221 F. 912 | 6th Cir. | 1915
The broad questions regarding the right of action in this case were considered and decided by this court upon a former writ of error. 195 Fed. 875, 116 C. C. A. 465. It is unnecessary to restate the facts. It then appeared that the jury had found a verdict upon the theory that defendants, as directors of the bank, had become subject to a duty to charge off from the books of the bank the sums of $233,000 and $70,000, which were, in fact, ultimately lost by the bank upon liquidation of the Maltby and Brotherton debts, respectively ; and it is this reduction of the directors’ duty in this respect to terms of dollars to which we propose to refer as' the “basis” of recovery. We held that, for lack of proof, the Brotherton loss must be excluded from such basis, that the proof fairly tended to support the $135,000 basis as to the Maltby loss, but that beyond this sum the proof as to the Maltby loss was too conjectural and speculative to support a verdict. We reached this conclusion, because the proofs tended to show that defendants, during 1903, either in fact knew or must be charged with knowing that a large share of the Maltby debt was bad, and because, while there was nothing definite to show how much was then known to be worthless, the fact that the directors did, within the next year, charge off $135,000 was sufficient to convert mere conjecture into reasonable inference, and so the verdict had support up to the $135,000 basis, and not beyond. We found ourselves unable to accept plaintiff’s offer of remittitur and to affirm the judgment to the extent of this basis, because of other errors which entitled the defendant to a new trial of the main issues.
Upon the second trial, the plaintiff abandoned any claim to recovery dependent on the Brotherton loss; and with regard to- the Maltby debt, plaintiff claimed and recovered a verdict upon the basis of $200,000, being $65,000 in excess of the basis which, if our former decision be accepted, it must be conceded the proof tends to support; and defendant Chesbrough, after severing McGraw, alone brings error. Instructions given to the jury to guide it in reaching the basis of recovery, were substantially in harmony with the rules which we indicated; and so the question is whether new evidence on the second trial justified at all the jury in finding the whole or any part of this $65,000.
We think there was evidence fairly indicating that the McGraw report was known to Chesbrough, and so there is presented the sharp question whether that report substantially tended to prove the $200,-000 basis. We appreciate the caution with which an appellate court must approach súch a question under a writ of error; and we "realize that such a verdict must not be declared unsupported by any evidence, unless the proposition is one upon which reasonable minds cannot differ. At the same time, we realize that directors who, perhaps without any fault on their part, find their bank .confronted with an enormous loss, may be compelled to choose between precipitating a panic and ruining the bank if they make full and public disclosure, and, on the other hand, by gradual disclosure, saving the bank from collapse and retrieving part of the loss; that this is a hard choice; and that while this hardship cannot bar the statutory result of their proved violation of law, yet it entitles the directors not to be condemned upon mere guesswork and surmise years after the event, when the earlier duty in the face of then existing uncertainty is so likely to be judged by the certainty later developed. These considerations justified us in holding the verdict excessive on the former trial, and they justify us in adhering to the same point of view. From this point of view, we are compelled to think that the McGraw report is legally insufficient to have its claimed effect. It does support the inference that the directors were put on notice regarding the reliability of the Maltby inventory, and it might support the inference that Chesbrough was negligent in not then ascertaining that the loss would be as great as it proved to be; but such negligence is not the issue. To this plaintiff, Chesbrough is liable only for that conduct which is practically equivalent to intentional misleading; and evidence well supporting a charge of negligence may have no legal tendency to support a finding of intentional or reckless wrong.
We have reached this conclusion after study and analysis of the McGraw report as compared with the Maltby inventory. It,would unduly extend this opinion to go much into the details of this comparative analysis. It is sufficient to notice, among other things: That plaintiff’s theory requires a finding that the directors knew the Maltby assets would realize less than 45 per cent, of Maltby’s figures; that there
In reaching this conclusion, another feature has distinct force: After plaintiff became a director, and while the hank continued to carry and report as assets all the Maltby'paper above $135,000, plaintiff joined in these reports. We held that this did not amount to an estoppel, but was in the nature of an admission having evidential force. The McGraw report, which is said to establish knowledge against Chesbrough, became part of the books and papers of the bank, and was presumptively known also to Woodworth when he signed the reports of 1905. By so much is the evidence against plaintiff stronger than it was before, and by so much more does it seem probable that he is himself guilty of the same kind of conduct upon which he relies to establish his claim against Chesbrough. This increases the necessity that his case should be supported by testimony clearly fit to induce conviction rather than by vague inferences; and this consideration alone is enough to put this case almost in a class by itself as to the degree of proof required to justify submission.
A very large number of assignments of error is presented. Those which do not raise the same questions disposed of on the former hearing we have examined, and we do not find that any one of them is based on prejudicial error. In so far as they do raise again the same questions which we have once determined, we assume that they are now only intended properly to shape the record for review by the Supreme Court.
If the plaintiff, within 30 days from the filing of this opinion, files in the court below his written election to reduce the judgment by the sum in which it exceeds the $135,000 basis, and files in this court a certified copy of such remittitur, the judgment, as so modified, will be affirmed; otherwise, and for the reasons stated, it will be reversed, and the case remanded for a new trial. In either case, Chesbrough will recover the costs of this court. The plaintiff, if he desires to abate, should prepare and give to the defendant a statement showing his basis of apportionment and interest computation; if counsel do not agree upon'this result, the matter can be summarily submitted to us.