Court Opinion

ID: 4927838
Source: CourtListenerOpinion
Date Created: 2021-09-24 00:59:18.39917+00
Date Added: 2024-06-11T08:13:32.267284
License: Public Domain

The opinion of the Court was drawn up by
Tenney J.
-This action founded upon Stat. c. 519, § 28, 1831, is in favor of a stockholder against certain of the directors of the Frankfort Bank, for the recovery of damages, alleged to have been sustained by the former, in a loss or deficiency of his capital stock by reason of mismanagement by the latter in their official conduct.
In the act referred to, the legislature evidently intended to secure the public against losses, which might arise from a deficiency of the capital stock of banks, holding a charter under the authority of the State• and from an examination of the section relied upon by the plaintiff, we are satisfied, it was their design to afford thereby a protection to the creditors of banks, and not to furnish a remedy to stockholders for injuries occasioned by the want of judgment or fidelity in the directors of their own appointment.
A loss or deficiency in the capital stock creates a liability in the stockholders as well as in the directors, in the event of the inability of the directors. If the section cited was the provision of a remedy to those, owning capital stock in a bank, in cases of loss or deficiency, one stockholder can resort to another in suits at law, in the contingency named, and thus each proprietor may in turn be a creditor and a debtor, one to the other. This involves an absurdity, which cannot be admitted as the result of a deliberate act of legislation.
The Court in Massachusetts, in the case of Harris v. First Parish in Dorchester, 23 Pick. 112, cited by the defendants, regard a similar -provision as a protection to bill holders and creditors of the bank. Plaintiff must become nonsuit.