Warren v. Robinson, 21 Utah 429

21 Utah 429 | Utah | 1900

Bartch, C. J.

This action was originally brought by the plaintiffs, as stockholders of defendant Citizens’ Bank, in behalf of themselves and all other stockholders, creditors, and others similarly situated, against the defendants for an accounting, and for damages alleged to have been occasioned by reason of negligence, in the management of the bank, by its directors and officers. At the trial, after the plaintiffs rested, the court, on motion of defendants, granted a non-suit. Thereupon the plaintiffs appealed. This court on appeal affirmed the judgment of non-suit, as to all of the defendants except Brough, Spencer, Murphy, Kuhn, Wells, Schramm, and Corey, and as to them held that a prima facie case had been made out, and ordered the lower court to proceed in accordance with the opinion of the appellate court. After the remittitur was sent down, defendant Corey filed an amended answer alleging, in substance, that the cause of action stated against him in the complaint was merged in .a judgment rendered in November, 1894, and that he had been discharged from the debts set forth in plaintiff’s complaint in bankruptcy proceedings. To this plea the plaintiffs filed a demurrer, which was overruled. They then filed a reply to the answer, and also filed a supplemental complaint alleging the death of defendant S. S. Schramm, who had died since the former trial, and the presentation of their claim to his executors, and the rejection thereof; by them. Thereafter the case was again called for trial, but before proceeding, the court, on motion of counsel for defendants, dismissed the action as to the executors of the estate of S. S. Schramm, upon the ground that the cause of action stated in the complaint did not survive against such executors. The trial was then proceeded with against, the other defendants, who had been held jprima facie liable by the appellate court, and counsel for the plaintiffs submitted the records of the former trial, as follows: “May it please the court, all of the records in this case are before the court. We submit them as the records of this court, being all the evidence extended by the stenographer from his notes in the original hearing, upon which the Supreme Court has decided that the plaintiffs have made a 2}rima /«cié case.” With this the plaintiffs rested their case, and thereupon counsel for the defendants moved for a judgment of non-suit, on the ground that the plaintiffs had offered no evidence to sustain the allegations of the complaint. The court held that the cause must be tried de novo, and, upon counsel for plaintiffs declining to place their witnesses upon the Btand, and again offer their testimony by examination as upon the original trial, sustained the motion for non-suit, and dismissed the action. The plaintiffs then prosecuted this appeal.

The main question presented is whether the court erred in construing the opinion and remittitur of the Supreme Court as requiring a new trial, and consequently as requiring the plaintiffs to again introduce all their evidence in the same manner as at the first trial of the canse. The appellants insist that the mandate of this court did not require a reproduction of all their evidence verbally as on the former trial; that the evidence formerly introduced had been held to have made out a prima facie case as to the defendants now being proceeded against; and that all the original evidence introduced upon the former trial, and upon which the Supreme Court had passed, being in the records submitted by them to the court, the same judge sitting to again hear the case, and they having rested their case upon that evidence, the court, under a proper construction of the remittitur, should have required the defendants to proceed with their defense the same as though no non-suit had been granted.

The respondents maintain that the court properly insisted upon a trial de now, and that the question concerning the proper construction of the remittitur from this court, can not be considered on this appeal for the reason, as they claim, that the remittitur was not presented to the court below, and is not incorporated in the bill of exceptions settled in this case. As to whether or not the remittitur was formally presented to the court below, we have no means of ascertaining; nor do we regard such presentation, or lack of it, material to this decision. From the fact that the court set aside its former judgment and proceeded to again try the cause, it is manifest that it considered the remittitur, however it may have come before it. Nor are we prevented from ascertaining and determining whether the court below proceeded in accordance with our mandate, because the remittitur is not contained in the bill of exceptions. The remittitur consists of a copy of the judgment entered in the records of this court, and, where there is a reversal, also of a copy of the opin-ión filed by us. The original in each case, therefore, remains in our own court, and it would indeed be an anomalous state of affairs if, under tlie circumstances of this case, we could not take notice of our own original records and files. But if there were any question about this, the motion to amend the transcript by adding thereto the remittitur, made and submitted under Eule 5 of this court, would, in justice, have to prevail, and that would cure the alleged defect. Therefore to determine the-question whether the court below properly interpreted the opinion and judgment of this court, we feel entirely free to resort to that opinion, a copy of which was attached to and formed a part of the remittitur, to ascertain the nature of our decision and what it required. That portion of it which is material here, reads' as follows: “We do not herein assume to determine the ultimate rights of the plaintiffs. Whether or not they will finally be able to recover for any of the transactions complained of, will perhaps depend largely upon the question whether or not they themselves have been guilty of such acts and conduct respecting these transactions and the management of the bank as will prevent a recovery by them. We simply hold that the plaintiffs have established a prima facie case against the defendants Brough, Spencer, Murphy, K/uhn, Wells, Schramm, and Corey; and as to them the judgment of the court must be set aside, costs to abide the result of the action. As to defendants Eobison, Maguire, Beeman, Perkins, and Armstrong, the judgment of non-suit is affirmed, with costs against the plaintiffs. The cause must, therefore, be remanded to the courts below with directions to proceed in accordance herewith. It is so ordered. ’ ’

Such, after reference to the rules of law which must govern the case and a review and discussion of the new evidence is the concluding paragraph. This contains a clear and express holding that tbe evidence of the plaintiffs “ established a prima facie case against the defendants Brough, Spencer, Murphy, Kuhn, Wells, Schramm, and Corey, ’ ’ and the order is that as to those defendants, the judgment of non-suit must be set aside, and the cause remanded. to the court below, with directions to proceed in accordance with the opinion.

