172 N.W. 514 | S.D. | 1919
Plaintiff was a depositor in, and defendants ■directors of, a national bank at the time such bank became insolvent. The bank failed to pay its depositors in full, and plaintiff brought this action to recover damages resulting to him from such fact. The complaint is very long. Its allegations cover three general grounds, not separated into different causes of action, upon which plaintiff seeks recovery: (a) That defendants made reports to the Comptroller of the 'Currency knowing same- to be false and incorrect; (b) that defendants did not diligently and honestly administer the affairs of such bank; (c) that the defendants practiced deceit upon which a common-law liability may be predicated. Defendants moved the trial court to strike from such complaint certain designated allegations thereof, upon the grounds that “the said matters and statements are irrelevant and redundant.” 'Such •motion was denied as to most of the allegations attacked, and from such order of denial-this appeal was taken.
" [x] Appellants concede that the complaint states a cause of action under section 9831, 9 U. S. Comp. 1916, p. 12076; Rev. St. § 5239, Act June 3, 1864, c. 106, § 53, 13 Stat. 116. That section, so far as material to this action, reads:
“If the directors of any national banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this title, all the rights, privileges, and franchises of the association shall be thereby forfeited. * * * And in cases of such violation, every director who. participated in or assented to the same shall be held liable in his personal, and individual capacity for all damages which the association, its shareholders, or any other person, shall have sustained in consequence of such violation.”
Appellants contend that such section prescribes the limits of their liability, that there can be no common-law liability for deceit,
“Mark the contrast between the general common-law duty to ‘diligently and honestly administer the affairs of the association’ and the distinct emphasis embodied in the promise not to ‘knowingly violate, or willingly permit to be violated, any of the provisions of this title.’ In other words, as the statute does not relieve the directors from the common-law duty to be honest and diligent, the oath exacted responds to such requirements. But as, on the other hand, the statute imposes certain express duties and makes a knowing violation of such commands the test of civil ■ liability, the oath in this regard also conforms to the requirements o'f the statute by the promise not to ‘knowingly violate, or willingly permit to be violated, any of the provisions of this title.’
“And general consideration as to the spirit and intent of the National Bank Act (Easton v. Iowa, 188 U. S. 220 [23 Sup. Ct. 288, 47 L. Ed. 452]; Davis v. Elmira Savings Bank, 161 U. S. 275 [16 Sup. Ct. 502, 40 L. Ed. 700]) also render necessary the conclusion that the measure of responsibility, concerning the violation by directors of express commands of the National Bank Act, is in the nature of things exclusively governed by the specific provisions on the subject contained in that act.”
It would seem' that the words “makes a knowing violation of such commands the test of civil liability” may have led to some misunderstanding of what the court intended to decide. The court, as clearly -disclosed by the whole opinion, did not intend to declare that a known violation of express duties was the sole test of civil liability, but rather that a known violation of express duties is the test of civil liability for violation of express duties— in other words that bank directors are not civilly liable for violation of those duties expressly imposed upon them by the federal law unless the act or omission constituting such violation is done
“The civil liability of national bank directors, then, in respect to the making and publishing of the official reports of the condition of the bank, a duty solely enjoined by the statute, being governed by the National Bank Act, it is self-evident that the rule expressed by the statute is exclusive, because of the elementary principle that where a statute creates a duty and prescribes a penalty for nonperformance the rule prescribed in the statute is the exclusive test of liability.”
The court further said:
“Where by law a responsibility is made to arise from the violation of a statute knowingly, proof of something more than negligence is required, that is, that the violation must be in effect intentional.” The italicizing is ours.
And the court also said:
“Of course in what has been said we have confined ourselves to the precise question arising for decision, and therefore must not be understood as expressing an opinion as to whether and to what extent directors of national banks may be civilly liable by the principles of the common law for purely voluntary statements made to individuals or the public, embodying false representations as to the financial condition of the bank, by which one who has rightfully relied upon such representation has been damaged. And because we have applied in this case to the duty expressly imposed by the statute the standard of conduct established therein we must not be considered- as expressing an opinion upon the correctness of the views enunciated by the court below concerning the standard which should be applied solely under the principles of the common law, to fix the civil liabilities of directors in an action of deceit. See Briggs v. Spaulding, 141 U. S. 132 [11 Sup. Ct. 924, 35 L. Ed. 662].”
In Thomas v. Taylor, 224 U. S. 73, 32 Sup. Ct. 403, 56 L. Ed. 673, the court, in discussing the decision in the Yates Case, and partictilarly the words of the next to last quotation above, say that the court held:
“Not, therefore, that as a condition of liability there should be proof of something more than recklessness; not that there*625 should be an intentional violation, but a violation ‘in effect’ intentional.” .
And the court in Thomas v. Taylor then say:
“There is ‘in effect’ an intentional violation of a statute when one deliberately refuses to examine that which it is his duty to examine.”
If the Nebraska court had noted this interpretation thus given to the words that had been used in the Yates Case, the state court, upon the appeal from judgment on the retrial of the Yates Case, would probably have reached a different conclusion than it did on such appeal (Jones Nat. Bk. v. Yates, 93 Neb. 121, 139 N. W. 844, 1135), and would have avoided the reversal reported in Jones Nat. Bk. v. Yates, 240 U. S. 541, 36 Sup. Ct. 429, 60 L. Ed. 788. In this last case, the federal court discussed the findings of the trial court. The trial court had found that reports to the comptroller “were not made in good faith” where, with “no actual personal knoweldge of the truth or falsity” of reports attested by him, a director in attesting them “relied upon the statements añade to him by the president and cashier,” but “without any investigation,” and when “attesting such statements” such director “knew that he had no personal knowledge” of their truth or falsity, and such reports “were attested recklessly and without performing his duties as a director” to ascertain their truth and falsity. The federal court held that:
“If this finding, fairly construed, did not import more than mere neglect or inattention, it would not.be sufficient to sustain a recovery; for Congress did not make negligence the test of liability, but the fact that the act was violated knowingly.”
But the court further said:
“There may be a violation ‘in effect intentional,’ and therefore within the statute, ‘when one deliberately refuses to examine what it is his duty to examine.’ Thomas v. Taylor, supra.”
The order appealed from is affirmed.