*507

When the plaintiff rested, the appellant moved that the bill be dismissed as to him, announcing that he would not introduce any evidence in his own behalf, and at the conclusion of the trial the District Court granted his motion. On appeal the Circuit Court of Appeals reversed this judgment, found or special. The only justification or excuse Bowerman liable, and in the decree, which we are reviewing, remanded the case to the District Court, with direction to enter a decree in conformity with the views expressed in its opinion.

Appellant's answer to the bill is substan- the suggestion of the Comptroller of the tially a general denial.

*510

(39 Sup.Ct.)

Some of these by-laws were flagrantly disobeyed for years before the failure, and the others were observed in a manner so perfunc-ly and honestly administer the affairs of the tory as to amount to a disobedience of them. The three large loans complained of were never reported to the board of directors, except fragmentarily from time to time, when indistinguishably incorporated with other overdrafts, although they were gradually accruing during many months.

*511

affairs of the bank, is equally clear; and that Bowerman, when guilty of neglect in both of these respects, did not exercise the diligence which prudent men would usually exercise in ascertaining the condition of the business

"In any view the degree of care to which these defendants were bound is that which ordinarily prudent and diligent men would exercise under similar circumstances, and in determining that the restrictions of the statute and the usages of business should be taken into account. What may be negligence in one case of the bank, or a reasonable control and may not be want of ordinary care in another, supervision over its affairs and officers, is and the question of negligence is, therefore, ulti-likewise beyond discussion. He cannot be mately a question of fact, to be determined shielded from liability because of want of under all the circumstances." knowledge of wrongdoing on his part, since that ignorance was the result of gross inattention in the discharge of his voluntarily asBowerman was a banker, and the letter, "Without reviewing the various decisions on from which we have quoted, written to the the subject, we hold that the directors must ex-president of the bank which failed, shows he ercise ordinary care and prudence in the administration of the affairs of a bank, and that what was necessary for the safe conduct of so understood the business of banking, and this includes something more than officiating as figureheads. They are entitled under the law it, that even slight care on his part in the to commit the banking business as defined, to discharge of his duty as a director must have their duly authorized officers, but this does not discovered and arrested what he himself absolve them from the duty of reasonable super- characterized as a hazardous manner of convision, nor ought they to be permitted to be ducting its affairs. He was a man of such shielded from liability because of want of knowl-importance and reputation that the use of, edge of wrongdoing, if that ignorance is the result of gross inattention."

And again, in the final summing up, on page 165 of 141 U. S., on page 935 of 11 Sup.sumed and sworn duty. Ct. (35 L. Ed. 662):

In an earlier case, Martin v. Webb, 110 U. S. 7, 15, 3 Sup. Ct. 428, 433 (28 L. Ed. 49) it was said:

"Directors cannot, in justice to those who deal with the bank, shut their eyes to what is going on around them. It is their duty to use ordinary diligence in ascertaining the condition of its business and to exercise reasonable control and supervision of its officers. They have something more to do than from time to time, to elect officers of the bank, and to make declaration of dividends. That which they ought, by proper diligence, to have known as to the general course of business in the bank, they may be presumed to have known in any contest between the corporation and those who are justified by the circumstances in dealing with its officers upon the basis of that course of business."

This latter statement of the rule is made in a case dealing only with borrowers from the bank, but there is no *good reason why it should not be applied for the protection of depositors and stockholders.

While the rule as thus formulated in Briggs v. Spaulding, supra, has been thought by some state courts of last resort to be an understatement of the law of the duty of bank directors, it is amply broad, without restatement, for the disposition of the case before us.

That ordinarily prudent and diligent men, accepting election to membership in a bank directorate, would not willfully absent themselves from directors' meetings for years together, as Bowerman did, cannot be doubted; that a director who never makes, or causes to be made, any examination whatever of the books or papers of the bank to determine its condition, and the way in which it is being conducted, does not exercise ordinary care and prudence in the management of the

his name must have contributed to securing the confidence of the community and of *depositors for the bank, and it would be a reproach to the law to permit his residence at a distance from the location of the bank, a condition which existed from the time he first assumed the office of director, to serve as an excuse for his utter abdication of his common-law responsibility for the conduct of its affairs and for the flagrant violation of his oath of office when it resulted in loss to others.

[4] It is argued that the decree of the Circuit Court of Appeals should be reversed, and the cause remanded for a new trial for the reason that the trial in the District Court was on the theory that only the charge of statutory liability was involved and to be met by the appellant, and that he should have an opportunity to produce evidence, if he desires, on the issue of common-law liability.

At his peril the appellant put the construction on the pleadings which, for the reasons stated in this opinion, was erroneous. The suit was in equity, and he was charged with notice that the decision of the trial court was subject to review on both the law and the facts, and, although he was present in court during the trial, he neither took the stand to testify in his own behalf nor offered any evidence upon the question of his liability. The interests represented by the receiver are entitled to consideration, as well as those of the appellant, and the contention cannot be allowed.