It will be noticed that the case was not “reversed and remanded, ’ ’ but simply ‘ ‘ remanded ’ ’ with directions to ‘ ‘ proceed; ’ ’ that is, sent back to the court below to proceed, the same as if no judgment of non-suit had been entered, according to the rules of law announced in the opinion as governing the case. In other words, after the judgment of non-suit was set aside, the case stood as it did before that judgment had been entered, except that the defendants, as to whom the judgment was affirmed, were no longer interested parties. There is nothing in the opinion, nor in the judgment entered in the records of this court, nor in the remittitur, which required a trial de novo. Nor does the record on appeal show any good reason for the ordering of such a trial by the lower court. The case was tried before a court, sitting as a court of equity, without a jury. The same judge who presided at the former trial and heard the evidence and observed the witnesses, was again presiding. That same evidence was before him in record form, although, it must be confessed, very inar-tistically submitted, as appears from the abstract herein. The court of last resort had reviewed and discussed the evidence, and held it sufficient to establish a jjriona facie case as to the defendants who were still interested parties to the suit. There was no change of material issues, and it appears the plaintiffs had no other or different evidence to offer, and were willing to rest their case on that introduced at the previous trial. Nor is there anything to show that the defendants would bave been injured or tbeir rights jeopardized if the court, upon tbe plaintiffs having submitted their evidence in record form and rested, had proceeded with the trial from the point whore it was interrupted by the motion for non-suit. On the contrary, it is manifest that the testimony of the plaintiffs, being very voluminous, could not have been introduced by the reexamination of witnesses, without great expense to the litigants. Under these circumstances and without ah express direction in the mandate to do so, the ordering of a trial de novo, and the requiring of the evidence, which had already been held sufficient to establish a prima faeie case, to be again introduced by examination of the witnesses, was unnecessary and unauthorized. Where a judgment of non-suit, entered by a court of equity, is ordered to be set aside by the appellate court, and the cause is remanded with directions to the court below to proceed in accordance with the opinion, and neither the opinion nor the mandate requires a trial de novo to be granted, the effect is to place the case in the same position in. the court below as it was in at the time when the progress of the trial was interrupted by the motion for the non-suit, and the court may resume the trial and proceed therewith in the same manner as it would have done if no judgment of non-suit had been entered.

In Hawkins v. Cleveland C. C. & St. L. Ry. Co., 99 Fed. Rep., 322, as appears from the syllabus, it was held: “When a decree is reversed, and the mandate does not direct the entry of any particular decree, but only that further proceedings be had, not inconsistent with the opinion of the appellate court, the effect is to put the case in the same position in the court below as if no decree had ever been entered; and the court has the same authority to permit amendments of the pleadings to enlarge the issues, and admit further proofs, as it had before the entry of the decree.” Nelson v. Hubbard, 13 Ark., 253; Woolman v. Garringer, 2 Mont., 405; Commissioners v. Carey, 1 Ohio St., 463; West v. Brashear, 14 Pet., 5; Supervisors v. Kennicott, 94 U. S., 498; In re Sanford Fork & Tool Co., 160 U. S., 247; Ex parte Sibbald v. The United States, 12 Pet., 448.

And where an appeal is taken from a judgment of an inferior court entered under a mandate of the appellate court, the latter tribunal will construe its own mandate in connection with its opinion to determine whether the inferior court proceeded in accordance therewith. Gaines v. Rugg, 148 U. S., 228;. In re Sanford Fork & Tool Co., supra.

We are of the opinion that the court erred in ordering a trial de novo, under the circumstances of this case.

We are also of the opinion that the demurrer, to the amended answer of W. W. Corey was improperly overruled. This suit was brought against him for the misappropriation or misuse of a trust fund, and breach of duty, occasioned through neglect while he was acting in a fiduciary capacity. The facts set up in .the complaint, if established by competent proof, show a condition of at least constructive fraud. Breach of duty by a person acting in a fiduciary capacity is “constructive fraud.” Story, Eq. Jur., Secs. 258-9, 307-8, 311; Cooley on Torts, p. 607; Baker v. Humphrey, 101 U. S. 494, 502.

This case, as to Corey, therefore, falls within the exception contained in Section 17 of the Bankruptcy Act, 30 U. S. Stat. at Large, 550, which, so far as material here, reads: “A discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity. ’ ’

Corey having been charged in the complaint with a breach of duty by negligent management of the affairs of the bank, of which he was a director and officer, and consequent loss to the institution, his discharge in bankruptcy constituted no bar to this action, which had been previously brought against him, and therefore the demurrer ought to have been sustained. Likewise, although a judgment had previously been entered against him for a debt which he owed the bank, he was still liable for any breach of duty or negligent management of the affairs of the bank of which he may have been guilty while a director or officer of the institution, if such breach of duty resulted in injury to his trust.

So, we are of the opinion that this action survived against the executors of S. S. Schramm, he having been a defendant at the former trial, but having since died. He and others were directors of the bank and acted in a fiduciary capacity. The complaint charges that, while so acting, the deceased was negligent and inattentive to duty and that, in consequence thereof, loss resulted to the bank, that is, funds and property of the institution, through his carelessness and inattention to his duties were permitted to be wasted and lost. In such case the action survives, and may be maintained against the executors, under Section 3916, Rev. Stat.

It has been held likewise in California under a statute like ours. Fox v. Hale & Norcross, S. M. Co., 108 Cal., 478; Coleman v. Woodworth, 28 Cal., 567.

The judgment must be reversed with costs, and the cause remanded with directions to the court below to proceed in accordance with this and our former opinion herein.

It is so ordered.

Baskin, J., and Higgins, Dist. Judge, concur.