Knoop, Hanneman & Co. v. Blaffer

On Application for Rehearing.

Plaintiff's present an earnest argument in favor of their application, and on account of the great importance of the case, we will supplement the opinion complained of.

I.

They insist that we have misconstrued the banking law of the State and have limited their claim to the amount of the deposits as the measure of damages.

It was not the purpose or intention of the opinion to thus limit the operation or effect of the banking laws. We simply held that the liability of directors, under the state of facts presented, was one arising ex delicio and not ex quasi eoniraetu as contended.

The liability sought to be enforced in this instance happened to be for the debts of the bank, i. e., the plaintiffs’ deposits. We had no occasion to place any such restriction upon the liability of directors, in reference to damages or other obligations incurred by the corporation, as supposed.

II.

We are not disposed to recede from the views expressed in reference to quasi contracts.

Counsel insist that “it is not from the violation of the banking law that the quasi contract results;” but that it results “from the lawful act of accepting the directorship of the bank, and receiving the deposits. The liability itself flow's first from the quasi contract, and then from the violation of law.”

The manifest fault of this argument is that the directors of the bank are taken for the bank itself.

The opinion quotes from the statute itself the enumerated duties of the directors of banking corporations, and also the section of the Revised Statutes which defines the liability of the stockholders of corporations generally, for the purpose of making it plain that it was not one of the duties of directors to receive, or have the care of deposits of the bank. Por this reason they did not enter into any contractual relations in reference to funds deposited in the bank.

The illustrations given are not apposite, for the reason that tutors, executors, administrators and agents are entrusted with the funds, under specific provisions of the law ; and if they misappropriate them *31they are liable under those laws. The same is true of the negotiorum gestor. In each of those relations exists a trust to be performed.

But the directors of a bank are in no sense the trustees, agents or negotiorum gestores of the depositors of the bank, and incurred no contractual obligations, or relations under the banking law. By assenting to, or acquiescing in the loans and discounts made by the corporation, while in an insolvent situation, those directors violated the penal provisions of the statute, and subjected themselves to the payment of its debts and obligations. ”

III.

While it is true that the opinion does not m terms decide whether a contract did, or did not, arise from the statute itself, by the fact of the parties acting under it, and, therefore, accepting the stipulations of such statute, made by law, in favor of the creditors of the bank;” it does in effect, by holding that the liability of the directors, under the facts presented, arose ex delicto and not ex quasi contractu.

Counsel insist that “when parties act under a statute which creates specific rights, obligations and liabilities, the Statute itself becomes a contract between the parties, and their acting under it shows their implied acceptance of its stipulations.”

Applying this principle of law and precept of jurisprudence to the banking law under consideration, and we find, as stated in the preceding paragraph, that it imposed no duty upon tlio directors in reference to funds deposited with the corporation ; and by undertaking the discharge of their duties as such, which are exclusively administrative in their character, they incurred no contractual obligation toward the depositors. The penalty that the law imposes upon directors who impliedly assent to any violation of the law by the corporation operates as merely a safeguard for the protection of depositors, on the happening of a contingency that may arise necessitating its enforcement.

But that liability is not contractual. We fail to perceive any analogy between the case as stated and that suggested by counsel of a municipal corporation issuing bonds, in pursuance of an enabling law, and securing their payment by tax levies. In such case the law is considered as read into the contract, and it cannot thereafter be changed to the prejudice of the holders of such bonds, until same are fully paid. The tax levies are the trust of the creditor. The duty is specifically imposed upon the corpoiation, and their acts cannot be recalled to the prejudice of third persons.

*32iv.

Counsel complains that'no attention was given to the grounds on which he particularly relied as interrupting prescription urged by defendants, viz: the acknowledgment of the bank’s liability in the account of the liquidating commissioners, filed on the 9th of February, 1880, and upon which plaintiffs are placed as creditors.

As the opinion in effect declared, this court held in Lacombe vs. Milliken, 36 Ann. 369, that liability accrues, not in favor of the bank in liquidation, which is a debtor to its creditors, but in favor of those creditors, hence that suit did not have the effect of interrupting prescription, it being a suit by the commissioners of the bank, and they without any cause of action.

The correctness of this view the plaintiffs’ counsel inferentially admits.

Now, we submit — and so decide — that it follows, as a necessary corollary from that argument, that the account and tableau of distribution was but an acknowledgment, or admission of the debts of the bank, to and in favor of the plaintiffs and other creditors. The commissioners had no more authority to admit the liability of the directors on their account 'than they did to sue them for its recovery.

They take this incorrect premises from which to argue that, if the directors are liable ex delicto, they are liable in solido under R. C. (J. 2324, as wrong-doers, with the corporation.

But defendants are not proceeded against under that article, but explicitly and distinctly under the banking law, and for the enforcement of a particular liability thereunder, for the debts of the bank.

It is sufficient answer to say that the statute declares that directors “shall become individually liable for” the debts and obligations of the bank. The statute does not give such a liability the character or quality of solidarity, and we will not.

The case cited by counsel (Morgan vs. Metayer, 14 Ann. 612 ) only involves an ordinary contract of two debtors in solido, one of whom became insolvent, and acknowledges the debt on his bilan. We regard it as inapplicable.

In conclusion we have only to say that rye adhere to the conclusion first announced, and the rehearing is therefore denied.

Rehearing refused.