8 Mart. (N.S.) 68 | La. | 1829
delivered the opinion of the court. This is an action by the plantiffs, stockholders in the late Planters' Bank, against the defendants, who are also stockholders in the same institution, to obtain a settlement of the accounts, a liqudation of the affairs, and a division of the funds belonging to the bank.
As necessary to this settlement, the plaintiffs allege, that three of the directors of the institution, viz: Laurent Millaudon, Joseph Abat and Jean Lanna, are indebted to it in a sum of $451,000 for fraudulent and unfaithful conduct by them, while acting in the capacity just stated. The specifications, given in the petition of their acts, are brought under the following heads:
1st. That,while acting as directors, they permitted the president and cashier of the bank, at divers times, between the 3d of August, 1817, and the 3d of November, 1819, to discount notes from the funds thereof, to a large amount, viz: $350,000 without the interven
2d. That, after the 3d of November, 1819, and the 1st of May, 1820, they, being still directors,did aid and assist Paul Lanusse, the president, and Bailly Blanchard, the cashier, in discounting notes without the authority of the president and four directors; particularly notes of the president not endorsed, but payable to the president, directors and company of said bank, contrary to the rules and regulations thereof, and to its injury $100,000.
3d. That on divers days and times, between the 1st of June, 1819, and the day of July, 1820, the defendants, being directors of said bank, did collusively and fraudulently cause to be transferred to the bank 800 shares thereof at par; although by reason of the misconduct of the defendants, the stock had become of little value, and was then currently sold in New-Orleans at a great loss.
4th. That on the 16th of October, 1819, the defendants were appointed a committee to exam
5th. That the defendants wilfully, improperly and fraudulently voted to discharge the sureties of the cashier, viz: Paul Lanusse and Jean Lanna, one of the defendants, and cancel the bond they had given to the bank with said cashier, while at that time he was indebted to the institution in a large sum, viz: $49,000, and also in other sums of money.
6th. That they paid to the cashier and attorney of the bank $5,500 fraudulently and collusively with an intention of injuring the stockholders; and that at divers other times, they improperly paid to other persons large sums of money, which added, to those paid to the attorney and cashier, amount to the sum of 36,000
Several of the stockholders, who refused to join in this petition, but who were necessarily made parties to the suit in order that a final settlement should be made between all, having an interest in the institution, have answered this petition, by declaring their ignorance of the matters therein alledged, and have required that to be done in the premises, which equity and justice may demand.
The defendants, Abat, Millaudon and Lanna, on whom fraudulent conduct is charged, and against whom such heavy responsibility is invoked, filed an answer in which they deny all the facts and allegations in the petition; more especially those which alledge fraud and collusion
On these issues, the parties went to trial in the court in the first instance. A great deal of verbal and documentary evidence was introduced. The judge was of opionion that, though a gross misapplication of the funds was established, and a consequent loss incurred by the stockholders, there was no proof adduced, which authorsed him to hold the defendants responsible. That the loss was imputable to the improper conduct of the president and cashier. He gave judgment against the plaintiffs, and they appealed.
This case is one of great importance to both plaintiffs and defendants from the large amount in dispute; and of special interest to the latter, as involving charges of the most serious nature against their honesty and truth. It is also of great importance to the public, who from the number of these monied institutions and their influence on the affairs of society, as well as on those whose fortunes are embarked in them,
1. The first charge is the permission, given to the president and cashier to discount paper without the intervention and assent of four directors, as required by the 10th section of the act of incorporation.
Before proceeding to state the evidence, by which this charge is supported, and the effect to which in our judgment it should be entitled, it will be well to ascertain, and settle, the degree of care and diligence which the law required in the defendants, while exercising the trust of bank directors, and what responsibility such a situation imposed on them.
On this point, though there is some, we do not conceive there is much difficulty. They were the agents or mandatories of the stockholders, and as such undertook the management of its affairs, according to the rules prescribed by their charter, and by the bye, laws made in pursuance thereof. By the provisions
The directors of banks from the nature of their undertaking, fall within the class last mentioned, while in the discharge of their or
It is said by a writer of great authority who
It is no doubt true, that if the business to be transacted, presupposes the exercises of a particular kind of knowledge, a person who would accept the office of mandatory, totally ignorant of the subject, could not excuse himself on the ground that he discharged his trust with fidelity and care. A lawyer, who would undertake to perform the duties of a physician; a physician, who would become an agent to carry on a suit in a court of justice—a bricklayer who would propose to repair a ship, or a landsman who would embark on board a vessel to navigate her, may be presented as examples to illustrate this distinction. Thus it was a provision of the Spanish law.—Gran culpa es aquel que se trabaja de facer cosa que non sabe, o que le non conviene.—Par. 7, ttt. 34, ley 5. But when the person who is appointed attorney in fact, has the qualifications necessary for the discharge of the ordinary duties of the trust imposed, we are of opinion that on the occurrence of difficulties, in the exercise of it, which offer it choice of measures, the adoption of an ordered opinion beration
The evidence on this head establishes the fact of a permission having been given, by the board of directors to the president and cashier to discount paper, which was at a longer date than 60 days, and it is also proved that two of the defendants Abat and Lanna, were present when this power was granted on the 13th August, 1817. But it is shewn that a few days after, in consequence of a protest very properly, and judiciously made by one of the directors, De la Croix, before a notary public of this city against the legality and correctness of the proceeding, the order granting the permission was repealed. This repeal took place on the 24th September of the same year, and was made on the motion of one of the defendants, Millaudon. Had it been proved that an injury was sustained by the bank in consequence of this improper indulgence,accorded to its officers, we should have been of opinion that all the directors present at the deliberation
II. The second accusation is in substance the same as the first; and is equally unsupported by proof. It alleges fraud in the defendants, by their assisting the president and cashier to discount paper, between the 3d day of November,
III. The third specification of misconduct is the acts of the defendants, in transferring to the bank a large number of shares, to the amount of $160,000 at par, when it was well known to them, and so the fact was, that the stock, at the time the transaction took place, was not of the value at which it was transferred.
