70 P. 989 | Utah | 1902
This action was instituted on behalf of plaintiffs, as stockholders of defendant, the Citizens’ Bank of Ogden, and all stockholders and creditors and others similarly situated who might thereafter join, 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. The action was tried by the lower court without a jury, and a judgment of nonsuit granted, from which judgment plaintiffs appealed, and the judgment of nonsuit as to the defendants Maguire, Beeman, Perkins, Armstrong, and the bank was affirmed; but said judgment was reversed as to defendants Brough, Spencer, Murphy, Kuhn, Wells, Schramm, and Corey. Warren v. Robison, 19 Utah 289, 57 Pac. 287, 75 Am. St. Rep. 734. Pending trial from which this appeal is taken, the defendant Schramm died, and his executors were substituted as parties defendants. The plaintiffs R. J. Hill and John Brennan also died before the date of the second trial. Upon the second trial a judgment was rendered by the district court against all the defendants then before it, holding them, liable to the plaintiffs in certain specified amounts. Plaintiffs appeal to this court from the judgment, the defendant Brough appeals, and the defendants Spencer, Murphy, and Kuhn also appeal. The appeal in each instance is taken solely upon th9 judgment roll.
The plaintiffs, appellants, assign in their petition of error eight different errors, but they may all be resolved into one, viz., that the court erred in awarding judgment on the findings in favor of the plaintiffs and against the defendants for any less sum than $20,050, with interest thereon from the twenty-sixth day of December, 1893. The court found in its findings of fact that plaintiffs are the owners of 200 1-2 shares of the capital stock of said defendant, the
Said appellants further contend that the trial court should have held, upon the findings of fact, the defendants Spencer, Murphy, and Kuhn liable upon the so-called Cache Valley Land & Canal Company loan. Said finding is as follows:
“No. 23. The court further finds that the transaction mentioned in the twenty-first and twenty-second paragraphs of said amended complaint, and therein referred to as the Cache Valley Canal Company transaction, was a loan made to said canal company by the defendant Theodore Robison (who was then and there acting vice-president and general manager of said bank) surreptitiously and without the knowledge or consent or permission of either the president or any director of said bank, and that said Robison purposely concealed said transaction for some time thereafter from the attention of the president and directors of said bank, without fault or neglect of duty on their part; that at the time said Robison made said transaction, and for a long time thereafter, the defendant Kuhn was absent from the State of Utah, and was at Green River, in the State of Wyoming, there engaged as a party to and as a witness in an important action then and there pending in the district court of said State of*211 Wyoming and that said Spencer was also at and during said time necessarily absent from the said State of Utah, and in the State of Oregon, there attending to important business interests in which he was interested; and that defendant Murphy was at and during said period of time con-finded to his residence by reason of severe personal illness, and was thereby unable to go to said bank or to attend to his duties therein; that when, by due diligence, the president and the directors of said bank discovered and learned of and concerning the said canal company transaction, they made all reasonable efforts to collect for said bank the sum of money involved in said transaction, but were unable to do so; and the court further finds that said bank did not in this transaction sustain any loss or injury which was occasioned by any neglect of duty of either of the defendant directors before the court upon this trial.”
It clearly appears from the above finding that said defendants Spencer, Murphy, and Kuhn were not guilty of any neglect of duty in the matter of said loan, but that,
The defendant C. M. Brough, respondent and cross,appellant, contends: (1) That the findings of fact respecting the transaction of the Cache Valley Land & Canal Company loan are insufficient to support the conclusions of law and judgment made and entered against him; (2) that the findings of fact show such knowledge of the character of the employment of the defendant Brough, and his reliance upon his contract, and the knowledge of plaintiffs of the course and manner of business of said Citizens’ Bank, as to estop plaintiffs to assert any claim against him; (3) that plaintiffs are barred as- to him by the statute of limitations. The
“(37) The defendant C. M. Brough was employed in said bank, under the title of cashier, from the latter end of January, 1892, until the twenty-first day of December, 1893.
“(38) That the terms of his employment (except the amount of.salary) and the duties required of him are expressed by a certain letter written by him to' the board of directors, and accepted by them as the basis of his employment, which said letter is in the words and figures as follows, to-wit: ‘Ogden, Utah, November 15, 1891. Citizens Bank Directors, Theodore Eobison, Manager, City. Gentlemen: Eeplying to yours of lí-9-91, I beg to say, there is no inducement in your offer for me to leave the Utah National Bank for same salary, and perhaps greater responsibilities. If you will make your offer $200 per month, with the understanding that I shall not be charged with the re-sponsibilty of making loans, or selecting securities (because you have a manager), I shall come to you between January and February, as I want to take a rest. Eespectfully, etc., C. M. Brough.’
“(39) That the said O. M. Brough, acting in good faith, never, at any time during the course of his employment in said bank, assumed to, or believed it to be his duty under his said contract to make loans, pass upon securities, or to enforce collections, or in any manner advise or to assist in the management of the affairs of the said bank, but, in fact and in truth, only performed those duties which appertain*213 to tbe paying and receiving teller of a bank as usually pei’-formed by said officer; that, is to say, receive deposits and payments of money due upon notes and other bills, and to pay out moneys on checks and drafts, and to keep such books of the bank as is usual and customary in banks, which said duties so performed by him were the samé as those imposed upon and performed by his predecessors in said office.
