Court Opinion

ID: 6503175
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:43.605569+00
Date Added: 2024-06-11T15:54:39.904554
License: Public Domain

ORMOND, J.
This action is against the defendant, as one of the majority of the board of directors of the Branch Bank of Mobile, by whose act a sum of money was appropriated to compensate another director, as an agent of the bank.
In the Branch Bank at Mobile v. Collins, 7 Ala. 95, this was held to be illegal, and that the money so unlawfully received could be recovered from the director receiving it, by action of assumpsit. This action is against an individual director, who by voting with the majority participated in the unlawful act, but did not receive the money.
The act incorporating this, as well as the rest of our banks, placed it under the control of a president and directory. The second section of the charter declared, that “ for the management of the concerns of said bank, the legislature shall annually proceed to elect by joint vote of both houses, a president, and fourteen directors, whose office shall continue for one year,” &c. The power here conferred on the directory, is to those composing it collectively, and not as individuals, and like all other grants of power to a body of men acting in a corporate, political, or judicial capacity, is to be exercised by the majority, unless the act creating the body otherwise limits, or declares the mode in which it shall act, *197or manifest its determinations. The only limitation in the charter of this bank is, “ that not less than six of the directors shall constitute a board for the transaction of business, of whom the president shall always be one;” and as it does not require that each member of the board shall concur in the performance of any act, it follows necessarily that the act may be done by a majority of the board present. This, however, is not left to inference, as the act requires the board to Iceep a minute of its proceedings, and authorizes any member to require the yeas and nays to be recorded.
That it is not the vote which any director may cast, which constitutes an act for which he might be afterwards held responsible, is evident from the fact, that it requires a majority to do any act as a board of directors, and that it is only as one of the majority, that a director can participate in the action of the board. He has no capacity to act as a director, but as an integral part of the board, and the act when done, is not the act of each member individually, but is the result of the joint action of the majority collectively. A vote,given by a member in the minority, has clearly no influence upon the action of the board, yet until the result of the ballot or vote is ascertained, his voice is as potent, as one which the result ascertained to have been in the majority. It follows necessarily, that an act done by the board, is not the act of the individual members who by voting in the majority have produced the result, but the act is the consequence of-the joint action of those directors, who by their vote have carried the proposed measure.
The case of the Franklin In. Co. v. Jenkins, 3 Wend. 130, is the converse of this. There, four persons were sued as directors, for a waste of the funds of the company, and the court held, that as they did not constitute a majority of the board, they were incapable of doing any corporate act, and could not therefore jointly?-, as directors, have wasted the money or effects of the corporation, but if liable at all, were liable individually. That is the precise principle involved in this case. In both counts of the declaration, the act complained of, is charged to have been done by the defendant in his capacity of director, acting with, and constituting one of the majority of the board, by which the act was done ; it *198was an act, therefore, which from its very nature, as well as from the express allegation of the declaration, was not an act done by him as an individual, but the act of the board. Doubtless each of the individuals, comprising the directory, by an improper interference with the property of the bank, would be responsible to it for the injury thereby sustained. But that is not the charge. He is charged not with his own act, but with the act of the majority of the board, and in my opinion, no action can be maintained against any individual composing that majority, but that if liable at all, they are jointly liable.
It is further urged, that conceding all the directors composing the majority should have been sued, advantage can -only be taken of the omission by plea in abatement. The rule that although several are concerned in the commission, of a tort, they may be sued either jointly or severally, proceeds from the nature of the act, which in general is such, that each, or all may have committed it. If it is of such a nature that it cannot be joint, as in verbal slander, although many may repeat the same words, the action must be several, (1 Ch. P. 77); and for the same reason, it would seem necessarily to follow, that if there can be a tort, which one cannot commit, but in connection with others, that the action must be joint, and could not be several.
But can this be considered a tort, in the proper sense of the term. It manifestly wants the ordinary ingredients which constitute it. Here was no violence, or any act denoting intentional wrong. It was an act done colore officii, and does not per se denote an intention to waste or misapply the funds of the bank; and although an unauthorized act, and for the consequences of which the actors in it may be responsible to the bank, it may nevertheless have been done in good faith, and from a belief that it was authorized by the authority reposed in them as directors. It seems to belong to that class of injuries “for which the law has made no provision, or rather where no general action could well be devised before-hand,” and which may therefore be redressed by $ .special action on the case. [1 Bac. Ab.’ 72.]
There was no necessity to plead the non-joinder of the other directors, because the plaintiff by his own statement of *199his case, shows that he has no canse of action against the defendant individually; a demurrer therefore to the declaration Yas proper mode of making the objection.
