Court Opinion

ID: 6660561
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:01:38.351361+00
Date Added: 2024-06-11T16:00:09.286797
License: Public Domain

Sedgwick, J.,
dissenting.
It seems to me that the opinion and the concurring opinion are both predicated upon the capital error of assuming that it has been decided by the supreme court of the United States that the action is one for deceit at Common law, and for that reason cannot be maintained. The opinion says that it was held (by the supreme court of the United States) that plaintiffs’ petitions were insufficient to charge the defendants with a “common law liability for fraud and deceit,” whereas that court held . that the action was essentially for a violation of the federal statute, and expressly holds that such actions can be maintained in the state courts, and then reverses the judgment of this court, not because of any defect in the petition, that question not being discussed or even mentioned, but because the trial court erroneously instructed the jury as to liability under the federal statute. The opinion discusses the proposition somewhat at length, and concludes that “unless the supreme court of the United States shall recede from its decision of these cases, the petitions will be held insufficient by that court to state a common law liability for fraud and deceit as against the defendants, who were simply directors of the Capital National Bank.” It seems to me Avonderful that any members of this court should so completely misunderstand the opinion of that court. The concurring opinion falls into the same remarkable error, as the first sentence shows: “I concur in the view that the amendments made after the remand do not change the issues, and only set out more fully a cause of action for deceit at common law.”. This is exactly the reverse of what the supreme court in fact decided: “Directors of a national bank who merely negligently participated in or assented to the false representations as to the bank’s financial condition contained in the official report to the comptroller of the currency * * * cannot be held civilly liable to any one deceived,” etc. Yates v. Jones Nat. Bank, 27 Sup. *133Ct. Rep. 638 (206 U. S. 158). This is the decision of the merits of the case as stated in the third paragraph of the syllabus. In the opinion the court say that the basis of the assignments of error is found in the instructions given by the trial court, and in refusals to give instructions. These instructions and refusals are quoted by the court and they all relate to this one point. Is proof of negligence only sufficient? Must the violation of the federal statute be in effect intentional? These instructions and refusals furnish the sole ground for reversal. All other points are resolved in favor of defendant in error. The court said that it was suggested by the plaintiffs in error that the action to enforce-a liability created by the federal statute was “so inherently federal” that “the state court was wholly devoid of jurisdiction, * * * and that such action could only be brought in the courts of the United States.” It was thought sufficient in the opinion to say that such contentions were without merit; but the character of the action and the right to bring it in the state courts is plainly stated in the fourth paragraph of the syllabus: “State courts may enforce, against directors of a national bank who have made false representations as to the bank’s financial condition in the official report to the comptroller of the currency, the civil liability prescribed by U. S. Rev. St., sec. 5239, which * * * makes every director who participated in or assented to the same civilly liable to persons who have suffered damage in consequence thereof.” How is it possible that any one should suppose that the court held that the pleadings were defective or that the judgment was reversed because the action was the common law action fqr fraud and deceit?
It is said in the opinion which has been promulgated as the opinion of this court: “As we view the opinion of the supreme court of the United States in Yates v. Jones Nat. Bank, supra, there was required in this case of the directors of the bank only that standard of conduct expressly imposed by section 5239 of the Revised Statutes *134of the United States (U. S. Comp. St. 1901, p. 3515), and no higher duty may he rightfully established and demanded.” And this is discussed at length in the opinion. This statement is entirely outside of the case at bar. There is no attempt to establish or demand any higher duty of these directors than is enforced by the federal statute. No action against the directors of a national bank for fraud and deceit at common law can be maintained. This was decided when this case was formerly before the supreme court of the United States, and has been since emphatically decided by that court, and no such claim can be made in this case. The question is whether these directors are liable under the federal statute, and this action is prosecuted under that statute to enforce such liability. No action could be presented in any other way. No one who will take the pains to read the opinion need make such mistakes. If the instructions of the trial court had correctly stated the law as to liability under the federal statute the judgments would have been affirmed.
