121 Ark. 408 | Ark. | 1915
This appeal involves several consolidated actions instituted in the chancery court of Benton Gounty against defendants, Zimmerman and others, directors of a defunct banking corporation doing business at Biloam Springs, to recover on account of liability alleged to have been incurred by reason of their neglect of duty in the management of the affairs of said bank. The bank was declared to be insolvent in the summer of 1910, and a receiver was appointed, and the uncontradicted evidence in this case shows that it had been insolvent for three or four years, at least, prior to the appointment of a receiver. The evidence is sufficient to warrant .a finding that there was gross mismanagement of the affairs and business of the bank, causing considerable loss to the depositors and stockholders. These actions were instituted shortly after the appointment of a receiver, and at the trial of the cause before the chancellor there was a decree ih favor of the plaintiffs for the recovery of a large sum of money against all of the directors save one, and those against whom the decree was rendered appeal to this court. The plaintiffs -appeal from the decree exonerating the other -director, Murphy, and also from that part of the decree which held that the directors were not liable- for a deposit of $20,000 made by the Western & Southern Fire Insurance Company, one of the plaintiffs.
We are of the opinion that 'according to the clear preponderance of the testimony, appellant Zimmerman did not serve .as a director after the meeting of stockholders ón April 15,1906, and that he is not liable in any of these actions. The ¡minutes of the meeting of stockholders, as recorded on the books of the corporation, were introduced in evidence, and they recite that Zimmerman was elected at each meeting of the stockholders up to and including the year 1909. This is about all the evidence that was adduced tending to show that he was a director. Mr. Covey, the receiver, testified as to conversations which he had with Zimmerman after his own appointment as receiver, and those conversations merely show that he apprised Zimmerman of the fact that the minutes showed that he' was a director, and that Zimmerman requested him to look into the matter and write to him further on the subject. The testimony of Mr. Covey is hardly sufficient to show an admission on the part of Zimmerman that he was in fact a 'director in the corporation.
Turning to the testimony adduced by appellant, it shows very clearly that Zimmerman Avas not a director. In fact, there is no substantial dispute on that point. Zimmerman shows that he moved to Texas in April, 1906, and came back to Silo am Springs only occasionally to visit his family. In March, 1906, he informed the president of the bank, Mr. Morris, that he Avould not be able to serve as director, and proposed to resign. Morris told him that it would be inconvenient to call a meeting for the purpose of electing a successor, but promised that he would not be re-elected at the meeting in April. Zimmerman testified that he was not present at the April meeting, and never received any information until after the appointment of a receiver that he had been re-elected as a directin' or that the minutes recited that fact. Morris corroborated Zimmerman and testified concerning his conversation with the latter in March, 1906, and he stated that Zimmerman was not present at the April meeting. Lafollette, the assistant cashier, testified to the ^same effect.
The ease of Van Amburgh v. Baker, 81 N. Y. 46, is directly in point. That was a suit against the directors or trustees on account of their failure to file an annual report under a statute similar to the statutes of this State. Some of the directors sought to he charged had,inadvance of an annual meeting, indicated their unwillingness to serve for .another term, and the court, in holding that they were not liable, said: “Here the defendants not only ceased to act as trustees, but before the expiration of the/ year for which they were elected, they made a distinct avowal that they would not act as directors afterFebruary 25,1875. To hold the defendants liable, under such circumstances, for not making the report in January, 1876, would be both against reason and authority.” In that case the directors were not re-elected, 'but liability was sought to be established by reason of the fact that it was their duty to hold over .and to continue to /discharge the duties of the office until their successors were elected. Disposing of that contention, the court /said: “Unless they (the .directors) chose to act, their offices became vacant at the end of the year. It was not necessary for them to resign at the end of the year, to produce a vacancy. The vacancy would come from the termination of their terms of office.”
It .appears from the evidence that Zimmerman, while in Texas, assisted in the purchase of a large farm for the bank in that State but the service was performed at the request of the president and not as one of the directors.
We are of the opinion, therefore, that there is no liability on the part of Zimmerman established, for the reason, as above indicated, that he had completely severed Ms official /connection with the corporation at the meeting in April, 1906, and was not responsible for any mismanagement of the .affairs of the corporation after that time.
The decree against Zimmerman is reversed, and each of the causes is as to him dismissed, hut in all other respects the decree of the chancellor is affirmed.