate and special demurrers were filed to the amended bill. The demurrers were overruled, and from the decree overruling the séveral demurrers to the whole bill the chancellor granted an appeal to settle the principles of the cause. For the purposes of this opinion it is unnecessary to detail the various grounds of the demurrers, some of which are "directed to the whole bill, and others separately to the Cohen transactions and the Rothchild transactions.
The theory of the complainants’ bill seems to be that under section 851 of the Code of 1892, it is unlawful for a bank of deposit to lend more than one-fifth of its capital stock to any one person or firm, and that the directors assenting to such loan are individually liable to creditors whose debts were contracted before ‘the repayment of the money borrowed. It is certainly true that this section expressly provides that “a bank of deposit shall not loan a sum greater than one-fifth of its capital to any one person or firm,” b.ut the section does not expressly im.pose personal liability upon the directors assenting to or making- the loan. There is a manifest difference between section 851 of the Code of 1892 and the same section reenacted as section 922, Code 1906. The provision in the Code of 1892 makes it unlawful for a bank of deposit to lend more than one-fifth of its capital stock to any one person or firm, but-imposes no penalty for a violation - of the law. The Code of 1906, on the contrary, does not forbid a loan of more than one-fifth of its capital to any person generally, but does forbid such' excessive loan
What we have said with reference to the loans to Mr. Cohen disposes also of the complaint based upon the excessive loan to Mr. Rothchild. This loan was negotiated while the Code of 1892. was effective; and, while it was made against the plain provisions of the statute, no statutory liability was incurred by the directors. The liability did not exist at common law; but, on the contrary, the statute invoked “is new and unknown to the common law,” as stated by our court in Avery v. McClure, 94 Miss. 184, 47 So. 901, 22 L. R. A. (N. S.), 256, 19 Ann. Cas. 134. We are not called upon to speculate as to what remedy would be afforded any interested party for the violation of section 851 of the Code of 1892. It is certain that the state could by proper proceeding complain at the ' corporation as such. The evident defect in the older statute has been cured by the additional provisions of the present Code as well as the state banking act of 1914. Laws 1914, page 124.
The decree-of the court below is contrary to the views here expressed, and accordingly should be reversed and set aside, and a decree entered here in favor of appellants sustaining the demurrers and dismissing the bill.
Reversed.