Frederick v. McRae

Quinn, J. The State Bank of Silver Lake became insolvent and was taken in charge by the superintendent of banks in February, 1919. Its affairs were so handled that the creditors had received a dividend of 45 per cent on their claims when, in January, 1923, this action was brought by 193 depositors against' six directors, to recover $159,-238.22 for themselves and all other creditors. Subsequently the superintendent of banks was made a party defendant. In his answer he joined in demanding judgment against the defendants, for the reasons stated in the complaint. The other defendants interposed a demurrer to the complaint, alleging misjoinder of causes and that the complaint failed to state a cause of action. From an order overruling the demurrer defendants bring this appeal. The plaintiffs attempt to set forth two separate causes of action in their complaint. For the first cause they charge that, by aid of forgeries and other unlawful acts, the cashier of the bank obtained and appropriated to his own use something like $190,000 of the funds of the bank; that such forgeries and loss would never have occurred but for the official neglect and misconduct of the directors; that, when depositing their money, plaintiffs had no notice or knowledge of the insolvency of the bank; that in so depositing their money, they and each of them had full faith that the defendants were duly performing their trust in managing the affairs of the bank; that defendants, knowing the insolvent condition of the bank, kept the same open and accepted their deposits without in any way notifying plaintiffs of its condition; that as a consequence thereof plaintiffs lost the whole of their deposits except 45 per cent paid by the receiver. [368] For a second cause of action it is charged that defendants, as such directors, depleted the funds and assets of the bank to the extent of $11,000, by the payment of dividends to the stockholders while the bank was known by them to be insolvent, all in disregard of their duties as such directors. There can and should be no doubt but that the law places upon the directors of a bank the duty of looking after its affairs with diligence, to the end that its depositors may be protected against loss through insolvency. Baxter v. Coughlin, 70 Minn. 1, 72 N. W. 797; Q-. S. 1913, § 8919. The purpose of this statute is to protect depositors against loss and to punish officers of the bank for receiving deposits knowing the bank to be insolvent. The case falls within the rule that, where the statute imposes a duty upon a person,' and that person disobeys the mandate of such statute, he renders himself liable in damages to the party for whose protection it was enacted. Osborne v. McMasters, 40 Minn. 103, 41 N. W. 543, 12 Am. St. 698; Perry v. Tozer, 90 Minn. 438, 92 N. W. 137; Anderson v. Settergren, 100 Minn. 294, 111 N. W. 279; Schaar v. Conforth, 128 Minn. 460, 151 N. W. 275; Farrell v. G. O. Miller Co. 147 Minn. 52, 179 N. W. 566. The complaint contains statements of fact which, if true, would entitle a depositor to recover from a director. However, that question is not here for determination. The right of a depositor to recover depends upon whether he had knowledge of the insolvency. His right to recover would depend upon the question of deceit. If he showed himself entitled to recover against the director, the amount recovered would be his, not as a part of the assets of the bank, but as damages on account of the deceit.- It follows that the directors would not be liable individually for damages to a creditor for loss through insolvency in the absence of actionable deceit. The receiver or superintendent could maintain an action for the recovery of assets only. He could have no interest in the cause of action for deceit. The unlawful payment of dividends to the stockholders, if such there was, constituted a violation of the duty of every director participating therein, redress for which must be sought by the corpor [369] ation itself or by its representative for the benefit of the bank. A depositor could in no manner maintain such an action because the directors were in no way dealing with him. The element of deceit would be entirely wanting. Hence, a misjoinder of causes of action under the provisions of section 7780, G. S. 1913. The assets of this bank were in custodia legis. The receiver might, under the direction of thé court, bring suit to collect, compound or sell all claims belonging to the bank. G. S. 1913, §§ 6363, 6370 and 4627. This fact furnishes to the depositors a speedy and adequate remedy at law. Therefore a bill in equity will not be entertained for that purpose. The depositors might very properly have petitioned the court for an order requiring the receiver to bring an action to recover from the directors the dividends wrongfully paid out. As it clearly appears that there is a misjoinder of causes of action, the demurrer should have been sustained. Reversed.