Task: songer_respond1_1_4

What follows is an opinion from a United States Court of Appeals.
Intervenors who participated as parties at the courts of appeals should be counted as either appellants or respondents when it can be determined whose position they supported. For example, if there were two plaintiffs who lost in district court, appealed, and were joined by four intervenors who also asked the court of appeals to reverse the district court, the number of appellants should be coded as six.
When coding the detailed nature of participants, use your personal knowledge about the participants, if you are completely confident of the accuracy of your knowledge, even if the specific information is not in the opinion. For example, if "IBM" is listed as the appellant it could be classified as "clearly national or international in scope" even if the opinion did not indicate the scope of the business. 

Your task concerns the first listed respondent. The nature of this litigant falls into the category "private business (including criminal enterprises)", specifically "financial institution". Your task is to determine what subcategory of business best describes this litigant.

SIMONS, Circuit Judge.
For.losses sustained by a closed national bank in consequence of acts, ultra vires, and excessive loans, a decree was entered awarding the hank’s receiver damages against its officers and nonofficer directors. The latter were assessed varying sums aggregating approximately $4,000,000, and they alone have appealed.
The suit was in equity by appellee’s predecessor as receiver appointed by the Comptroller of the Currency under the National Banking Act. The bill counted both upon breach of statutory duty and upon common-law negligence. The cause was referred to a master, who after extended hearings made an exhaustive report upon the voluminous testimony, with findings of fact and conclusions of law. Though he recommended a decree against nonofficer directors for damages aggregating upwards of $500,000, yet in respect to the transactions for which liability was by the decree adjudged, exonerated them of common-law negligence or knowing and intentional violations of the statute. Exceptions were taken by both receiver and appellants. Those of the latter were in all respects sustained, while those of the former were sustained in so far as they related to alleged violations of the Banking Act in the transactions here reviewed. In respect to them, there was no finding that the appellants were negligent.
In the principal opinion in the case (7 F.Supp. 924, 959), the court directed that, “Except as hereinbefore otherwise indicated, the report of the master will be confirmed.” It was undoubtedly in response to this direction that section 55 was incorporated in the decree. It is as follows: “All claims asserted by the plaintiff in the bill of complaint as amended, other than those hereinbefore specifically adjudged in plaintiff’s favor, are hereby adjudged in favor of the defendants respectively, and the bill of complaint as amended is hereby dismissed as to all other such claims, as to the respective defendants against whom such claims were asserted.” The plaintiff did not appeal. In this situation it becomes necessary at the outset to define the scope of this review, and to ascertain precisely the questions here involved.
It is clear that the duty which rests upon directors of a national bank by reason of the provisions of the National Banking Act are entirely separate and distinct from the duties imposed upon them by the common law, Yates v. Jones National Bank, 206 U.S. 158, 27 S.Ct. 638, 51 L.Ed. 1002; Jones National Bank v. Yates, 240 U.S. 541, 36 S.Ct. 429, 60 L.Ed. 788, and, “it is obviously possible that a director may neglect one or more of the former, and not any of the latter, or vice versa” (Bowerman v. Hamner, 250 U.S. 504, 511, 39 S.Ct. 549, 551, 63 L.Ed. 1113), though “there is no sound reason why a bill may not be so framed that, if the evidence fails to establish statutory negligence, but establishes common-law negligence, a decree may be entered accordingly,” to which the court significantly added, “and thus the necessity for a resort to a second suit avoided.”
Notwithstanding section 55 of the decree and his failure to appeal therefrom, the appellee urges upon us the negligence issues raised below, first, upon the ground that since appeals in equity bring up the whole case, the decree below should be sustained if right for any reason; and, second, on the ground that the negligence counts were not disposed of in the District Court. We are, of course, familiar with the principle invoked governing reviews in equity, and have uniformly applied it. Mills Novelty Co. v. Monarch Tool & Mfg. Co. (C.C.A.) 49 F.(2d) 28, 29; A. O. Smith Corp. v. Petroleum Iron Works Co. (C.C. A.) 73 F. (2d) 531, 538. We think, however, that the appellee confuses reasons for decision with causes of action, which arise only because of the invasion of some essential primary right of the plaintiff or breach of some duty by the defendant. It is quite clear that where an appellee defends a decree he may do so not only upon the grounds upon which it was based, but also upon all grounds urged below, Langnes v. Green, 282 U.S. 531, 51 S.Ct. 243, 75 L. Ed. 520, but to press a cause of action foreclosed by the decree is to seek to overthrow it and not to defend it.