When the case was in this court the first time, this court followed the law announced in the earlier casé of Gerner v. Mosher, 58 Neb. 135, 154, and held that, in signing the reports to the comptroller of the currency, the directors “by such act vouched for, or certified to, the absolute truthfulness of the statements therein contained, and not that the report was correct so far as the directors knew or had been advised by the proper performance of their duties as directors.” This court thereupon held that the instructions given by the trial court were not erroneous. Yates v. Jones Nat. Bank, 74 Neb. 734. The supreme court of the United States reversed the case upon this point only, and held that, “where by law a responsibility is made to arise from the violation of a statute knowingly, proof of something more than negligence is required; that is, that the violation must in effect be intentional.” To determine the meaning pf this language of that court in this case is now the question of law for this court upon *135this appeal. If there ever was any doubt of the holding of that court upon this point, that doubt has emphatically been set at rest by a later decision, where the language used by that court in this, case is quoted and its meaning fully stated and made plain. Thomas v. Taylor, 224 U. S. 73. That case originated in a nisi prius court of the state of New York. It was afterwards taken to the appellate division, and to the court of appeals of that state. The court of appeals adopted the opinion of the appellate division, and the supreme court of the United States affirmed the decision of that court. It appears that the action was begun as a common law action for fraud and deceit and was substantially so prosecuted in the trial court, and when .it reached the appellate division it was insisted that it could not then be considered as an action to enforce the liability imposed by the federal statute. The state court held that a common law action for fraud and deceit could not be sustained against the directors of a national bank, but that “a judgment in an action against such directors, tried and determined in accordance with common law principles for publishing a false report which induced the plaintiff to purchase stock in the bank, will not be reversed when the case, both as to pleading and proof, meets the statutory requirements, especially when defendants do not claim to have been prejudiced by the theory upon which the action was tried. A right decision will not be reversed merely because a wrong reason has been assigned therefor.” 124 App. Div. (N. Y.) 53. The supreme court of the United States approved this holding, and again decided that no common law action for fraud and deceit could be maintained, and yet this court states as a reason for reversing this judgment that, “unless the supreme court of the United States shall recede from its decision of these cases, the petitions will be held insufficient by that court to state a common law liability for fraud and deceit as against the defendants, who were simply directors of the Capital National Bank.” That court, in this very case, had decided that no possible *136allegation can be sufficient to state such common law liability; that is, that no common law action could be sustained.
The case of Thomas v. Taylor, 224 U. S. 73, will leave no possible room for doubt as to the measure of liability of the directors in making these reports to the comptroller. In that case, as in the case at bar, the assets of the bank had become depleted and the reports to the comptroller misrepresented the condition of the bank. The plaintiff had not seen the reports to the comptroller, but had been informed of their contents, and purchased some of the stock of the bank relying upon the statements in those reports. On account of the false reports he was compelled to pay an assessment upon the stock which he bought, and brought his action to recover damages so sustained. In the syllabus the court stated the law as follows: “Although the common law action of deceit does not lie against directors of a national bank for making a false statement, and the measure of their responsibility is laid down in the national banking act (Yates v. Jones Nat. Bank, 206 U. S. 158), an action may be maintained in the state court regardless of the form of pleading if the pleading itself satisfied the rule of responsibility declared by that act. There is, in effect, an intentional violation of a statute when one deliberately refuses, to .examine that which it is his duty to examine.” The opinion is devoted largely to an explanation of the holding in the case at bar when it was before that court. The court said: “The contention goes beyond what was said in Yates v. Jones Nat. Banlc. The language there is ‘that, where by law a responsibility is made to arise from the violation of a statute knowingly, proof of something more than negligence is required; that is, that the violation must in effect be intentional.’ Not, therefore, that as a condition of liability there should be proof of something more than recklessness; not that there should be an intentional violation, but a violation fin effect’ intentional. There is fin effect’ an intentional violation of a statute when one *137deliberately refuses to examine that which it is his duty to examine.” And, again, the court said: “There was an issue of knowledge tendered by the pleadings, and to sustain their side of the issue plaintiffs in error offered testimony of the correctness of the books and to show that the report was a true copy of them, as it was alleged in their answer to be.”
The case at bar is quite similar. There is evidence that the comptroller became dissatisfied with the conditions of the bank, and wrote to the officers of the bank to call the attention of the directors to its condition and to send a statement of what they found to the comptroller. This was done, and these defendants signed the statement to the comptroller. It is therefore conclusive that these defendants knew the condition of the bank. After this the reports were published as before, and the plaintiffs were deceived and damaged thereby. There is a large mass of evidence in the case, but it is useless to discuss it, in view of the total inadequacy of the opinion and concurring opinion to discuss, or even to state, the questions of law upon which this decision depends.
Fawcett, J., concurs in this dissent.