Court Opinion

ID: 8759822
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:01:48.797105+00
Date Added: 2024-06-11T17:01:29.539391
License: Public Domain

PER CURIAM.
The facts are so fully and carefully considered by the Circuit Court that little more is required. The cancellation of the bond and mortgage covering No. 33 Nassau street, New York —property now occupied by the Bank of Commerce—left the Building Association without available property. The mortgage, unquestionably worth its face value, was canceled and nothing remained but so-called securities, which, if not worthless, were unavailable and discredited. This act of spoilation was done with the knowledge, consent, and procurement of the defendant, and he is liable for the consequences. It matters not that he may have supposed that by aiding the trust company at the expense of the building association he was, considering his relations to each, doing a laudable act. The courts are not permitted to take such matters into consideration. It is enough that he occupied fiduciary relations to the association, its creditors and stockholders. It was peculiarly his duty to protect and preserve the property and when it appears that instead of so doing the association was, through his procurement, stripped of every dollar of available assets, it follows as a necessary conclusion that he must respond to those who have suffered through his act.
We agree with the Circuit Court 'in thinking that even though it be conceded that at the time of the sale of No. 33 Nassau street the equity of redemption was worth more than $100,000, the conveyance to the trust company for that sum cannot be regarded as a breach of duty by the defendant. Although the evidence shows that prior to the sale the directors of the association were not particularly solicitous for its interests, there is insufficient proof to warrant a finding of wrongdoing on their part at that time. Eor this reason we think that complainant’s contention as stated in his first and second assignments of error cannot be maintained.
In the remaining assignments the complainant asks that the decree be amended by striking out all portions thereof requiring the delivery of the Brigantine securities to the defendant as a condition precedent to the payment of the money found due from him. Certainly the decree should not fail because of the complainant’s inability to comply with this condition. He insists that these securities are beyond his control. Indeed, it seems to be admitted by all that they are now in the possession of a receiver, appointed by the Circuit Court for the Southern District of New York, in an action pending therein by this complainant against the Holland Trust Company, and that-the success of that action depends upon the ability of the complainant to make delivery of said securities in case the court should decree in his favor. There is, we think, considerable force in the complainant’s contention that, as the action is one sounding in tort, the defendant is not entitled to an assignment of the securities as a condition to the payment of damages occasioned by his negligent acts. In this view, a proper solution of the difficulty might be to strike out from the decree the provisions directing the delivery of the Brigantine securities without prejudice to an application by the defendant, on payment of the amount directed to be paid by the decree, to be subrogated in the action pending in the Southern District; where *480the equities can be fully determined. We are not possessed of sufficient information to deal with this question; we do not know that the receiver in the second suit will, on demand, refuse to deliver the securities, and we do not know their present value. In view of these •circumstances, if the parties are unable to agree upon a modus vivendi, we think the Circuit Court should be permitted to amend its decree so as to insure its speedy enforcement either by striking out the provision for delivery of the securities or by ascertaining their present value and deducting the amount from the sum to be paid by the defendant.
The action is not barred by the statute of limitations or for laches, for the reason that the complainant did not discover the wrongful conduct, which is the foundation of the action, until a few months prior to its commencement. Directors are assumed to act for the interests ■of their stockholders, and the latter have a right to rely upon the assumption that they are acting honestly until the contrary appears. There was nothing to excite suspicion in the present instance. The mere fact that the complainant knew, or should have known, that the •exceedingly valuable building of the Bank of Commerce was being •erected on the premises, No. 33 Nassau street, if entitled to any significance, should have lulled rather than excited suspicion, for it indicated that the association had made a most favorable disposition •of its property. It surely was no notice, especially during the time that •dividends were regularly paid, that through the action of its directors the association had been despoiled of every, vestige of available property.
We have examined the other assignments of error argued by tlie defendant, and are of the opinion that none can be sustained.
The decree is affirmed, with costs, and the cause is remanded to the Circuit Court to make such modifications and amendments, not inconsistent with this decision, as it may deem necessary.