against the further prosecution of the ac- there is, therefore, jurisdiction, even if, in tion, and to operate as a bar to recovery, other respects, jurisdiction might not be exwas set up in special defenses, which need ercised, as to which we are not called upon not, however, be further noticed.

to decide. Schlemmer v. Buffalo, R. & P. R. The answers of Yates and Hamer were Co. 205 U. S. 1, 51 L. ed. 681, 27 Sup. Ct. similar in effect to that of Thompson, ex- Rep. 407; Tullock v. Mulvane, 181 U. S. 497 cept as to the allegation that Thompson | 46 L. ed. 657, 22 Sup. Ct. Rep. 372; Metrowas not a director when the plaintiff made politan Nat. Bank v. Claggett, 141 U. S. 520, his deposits.

35 L. ed. 841, 12 Sup. Ct. Rep. 60; Logan The cause was put at issue. Before the County Nat. Bank v. Townsend, 139 U. S. trial three of the defendants—Walsh, Ha- | 67, 35 L. ed. 107, 11 Sup. Ct. Rep. 496. mer, and Phillips-died, and the action was To dispose of the controversy presented revived against the administrator of Walsh by the record before us we need only conand Hamer, but was not prosecuted further sider the following assignments of error: against the estate of Phillips. The com- “7. The court has erred in deciding that panion actions brought by different plain the fact that those plaintiffs in error who tiffs were tried with the case at bar by a were directors were without knowledge of jury, and there was verdict against all the any falsity of the reports attested by them defendants then before the court, upon which or some of them, mentioned in the petition, judgment was entered except as to the ad- was immaterial, and that such directors or ministrator of Walsh, in whose favor judg- any of them were liable under the proofs ment was entered by the court upon special showing that they were without knowledge findings as to him made by the jury. After of the falsity of such reports; the said dethe correction of an error in the amount of cision is in violation of the provisions of the judgment the case was taken to the $ 5239 of the Revised Statutes of the United supreme court of Nebraska, where the judg- States, which makes liability of the directment was affirmed. 105 N. W. 287. This ors dependent upon the fact that they writ of error was then sued out, apparently knowingly violated or knowingly permitted on behalf of all the defendants. We assume, the violation of the provisions of the nahowever, that Charles W. Mosher and R. C. tional banking act, and participated in or Outcalt, two of the defendants below, have assented to such violation. abandoned the prosecution of the writ. We "8. The court has erred in deciding that 80 assume because no cost bond appears to a common-law action of deceit based upon have been furnished by either; because nei- reports of the Capital National Bank made ther has appeared at the bar by counsel to the Comptroller of the Currency and atand no brief in their behalf has been filed, tested by the directors of such bank can be and, on the contrary, in the brief of the de- maintained against such directors, without fendants in error it is stated that the per- knowledge of any false statements in such sons named did not prosecute error, which reports, and without any participation in we take to mean that the parties referred or assent to any violation of the national to have abandoned in this court the prose- banking act as essential elements of the cution of the writ of error which was sued cause of action as required by § 5239 of the out in their names, and because the bill of Revised Statutes of the United States." exceptions does not contain the answers of The basis for these assignments is found those defendants nor the evidence relating not only in instruction given by the trial to their case, which would be pertinent to court, but in refusals to give instructions consider if we were called upon to deter-asked by the defendants. The instructions mine whether prejudicial error was commit. given, which are pertinent to the assignted as to them. None of the remaining ments, and which were duly excepted to beplaintiffs in error were officers of the bank, low, read as follows: and they were sued simply for acts done as “Bank officers and directors who make or directors thereof.

