Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1894-10-03
BANK DIRECTORS LIABILITY.
Decision by the Circuit Court Of Appeals
Involving This Question.

The opinion prepared by Judge Hughes
handed down yesterday in the United
States Circuit Court of Appeals. in the
case Of W. s. Oh. Robinson. receiver or
the First National Bank Of Wilmington.
n. C.. appellant. VS.. y. +. Hall. ct ais,
appcllees. is Of interest TO the directors
OF national banks.
This was suit by receiver or
national bank against its five directors
10 subject them personally 10 losses sus-
tanned by the bank as the result OF gross
negligence in office on their part
The case was tried below on demurrer
10 the bill Of complaint and amendments.
The demurrer was sustained, and the
question was whether the defendant al
rectors were liable on the facts set out
In the bill and amendments.
THE DUTY OF DIRECTORS.
4 general idea Of the issues involved ana
the conduct and responsibilities or the
directors may be gathered from the loi-
lowing excerpt from the opinion:
"Thc frauds and irregularities which re-
suited in the ruin Of the bank went on
through n period Of more than thIee
years, during all Of which time the de-
PENDANT directors were in oiilcr, Many
OF these irregularities were not thlhsS o.
secret occurrence and sudden develop
mcnt They were such rs must nave
been known 10 the defendants. " they
gave even the most casual attfnuon 10
the affairs Of the bank. The emDc7Zle-
ment OF Rowdcn (the cashier. the $1,000
loans TO the Northrups ana to herchner,
and the losses resulting were laCtS that
could not have eludcd the most cursory
attention Of the directors to their duties.
In respect to their omission 10 register
the mortgages. il ia n mistake 10 suppose
that the directors Of national banks cease
10 be such and that their duty 10 me
bank lapses when an examiner Is put
in charge of its funds, properties. and
books by the Comptroller Of the Currency.
IL is incumbent upon them TO give atten-
tion to these affairs even more specially
after the examiner takes charge than De-
fore. In the case az bar ii was espe-
cially their duty 10 register the MORTGAGES
held by the bank from Mitchell, Boat
wright and the Northrups 60 secure IN
debtedueSs). Their DUTY was the more
special and urgent in respect to their
securities in consequence of the fact that
the management Of the affairs of the
bank had been taken from its own eXccu-
tive officers ana committed 70 a tempo
rary officer appointed by the Comptroller.
who. in all probability. was unfamiliar
with the registration laws Of North Caro-
lima. They were still as much the advis-
ors Of the bank examiner a. they had
been Of the cashier Notwithstanding they
were not invested by law with the con-
troll over him which they were empowered
10 exercise over the cashier 1t was es-
pecially the duty of the defendant direC-
tors. acquainted as they were with the
local laws Of registration. to see TO and
make certain the prompt registration or
the three mortgages. Their duty as d.
rectors did not cease I'm these respects
until after the appointment Of the L.
ce.Ver of this bank
THEIR OWN INTERESTS.
I'm respect to the action Of the defend
them.
their deposits two months before the sus-
pension. in fun knowledge that such an
event must occur. there could be no ad-
Indication except after plenary proofs.
That dppOsitOrs generally are at liberty
10 check out the entire funds al their
credit before suspension Is clear; but even
they. after suspension. are entitled only
20 such percentage Of their deposits as the
assets OF the bank Will liquitate. II d.
rectors are depOsitois. and know two
months or more before suspension that
that event IS inevitable. and that the bank
can pay only a percentage Of its deposits,
and yet check for the whole of their own
centage 10 which other creditors would
be entitled. they certainly defraul TO the
extent of the dimiuutiOn the creditors
whose interest they are relied upon to
protect. ana should Be held to strict ac-
countability. In the present stage OF this
case. the incident Is of importance only
in showing that the defendant directors
We're not prevented by any special cir
cumStanCes from giving close attention
10 the affairs Of the bank when their own
personal interests were seriously IN
vOlyed."
THE CASE MUST PROCEED.
The opinion states that the Gaze differs
from that Of Briggs vs.. SpauldiHg de-
cded by the United States Supreme Court
ana concludes:
con the whole case. as shown by the
record. are Of opinion that the court
below erred in sustaining the demJrrers
to the bin as finally amended, on the
tfsF tf 10
learned judge below. and that the decree
must be reyer. ed. The case must 20
back to the court from which IT came,
the dcmurrrrs there fled must be over
ruled. and the case proceeded in on pie
nary proofs 10 decree on the merits"