First National Bank v. Drake

35 Kan. 564 | Kan. | 1886

The opinion of the court was delivered by

Johnston, J.:

*576„ .. ,, , National bank— ?n directorías aboard. *574This case can be easily disposed of. The only question presented arises upon the refusal of the court to enter judgment in favor of the plaintiff upon the findings of the jury for the amount of money taken from the bank by the defendant as interest on demand certificates of deposit that had been issued to himself while he was serving as president *575and cashier of the bank. The defendant admits that he took the money at the times and in the amounts charged by the plaintiff, and the jury have found that during all the time the defendant was acting as an officer of the bank, there existed a rule or by-law of the bank which prohibited the payment of interest on demand certificates of deposit, and” that at no time while the defendant was an officer of the bank did he ever inform the board of directors that he had taken interest on these certificates; and it was also found that the directors did not at any meeting of the board authorize or ratify the action of the defendant in taking interest. The defendant contended and contends that although his act in taking the money was contrary to the by-laws of the bank, yet that there had been a ratification of the unauthorized act by the board of directors which is binding upon the bank. After stating that the directors had never at any meeting of the board ratified the taking of interest by the defendant, the question was asked the jury: “Did the board of directors at any time ratify the taking of the several amounts of interest?” To this question an affirmative answer was given; but in the next finding the jury explained particularly how the supposed ratification had been made, finding that it was “ by individual consent of a majority of the board.” The last finding, stating particularly what was done, controls and. prevails over the former one stating the general conclusion that there had been a ratification. These findings clearly show that the only sanction which the unauthorized acts of the defendant have received from the plaintiff, was given by the individual members of the board acting singly and separately, and not as a board. Action thus taken is not binding on the bank, and does not constitute a defense to the plaintiff’s claim. The statute declaring the method in which the bank may exercise corporate power provides ■ that the appointment and dismissal of its officers, the enactment of by-laws regulating the manner in which its officers and agents shall conduct its business, and the general supervision and management of its affairs, shall reside in and be exercised by a board of directors. (Rev. Stat. U. S. *576§ 5136.) This statute provides for the election of , 1 a president of the board, and otherwise assumes that the directors shall act unitedly as an organized body. The election of an individual as a director does not constitute him an agent of the corporation with authority to act separately and independently of his fellow-members. It is the boai’d duly convened and acting as a unit that is made the representative of the company. The assent or determination of the members of the board acting separately and individually is not the assent of the corporation. The law proceeds upon the theory that the directors shall meet and counsel with each other, and that any determination affecting the corporation shall only be arrived at and expressed after a consultation at a meeting of the board attended by at least a majority of its members. As the only powers conferred upon directors are those which reside in them as a board and when acting collectively as such, the individual consent of a majority of the members acting separately is not enough to ratify the unauthorized appropriation of the money of the bank by the defendant. (Angell & Ames on Corporations, § 504, et seq.; Morawetz on Private Corporations, § 247; Field on Corporations, § 242; Baldwin v. Canfield, 26 Minn. 43; First National Bank v. Christopher, 11 Vroom, 435; Junction Rld. Co. v. Reeve, 15 Ind. 236; In re Marseilles Rly. Co., Law Rep., 7 Ch. App. 161; D’Arcy v. Tamor &c. Rly. Co., Law Rep., 2 Exc. 158; Schunn v. Seymour, 24 N. J. Eq. 143; Cammeyer v. United German Churches, 2 Sandf. Ch. 186; Edgerly v. Emerson, 3 Foster, 555; Stoystown & Greensburg Turnpike Road Co. v. Craver, 45 Pa. St. 386; Keeler v. Frost, 22 Barb. 400. See also the following cases, which are somewhat analogous and applicable: Aikman v. School District, 27 Kas. 129; Mincer v. School District, 27 id. 253; Comm’rs of Anderson Co., v. P. & F. R. Rly. Co., 20 id. 534; P. & F. R. Rly. Co. v. Comm’rs of Anderson Co., 16 id. 302; Herrington v. District Township of Liston, 47 Iowa, 11; McCortle v. Bates, 29 Ohio St. 419.)

The conclusion which we have reached renders it unneces*577sary to consider the other questions so much and so well argued by counsel with regard to the relations existing between the cashier and the board or directors, and which both of them sustain toward the bank, and whether the doctrine of ratification can have application to a transaction wholly between the Board of directors'and the cashier.

The ruling of the district court disallowing the plaintiff’s motion for judgment non obstante veredicto' will be reversed, and the cause remanded with directions to enter judgment on the special findings of the jury for the additional amount appropriated by the defendant without authority of the bank as interest on demand certificates of deposit, in accordance with the plaintiff’s application.

All the Justices concurring.