“(40) That the committee provided to serve, by the by-laws of the said bank, consisting of three stockholders, two directors, cashier, and manager, to pass upon the loans and discounts, and the other matters and things in said bylaws provided, was in fact never appointed, and in lieu of •said committee there was appointed, for the purposes aforesaid, and to perform said duties, a committee called the ‘Executive Committee,’ consisting of three members of the board of directors, which said committee performed and were required to perform the said duties during the entire life of said bank.
“(41) That the plaintiffs in this action, and each of them, and all the stockholders in said bank, knew, or had full means of knowing, that- the above first-named committee was never appointed, and that the duties devolving upon it bv the by-laws were being performed by the last -named ■committee, and that the said defendant C. M. Brough was performing no duties in respect to the management of the -said bank, but was performing only those duties as above set out.
“(42) That the plaintiffs John J. Cortez, E. T. Sanford, Richard Hill, R. J. Hill, Albert Sadd, M. J. Hogan, and John Atkinson were all borrowers at said bank, and before the employment of the said defendant Brough therein, and knew that the manager thereof was its active executive officer, and that the cashier performed no duties in respect to loans made by the said bank.
“(43) That the said defendant C. M. Brough, at the time of his said employment and prior thereto, was advised*214 of all tbe matters and things as herein found in the foregoing findings, and relied thereon, and also relied upon his contract hereinbefore set out, in his acceptance of employment in said bank, and acted thereon in good faith, and in the discharge of duties which he performed while in said employment.”
“(45) That the Cache Valley Land & Canal Cotnpany was a corporation organized for the purpose of constructing a canal system in the State of Idaho, and was an enterprise speculative in character, and dependent upon the ability of its promoters to bond the same to be carried to' successful issue; that, at the time of the loan made to it as herein stated, negotiations were in progress for bonding the property and franchises of said company for a large sum of money; that the said Theodore -Robison was president of said Canal Company, and the defendant C. M. Brough was a stockholder and officer thereof, viz., treasurer; that on the seventeenth day of February, 1893, as in finding No. 23 stated, the said Robison made a loan to said Canal Company in the sum of $10,000, in the manner following, viz.: On said day he caused to be executed by said company a note in favor of the said Citizens’ Bank, and indorsed the same himself, and secured the same to be indorsed by one R. H„ Whipple and Corey Bros. & Co., and forwarded the said note to the Continental National Bank of Chicago for discount; that on the twenty-fourth day of said month he was-advised by said Chicago bank that said note had been discounted, and thereupon informed said Brough that said loan had been made, and instructed him, the said Brough, to enter said sum so loaned to the credit of said company in the books of the bank; that said Brough had no knowledge of' the making of said loan until said information and instructions were given, and the same was made without his advice or knowledge; that, pursuant to- said instructions, said Brough, (in violation of his duties to said bank) entered the said sum to the credit of said Canal Company, and (in violation of*215 bis trust as an officer of tbe bank) paid the same out in due course, upon the cheeks of said company, and the amount so loaned was wholly lost to said Citizens’ Bank; (and upon the foregoing facts, the court finds that in entering the said sum to the credit of said company, and paying the same out upon the cheeks of said company, the defendant C. M. Brough, well knowing the financially unsound, uncertain, and speculative character of said company, was negligent in the discharge of his duties).”
“(21) That said Corey Bros. & Co., when the said loans were so made and renewed as aforesaid, was solvent and financially good for said sums so loaned, and was so considered by the business men of Ogden City. That this money was so borrowed by said Corey and his firm without giving any security therefor to said bank; and the court further finds that, in the permitting of the said loans to be made, all of the then acting officers of said bank, except the defendant Brough, in violation of the statutes of Utah, permitted said loans to be made.”
Ending No. 45 is the basis upon which the trial court held defendant Brough liable and entered judgment against him. Erom said finding it appears that defendant Robison made the said Cache Valley Land & Canal Company loan without the knowledge or consent of defendant Brough; that it was made to the company, its note taken indorsed by Robison, Corey Bros. & Co., and R. LC. Whipple; that defendant Brough, under the instructions of defendant Robison, entered the amount so borrowed to the credit of the company in the books of the bank, and paid it out in due course. The district court finds that the acts of Brough, in entering
Erom an examination of the findings of fact heretofore quoted it will be observed that, under the terms of his employment, the defendant Brough was not charged with
.Defendant Brough also relies upon the statute of limitations as a defense to said action, but a consideration of that- question is deemed -unnecessary.
Cross-appellants, Spencer, Murphy, and Kuhn, contend: first, that the lower court- erred in its conclusions wherein it awarded damages against said defendants in favor of plaintiff Nettie Stevens; second, the court erred in its conclusion of law in holding as matter of law that the representatives of R. J. Hill and John Brennan, deceased, should recover judgment, because there was no pleading filed in the cause by either of their representatives. Said appellants contend that the trial court erred in awarding damages against
The second error 'alleged is that the representatives of plaintiffs Hill and Brennan, after an order of substitution was made, failed to file any pleading, which it is contended
Upon the question of the necessity of filing a new pleading in cases of substitution, we quote approvingly from the Encyclopaedia of Pleading and Practice (volume 20, pp.
The question as to whether or not the shares of stock
It is ordered and adjudged that tbe judgment of tbe court below be, and tbe same is, hereby affirmed, except a3 to tbe appellant Cbas. M. Brougb, and as to bim, tbe same is reversed, and, that be recover bis costs in this bebalf expended and that tbe original appellants and cross-appellants, except tbe said Brougb, pay tbe costs of their respective appeals. It is further ordered that tbe case be remanded with directions to tbe court below' to modify tbe judgment in accordance herewith.