The identity of the circumstances under which two distinct primary rights, or from which separate and distinct liabilities arise, does not preclude recognition of separate and distinct causes, for “separate causes of action may arise out of the same-transaction, in which event a recovery or judgment in an action on one does not ordinarily bar an action on the other.” Freedman on Judgments (5th Ed.) § 594, so “if two separate and distinct primary rights could be invaded by one and the same wrong, or if the single primary right should be invaded by two distinct and separate legal wrongs, in either case two causes of action would result,” Pomeroy Code Remedies (5th Ed.) 367, cited with approval in United States v. Pan-American Petroleum Co., 55 F.(2d) 753, 777 (C.C.A.9), certiorari denied, 287 U.S. 612, 53 S.Ct. 14, 77 L.Ed. 532. Where rights arise under the laws of distinct sovereignties, a judgment based upon the violation of the one is no bar to a suit upon rights declared under the other, and the identity of parties, subject-matter and the extent of the relief to be granted is not controlling. Troxell, Administratrix, v. Delaware, Lackawanna & Western R. R. Co., 227 U.S. 434, 33 S.Ct. 274, 57 L.Ed. 586. This is in harmony with the rule applied to crimes that an act denounced by both national and state sovereignties is an offense against both, and may be punished by each, notwithstanding constitutional immunity against double jeopardy. United States v. Lanza, 260 U.S. 377, 43 S.Ct. 141, 67 L.Ed. 314. While the broad language of the Troxell Case was somewhat limited in Baltimore S. S. Co. et al. v. Phillips, 274 U. S. 316, at page 321, 323, 47 S.Ct. 600, 602, 71 L.Ed. 1069, the principle was not denied, the court saying: “A cause of action does not consist of facts, but of the unlawful violation of a right which the facts show. The number and variety of the facts alleged do not establish more than one cattse of action so long as their result, whether they be considered severally or in combination, is the violation of but one right by a single legal wrong. The mere multiplication of grounds of negligence alleged as causing the same injury does not result in multiplying the causes of action. ‘The facts are merely the means, and not the end. They do not constitute the cause of action, but they show its existence by making the wrong appear. “The thing, therefore, which in contemplation of law as its cause, becomes a ground for action, is not the group of facts alleged in the declaration, bill, or indictment, but the result of these in a legal wrong, the existence of which, if true, they conclusively evince.” ’ Chobanian v. Washburn Wire Co., 33 R.I. 289, 302, 80 A. 394, 400, Ann. Cas,1913D, 730.” So is clarified the excerpt we have quoted from Bowerman v. Hamner, supra, “And thus the necessity for a resort to a second suit avoided.”
The contention that the purpose of section 55 of the decree was merely to dismiss claims based on transactions neither negligent nor violating the statute and was without reference to charges of negligence in the transactions which led to findings of statutory liability alone, must be rejected. The case was pleaded and tried as one involving causes of action based upon violation of the statute, and other causes based upon common-law negligence. It was so analyzed in the report of the master. When the court came to enter a decree against the officers as distinguished from nonofficer directors, it granted recovery in relation to each transaction, both for staatutory violation and for common-law negligence. Finally, since the court specifically ordered that thé report of the master would be confirmed except as otherwise indicated, section 55 must be response thereto, since there is no other, and the opinions are incorporated in the decree by its terms (section 59) in respect to the sustaining and overruling of exceptions.
We conclude, therefore, that no question of common-law negligence as such is presented to us for review, and that the case as submitted involves in respect to each transaction in issue the sole question as to whether there has been a breach of statutory duty imposed upon the directors by the National Banking Act.
It becomes necessary to consider another contention of general application. It is, of course, the rule (Equity 61%, 28 U.S. C.A. following section 723), that in reference to a master his report shall be treated as presumptively correct, and may be modified or rejected by the court "only when in the exercise of its judgment it is fully satisfied that error has been committed. It is urged, however, that since the order of reference recited that the report of the master was to be advisory only, little weight need be given his findings. To what extent this weakens the presumption of correctness that attaches to them would be difficult to say. Certainly the court must even in such circumstances consider the superior opportunities of the master who heard and saw the witnesses to appraise their credibility and to harmonize conflicting testimony. In practical application perhaps there is little difference between saying the master is presumptively correct and saying that his findings are purely advisory, especially when as here the master is specially selected for exceptional ability to aid the court in a peculiarly complicated and difficult case. His advice is not lightly to be rejected, whatever the formula. Moreover, it happens upon this record that there is little conflict between master and court on evidentiary facts. Since concurrent findings of court and master will not by us be set aside except for clear mistake, in the usual case, it will follow in this that whatever in persuasiveness the master’s findings lose by the advisory recital in the order, by just so much do the court’s findings gain, and the result is the same.
