The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1895-02-14

charged to have been made by the defenu-
ants when acting in their official or in their
personal character because we think that
the law regarding the defendants liability.
in any aspect of it, is not as the defend
ants claim Directors of a corporation, in
the management of it's affairs. are the
power which gives expression to its will,
crimes frauds in it's name or for its
benefit; and whatever the liability of the
under cover of their Office of direc-
tors, commit frauds like those
charged against these defendants ought to
the clearest principles of law and
justice, accountable for their conduct in a
1t is true that the contract OF insurance
was made, with the corporation, and not
be maintained upon that Contract against
such directors, whatever agency they may
have had in making IT,. 1t was the contract
and there was. therefore. privity of
contract between the plaintiff and these
upon any contract or to obtain damages
for the breach of one. The plaintiffs claim
Selves anae Of tse aeendant o aaing
once and position of directors, have per-
petrated fagitious fraud upon him for the
pecuniary profit and emolument as stock
holders thereof; that they individually made
and concurred in the making and publish
ing of the statement that the affairs of the
company were in a sound and prosperous
ceondition, knowing it to be false, and in
holders who might be induced thereby to
insure their property in that company. And
be regarded as its agents or its elements
impartial justice and public policy both re-
they should be, held responsible to third
persons for the ,nisfeasances by them In
fact committed or commanded See Cooley
on Torts, Second Ed, 57s, $40, and notes.
In l Morawetz on Priv. Corps, Sec. 573,
1t is said: 1T has often been decided that
sensations to the financial condition of
the company, whereby others induced to
give credit to the company or to purchase
rectors issue reports or prospectuses in
tended for general circulation and to adj
with the public they are responsible for
the natural consequences of their action in
or prospectuses false, and were made
1raudulently, any person into whose hands
and who is misled thereby. has his action
against the directors: it is not necessary
tnat the misrepresentation be made by the
ing
NJ, 1T is insisted that the case of Bailey VS..
therein cited, hold a contrary doctrine but
as we understand that case it is not in
consistent with the doctrine of the cases
ABOVE cited 1t was an action against the
directors of the Capital National Bank, of
Lincoln, Neb., to recover damages for false
plaintiff, who was thereby induced to loan
money to the bank The contention on
the part Of the plaintiff was that the COM
plant stated common law action to re-
cover damages for deceit. On the part of
the. defendants it was contended that the
action act was one to recover damages for OFF,
ciai misconduct involving a violation OF
the provisions - of the national
the complaint as one for the recovery of
damages for misfeasance in the performance
of duties imposed upon them by the nation
al banking act, and held that for such
breaches of duty the right of action accrued
to the bank and an action therefor could
insolvent bank against the directors for the
benefit OF all its creditors. 1t is apparent
complaint not contemplated by the plaintiff
I'm the case in hand, the plaintiffs seek to
recover damages for an injury which could
in no event give right of action to the
bank or to its. receiver. or to any other
creditor than the plaintiffs. If the frauds
to Re ii tho e' viii enr
" escape liability for fraudulent representa-
tons, as shown by the complaint, of the
the law is justly obnoxious to such a re-
proach. In my opinion the settled doctrine
Torrance of duties imposed upon them by
law, the directors of bank use their Off
cial station 10 make false representations,
which are believed and acted upon by third
parties, they are liable to respond for the
injury done to the one defrauded thereby;
tional banking act cannot be deemed to
preclude the right to maintain a common
law action of deceit for such false and
fraudulent representations.
cit is further, insisted that if a cause of
action may be maintained against the direc-
tors personally for making false represent
tations to the injury of a depositor, it is not
maintainable unless such representations are
made in writing and signed. by the party to
be charged. citing Burnss Ind. Stats, Sec
1854. In view of the construction placed
upon the complaint, it is neither necessary
nor proper to express any opinion on it's
sufficiency to Withstand the objection grow
ing out of the above cited provision of the
statute of frauds
Having reached the conclusion that the
complaint presents common law causes of
action for deceit, it follows that no federal
question is presented, and the case must be
remanded TO the court of the State from
which it was removed. Let the case be re-
nlanded to the Superior Court of Marion
county, Indiana, at the costs of the defend
ants.