participate in a published report of the A motion to dismiss first requires atten- financial condition of the banks of which tion. The asserted want of jurisdiction in they are such officers and directors may bethis court is based upon the contention that come liable for damages sustained by one no Federal question was raised in or de depositing money in such bank in reliance cided by the state court. But, as will hereupon the false representation of the condiafter appear, the record plainly shows that tion of the bank contained in the report, both in the trial and appellate courts an even though such director or officer did not immunity was claimed under § 5239 of the know that his report so published was in Revised Statutes (U. S. Comp. Stat. 1901, fact false or untrue. p. 3515), at least in respect to the rule of "The director of a bank who publishes or liability applied below, and such immunity participates in the publication of a report was expressly denied by the state court, and 'of its condition, by such act asserts that the

statements contained in such report are sub- , fendants made and published false and misstantially true, and he cannot rely upon his leading statements concerning the financial ignorance of the true condition of the bank condition of the bank, whereby the plainas a defense to an action, when he, in such tiffs were induced to become and remain its published reports, represents the bank to be creditors, to their damage. In short, whatsolvent, if in truth it is not solvent and ever other allegation may be contained in its assets are fictitious or worthless or its the petition, they also contain sufficient to liabilities so much greater than its assets as constitute a common-law action for deceit. to render the bank insolvent.

That the party upon whom the deceit or “A director or executive of a national imposition was practised by the officers of bank is responsible for the making and pub- a national bank may maintain an action lication of a false report of its financial con- against them in his own name and behalf dition, though he did not personally make for damages resulting to him therefrom, and and publish such statement, if he, in any that his right of action does not rest on the manner, participated in the making or pub- Federal statutes, but the common law,

is lication thereof. A director of a national no longer an open question. bank is presumed to know its true condition and that the law requires a true statement “It was incumbent on the plaintiffs to esof its affairs to be made and published by tablish, by a preponderance of the evidence: the bank from time to time, and if one has (1) That the defendants published the statebeen a director or executive officer of such ments purporting to show the financial cona bank for a long period of time he is pre- dition of the Capital National Bank or parsumed to have knowledge of the making and ticipated in the publication thereof; (2) publishing of the statements of its condi- That such statements were false; (3) That tion, and the burden is cast upon him to the plaintiffs severally relied upon such overcome this presumption by competent ev- statements and believed them to be true, idence.

and were thereby misled, to their injury. As “The jury are instructed that inasmuch to the first proposition, the evidence shows as the law required that all reports made by that none of the statements were actually a national bank to the Comptroller of the made by all of the defendants, but that each Currency shall be published at the expense defendant participated in making some of of the bank, in a newspaper at the place them. It is urged on behalf of the defendwhere the bank is established, you have a ant Thompson that he participated in makright to consider such published reports as ing but one of them. That is a mistake; have been introduced in evidence in this ac- the evidence is conclusive that he signed and tion, purporting to have been signed and participated in making at least four of them, whose names appear in such published re- the first being that made and published Deports as having been authorized by such cember 28, 1886, the last, that made and defendants so appearing to have signed the published July 9, 1891. The mistake arises, same.”

perhaps, from the construction which the deOf the instructions refused, to which ex- fendants seem to place on the petitions. ceptions was taken, we need only quote the The petitions set out two of the statefollowing:

ments at length, but it is also alleged “The jury are instructed that if you find at divers other times and dates, between the from the evidence introduced in reference to 28th day of December, 1886, and the 21st any one of the directors named in any one day of January, 1893, the defendants made of the said cases that such director did not and published other false and misleading reknowingly violate any of the requirements ports purporting to show the condition of of the national banking act under which he the bank which were relied upon by the was acting as such director, but acted in plaintiff. The defendants appear to take good faith, trusting and confiding in the of- the position that plaintiffs should be reficers, agents of the bank, having no reason stricted to the two reports set out at length. to suspect the integrity and honesty of any We do not think so. The allegations of the one of such officers and agents, then you are petitions are sufficiently broad to admit instructed that your verdict should be in proof of any and all statements made on favor of such defendant."