The history of the National Bank of Kentucky dates back to the incorporation of the Bank of Kentucky in 1834. It was reincorporated under the National Banking Act in 1900, consolidated from time to time with other banks with continuing increases of its capital and surplus until at the time of the transactions here involved its combined capital stock and unimpaired surplus aggregated $6,000,000. For a number of years prior to the period here considered, it had enjoyed substantial prosperity, and had paid large dividends to its stockholders. On November 16, 1930, it was closed by action of its directors and a receiver for it was shortly afterwards appointed by the Comptroller. On March 30, 1931, the receiver filed his bill in equity against the directors, including officers, to recover for losses claimed to have been sustained by the bank through acts, ultra vires, and through excessive loans.
Something must be understood of the size, manner of organization, and volume of business of the bank in order to place the acts of the accused directors in their proper setting. The National Bank of Kentucky was the largest bank in the South. Its total resources were over $52,000,000. It had more country bank customers than all other banks in Louisville combined. Its weekly loan list contained on an average the names of about 500 borrowers. There were 200 employees, of whom at least 150 were engaged daily in keeping a record of the bank’s transactions. The method followed by the defendants in administering the bank’s affairs is fully described in the principal opinion below, 7 F.Supp. 924. All loans of $5,000 and over were required to be submitted to a loan committee of eight members having charge of loans and investments, and approval of at least five members was required before any loan or investment could be made. Each loan coming before the committee was recorded, and under rules adopted by the board loans of $20,-000 and over were required to be recorded in alphabetical order in what was called the “$20,000 and Over Book,” which was brought to the directors’ meeting on the first of each month. It was the duty of the cashier to read to the directors all loans of $50,-000 or more appearing thereon, so that the book was sometimes referred to in the record as the “$50,000 and Over Book.” The bank was so large that it was necessary to divide it into departments and to place an officer at the head of each, giving him superintendence and • control of all matters within its jurisdiction and scope. These were the discount, collection, exchange, individual bookkeeping, country bank, transit, paying and receiving, collateral, safety vault, and other departments. Once in each year audit of the bank’s books was made by Humphrey Robinson & Co., clearing house accountants, of Louisville. In addition the bank had its own auditing department with an efficient auditor at its head whose duty it was to make report to the cashier. The auditor had general authority to go into any department of the bank at will and to audit its books and records. His authority in that respect was as complete as that of the National Bank Examiner.
During the period with which we are concerned Brown was president of the bank and Jones its cashier. The master found that the directors were unusually regular in attendance upon the board meetings, and more interested in the bank than ordinary directors. They had implicit confidence in Brown and other officers, and trusted them just as the public generally in Louisville trusted them. While rejecting certain ultimate conclusions, the court accepted the preliminary findings of the master that Brown, the president of the bank, aided by Jones, its cashier, had throughout the period of time here involved deliberately, systematically, and for the purpose of assisting Brown to abstract substantial sums from the bank and otherwise to further his own interests at the expense of the bank, concealed from nonofficer directors communications from the Comptroller of the Currency, reports of bank examiners and auditors, circumstances indicating the character of loans and investments, and other facts which would have apprised the directors as to the true relation of the bank to the various loans and investments herein involved. A careful examination of the record made it clear to the court that except as otherwise indicated, there was substantial evidence to support the findings of the master in the respects indicated, giving such consideration to the opportunities for personal observation enjoyed by the master and his superior facilities for discovering the truth. It was further the conclusion of both master and court that no misconduct or bad faith on the part of any of the nonofficer directors had been shown. Certainly there is no suggestion in the record that any of the appellants profited or expected to profit personally, either directly or indirectly, by any of the unlawful acts upon which the decree is based. With the issues uncomplicated by questions of negligence, and decision uninfluenced by any suggestion of fraudulent coriduct on the part of the appellants, we are free to consider the alleged violations of the Banking Act, to determine what is thereby specifically prohibited, and from established evidentiary facts to draw such inferences as seem clearly indicated, having in mind that there has been no exoneration of the bank o,r its officer directors by either master or judge, since the latter have been found liable for all losses sustained in respect to transactions here involved, and on their behalf there has been no appeal.
