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Rose v. First State Bank of Paris

Court of Civil Appeals of Texas, Texarkana
May 21, 1931
38 S.W.2d 863 (Tex. Civ. App. 1931)

Opinion

No. 3975.

May 12, 1931. Rehearing Denied May 21, 1931.

Appeal from District Court, Lamar County; Newman Phillips, Judge.

Suit by A. J. Rose against the First State Bank of Paris, Tex., and others. Judgment for defendants, and plaintiff appeals.

Affirmed.

The appeal is to revise a ruling of the trial court in sustaining a demurrer to the plaintiff's petition upon the ground that it appeared from the face of the petition that the cause of action was barred by the statutes of limitation. It was the opinion of the trial court that "the statute of limitation of two years" was applicable to the case.

The suit was filed in the district court on May 26, 1930, by the plaintiff, A. J. Rose, against the First State Bank of Paris, and the other named defendants, respectively as president, vice president, cashier, and directors of the bank. The allegations in the petition are, in substance, that the bank was, and had so existed for some time previously, in failing circumstances and was actually insolvent on the date of April 30, 1926, and the officers and directors knew of such fact, when the plaintiff deposited in the bank $16,000 in money and was issued and delivered the following certificate in writing:

"$16,000.00 No. 1056

"The First State Bank of Paris, Texas, April 30, 1926.

"This certifies that A. J. Rose has deposited in this bank $16,000.00 payable to the order of himself, in current funds on the return of the certificate properly endorsed. Due January 1, 1927.

"With interest at no % per annum for the time specified.

"This certificate is not subject to check, and is not negotiable.

"No interest after maturity.

"E. H. McGlasson, Vice-President."

That at the time when the deposit was made in the bank the plaintiff had no notice nor knowledge of its insolvency, but on the contrary, as the bank was open and being operated, he was led to believe that it was solvent and worthy of credit and confidence, and that his money would be repaid to him on his demand on January 1, 1927. That on May 26, 1926, and because of insolvency, the officers and directors of the bank closed its doors and placed its affairs and assets in the hands and under the control of the banking commissioner of Texas for liquidation. That the assets of the bank were all collected and disposed of during the process of liquidation, and this plaintiff has received no part of the sum deposited by him.

As was specially alleged: "The plaintiff further alleges that he did not at any time know or have any cause or reason to suspect the insolvency of said bank until some days after the 26th day of May, 1926, when he, for the first time, learned of its insolvency, and the fact that it had been taken in charge by the Banking Commissioner of the State of Texas; that it was not until some days after the 26th day of May, 1926, that he had any cause or reason to suspect, nor was he, previous thereto, in possession of any fact or circumstance, which would cause him to believe or even suspect that such bank, at the date it received such deposit from him, to-wit, on April 30, 1926, was insolvent, and was then insolvent."

King, Mahaffey, Wheeler Bryson, of Texarkana, for appellant.

W. F. Moore, of Paris, for appellees.


The point presented for decision is that of whether or not the cause of action was barred by the statute of limitations. The answer depends, first, on how the action should be classified. The asserted right of action is founded solely on article 533, R.S. 1925, which is as follows: "No president, director, manager, cashier or other officer or agent of any bank or banking institution organized and doing business under the provisions of this article shall receive or assent to the reception of deposits, or create or assent to the creation of any debts by such bank after he shall have knowledge of the fact that it is insolvent or in failing circumstances. Every person violating the provisions of this article shall be individually responsible for such deposits so received and all debts so contracted. Any director who may have paid more than his share of the liabilities mentioned in this article may have the proper remedy at law against such other persons as shall not have paid their full share of such liabilities. In case of the insolvency of one or more of such officers, agents or managers, the same shall be paid for the time being by those who are solvent, in equal proportion." The article is clear in the nature and purpose of its adoption, to impose upon the bank's officers and directors, as such, the legal liability of becoming "individually responsible" when the special circumstances stated occurs, to pay to the specially named depositors "such deposits so received" by "such bank." The word "deposits" as used is descriptive of the obligation assumed by the bank with the assent of the officers and directors "violating the provisions of this article." A general deposit is, in truth, but a loan of money to a bank and the relationship of the bank to the depositor is legally regarded as that of debtor and creditor. Baker v. Kennedy, 53 Tex. 200; 7 C.J. § 326, p. 641. The effect of the provisions of the act, then, is an intention not to relieve the bank of any liability for the wrongful acts done by the officers and directors in receiving such deposits, but to impose this additional liability upon the officers and directors in favor of and for the benefit of the specially named creditors of the bank for the money so due from the bank to such creditors by reason of the financial condition of the bank. In the case of Fichtner v. Mohr (Mo.App.) 16 S.W.2d 739, in passing upon the Missouri statute which is in the words of the Texas statute, the court concluded that the liability thus imposed upon the officers and directors of the bank should be classed as a penal and not a contractual one. Stated in other words, the ruling was to the effect that the liability was not in the nature of a mere personal contract but a specialty debt created by statute. And in Wood on Limitation (3d. Ed.) § 39, p. 95, it is said: "The test whether a statute creates a specialty debt or not is whether independent of the statute the law implies an obligation to do that which a statute requires to be done, and whether independently of the statute a right of action exists for a breach of the duty or obligation imposed by the statute. If so, then the obligation is not in the nature of a specialty. * * * but if the statute creates the duty or obligation then the obligation thereby imposed is a specialty." The distinction is, as given by section 36, Wood on Limitation, and reading: "In all cases where liability is created by the positive requisitions of a statute and not by the acts of the parties themselves, the liability is in the nature of a specialty, and is not within the statute of 21 James nor within the statutes adopted in the several states applicable to simple contracts, unless expressly made so." Further, in the like principles of statutory liability of stockholders, the rule appears, as stated in 1 Cook on Corporations, p. 585: "But the usual statutory liability of stockholders is not a penalty. The courts are nearly unanimous in holding that by statute where the stockholders in a corporation, instead of being relieved entirely from liability to the corporate creditors, are only partially relieved therefrom, the additional liability is a contract liability, and will be enforced by the courts of any state. In other words, the ordinary statutory liability of stockholders is a contract liability, and is generally held to be such by the courts of all the states."

