Evening star., 1935-04-29
LIABILITY RULING.
PARTLY AbS0LVES.
PARK BANK HEADS.
Appellate Court Decision
r.
Touches on Case After
Charter Expired.
ANOTHER SUIT PENDS
ON PRIOR SITUATION
Status of Action Involving Re.
sponsibility Of Directors Before
August 80, 1929, Undecided.

Directors of the Park Savings Bank
were absolved of liability to depositors
for loans accruing after the banks
charter expired in 1929 in q decision
handed down today by the District
Court of Appeals.
The opinion, however. was under
stood to leave open question of the
liability of the directors to depositors
as of August 30. 1929. the date when
the charter expired. This question is
important as another suit is pending
in the lower court to hold the direc-
tors liable for funds allegedly due cer-
tain depositors when the banks char
ter lapsed.
The decision. affirming a ruling by
Justice Jesse c. Adkins. in the Dis
trict Supreme Court, held in effect
tha tthe acts Of the directors after the
expiring of the charter were beyond
the scope of the powers contained in
the charter, but that the directors are
not personally responsible to the de-
dllN OtAtSA SASoAtoAS'
Ignorance Not Condoned.
Pointing out that the life of the
corporation was fixed by Alabama
statutes. the appellate court said the
creditors were legally bound to know
the law and could not now complain
of losses sustained by dealing with
the bank after the expiration of its
charter.
The complaint against the di-
rectors did not rest upon any charge
that they acted fraudulently, but upon
the theory that they became liable
as co-partners when they carried on
the business beyond the statutory
life of the corporation. In this con-
nection the court said the bank. after
expiration of the charter. operated as
a corporation by force of law and that
its existence as such could be ques-
toned only by the State of Alabama.
The opinion, written by Chief JUS
tice Martin. covered two similar suits,
one brought by group of depositors
and the other by John F. Moran,
the banks receiver.
Cites Charter Factor.
In commenting upon the legal bar
confronting the depositors, the court
said:
The persons dealing with the cor
porations as depositors after expira-
tion Of its charter were charged with
the knowledge of the terms Of the
corporate charter. They therefore
knew. either actually or construc-
lively, that. the bank was not then
authorized by its charter to proceed
with general banking business.
Therefore they are estopped to deny
the legality of the banks actions and
cannot hold the directors or stock
holders liable, individually or as part
ners."
The directors were represented by
Attorneys Joseph T. Sherier and Otis
Beall Kent.
Ruling Partly Appealed.
The case was appealed from a de-
cision of Justice Jesse c. Adkins in
District Supreme Court. Justice Ad-
Hns had held that the directors Of
the bank were liable as liquidating
trustees for the assets of the bank at
the date of the charter expiration in
1929. He held, however. that the di-
rectors were not liable as co-partners
for the assets which came into their
hands after the charter expired. This
second part of his decision was ap-
pealed by the depositors and the re-
ceiver.
The Court of Appeals. in its decision
today, said this appeal therefore re-
lates only to the alleged liability OF
the directors of the bank for such OBJ
legations as were incurred after Au-
gust 80, 1929. The sole question is
whether the individual directors Of the
bank became liable for the deposits
received by the bank when it contin-
ued in the operation of the banking
business after August 80. 1929.
Decision Upheld.
ut is our opinion that the fore
going facts do not show liability Of
the directors for the deposits made
with the bank subsequent to August
80 1929, and that the ruling of the
lower court to this effect is correct"
I'VE are satisfied" continued the
appellate tribunal, that the provisions
Of section 1869 of the Alabama code,
supra. that the directors as liquidating
trustees of the bank shall be Jointly
end severally liable to its creditors and
stockholders to the extent of the prop
erty which may come into their hands
relates solely to the assets of the bank
as they existed on August 80. 1929.
and do not refer to the deposits made
with the bank after that date. This
construction is justified by the Ian
guage and purpose Of the act"
Charges Asset Decline.
John F. Moran, receiver, in the
original case had charged that the
directors when the bank expired in
1929 came into possession of assets
having a value of $4, 1922, 1894 When
the bank was closed March 6, 1888,
he said, the assets of the bank
amounted to only $3,973,107.59.
Moran was represented by j. Bruce
Kremer. George B. Springston and
Herbert M. Bingham, while depositors
were represented by E. Hilton Jackson
and William z. Richardson.