The transactions which furnished the bases for liability imposed by the decree comprise: (1) The purchase and operation by the bank of the business of the Kentucky Wagon Manufacturing Company, held to be ultra vires; (2) loans to Wakefield & Co., which, when aggregated with loans made to employees and officers of that company, were held to be excessive; (3) loans to Murray Rubber Company, which when aggregated with certain bonds of that company held by the bank were held to be excessive; (4) loans to Norman & Co., likewise held excessive; and (5) loans upon the shares of the Banco Kentucky Company, which by reason of the fact that the latter held a large amount of trust participation certificates evidencing an interest in the shares of the bank were held to be in effect loans by the bank upon the security of its own shares.
Kentucky Wagon Manufacturing Company.
This company had been for a long time successfully engaged in the manufacture and sale of wagons and other vehicles in the city of Louisville. Its business had, however, fallen off largely because of the growing demand for motor vehicles. In 1921 or 1922 a merger was effected between the Wagon Company and a number of other corporations which resulted in the creation of a corporation called Associated Motors Corporation (later National Motors Corporation). With the details of the merger we are not concerned, except that title to the Wagon Company’s plant and inventory to the value of $1,725,760.01 passed to National Motors, although possession remained in the Wagon Company. Title to the Wagon Company’s inventory to the value of $1,060,000 remained with it. In June, 1924, the Kentucky Wagon Manufacturing Company and National Motors Corporation were both adjudicated bankrupt. At that time the Wagon Company owed the bank approximately $500,000, and National Motors Corporation owed it upwards of $300,-000. The Kentucky Wagon Company had received for its plant and that part of its inventory sold to Nationál Motors first mortgage bonds, collateral trust notes, unsecured notes, and preferred stock, while National Motors assumed debts of the Kentucky Company to the extent of $1,300,000. Some of the bonds had been transferred to the bank, and the bank held additional bonds as collateral to advances made to National Motors. The properties of these two companies located in Louisville consisted of land, plant, and equipment valued at $2,-383,000, inventory transferred to National Motors valued at $1,725,000, and inventory retained by the Wagon Company valued at $1,060,000.
The bank was manifestly faced with the problem of either taking its then present loss or considering some reasonably feasible and permissible plan to reduce or eliminate it. To have remained idle, to have awaited speculative results of a bankruptcy sale was a course not dictated by prudence or sound business judgment, and to have refused to consider any reasonable plan for saving the going concern value of the wagon works might indeed have submitted its directors to charges of negligence, for both district judges who had supervised the bankruptcy proceedings had ordered the receivers to continue operations to save going value. It was at this juncture that Judge Alexander P. Humphrey, general counsel for the bank and a member of its board of directors, an able lawyer, submitted a plan for salvaging of the bank’s loan. It does not appear that any other or better plan was ever suggested. The bank was to purchase the local claims against both the Kentucky Company and National Motors. An offer of composition had already been made by the Kentucky Company and had been rejected. An amended offer of 25 cents upon the dollar was pending when the plan was adopted. By the purchase of the local claims it was expected that the bank would acquire an undivided right to the inventory retained by the Kentucky Company, and since many of the creditors also held first mortgage bonds of National Motors, the bank would be able by adding such bonds to those already held to buy in the local plant free from all other claims of bondholders and to sell it as a going concern. The plan was approved by the directors, and executed as proposed, except that pending foreclosure proceedings against National Motors property were delayed through no fault of the bank and title to the land, plant, and equipment was not perfected until December 28, 1927. In the meanwhile a new corporation had been organized in Delaware, to take over the inventory originally retained by the Kentucky Company and its other property when the title should be acquired.
The alleged ultra vires character of the bank’s activities in respect to the Kentucky Wagon Manufacturing Company resolves itself into two phases, and bears upon the liability of two different groups of directors —those who were members of the board at the time the property was acquired and those who came on the board in April, 1927, “when the bank was united with the Louisville Trust Company [see Laurent v. Anderson, 70 F.(2d) 819 (C.C.A.6)], though the court held both equally liable. In its first phase the question seems to be whether the bank had authority to acquire the Wagon Works and to organize a corporation to operate it, assuming its purpose to be as was found by the master to salvage its debt by saving going concern value. The second phase concerns liability of directors, both old and new, in continuing the operation of the Wagon Works for a number of years after efforts to sell it as a going concern had proved futile and while it was losing money which the bank was compelled to supply.
