Grunster v. Jessup

Opinion by Mr. Justice Fell, J., This action was brought by the assignee for the benefit of creditors of the Scranton City Bank on a bond conditioned for the faithful performance of the duties of its vice president. The principal and two of the sureties died before the trial, and the representatives of their estates have been substituted on the record as defendants. The witness whose competency was challenged as to matters which had occurred during the lives of the deceased parties was a stockholder in the bank at the time the assignment was made, and. as such was liable to the creditors in double the amount of the stock held by him. He was also a director, and with the other directors had entered into an agreement with the depositors to pay them in full and to take an assignment of their claims against the bank, [552] and claims amounting to $183,000 had been assigned to them. For the purpose of carrying out this agreement, the witness had joined with the other directors in borrowing a large amount of money on their joint notes, one of which for $9,000 was still unpaid. Notwithstanding the apparant incompetency of the witness because of his interest in the result of the trial, it was contended that he- was qualified to testify because the statute of limitations was a bar to any proceedings to enforce the liability of stockholders, under the special provisions of the bank’s charter, and because he had assigned his interest in the fund in the hands of the assignee for the benefit of creditors which he had acquired by the agreement mentioned for the purchase of depositors’ claims against the bank. It was held that the statute of limitations relieved the witness from liability as a stockholder, and that the assignment of his interest was not colorable, but that it did not carry the whole interest, as he was still liable on his agreement to pay the depositors in full, and on the note given for the money borrowed for the purchase of claims. In view of the recent decision in Darragh v. Stevenson, 183 Pa. 397, which was not brought to the attention of the court, a different conclusion might have been reached as to the effect of the assignment, even if it had carried the whole interest. It was made a few. days before the second trial, and evidently not in that good faith which the statute requires, but for the sole purpose of enabling the witness to sustain the action by his testimony. The decision, however, is based upon reasons which fully sustain it. The agreement to pay the depositors in full was binding. Admittedly they had not been paid in full, and the court with the witness before it found that the directors had not been released. Whatever the assignee for the benefit of creditors might recover in this action would go in direct relief of the pecuniary obligation of the witness. The judgment is affirmed.