and between the dates just mentioned. If Concerning the cause of action and the definiteness and certainty required all such proof required to justify a recovery, the su- statements to be set out at length, the rempreme court of Nebraska said:

edy was by motion.” “The petitions show misfeasance and mis- It is not to be doubted that, although the management on the part of the defendants, plaintiff alleged the making of false verbal as officers of the bank, and that the bank and written statements, there was no atthereby sustained damages, but they show tempt to establish any verbal misrepremore than that. They show that the desentations. It is also certain, even if it be conceded, arguendo, that there was some evi- , the bank is wholly an unimportant considdence tending to show the making of al- eration, since proof of a scienter is not necleged written representations other than essary to a recovery. This court has frethose contained in the official reports made quently asserted that, to maintain an action by the association to the Comptroller of for false representations, it is not essential the Currency, and published in conformity that it be shown that they were intentionto the national bank act, that such latter ally or knowingly made by the defendant. statements were counted upon in the amend. This is the rule in ordinary causes, and no ed petition, and were, if not exclusively, valid reason can be suggested or pointed out certainly principally, the grounds of the al- why the same principle should not apply in leged false representations covered by the actions for deceit against the directors of a proof. Under this state of the record, ir- banking corporation. Certainly no case has respective of the nature and extent of the come under our observation which has made proof required to maintain an action of de- an exception in their favor.” ceit at common law, the question is: Did The proper solution of the question above the supreme court of Nebraska rightfully propounded necessitates a consideration of decide that the plaintiff was entitled to re- the legislation of Congress respecting nacover against the defendant directors upon tional banks. proof merely of the following facts: "(1) By $ 24 of the national bank act of FebThat the defendants published the state-ruary 25, 1863 (chap. 58, 12 Stat. at L. 665, ments purporting to show the financial con- 671), each association was required to make dition of the Capital National Bank or par- and forward to the Comptroller of the Curticipated in the publication thereof;_(2) rency quarterly reports, containing “a true That such statements were false; (3) That statement of the condition of the associathe plaintiffs severally relied upon such tion making such report,” in respect to statements and believed them to be true, enumerated items, and it was provided thať and were thereby misled, to their injury ?" such report "shall be verified by the oath And the exact import of the propositions or affirmation of the president and cashier, which were thus stated by the court below and all wilful false swearing in respect to and were made the test of the right of the such report shall be perjury, and subject to plaintiff to recover is plainly shown by an the punishment prescribed by law for such opinion of the Nebraska court cited in its offense.” It was made the duty of the opinion in this case; viz., Gerner v. Mosher, Comptroller to publish full abstracts of such 58 Neb. 135, 46 L.R.A. 244, 78 N. W. 384, reports, as to specified items, in newspapers which involved the liability of the directors printed in the cities of Washington and of the very same national bank with whose New York, “and a separate report of each failure this record is concerned. The court association” was required to be published, said:

at the expense of the association, in a news“The defendants in the present suit, who, paper published in the place where such asas directors, attested the reports made by sociation was established. Associations lothe Capital National Bank to the Comp- cated in a number of the leading cities were troller of

of the Currency, by such act also required to publish, in a newspaper vouched for, or certified to, the absolute published where the association was located, truthfulness of the statements therein con- a statement, under the oath of the president tained, and not that the report was correct or cashier, of the condition of the associaso far as the directors knew or had been ad- tion, showing the average amount of loans vised by the proper performance of their and discounts, specie, deposits, and circuladuties as directors. The means of informa- tion. By $ 45 the cashier of each association, this record shows, were accessible to tion was required after each dividend to them. It was their duty to know whether make, under oath, "a full, clear, and acthe reports were correct or not.

