Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-09-04
JUDGE EWING ON BANK DIRECTORS

Judge Ewing's decision on the liability
of the Penn Bank directors is racy read
ing, but the raciness is not all there is TO it,
If that were all, the depositors who lost
their money in the bank, and who now
find that though the Judge considers the
directors were singularly "gullible" they
yet are not liable under latest United
States Supreme Court decisions, would
have small comfort Indeed, perhaps for
them the latter is their portion in any
point of view. But the pubhc-who may
be perplexed by the Judges statement
that ''at first impressions we would say
there was grave negligence, but tested by
the rules of law in Briggs CS SHEPPARD, q.
S. 141, it would seem otherwise
probably have to thank this decision for
ray of light showing the just and true
course to pursue in defining bank directors
duties
The substantial contention of Judge
Ewing and the meat of his decision is that
the directors of the Penn Bank did not eX-
ercise the care which a vigilant regard for
the important interests committed to them
should have dictated; yet that they exer-
cised all the care that was usual with bank
directors; and that as they were them
selves deceived they are protected from
action by recent decisions of Court
superior to that in which Judge Ewing sits.
This accords closely with the common un-
derstanding of the facts in the case. There
is little doubt in any mind that the case
was one of deception; that the directors
were not personally involved in the trans
actions by which the bank was robbed;
and yet that the interests of depositOrS re-
quIre such degree of vigilance as would
defeat such deception of directors by bank
officers.
If any other decision were rendered in
the Penn Bank case than this just given,
it is safe to say there would be wholesale
designations from bank directories in this
State. Whatever may be the just or right
standard of vigilance to which directors
should be held, it is the well-known busi-
ness fact that the men who now fill the
places of directors, and who serve without
compensation, have not the time in nine
cases out of ten to give searching per-
sonal investigation from day to day or
week to week into the details of the ac-
tual condition of their banks They can |
spare at the most from their own private |
business an hour to their daily meeting, |
and serve on committee for an occasional |
audit For the rest they are obliged to |
trust to the acting managers, the presi- |
dents, the cashiers and their subordinates. |
But if this be not enough, and Judge |
Ewing plainly expresses the growing con- |
viction of the public that it is not enough, |
what is the remedy? The DISPATCH |
thinks the remedy will ultimately have to
be found in the passage of the statutes
defining a responsibility on the part of |
directors of fiscal institutions equal to the
gravity of the interests confided to them |
By the imposition of such special vigilance
as would reasonably prevent frauds, the
exact measure of care would be estab-
Iished; and then directors who were not
to direct in fact as well as in
name would have notice and could step
lown and out if they did not like the
The national banks are better protected
han the State banks in this respect. They
nave special examiners; and the stock
holders are liable to depositors to an
lmount equal to their stock But as was
ately shown in Philadelphia and else
where, even this does not suffice Com
to directors for both State and
rational banks and defined and certain
will make the only reliable
Then the bondsmen would be
accepted only by those who are prepared
o give them such full measure of their
ime and scrutiny as can detect and pre-
-ent dishonest practices.
Under the present legal status the LA
,ility of directors is practically nothing
xcept for personal knowledge of or par
icipation in dishonesty; and until they
i've more time to their duties, and are
therefore, it is not reasonable
o expect that business men would accept
'laces as directors with any greater legal
liability attaching.
The subject is decidedly one of growing
interest. We commend Judge Ewing's
pinion to thoughtful readers.