Proceeding to the consideration of the merits of the case, a majority of the court is of the opinion, that the court below erred in the charge given to the jury, as well as in some of those which it refused.
The power conferred on the directory was a trust of the greatest delicacy, and of the highest importance, in the exercise of which, the utmost good faith on their part was necessary. The undertaking implies a competen^ knowledge of the duties of the agency assumed by them, as well as a pledge that they will diligently supervise, watch over, and protect the interests of the institution committed to their care. They do not in our judgment undertake, that they possess such a perfect knowledge of the matters and subjects' which may1 come under their cognizance, that they cannot err, or be mistaken, either in the wisdom or legality of the means employed by them. To exact such extreme accuracy of knowledge from this or any other class of agents, to whom of necessity a large discretion in the choice of means must be entrusted, would be manifestly wrong, as it must frequently happen, that after the utmost circumspection and caution, the best possible course would not be pursued, and a loss be-sustained, which as the event would show, might have been avoided. The inevitable tendency of such a rule, would be-hostile to the end proposed by it, as no man of ordinary prudence would aceept a trust surrounded by such perils.
There may doubtless be instances of such gross error, in: the conduct of an agent, invested even with great discretionary powers, as to expose him, either to the imputation of such ignorance as is incompatible with the exercise of the duties he has undertaken, or to justify the imputation of fraud.
To apply these general principles to this case. That the directory did not know it was unlawful to employ one of their number as an agent of the bank, and give him a compensation in addition to his salary as a director, for the performance of extraordinary services, is no impeachment of their knowledge as mercantile men; nor does it by any *200means demonstrate the want of that skill which would be necessary to qualify them for the station they filled. Indeed, it merely proves they were not skillful lawyers, as well as merchants, and although the act was not lawful, and the director receiving such additional compensation may be compelled to refund it, it is not, if done in good faith, and with the honest purpose to collect and preserve the assets of the bank, an act which would expose the directory to a personal responsibility.
The principles here advanced are sustained by the decision of the Supreme^Court of Louisiana, in the case of Percy v. Millaudon, 8 Martin’s Lou. R. 68, N. S. That was a suit by the stockholders of a bank, against a portion of the directory, charging them with unfaithful conduct in that capacity. The opinion of the court, which is a very able one, places 'the question we have been considering, upon the same ground taken in this opinion; and holds, that bank directors are not responsible for errors of judgment, unless the error be of the grossest kind. Among other charges against the directors, was the making allowances to the cashier and attorney of the bank, beyond their salaries. Upon this particular specification, the court say,- “as to the charge of voting sums to the officers of the bank, in addition to their salary, we do not see any thing which may not be reconciled to a wish to reward zeal and merit, or What they consider such, in the service of the institution.”
The decision in Harman v. Tappenden, and others, 1 East, 535, also sustains the views here taken. That was an action by one corporator, against the other members of the corporation, for disfranchising him, and thereby cutting him off from the benefit of a fishery, which by custom as one of the corporators, he was entitled to. Lawrence, Justice, said, “ there is no instance of an action of this sort, maintained for an act, arising merely from error of judgment. Perhaps the action might have been maintained, if it had been proved, that the defendant’s contriving, and intending to injure and prejudice the plaintiff, and to deprive him of the benefits of his profits from the fishery, which as a member of this body he was entitled to from the custom, had wilfully and mali*201ciously procured him to be disfranchised, in consequence of which he was deprived of such profits,” &c.
This appears to us to be fully in point in principle. For if persons acting in a corporate capacity, are not responsible to another corporator, for a wrong done to him, in violation of law, unless done from malicious motives, certainly an agent of a corporation, ought not to be responsible to it, for an act which though unlawful, was done in good faith, and in the exercise of the power vested in him.
In such cases the quo animo is the gist of the matter, and an act is actionable, or othqrwibe, accordingl'to the intent with which it was done. In this particular case, there would be great injustice in holding these directors liable for a mistake of law, committed in the honest exercise of their duties. In the language of the case cited from 8 Martin, 68, supra, “it would require from them, knowledge and learning, which the law only presumes in those who have made the jurisprudence of their country the study of their lives, and which knowledge often fails them, from the intrinsic difficulty of the subject, and the fallibility of human judgment.”
Our opinion therefore is, that the directors are not responsible individually, for the act complained of, if in the appointment of the agent, they acted in good faith, and with a view to the promotion of the interest of the bank.
Let the judgment be reversed, and the cause remanded.