curate statement of the condition of the as

sociation,” enumerating specified particulars, "In our view, whether the attesting di- which statement was to be forthwith transrectors possessed knowledge of the falsity mitted to the Comptroller of the Currency. of their reports is wholly immaterial. They The national bank act of June 3, 1864 (chap. were in fact false and untrue, and those who 106, 13 Stat. at L. 109), substantially redeposited money with the bank, or who pur- enacted, in a much condensed form, the rechased stock of the corporation, in reliance quirements as to quarterly reports of the upon the truthfulness of the contents of financial condition of each association. The those reports, were as much deceived and abstract of such reports was required, howdamaged thereby as though the directors, ever, to be published by the Comptroller when they signed the reports, knew them only in the city of Washington, and every to be false. That they were innocent of the association was required to make a monthly true situation or condition of the affairs of statement of its condition under the oath

of the president or cashier. For each day, $ 9 of the act of 1864, a director of a naafter five days' delay in making a report tional bank was required, inter alia, as he each bank was made liable to a penalty of is now required by $ 5147, Rev. Stat. (U. $100. The act of 1864 did not contain a re- S. Comp. Stat. 1901, p. 3464), to "take an quirement for the making and transmittal oath that he will, so far as the duty deto the Comptroller of a statement following volves on him, diligently and honestly adthe declaration of a dividend.

minister the affairs of such association, and By an act approved March 3, 1869 (chap. will not knowingly violate, or willingly per130, 15 Stat. at L. 326, U. S. Comp. Stat. mit to be violated, any of the provisions of 1901, p. 3498), in lieu of the reports re- this title.” In the acts of 1863 and 1864 quired by the national bank act of 1864, it the concluding word used was not "title," was made the duty of each association, on but "act." the requisition of the Comptroller, to make Sections 50 and 52 of the act of 1863 (12 not less than five reports in each year. Stat. at L. 679, 680, chap. 58) were practiThese reports were not only required to be cally identical, and $$ 53 and 55 of the act verified “by the oath or affirmation of the of 1864 (13 Stat. at L. 116, chap. 106, U. S. president or cashier of such association,” but Comp. Stat. 1901, pp. 3515, 3497) were also to be “attested by the signature of at least substantially alike, and by those sections three of the directors." Publication of such civil and criminal liabilities were authorized reports was required to be made in a news- to be assessed against and imposed upon dipaper published in the place where the asso- rectors of banking associations in certain ciation was established, and a penalty of contingencies. Section 52 of the act of 1863 $100 for each day’s delay after a specified and § 55 of the act of 1864—as supplementtime in making and transmitting the reported by the act of April 6, 1869 (chap. 11, was authorized to be retained by the Treas- | 16 Stat. at L. 7), construed in the act of urer of the United States out of interest due July 8, 1870 (chap. 226, 16 Stat. at L. 195, the association. Each association was also U. S. Comp. Stat. 1901, p. 3497), making it required to make a report, attested by the an offense to aid or abet an officer or agent oath of its president or cashier, within ten of any association in doing the acts prodays after the declaration of a dividend, hibited in § 55 of the act 1864, with intent stating the amount of each dividend and the to defraud or deceive—became $ 5209 of the amount of net earnings in excess of such Revised Statutes (U. S. Comp. Stat. 1901, dividends.

p. 3497). It is copied in the margin... As embodied in the Revised Statutes the Section 50 of the act of 1863 and § 53 of provision became § 5211 (U. S. Comp. Stat. the act of 1864 became § 5239 of the Revised 1901, p. 3498), and is copied in the margin.† Statutes, reading as follows: By § 39 of the act of 1863, as well as by “Sec. 5239. If the directors of any na

tional banking association shall knowingly . to the Comptroller of the Currency not less violate, or knowingly permit any of the ofthan five reports during each year, according ficers, agents, or servants of the association to the form which may be prescribed by him,