[5, 6] It is also urged that the appellant resigned his office as director some time before the bank failed, and that the decree of the Circuit Court of Appeals renders him liable for transactions after his resignation.

The only showing on this subject in the

(39 Sup.Ct.)

3. CONSTITUTIONAL LAW 105 VESTED RIGHTS-WHAT CONSTITUTE.

record is the averment in appellant's answer, Compensation Law provides an extensive that he was not a director of the bank after scheme for compensating injured employés, basabout the 1st day of July, 1910, and that ed on the novelty, wisdom, and policy of the he refused to qualify when notified of his acts, cannot be considered by the courts; that re-election in January, 1911. These allega- being a matter for the Legislature. tions must be deemed denied under the 2. MASTER AND SERVANT 11 REGULAthirty-first equity rule (198 Fed. xxvii, 115 TION-LIABILITY FOR INJURIES TO SERVANT. C. C. A. xxvii). The only evidence in the The rules of law governing employers' rerecord on the subject is the oath of office sponsibility for injuries to employés arising in taken by appellant in January, 1910, and the course of the employment may be altered by testimony of the receiver that the letter from the Legislature in public interest; such rules the appellant to the president of the bank, assumption of risk being subject to change. as the fellow servant rule and the doctrine of from which we have quoted, was the only letter from him which he found, among the papers which came into his possession as receiver, bearing on the mismanagement of No person has a vested right, entitling him the bank, and that letter was written after to have unchanged the existing rules of law the failure. Section 5145 of the Revised concerning an employer's responsibility for perStatutes (Comp. St. § 9683) provides that di-sonal injury or death of an employé. rectors shall hold office for one year and un- 4. MASTER AND SERVANT 11 REGULAtil their successors are elected and have qualTION-LIABILITY FOR INJURIES. ified. In the absence of evidence that the appellant resigned or refused to qualify when re-elected in January, 1911, we must agree with the Circuit Court of Appeals in the conclusion reached, with the full record before it, that he continued to be a director "from the organization of the bank until the receiver took charge."

If the changes are not arbitrary and unreasonable, liability may be imposed on an employer without fault for injury or death of an employé arising in the course of the employment.

5. CONSTITUTIONAL LAW 245 EQUAL PROTECTION OF LAWS-EMPLOYERS' LIABILITY ACT.

Other claims of error, chiefly technical, The Arizona Employers' Liability Act, enhave been pressed upon our attention, and acted pursuant to Const. Ariz. art. 18, which have all been considered and found to be dangerous, and imposed liability on the emdesignated specified employments as inherently without substantial merit. Conduct such as ployer for accidental injury or death of emthis appellant was so palpably guilty of is ployés not caused by their own negligence, is not to be weighed in the scales of an apothe-not, though it changed the common-law rules as cary. The decree of the Circuit Court of to liability of masters, invalid, as denying to Appeals must be

Affirmed.

Mr. Justice MCKENNA and Mr. Justice MCREYNOLDS dissent.

(250 U. S. 400)

ARIZONA COPPER CO., Limited, v.
HAMMER. No. 20.

SAME v. BRAY. No. 21.

them the equal protection of the law, in violation of Const. Amend. 14.

6. CONSTITUTIONAL LAW 301-DUE PROCESS OF LAW-EMPLOYERS' LIABILITY.

In view of the interest of the state in the welfare of its citizens, the Arizona Employers' Liability Act, which makes employers in specified occupations designated as inherently dangerous, liable for the accidental injury or death of servants not themselves negligent, regardless of the employer's fault, is not invalid, as depriving employers of their property without due process of law, in violation of Const. Amend. 14.

RAY CONSOL. COPPER CO. v. VEAZEY. 7. CONSTITUTIONAL LAW 48 UNCON

No. 232.

MENDEZ. No. 332.

INSPIRATION CONSOL. COPPER CO. v.

BURDEN OF

Those attacking the Arizona Employers' Liability Act on the ground that it is in violaSUPERIOR & PITTSBURG COPPER CO. tion of Const. Amend. 14, have the burden of

V. TOMICH. No. 334.

(20 and 21, Argued Jan. 25, 1918. 232, Argued Jan. 28, 1918. 332, Argued April 25, 1919. 334, Submitted April 24, 1919. Decided June 9, 1919.)

--

demonstrating that it is clearly unreasonable and arbitrary, so as to bring it within the constitutional inhibitions.

301-DUE PROCESS OF LAW-DEPRIVATION OF PROPERTY WITHOUT.

