Court Opinion

ID: 3879678
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:11:35.037735+00
Date Added: 2024-06-11T07:41:52.894994
License: Public Domain

May 7, 1928. The opinion of the Court was delivered by
This is an appeal from an order of his Honor, Judge Featherstone, overruling a demurrer of the defendants to the complaint.
The action is by the plaintiffs as depositors (one of the plaintiffs being a stockholder as well as a depositor), on behalf of themselves and of all others, stockholders, depositors, and creditors of said bank, who may come in and seek relief by, and contribute to the expenses of, the suit, against the defendant, directors of said bank, liquidating trustees, for an accounting and for damages resulting from their alleged mismanagement and negligence in the supervision and conduct of the affairs of the bank.
The complaint contains a detailed statement of the various acts of alleged mismanagement and negligence on the part of the directors, resulting in losses to the bank, amounting to several hundred thousand dollars, and prays that the defendants be required to render an account of their management of the affairs of the bank during its active operation and since the bank was taken over by the Bank Examiner. *Page 435 
The defendants interposed a demurrer to the complaint upon the grounds stated in the written demurrer, which will be incorporated in the report of the case. The demurrer was overruled by his Honor, Judge Featherstone, in an order dated March 19, 1927, and from that order the defendants have appealed upon the grounds which appear in the report of the case. Both exceptions to the order relating to the motion to make more definite were abandoned at the hearing, Exceptions 6 and 7, also Exceptions 2 and 3, relating to the demurrer.
On January 4, 1923, on account of the insolvency of the bank, a resolution was adopted by the board of directors, requesting the State Bank Examiner "to take and retain sole possession and control of the property and business of such corporation for not exceeding thirty days." The Bank Examiner complied with that request on the same day.
It does not so distinctly appear in the complaint, but we assume that it was intended to be alleged, that in conformity with Section 3981 of Volume 3, Code 1922, on January 25th, within the 30-day period of possession and control by the Bank Examiner, the corporation, with the consent of the examiner, obtained from the Judge of the Court of Common Pleas presiding in the circuit an order authorizing the "corporation to liquidate its affairs, under the sole supervision and control of the examiner, and subject to the order of said Court."
Immediately upon the passage of the order referred to (and assumed to have been passed), as was held by this Court in the case of Browne v. Hammett,133 S.C. 446; 131 S.E., 612, "the directors of the bank became, ipso facto, liquidating trustees of the banking corporation, with all the rights, powers, and duties conferred by Section 4282. They in fact were vested with the title to all of the assets of the bank, for the powers conferred upon them are consistent only with the title. They had the right *Page 436 
to the possession of them; the right to collect the debts; the right to sell and convey the property; the right and duty to pay the debts and distribute the net proceeds; and they had the power to `meet and act under the by-laws of the corporation.' They had also, under Section 4283, the authority to sue for and recover the debts and property `by the name of the corporation.' The corporation by these necessarily exclusive provisions was completely stripped of every power, right, and activity as a corporation." (Attention is called to the omission of a line in the opinion of the Court, as reported in 133 S.C. at page 454; after the word "in," on line 2 from the bottom of that page, and before the word "the" on the last line, there should be inserted: "The directors contemplate the liquidation of." See 131 S.E., at page 614, second column, line 12 from bottom.)
It appears from the complaint that the former president of the bank, C.C. Jones, and the former cashier, D.E. Browne, have, since the order of liquidation, been acting as liquidating agents for the directors of the bank.
The appellants contend by their remaining exceptions that the demurrer should have been sustained upon the following grounds, substantially stated: (1) That when the order of January 25, 1923, which directed the liquidation of the bank, as provided for in Section 3981, was passed, the present rights asserted could only have been prosecuted "in the cause in which the order of liquidation was granted"; (2) that several causes of action have been improperly united in the complaint; (3) that there is no allegation of such a joint interest of the plaintiffs as justifies a joint action by them.
I. As to the first contention: The provision of the statute evidently referred to is:
"That during the periods when the examiner is in control of said corporation no action or proceeding against
said corporation or its stockholders shall be instituted except *Page 437 
in the cause in which the order of liquidation was granted."
It is sufficient answer to this contention to observe that the present action is not against the corporation or its stockholders, but emphatically in the interest of both.
II. As to the second contention: We find in the complaint but a single cause of action, with specifications: An effort to bring into the treasury of the corporation, for the benefit of its depositors and other creditors, and ultimately its stockholders, funds of the bank which, it is alleged, have been dissipated by the wrongful conduct of the directors.
III. As to the third contention: If our analysis of the complaint, as stated under contention II, is correct, it necessarily follows that there are no several rights attempted to be adjusted in the complaint.
As the Circuit Judge has held, the complaint is practically identical with that in Browne v. Hammett, 133 S.C. 446;131 S.E., 612. There the Court said:
"The appeal may be disposed of by a determination of the single question whether the plaintiffs, under the allegations of the complaint, have the right to maintain this action.
"The plain interpretation of the complaint is that the mismanagement and negligence of the directors, in the various particulars mentioned, have entailed losses of many thousand dollars to the bank, and that a recovery of the damages so inflicted upon the bank will enure to the benefit of the stockholders, depositors, and general creditors who will be entitled to participate in them. In other words, it is sought to realize, to the corporation, assets for distribution among the depositors and general creditors first, and to the stockholders, should a balance remain."
The judgment of this Court is that the order appealed from be affirmed. *Page 438 
MR. CHIEF JUSTICE WATTS and MESSRS. JUSTICES BLEASE and STABLER concur.
MR. JUSTICE CARTER did not participate.