Court Opinion

ID: 8899837
Source: CourtListenerOpinion
Date Created: 2022-11-27 00:54:21.343831+00
Date Added: 2024-06-11T17:07:45.721773
License: Public Domain

HUFSTEDLER, Circuit Judge
(dissenting):
I dissent from the majority opinion’s holding that the minority stockholders have stated a claim for relief under Section 93 of the National Banking Act. Leaving aside the impact of the Federal Deposit Insurance Corporation Act, I agree that Section 93 of the National Banking Act (“NBA”) gives a stockholder a direct federal claim for relief against the bank’s directors for their violation of the NBA to compensate him “for an injury which he, as distinct from the bank, has suffered.” The difficulty is that the minority shareholders in this case have not sustained any injury distinct from the bank. Their injury stems solely from the diminution of the value of their stock caused by the directors’ misdeeds. Injury of this kind is the classic example of nonpersonal injury for which the corporation alone can recover. The wrong thus suffered by these stockholders is deemed incidental to the wrong suffered by the corporation, and the wrong affects all stockholders. The well-settled rule is succinctly stated in Vincel v. White Motor Corp. (2d Cir. 1975) 521 F.2d 1113, 1118: “[WJhere an injury is suffered by a corporation and the shareholders suffer solely through depreciation in the value of their stock, only the corporation itself, its receiver, if one has been appointed, or a stockholder suing derivatively in the name of the corporation may maintain an action against the wrongdoer.” (Numerous cases are collected in a Note, 167 A.L.R. 279-284. Accord: Erlich v. Glasner (9th Cir. 1969) 418 F.2d 226.)
“Notwithstanding the general rule that a stockholder may not maintain a personal action for which an injury to the corporation of which he is a stockholder resulting in destruction or depreciation of the value of his shares, the courts have recognized an exception which permits a stockholder to maintain an action in his own right for an injury directly affecting him, although the corporation also may have a cause of action growing out of the same wrong, where it appears that the injury to the stockholder resulted from the violation of some special duty owed the stockholder by the wrongdoer and having its origin in circumstances independent of the plaintiff’s status as a stockholder.” (167 A.L.R. at 285, citing many cases.)
In all of the exceptional cases, the special relations giving- rise to an independent claim for relief are always those that cause a personal loss to the plaintiff that could not have been recovered by or on behalf of the corporation, and/or a loss that the plaintiff could not have recovered from assets collected by the corporation after it had successfully prosecuted its claim against an erring director. (Examples are given in Vincel, supra, 521 F.2d at 1118-1119.) None of those circumstances exist here.
The minority stockholders in our case allege nothing to bring them within any exception. They neither purchased nor sold any stock in reliance on the misdeeds of the directors. They had no contracts or any other special relationships with the directors or the bank that set them apart from their fellow stockholders.
The majority opinion discovers no circumstances that place these stockholders in an exceptional category. Rather, the majority appears to hold that Section 93, itself, as interpreted in Chesbrough v. Woodworth (1917) 244 U.S. 72, 37 S.Ct. 579, 61 L.Ed. 1000, creates an exception to the general rule. That conclusion rests on a misreading of both Section 93, Chesbrough, and its antecedents.
Yates v. Jones National Bank (1907) 206 U.S. 158, 27 S.Ct. 638, 51 L.Ed. 1002; Thomas v. Taylor (1912) 224 U.S. 73, 32 S.Ct. 403, 56 L.Ed. 673, and Chesbrough, all involve special relationships which, entirely apart from Section 93, would have created an independent cause of action in the aggrieved plaintiff. In Yates, the plaintiff was the creditor of an insolvent bank who was injured by his reliance on a false report in making a loan to the bank. In Thomas, the plaintiff had purchased shares in reliance upon a false report to the Comptroller of the Currency; he brought a common law deceit action in state court to recover his *505loss suffered when his shares proved worthless. Chesbrough was a factual replay of Thomas, except that in Chesbrough, the plaintiff sued in federal court relying on Section 93, rather than in state court on deceit.
None of these cases imply that Section 93 creates an exception to the general rule that an action for damages resulting from directors’ misconduct causing the value of shareholders’ stock to be diminished or destroyed belongs to the corporation alone. The purport of these cases is that Section 93 created a uniform federal standard of liability and that standard is narrower than that at common law. In Chesbrough, like Kimmich v. Potter (2d Cir. 1940) 112 F.2d 135, the corporation suffered “no such damage as plaintiff does by the report, and hence it or its receiver has no concern with this kind of action.” (Chesbrough v. Woodworth (6th Cir. 1912) 195 Fed. 875, 880.) The damages in Chesbrough were limited to the difference between the purchase price of plaintiff’s stock and its fair market value at the time of the purchase; no damages for diminution in the value of the stock after purchase was recoverable.
The claim for relief that these shareholders assert belongs to the corporation, and hence to the receiver. This defect cannot be cured by amended pleadings or by proof.
I have grave doubt that any individual actions against directors by stockholders can be pursued during the pendency of the FDIC receivership. Because I find no claim for relief stated on behalf of any of these stockholders, I have no occasion to detail those doubts or the reasons for them.
I would respond to both of the certified questions: The shareholder plaintiffs have no right to maintain either an individual or representative action under Section 93 of the NBA or under state law where the only damages claimed are the diminution of the value of their shares in the failed bank.