This is the part of the case which has created the most difficulty in our minds, and the effect, which the evidence is entitled to, cannot be properly understood, without a full statement of all the matters connected with the transaction.
So far back as the year 1813, we find a reso
In the commencement of the year 1818, an attempt was made, by persons not stockholders in the bank, to take the portion of stock which up to that time had not been subscribed for.—The board of directors refused them permission to do so, but afterwards opened the books and took the whole stock in their own names for themselves and on behalf of those who were stockholders at the time. The capital being increased, we find on the 3d of April, a resolution of the board of directors was passed, two of the defendants, Lanna and Millaudon,
Between the date of this resolution, and the first day of October, 1819, some shares were purchased, among others, 45 from the defendant, Lanna, at par, on the 29th June, 1819; but on the 10th October, 1819, it appear from the book of dividends that $300,000 was then held by individuals, and that they were paid their dividends on this amount.
Such being the amount of stock at that time, we learn by a statement made by the cashier eight days after, and eight days before he committed suicide, that $75,000 had been purchased on account of the institution within the preceding week; and that he held the defendant, Lanna's notes for $25,000 to represent stock to the same amount, which sum added to $75,000 reduced the stock down to the amount it was directed to be brought by resolution of 3d April, namely: to $200,000.
It would greatly have aided the court, in its
We cannot, however, disguise our impressions of the extraordinary character of the transaction. The cashier, sometime before he disappeared, must have been aware of the impending ruin which awaited the bank and hi
The presumption of this stock not having been transferred, in consequence of a sale duly and bona fide made to the president, in pursuance of the resolution of the 3d April, 1819, is much heightened by the statement of the cashier, that there was in the vaults of the
From whom, and on what terms, the balance of the stock found in the vault, viz: $75,000, was obtained, the evidence leaves us in the dark. The books shew no regular transfer of it. A serious question therefore presents itself, whether the defendants were justified in reporting as correct, transactions of the cashier, by which this stock stood in the place of cash. It is in evidence before us, that the defendants, previous to their proceeding to an examination of the vault, were informed of the culpable transactions, which had long existed between the cashier and the president;
We are inclined, however, to think that if the certificates so found, were those of persons other than the defendants, that they should not be held responsible; on the ground, that on finding the certificates there, they supposed the whole transaction correct, and that they presumed these evidences of stock had come regularly into the hands of the cashier. In
The counsel for the plaintiffs has proposed a mode of ascertaining to whom the stock belonged, which he considered infallible. We
As the case is one of great magnitude and embraces a variety of matter, we have thought the ends of justice would be promoted by ex
IV. The fourth ground, on which responsibility is alleged is the report of the defendants when appointed to examine the officers of the bank, after the disappearance of the cashier; their reporting the cash to be correct, when there was a deficit of $49,000.
The report, made by the defendants, is found on an entry made on the book of deliberations, in the following words: “On Mr. Lanna's motion, resolved, that all the transactions of this bank, as well as the vault and promissory notes, acceptances and bills receivable in the port folio, having been found correct, according to the statement of the book keeper, the late Bailly Blanchard be discharged, and his bond considered as void.
The propriety of this report, as preliminary to a motion for the discharge of the cashier and his secureties, will be considered hereafter. In reference to this accusation, altho’ it did not
V. The next accusation is the note given to discharge the cashier’s bond, and of all the transactions which this litigation has developed, it appears to us the most unjustifiable. It exhibits gross and culpable negligence on the part of two of the defendants, Abat and Millaudon, and on the part of the other, Lanna, who was surety, an attempt to deceive the bank to his own advantage. The defendants formed the committee which had examined the vault.
There is no doubt the defendant Lanna is still responsible on the bond, and whether judgement cannot be given against him, on the present state of the pleadings is a question we reserve until the case be finally decided, as we do the responsibility of the defendants, Abat and Millaudon, for permitting such a determination to be taken without opposition on their part.
VI. As to the charge of voting sums to the officers of the bank, in addition to their salary, we do not see any thing which may not
But one of the payments, that of $1000 to the attorney of the bank, stands on different grounds. The resolution granting it, is of date the 25th March, 1820, and the following is a translation of the order, which was signed by two of the defendants, Abat and Millaudon: "Resolved, That in case a suit is brought by the stockholders, against the president and directors of the bank, that Mr. A. L. Duncan will be employed to defend the latter, and that $1000 be allowed him for his services.” When bank directors are in contest with the stockholders, and the fidelity and prudence of the agency of the former are at issue, we think each should pay their own counsel. There is just as much ground, for making the directors responsible for the attorney the stockholders would employ.
VII. The seventh accusation is completely disproved. It is shewn that all the stock subscribe for, has been paid.
It is therefore ordered, adjudged and decreed that the judgment of the district court be an