Under the tests stated, undoubtedly the statute in the present case does create the duty or obligation upon the officers and directors to pay the deposit received by the bank for whom they assume to act, though independently of the statute the law does not imply any obligation upon the officers and directors to pay the debt; nor, independently of the statute, could any right of action for the debt of the bank be maintained by the creditors of the bank. Therefore the liability thus imposed should be classed as in the nature of a statutory liability imposed upon the officers and directors to personally pay the debt of the bank due by it to the plaintiff, a depositor creditor. It is a cause of action for a money judgment and the obligation is to pay money only.

What period of limitation, then, is applicable to the case of liability as here provided? There appears a great variety of decided cases in relation to different statutes of limitation which have been applied to actions of debt created partly by statute and partly by contract, as well as to debts created solely by statute. Article 5529 fixes four years as the period applicable for "every action other than the recovery of real estate, for which no limitation is otherwise pre scribed." Another provision, subdivision 4, article 5526, fixes two years as the period applicable for "actions for debt where the indebtedness is not evidenced by a contract in writing." In the case of Corsicana National Bank v. Johnson, 251 U.S. 68, 40 S.Ct. 82, 89, 64 L.Ed. 141, the bank sued its director and vice president under the provisions of the federal statute for an excessive and bad loan of the bank's funds. There the liability was a legislative or statutory liability to pay the loan, and the Supreme Court of the United States, in applying the Texas statute of limitations, held "in our opinion, the action is not one of the kinds specified in article 5687 [actions for debt], to which the two-year limitation applies, but is within the general description of article 5690 [the residuary section], and subject only to the limitation of four years." Presumably the ruling was based upon the view, which is logically correct, that the wording of subdivision 4 of article 5526 merely separated and distinguished those cases resting on oral contract from those cases resting upon written contract as provided by subdivision 1 of article 5527. Subdivision 1 of article 5527 provides for "actions for debt where the indebtedness is evidenced by or founded upon any contract in writing." But the Supreme Court of this state, in the case of Gordon v. Rhodes Daniel, 102 Tex. 300, 116 S.W. 40, 41, decided prior to the above case of Bank v. Johnson, construed, the term "actions for debt," as used in subdivision 4 of article 5526, as not intended as a separate and distinctive remedy for controversies arising out of mere personal contracts, but as intended to extend to and embrace liabilities that are payable in money only, although not resting upon mere personal contracts. The court cited and followed the early case of Robinson v. Varnell, 16 Tex. 382, as so broadly holding. There is reflected the intention by such construction of the terms of the statute to have the words "action for debt" embrace all liabilities payable in money only, when not founded upon a writing, whether upon a mere personal contract, or upon a specialty debt, or upon a strictly legislative liability. We feel bound by the construction so broadly given to the article in this case of Gordon v. Rhodes Daniel, supra, and regard the interpretation as controlling the present appeal. The two years' statute referred to was applied in the case of stockholders' liability. Austin v. Proctor (Tex.Civ.App.) 291 S.W. 702. Similarly a statutory liability was considered to be within the provision of the statute of limitations relating to all actions founded upon any contract or liability "not in writing." Nebraska National Bank v. Walsh, 68 Ark. 433 59 S.W. 952, 82 Am.St.Rep. 301.

The case cited of McCord v. Nabours, 101 Tex. 494, 109 S.W. 913, 917, 111 S.W. 144, is distinguishable from the present suit. In that case, as in all similar cases, article 5529, being the residuary section, is held applicable because it was an equitable action "to set aside the transaction by which McCord acquired the stock and to restore it to the estate for which he was assignee." It was not a suit to enforce the payment of money only, as in the nature of an "action for debt," but primarily to recover specific property. That same distinction would apply to the cases cited of Holland v. Ashley (Tex.Civ.App.) 158 S.W. 1033, and Yeaman v. Galveston City Co., 106 Tex. 389, 167 S.W. 710, Ann.Cas. 1917E, 191.

The judgment is affirmed.


Summaries of

Rose v. First State Bank of Paris

Court of Civil Appeals of Texas, Texarkana
May 21, 1931
38 S.W.2d 863 (Tex. Civ. App. 1931)
Case details for

Rose v. First State Bank of Paris

Case Details

Full title:ROSE v. FIRST STATE BANK OF PARIS, TEX., et al

Court:Court of Civil Appeals of Texas, Texarkana

Date published: May 21, 1931

Citations

38 S.W.2d 863 (Tex. Civ. App. 1931)

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