(dissenting). In the case of Davis, State Bank Commissioner v. Moore, 130 Ark. 128, the court held that the duty devolved upon the Bank Commissioner in making the assessment of liability of individual stockholders, and that his finding as to the amounts necessary to be assessed was conclusive in an action to enforce that liability. In that case the court recognized that the statute was borrowed from the act of Congress regulating national banks. In construing the act of Congress the Supreme Court of the United States has said that the general purpose of the statute was to confer upon the creditors of the bank a right to resort to the individual liability of the shareholders to the extent, if necessary, of the whole amount of their stock therein.
Under the acts of Congress and the decisions of the Supreme Court of the United States cited in the majority opinion, the comptroller of the currency is constituted a quasi judicial tribunal to determine at what time and what amounts, not exceeding the full liability of the stockholders, it is necessary to collect for them to pay the debts of the bank. It is said that his decision, like the decision of the land department and of other quasi judicial tribunals, is open to avoidance by the court only in a direct attack upon it upon the grounds of error of law, fraud, or mistake.
The effect of the holding in the majority opinion is that the decision of the Bank Commissioner can not be reviewed for errors of law committed by him in making the assessment. Here is where I think the opinion is wrong and is contrary to the decisions of the Supreme Court of the United States on the question. In United States v. Knox, 102 U. S. 422, the court said:
“Although assessments made by the comptroller, under the circumstances of the first assessment in this case, and all other assessments, successive or otherwise, not exceeding the par value of all stock of the bank, are conclusive upon the stockholders, yet if he were to attempt to enforce one made, clearly and palpably, contrary to the views we have expressed, it can not be doubted that a court of equity, if its aid were invoked, would promptly restrain his injunction.”
Here clearly the Supreme Court of the United States recognizes that the decisions of the comptroller are open to avoidance by a court in a direct attack upon them in an error of law, fraud, or mistake. Such, too, I think, is the effect of the reasoning of the other cases cited in the majority opinion. Such construction has been placed upon them by Judge Sanborn in Deweese v. Smith, 106 Fed. Rep. 438, and by Michie on Banks and Banking, vol. 3, sec. 248 (2 C. B.), p. 839, and The National Bank Act annotated by Bolles (4 Ed.), sec. 57, p. 169. This makes it necessary to consider whether or not the Bank Commissioner committed an error of law in ordering the assessment.
A demurrer was sustained by the lower court to the answer of the defendants. Therefore this question must be tested by the allegations of the answer, for the demurrer admits the allegations to be true. According to the allegation of the answer, Foster was the president of the bank and one of the directors thereof. It is also alleged that the directors of the bank negligently failed and neglected to give attention to or to take any control in the management of the bank and its affairs, but allowed the cashier to recklessly pay overdrafts and dissipate the assets of the bank in making bad loans and that the course pursued by the cashier in this respect was known to the directors; that the cashier permitted the Dixie Broom Corporation to make overdrafts for the period of a year and a half, which finally amounted to the sum of $125,-068.37; that the president of the bank knew the conditions with respect to the overdrafts from time to time as they accumulated and failed to have them corrected; that, after the commissioner took possession of the bank, the president, realizing that he was liable to the amount of these on account of his negligent management of the affairs of the bank, paid all the creditors of the bank, and that the amount so paid by him was less than the amount of the overdrafts; that, after he had paid the debts of the bank and after the Bank Commissioner had taken charge of its assets as an insolvent bank, the Bank Commissioner allowed him to take a note from the bank in the sum of the amounts he had paid to the creditors, and that the assessment ordered by the Bank Commissioner was for the purpose of making the stockholders pay this note. The allegations of the answer bring the case within the principles of law decided in Bailey v. O’Neal, 92 Ark. 327. In that case the court held: “Where the directors of a bank knowingly permitted the cashier to pursue for a number of years a reckless course of dealing, the probable consequence of which would be the insolvency of the bank, they will be held liable to the creditors of the bank.” Again, in the case of Bank of Des Arc v. Moody, 110 Ark. 39, the court held:
“Where the cashier of a bank made a number of bad loans, and the directors were guilty of negligence in not managing the affairs of the bank and controlling the action of the cashier, the directors will be held liable, not only to the creditors who are unable to enforce their rights against the bank, but to the stockholders thereof, whose stock was rendered worthless on account of the losses sustained by the bank.”
Under the principles of law decided in these cases and under the allegations of the answer, the president of the bank was guilty of negligence in managing the affairs of the bank and was liable for the overdrafts. Hence he could not take the note of the bank payable to himself for the amount of the overdrafts paid by him, and the Bank Commissioner committed an error of law in holding that he could give the bank his note for that amount and in ordering an assessment upon the stockholders to pay it.
The defendant moved to transfer the ease to equity and to make the president of the bank a party thereto. This should have been done. It would have avoided circuity of action; and if the allegations of the answer are true, there was no liability upon the part of the stockholders and the lawsuit would have been ended. It .is perfectly manifest that if the president of the bank was liable to the creditors of the bank under the statute by reason of his negligently permitting the large overdraft of the Dixie Broom Company, he could not pay the creditors and then recover back from the stockholders the amount so paid.