108 N.Y.S. 454 | N.Y. App. Div. | 1908
The-defendants are directors of the - Citizens’ National Bank organized under the National Bank Law and doing business in the village of Saratoga Springs, N. Y. Prior to March 1, 1904, the Comptroller of the Currency informed the directors of the bank by letter that certain specified assets, amounting to $194,107.02, must be regarded as doubtful, and that immediate steps should be taken for their collection or removal from the bank. Of such letter the defendants had knowledge. On April 8, 1904, pursuant to a call of the Comptroller, a report of the condition of the bank at the close of business on March 28, 1904, made in regular form, verified by the cashier of the bank, and attested to be correct by each of the defendants, was published as required by law.
' Plaintiff has recovered damages amounting to $4,800, and interest, on the ground of fraud on the part of the defendants in knowingly attesting and publishing a false report of the condition of. the bank, in reliance whereon plaintiff was deceived as to the value of the stock of the bank and purchased said thirty shares thereof to his injury.
In Yates v. Jones National Bank (206 U. S. 158) it was decided by the Supreme Court of the United States that the civil liability of national bank directors in respect to making and publishing official reports enjoined by statute is governed by such statute which affords within itself the exclusive rule for the recovery of damages occasioned by such reports. The court said: “ General consideration as to the spirit and intent of the national bank act (Easton v. Iowa, 188 U. S. 220; Davis v. Elmira Savings Bank, 161 U. S. 275) 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.” The report in question, which is under criticism, was not a voluntary statement of the defendants, but was exacted of them in the performance of their official duties by the mandate of the Federal statute. That statute declares the duties of the directors in publishing such reports, creates a liability for the violation of such duties, and establishes within itself the exclusive rule and standard for the enforcement of such liability. Section 5239 of the United States Revised Statutes .declares a civil liability against bank directors for the precise acts alleged in the complaint herein and under the authority of the Yates case a recovery may be had against the defendants at the instance of the plaintiff, but such recovery
It is urged' in objection to this judgment- that the case was tried and determined in accordance with common-law principles. Although the action cannot be maintained at common law, it so happens that the common-law requirements in tins State to sustain an action for fraud are the saíne as the statutory .requirements .for the maintenance-of this- action. ’ The complaint contains.all the allegations necessary for the maintenance' of the action under the bTational Bank Law; the findings of -the court are sufficient to sustain the complaint; the evidence is sufficient to sustain such findings ; and that a■ State court is a proper forum for the prosecution of the action seems to have been the opinion of the. court in the Yates case, above cited, and admits of no doubt. , The difficulty in that case was that there had been a recovery against the directors--without proof of scienter, which proof the. ..statute requires. Such proof has been supplied, in this case. A right decision will not be reversed merely because a wrong, reason has been .assigned therefor. There is no claim or pretense by defendants that - they have been prej udiced by the theory followed in the court below.
The case- both as to pleading and' proof meets the statutory requirements. That the report was false- and known to the defendants to be false they do not deny, nor do they attempt to explain their conduct. They did- not.intend to defraud any particular per- .. . . . a . " son, but they did intend to- deceive the public and to create a false' impression as to-the financial strength of the bank.. Plaintiff, relying on their false statement, has been in jured. Defendants are.'both legally and morally liable for the natural consequences of their wrongful act and should respond for such damages as plaintiff has sustained because thereof.
But has the plaintiff been damaged to the full extent of the pur-. chase price of the stock ? The trial court lias found- that such stock was valueless and has awarded damages equivalent to the purchase price. Such conclusion that the stock was valueless seems to-be based on the fact 'that the Comptroller notified the bank that its capital was ■ exhausted and required ,an assessment for its full ■
The judgment must, therefore, be reversed on the law and facts and a new trial granted, with costs to the appellant to abide the event, unless plaintiff stipulates to deduct therefrom $2,000 and interest, in which case the judgment as so reduced should be affirmed, without costs.
Judgment reversed on law and facts and new trial granted, with costs to appellant to- abide event, unless the plaintiff stipulates to deduct therefrom $2,000 and interest, in which case judgment as so reduced unanimously affirmed, without costs.
See U. S. R. S., § 5211,— [Rep.
See Taylor v. Thomas (55 Misc. Rep. 411).— [Rep.