It is true that a national bank has no authority to engage in or promote a purely speculative business or adventure. First National Bank v. Converse, 200 U.S. 425, 26 S.Ct. 306, 50 L.Ed. 537. It has generally been thought, however, and we think the view is nowhere seriously disputed, that a bank has implied power when faced with a loss growing out of a legitimate banking transaction to acquire stocks or other property when it is honestly believed at the time that under more favorable circumstances a loss which would otherwise accrue might be averted or diminished. Banks may do in this behalf whatever natural persons may do under like circumstances. First National Bank of Charlotte v. National Exchange Bank of Baltimore, 92 U.S. 122, 23 L.Ed. 679. As an incident to the exercise of the power of a bank to collect its debts is the right to secure and save the debt. Roebling v. First National Bank, 30 F. 744 (D.C.W. Va.), and a bank may lawfully do many things in securing and collecting its loans, in the enforcement of its rights and m the conservation of its property previously acquired, which it is not authorized to engage in as a primary business. Morris v. Third National Bank, 142 F. 25 (C.C.A.8), cert. denied 201 U.S. 649, 26 S.Ct. 762, 50 L.Ed. 905; Bailey v. Babcock (D.C.) 241 F. 501; California Nat. Bank v. Kennedy, 167 U.S. 362, 17 S.Ct. 831, 42 L.Ed. 198. Compare Cockrill v. Abeles et al., 86 F. 505 (C.C. A.8). “When a national bank has lawfully acquired real estate or other property, it may sell that property and convert it into money; and, in order to do so, it may clean it, make reasonable repairs upon it, and put it in presentable condition to attract purchasers, in the same way that an individual of sound judgment and prudence would do if he desired to make a sale of the property. * * * The duty of exercising this power is imposed upon the directors and officers of such a bank, and the authority to determine in the first instance when and to what extent it shall be exercised is necessarily intrusted to their judgment. Moreover, they cannot escape the discharge of this duty. They are bound to consider and decide the question at their peril. It follows that, when they have honestly and carefully considered and decided it, they ought not to suffer because, in the light of subsequent events, which could not be foreseen, it turns out that their decision was unfortunate.’’ Cooper v. Hill, 94 F. 582, 585 (C.C.A.8).
The controlling principle seems to us to be that while the bank has no power, either express or implied, to enter upon an original speculative enterprise, yet as an incident to its express powers the bank has a right to acquire property, to put it in condition for resale, and where such property is a manufacturing establishment whose value depends substantially upon uninterrupted operation, we think implied power exists to continue such operation for a time providing the primary purpose of the bank is to-save its debt rather than to speculate in future profits, and there is reasonable prospect of realization. How much new money may to that end be invested, and how long such operation may continue, must depend, of course, upon the necessities and peculiar circumstances of each individual transaction. The particular problem envisioned may not be resolved by the application of arbitrary or empirical tests, and much must be left to the business judgment of those responsible for its solution if such judgment is honestly exercised. There is ample if not wholly undisputed evidence that the salvaging of the debt to the bank was the only purpose of the adopted plan, and the master found it so to be. Of course the purchase of outstanding claims required a substantial sum of money, upwards of $300,000, and the purchase of the real estate and plant equipment required in addition to the bonds held by the bank a further outlay. But figures are in such cases merely relative. The bank acquired an inventory, fairly appraised at several times the debt, and a well-equipped plant of 35 acres in the heart of Louisville. The expectation that it could therewith reduce or prevent a loss was a reasonable one. That it would require.approximately three years to acquire title to the Wagon Company’s real estate and equipment was not, of course, in contemplation, and it is not suggested that the delay was in any manner due to the fault of the appellants. That the acquisition of the property by the bank, and the manner of it, met with no criticism on the part of the bank examiners or the Comptroller is also important, and this without reference to whether reports of the examiners were ever brought to the attention of the directors, and without respect to any power on the part of the Comptroller to tie his hands by practical construction. As late as October 13,, 1928, Chief National Bank Examiner Wood reported to the Comptroller that the operation of the plant even at a loss had probably been a wise thing, and still later, on May 25, 1929, his report contains the statement, “One of the benefits resulting from this operation has been the fact that the plant continued as a going concern, with the added value that attaches to a going concern over an idle plant.” It requires little citation to demonstrate that there is an element of value in an assembled and established plant even under receivership or in bankruptcy, In re Nathanson Bros. Co., 64 F.(2d) 912 (C.C.A.6), and continued operation by receivers under court orders may well have given apparent sanction to the plan adopted by the bank in the present case.