8. CONSTITUTIONAL LAW

1. CONSTITUTIONAL LAW 70(3) PROVThe Arizona Employers' Liability Act, proINCE OF COURTS-WISDOM OF LEGISLATIVE viding that employés in occupations designated ACTS. as inherently dangerous, who are injured withAttacks on the Arizona Employers' Liabili-out their own negligence, may recover the proxty Act, which with the Workmen's Compulsory [imate damages resulting from the injury, to

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

be assessed by a jury, is not invalid, as de-, so that an injured workman may recover for priving employers of their property without pain suffered, does not render the act invalid, due process of law, on the ground that the damages were unlimited, for the act, as construed by the highest Arizona court, limited recovery to the actual damages, and the fact that damages were to be assessed by a jury is certainly no ground for asserting a denial of due process of law.

for pain is as much a part of the workman's loss as the loss of a limb or other member, and, while the actual pain may not be shifted, it may be compensated for. (Per Mr. Justice Holmes, Mr. Justice Clarke, and Mr. Justice Brandeis.)

The Chief Justice, Mr. Justice McKenna, Mr. Justice McReynolds, and Mr. Justice Van Devanter dissenting.

In Error to the District Court of the United States for the District of Arizona.

In Error to the Supreme Court of the State of Arizona.

Action by Joseph B. Hammer against the

10. CONSTITUTIONAL LAW 42 PERSONS Arizona Copper Company, Limited. There ENTITLED TO RAISE.

The constitutionality of the Arizona Employers' Liability Act is not open to attack on grounds that might possibly arise, but which do not affect the employers who were questioning its constitutionality.

11. CONSTITUTIONAL LAW 38
OF STATUTE
CONSTRUCTION.

was a judgment in the United States District Court for plaintiff, and defendant brings error. Action by Richard Bray against the Arizona Copper Company, Limited. There was a judgment for plaintiff in the United States District Court, and defendant brings VALIDITY error. Action by Dan Veazey against the POSSIBILITY OF IMPROPER Ray Consolidated Copper Company. There was a judgment for plaintiff in the United States District Court, and defendant brings error. Action by Ceferino Mendez against the Inspiration Consolidated Copper Company. A judgment for plaintiff was affirmed by the Supreme Court of Arizona (19 Ariz. 151, 166 Pac. 278), and defendant brings error. Action by Frank Tomich, sometimes known as Frank Thomas, against the Superior & Pittsburg Copper Company. A judgment for plaintiff was affirmed by the Supreme Court of Arizona (19 Ariz. 182, 165 Pac. 1101), and defendant brings error. The cases were consolidated in the Supreme Court, and the judgments for the several plaintiffs affirmed.

As the Arizona Employers' Liability Act, making employers liable though without fault, imposes liability only for accidental injuries attributable to inherent dangers of the occupation, it cannot be deemed unconstitutional, on the theory that it might be extended by construction to nonhazardous industries, for it is obvious that employers in such industries are in little danger from the act.

12. CONSTITUTIONAL LAW 38 CONSTITUTIONALITY OF STATUTE-POSSIBILITY OF IMPROPER CONSTRUCTION BY STATE COURTS. As the highest court of Arizona has construed the Employers' Liability Act to limit recovery to compensatory damages, it cannot be assumed, where its constitutionality was questioned in the federal Supreme Court, that its benefits might be extended in case of death claims to those not nearly related to or dependent on the deceased employé, etc., for it would be improper for the Supreme Court to assume that the state court would place such a construction on the act as to render it obnoxious to the federal Constitution.

13. CONSTITUTIONAL LAW 249, 305-DUE PROCESS OF LAW-EQUAL PROTECTION OF LAWS-ELECTION OF REMEDIES.

Though an Arizona employé, who suffers injuries, has an election, and may proceed either under the Employers' Liability Act, if he is not guilty of negligence, or, if guilty, under the Workmen's Compulsory Compensation Law, or, if the employer is at fault, under the common law, relieved of certain defenses, such right of election does not deprive employers of their property without due process of law, or deny them the equal protection of the law, in violation of Const. Amend. 14.

14. MASTER AND SERVANT

11-VALIDITY

OF REGULATIONS-LIABILITY ACT. That the Arizona Employers' Liability Act allows compensation to be made as in tort cases,

Cases Nos. 20 and 21:

Messrs. Ernest W. Lewis, of Phoenix, Ariz., John A. Garver, of New York City, and William C. McFarland, of Douglas, Ariz., for plaintiff in error.

Messrs. Frank E. Curley, of Tucson, Ariz., L. Kearney, of Clifton, Ariz., and Frank H. Hereford, of Tucson, Ariz., for defendants

in error.

Case No. 232:

Messrs. William H. King, of New York City, and Alex Britton, Evans Browne, and F. W. Clements, all of Washington, D. C., for plaintiff in error.

Mr. Edward W. Rice, of Globe, Ariz., amicus curiæ.

Case No. 332:

Messrs. Edward W. Rice, of Globe, Ariz., and Harvey M. Friend, of Washington, D. C., for plaintiff in error.

Mr. Graham Foster, of New York City, for defendant in error.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes