Stuart v. Robertson

Opinion by LOG-SDON, 0.

The only question presented for determination in this proceeding is whether the trial court erred in sustaining the demurrer of defendants to the petitions ,of plaintiffs.

The contention of defendants upon the demurrers. and in this court, was and is that plaintiffs’ right of action and form of remedy was in the 'nature of a bill in equity, brought promptly upon discovery of insolvency and loss; that in such action the receiver should have been made a party, and that the recovery should be for the benefit of all the stockholders, and; its proceeds distributed as an asset of the insolvent bank.

Plaintiffs cite and rely upon the provisions of Comp. Stat. 1921, sec. 178, and on the cases of West v. Madansky, 80 Okla. 161 . 194 Pac. 439 ; Owens v. Purdy et al., 90 Okla. 256 , 217 Pac. 425 ; Bynum v. Strain, 95 Okla. 45 , 218 Pac. 883 , and Security National Bank v. Geek, 96 Okla. 89 , 220 Pac. 373 , which make application of that section. The section relied on reads:

“The distinction between actions at law and suits in equity, and the forms of all such actions and suits, heretofore existing, are absolished; and in their place there shall be, hereafter, but one form of action, which shall be called a civil action.”

It is nor considered that this language creates any new rights or imposes any new liabilities. It, together with section 263, Id., merely abolishes the distinction, often •vague and shadowy, as to the form of the action, the substance of (he pleadings, and the separate identity of the forum in which the issues shall be tried. (See cases cited, Bupra.)

Plaintiffs concede the correctness of the contentions of defendants, and the correctness of the court’s ruling' on the demurrers, if this action had been brought by them as stockholders under the provisions of Rev. St. U. S.. sec. 5239. Plaintiffs insist, however, that their action is not thus brought. Their contention is thus epitomized in their brief:

“Plaintiffs are neither for nor against the corporation, the defunct First National Bank. Plaintiffs are not seeking to redress wrongs done to the' corporation. Neither are they suing the corporation. They are suing private individuals for wrongs done to plaintiffs by defendants in conspiracy.”.

It is difficult to apprehend ihe legal differentiation thus sought to be made. The wrongs complained of and the: damage alleged to have resulted grew out of the legal relations of the parties to each other — legal relations voluntarily assumed or eominued. The entire detriment accrued during the subsistence of these relations, though it was not discovered until those relations ceased through insolvency of the bank. It was not as individuals that defendants did the alleged wrongful acts, but as officers and directors. It was not as individuals that plaintiffs suffered detriment and damage, but as stockholders in common with others similarly situated. No fraud or deceit was practiced on plaintiffs, nor was any illegal aec performed to their detriment, which was not common to all persons similarly situated in their legal relations to defendants.

Under such circumstances It is not readily discernible how loss of their stock by plaintiffs through failure or inability to pay the double assessment, or secondary liability, as it is sometimes called, can create and bring- about a different legal relation between them and the defendants than existed prior to the bank’s insolvency. Plaintiffs have called the attention of this court to no authority sustaining this theory of a new legal relation arising by reason of the facts here shown. The authorities appear to he uniform and harmonious to the contrary: 7 C. J. 571, par. 183; Bolles’ Law of Modern Banking, vol. 1, p. 299; Howe v. Barney et al., 45 Fed. 668 ; Gerner v. Thompson, 74 Fed. 125 ; Horner v. Henning, 93 U. S. 228 ; City Nat. Bank of Mangum v. Crow et al., 27 Okla. 107 . 111 Pac. 210 ; Starr et al. v. Heald, 28 Okla. 792 , 116 Pac. 188 ; Checotah Hardware Co. et al. v. Hensley, 42 Okla. 260 . 141 Pac. 422 .

In Howe v. Barney et al., supra, the court stated the uniform rule thus:

“A stockholder in an insolvent Na'ional Bank, for which a receiver has been appointed, cannot sue its directors to make them personally liable for the mismanagement of the bank, as the right of action is in the receiver, and not in the individual stockholder.”

And in Bailey v. Mosher et al., 63 Fed. 488 . it is said:

“The law will not allow one creditor to appropriate the whole liability of the directors to his own benefit. It is well settled that an injury done to the stock and capital of corporation by the negligence or misfeasance of its officers and directors is an injury done to the whole body' of stockholders in common, and not an injury for which a single1 stockholder can sue. Smith v. Hurd. 12 Metc. (Mass.) 371; Howe v. Barney. 45 Fed. 668 .”

There is a well recognized rule which reu- *262 ders directors and officers of banks personally responsible to individuals who have been misled to their prejudice by false representations made to, or deceit practiced on, them concerning the condition of the bank, Gut this rule has no application to such a case as is here presented. Bolles’ Modern Law of Banking, yol. 1, p. 374-6, and authorities cited in notes.

In this case it appears that about 16 months elapsed between the closing of the bank and the institution of this action, during which period of- time plaintiffs ceased, to be stockholders through forfeiture for nonpayment of the assessment. No reason is shown why the action was not sooner commenced, nor why plaintiffs delayed until their rights as stockholders had been declared forfeited before seeking-1 relief. The case must be determined upon the record here presented and in conformity to established rules and recognized legal, principles. In such situation no’ authority has been found justifying a vacation of the trial court’s ruling on the demurrers, and its judgment based thereon .is in all things affirmed.

By the Court: It is so ordered.