Tanana Trading Co. v. North American Trading & Transportation Co.

220 F. 783 | 9th Cir. | 1915

GILBERT, Circuit Judge

(after stating the facts as above).

The court below sustained the defendant’s motion for an. instructed verdict on two grounds: First, that the plaintiff was estopped from bringing the action by its acts and conduct after it had discovered the nature of the transactions between Bain and Isom; and, second, that by releasing Bain and Struthers the plaintiff released the defendant. We do not deem it necessary to discuss the first ground on which the motion was granted, as, in our opinion, the second ground was sufficient to support the ruling of the court. There was a consideration for the release of Bain and Struthers. They had brought a suit against the corporation and the other directors to declare invalid and to enjoin the issuance of the 325 shares of stock to Livingston. In that suit they had obtained an injunction. What it may have been worth in money to the corporation or to the other stockholders to obtain a dismissal of that suit in view of its interference with corporate action and its embarrassment to the other directors and the officers who ostensibly controlled the action of the corporation, does not appear; but we may assume that the consideration was equivalent to full satisfaction for all the wrong done by the acts of those two directors. We have this situation, then: Here were these other directors, who were also stockholders of the corporation, who had made a settlement with the two officers whom they charged with conspiracy to defraud them, and to whose acts all the loss which had been sustained by reason of the sale to the defendant was attributable, accepting full satisfaction from them, and restoring them to their confidential relations to the corporation and to the other stockholders, restoring Bain, the principal actor in the alleged fraudulent transactions to the office of president, and adding to that office the office of treasurer, and intrusting to him the winding up of the corporation and the collection and distribution of its assets, and yet it is claimed that the corporation could, after doing all these things, go on and prosecute its demands against the defendant on account of its participation in the alleged fraud.

In cases of joint torts, the injured person may sue one, or any number less than all, of the joint tort-feasors, or may sue all; and, where there is but one injury, there can be but one satisfaction. If the injured person executes a release to one of the joint tort-feasors, it operates to bar an action against the others, for the reason that the cause of action is satisfied and no longer exists. The law applicable to the case is stated in a well-considered opinion by Judge McClain in Farmers’ Sav. Bank v. Aldrich, 153 Iowa, 144, 133 N.W. 383, where it is said:

“The weight of authority in this country seems to be unquestionably in support of the rule that an adjustment with one wrongdoer, and his release from all further liability, discharges all the joint wrongdoers, even though there is a reserved intention, either expressed or implied, to look to the other wrongdoers for further damages or compensation.”

See, also, The St. Cuthbert (D.C.) 157 F. 799; Gore v. Henrotin, 165 Ill.App. 222; Seither v. Philad. Traction Co., 125 Pa. 397, 17 A. 338, 4 L.R.A. 54, 11 Am.St.Rep. 905; Rogers v. Cox, 66 N.J.Law, 432, 50 A. 143; Abb v. Northern Pacific Ry. Co., 28 Wash. 428, 68 P. 954, 58 L.R.A. 293, 92 Am.St.Rep. 864; McBride v. Scott, 132 Mich. 176, 93 N.W. 243, 61 L.R.A. 445, 102 Am.St.Rep. 416, 1 Ann.Cas. 61; Wallner v. Chicago Traction Co., 245 Ill. 148, 91 N.E. 1053; Sircey v. Rees’ Sons, 155 N.C. 296, 71 S.E. 310; L. & N. R. R. Co. v. Allen, 67 Fla. 257, 65 So. 8; Casey v. Auburn Tel. Co., 155 App.Div. 66, 139 N.Y.S. 579.

The plaintiff relies on Gilbert v. Finch, 173 N.Y. 455, 66 N.E. 133, 61 L.R.A. 807, 93 Am.St.Rep. 623. That was a case in which certain directors of a corporation had diverted funds thereof. It was held that an instrument purporting to be a release by a receiver of the corporation to persons who had conspired with the defaulting directors, executed upon a compromise by which the receiver obtained a portion of the funds demanded, but providing in terms that the execution of the release should not affect any cause of action of the receiver against any person not named therein, did not, under the law of New York, relieve the directors of the company from liability when sued by the receiver to recover the balance of the diverted moneys. It was held, further, that the fact that prior to the appointment of the receiver mutual releases had been exchanged between the insurance company and one of the directors would not relieve the other directors from liability, and that the board of directors could not waste the funds of the corporation and then relieve themselves from liability by a release granted by themselves to a codirector.

That case differs in its facts from the case at bar. The release given by the receiver in that case contained the express reservation of the right to recover the remainder of the money. In the present case we have an absolute release, containing no reservations, made by all the other directors, who represented all the stock, and purporting to be made by the corporation itself, and, although it was not signed by the corporation, it was signed by all the other directors and stockholders, Livingston, Bishoprick, Blair, Cameron, and Dwyer. The action of all the directors in such a case should be taken to be the action of the corporation itself. Especially should this be held in the case of a corporation conducted as this was, as a joint venture of the stockholders and without regular meetings of the directors. A corporation will not be dealt with strictly as a legal entity in a case where the notion of legal entity is relied upon to justify wrong, “contrary to the real truth and substance of things.” Linn & Lane Timber Co. v. United States, 196 F. 593, 116 C.C.A. 267; McCaskill v. United States, 216 U.S. 504, 30 S.Ct. 386, 54 L.Ed. 590; In re Rieger (D.C.) 157 F. 609; United States v. Milwaukee Refrigerator Transit Co. (C.C.) 142 F. 247; Exploration Mercantile Co. v. Pacific H. & S. Co., 177 F. 825, 829, 101 C.C.A. 39; Smith v. Moore, 199 F. 689, 118 C.C.A. 127.

The judgment is affirmed.

On Cross-Appeal.

In this case there was a cross-appeal hy the North American Transportation & Trading Company from the judgment of the court below, wherein that court affirmed the decision of the clerk of the court below in taxing costs in favor of said appellant upon objections made to such cost bill by the plaintiff in said action. The transcript contains no statement of evidence in regard to the costs, the allowance of which was based on the facts in the case, and not on questions of law. It follows that there is before this court nothing upon which the court is authorized to act.

The judgment of the court below upon the cost bill is affirmed.