That it was the purpose of the bank to sell the Wagon Company property as soon as title was acquired is manifested by its preparations for prompt passing of title to purchasers and by its numerous efforts to sell. All the stock certificates of the new corporation were signed in blank by the officers of the company and delivered to the bank. At first efforts were made to sell this stock through one or more stock-selling agencies, and funds were advanced for that purpose. These proving unfruitful, the bank made numerous efforts to sell the physical assets. There was no expectation that the bank would have to supply new money in substantial amount to carry on the business for the purpose of preserving going-concern value. The plant was freed from all fixed charges, and had a large inventory which might be worked up and disposed of for the purpose of reducing the debt to the bank. That this expectation was not ill founded is evidenced by the fact that during the first year of operation, from August 8, 1924, to August 1, 1925, the advance less the amount recovered from one of the stock-selling agencies was but $2,355. We are unable to conclude, therefore, that-the original purchase and acquisition of the Wagon Company property was beyond the incidental and implied powers of the corporation and so ultra vires.
It was not until the second year of operation that substantial advances began to be made. These were at first by way of permitting overdrafts, later consolidated into notes. This continued to June 20, 1930, when the bank sold all of the property of the Wagon Company to Caldwell & Co., a brokerage house, for 100,000 shares of stock in the Banco Kentucky Company. During this period more than a million dollars was advanced by the bank, and if we ignore, as did the court below, the Banco Kentucky stock on the assumption that it was then as it afterwards clearly became, an asset of no value, the money so advanced was entirely lost. There can be no doubt that the continued operation of the Wagon Company’s business under these circumstances became highly speculative and therefore beyond the power of the bank and ultra vires. Both master and court so held, and the officers of the bank who knew the true situation áre liable for the full amount of the loss. A separate issue, however, presents itself in respect to the appellants, and this involves consideration of the terms of the National Banking Act, under which they likewise were held liable. Section 5239 Rev.St., title 12, § 93, U.S.C. (12 U.S.C.A. § 93) provides: “If the directors of any national banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this chapter, all the rights, privileges, and franchises of the association shall be thereby forfeited. * * * And- in cases of such violation, every director who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person, shall have sustained in consequence of such violation.”
The meaning and scope of this section is clearly settled by the decisions of the Supreme Court. For a director to be held liable it must appear that he “participated in or assented to the excessive loan or loans [or other violations], not through mere negligence, but knowingly and in effect intentionally (Yates v. Jones National Bank, 206 U.S. 158, 180, 27 S.Ct. 638, 51 L.Ed. 1002), with this qualification, that if he deliberately refrained from investigating that which it was his duty to investigate, any resulting violation of the statute must be regarded as ‘in effect intentional’ (Thomas v. Taylor, 224 U.S. 73, 82 [32 S.Ct. 403, 56 L.Ed. 673]; Jones National Bank v. Yates, 240 U.S. 541, 555, 36 S.Ct. 429, 60 L.Ed. 788).” Corsicana National Bank v. Johnson, 251 U.S. 68, 71, 40 S.Ct. 82, 84, 64 L. Ed. 141. See, also, Payne v. Ostrus, 50 F. (2d) 1039, 1041, 77 A.L.R. 531 (C.C.A.8); Chesbrough v. Woodworth, 195 F. 875 (C. C.A.6); Watts’ Appeal, 78 Pa. 370.
The master found that through concealment of facts from the directors by the officers appellants had no actual knowledge of the sums which were being expended in the operation of the Wagon Company during the period in controversy. Exceptions to the finding in this respect were overruled by the court. It is, we think, clear for reasons presently to be indicated, that the court considered the want of actual knowledge immaterial. It would be impossible to review the prodigious record and comment upon each item of evidence or the numerous contentions of counsel made in the exhaustive briefs with reference to this subject. It is sufficient to say that the large overdrafts of the Wagon Company were concealed from the directors by Brown, the president of the bank, with the connivance of the other officers. Brown had repeatedly assured the directors that the Wagon Company was “making its way.” Such criticism of the account as was made by the bank examiners was likewise concealed from the directors, though it must be said in passing that there was no suggestion in any of their reports that the operation of the company was ultra vires. The Wagon Company’s indebtedness as it appears in the excessive loan schedule on the reverse side of the reports to the Comptroller was inserted after signature by the directors. When in contemplation of the unification of the bank with the Louisville Trust Company a committee of the latter’s directors looked into the affairs of the Wagon Works they were told by Brown that the Wagon Company had a worth of $1,500,000 exclusive of inventory, and that the bank’s carrying figure was less than $440,000. The directors were expressly exonerated from any misconduct or bad faith by both court and master. There was here no abdication of duties or responsibilities as in Bower-man v. Hamner, supra, and the unusual diligence of substantially all of the directors was noted in the master’s report, and made the basis of his findings.
Notwithstanding, however, this lack of actual knowledge or knowing participation in the expenditure of large sums in the operation of the Wagon Works, and notwithstanding also lack of any evidence pointing to any deliberate refraining from investigating in respect thereto, the court found the whole transaction from beginning to end to be ultra vires, and this on the sole ground that “the speculative nature of this plan, the inevitable necessity of future substantial cash outlays therein, and the obvious uncertainty as to the saleability of this business, and as to the operating results thereof pending such sale, were facts which could not have been unknown to the participating and assenting officers and directors of the bank.” It was therefore held to be immaterial whether the directors ever actually knew the amounts which were being expended or precisely what losses were being sustained. The essential vice in the transaction was said to be the knowing and intentional participation of the officers and directors in a comprehensive unitary plan pursuant to which the incorporation of the new company and the acquisition and operation of the business was carried out. In this respect it makes no distinction between old or new directors (9 F.Supp. 151), or between officers and nonofficer directors. This was in amplification of the original opinion (7 F.Supp. 924, 936) wherein it was said, “But to organize, as it did, a new corporation, of which it became the beneficial owner, for the purpose of not only taking over the business of its debtor, but also of operating such business for an indefinite period, followed by its actual operation thereof for several years, was beyond the powers of the bank, as the defendants were bound, and must be presumed, to know.”
We have given careful scrutiny to the record. We are unable to draw the inferences from the evidence as were drawn below. We find no indication of a unitary plan to engage in a business of speculative nature, no evidence that substantial future outlays were contemplated or were reasonably inevitable, no obvious uncertainty of saleability, and no purpose of operating the business for an indefinite period. The record is clear that the original purpose of taking over the Wagon Company was to save the bank from loss by the sale of the property as a going concern. That the sale would be delayed by difficulties of acquiring title, and that large sums would be consumed in operation were never contemplated, and that the market would crash in 1929 was, of course, no more expected by the directors than by other business leaders of the period. The sums expended without their knowledge are not without more to be attributed to vice in the original plan. The very commendable effort made by the court below to differentiate the functions of the historian from those of the prophet but emphasizes the difficulty of freeing the mind from the influence of a subsequent diagnosis while retrospectively evaluating prognosis. The finding of an original purpose to operate the business for an indefinite period based in any degree upon its actual operation, thereafter for several years illustrates the point. While it has sometimes been held that on questions of value at a given time, after-acquired knowledge is not to be disregarded, for “Experience is then available to correct uncertain prophecy,-’ Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 697, S3 S.Ct. 736, 739, 77 L.Ed. 1449, 88 A.L.R. 496, the rule is not to be applied when retrospectively adjudging a liability based upon current knowledge of wrongful acts and without which they may not be averted. The burden of proof being clearly upon the receiver, we think it'has not been sustained, and the decree will be reversed in so far as it imposes liability upon the appellants for violation of the statute in respect to the purchase and operation of the Kentucky Wagon Company.
Wakefield & Company Loans.
The second transaction for which liability was imposed upon the appellants comprised loans in substantial amount to an investment

Question: This question concerns the first listed respondent. The nature of this litigant falls into the category "private business (including criminal enterprises)", specifically "financial institution". What subcategory of business best describes this litigant?
A. bank
B. insurance
C. savings and loan
D. credit union
E. other pension fund
F. other financial institution or investment company
G. unclear
Answer:

Answer: A