$ I Sec. 5209. Every president, director, by president or cashier of such association and cashier, teller, clerk, or agent of any assopresident or cashier of such association and ciation, who embezzles, abstracts, or wilattested by the signature of at least three

fully misapplies any of the moneys, funds, of the directors. Each such report shall ex

or credits of the association, or who, withhibit, in detail, and under appropriate heads, out authority from the directors, issues or the resources and liabilities of the [associations] [association) at the close of business association; or who, without such authority,

puts in circulation any of the notes of the on any past day by him specified; and shall issues or puts forth any certificate of deposbe transmitted to the Comptroller within it, draws any order or bill of exchange, five days after the receipt of a request or makes any acceptance, assigns any note, requisition therefor from him, and, in the bond, draft, bill of exchange, mortgage, judgsame form in which it is made to the Compment, or decree; or who makes any false entroller, shall be published in a newspaper try in any book, report, or statement of the published in the place where such associa association, with intent, in either case, to intion is established, or, if there is no news.jure or defraud the association or any other paper in the place, then in the one published company, body politic or corporate, or any nearest thereto in the same county, at the individual person, or to deceive any officer expense of the association; and such proof of the association or any agent appointed of publication shall be furnished as may be to examine the affairs of any such associarequired by the Comptroller. The Comptrol- tion; and every person who, with like inler shall also have power to call for special tent, aids or abets any officer, clerk, or reports from any particular association agent in any violation of this section,-shall whenever, in his judgment, the same are be deemed guilty of a misdemeanor, and necessary in order to a full and complete shall be imprisoned not less than five years knowledge of its condition.

nor more than ten.

to violate, any of the provisions of this and that among such duties is the furnishtitle, all the rights, privileges, and fran- ing to the Comptroller of the Currency rechises of the association shall be thereby ports concerning the condition of the bank forfeited. Such violation shall, however, be and the publication thereof. Although the determined and adjudged by a proper cir- statutory provisions subsequent to the act cuit, district, or territorial court of the of 1863, relating to the making and publishUnited States, in a suit brought for that ing of such reports, do not, as did the act of purpose by the Comptroller of the Cur- 1863, expressly require that the report, when rency, in his own name, before the associa- made, should contain a "true" statement of tion shall be declared dissolved. And in the condition of the association, yet, by cases of such violation, every director who necessary implication, such is the character participated in or assented to the same shall of the statement required to be made, and be held liable in his personal and individual by the like implication the making and pubcapacity for all damages which the associa- lishing of a false report is prohibited. tion, its shareholders, or any other person, Considering the text of the national bank shall have sustained in consequence of such act, as now embodied in the Revised Statviolation."

utes, including $ 5239, we think the latter As in the early acts relating to the na- section affords the exclusive rule by which tional banks, so in the sections of the Re- to measure the right to recover damages vised Statutes on the same subject, there from directors, based upon a loss alleged to are many provisions specifically enjoining have resulted solely from the violation by the doing or not doing of certain acts by the such directors of a duty expressly imposed association or its officers. Thus, by $ 5137, upon them by a provision of the act. By the Rev. Stat., U. S. Comp. Stat. 1901, p. 3460 first sentence of the section mentioned a for(formerly § 28 of the act of 1864), a na- feiture of the charter is entailed "if the ditional bank is prohibited from acquiring real rectors of any national banking association estate for purposes other than those speci- shall knowingly violate, or knowingly perfied in the act, and is forbidden to hold real mit any of the officers, agents, or servants estate, under certain contingencies, more of the association to violate, any of the prothan a specified length of time; by $ 5200, visions of this title.” And the last sentence Rev. Stat., U. S. Comp. Stat. 1901, p. 3494 ordains the rule by which civil liability is to (formerly $ 29 of the act of 1864), it is pro- be determined, by providing that “every dihibited to loan to any person or corporation rector who participated in or assented to the in excess of one tenth of the capital stock same shall be held liable in his personal and of a bank; by $ 5201, Rev. Stat., Ū. S. Comp. individual capacity for all damages which Stat. 1901, p. 3494 (formerly $ 35 of the act the association, its shareholders, or any othof 1864), banking associations are forbidden er person shall have sustained in conseto loan or purchase their own stock; by 8 quence of such violation.” As the section 5202, Rev. Stat., U. S. Comp. Stat. 1901, p. thus comprehends all the express commands 3494 (formerly $ 36 of the act of 1864), as- to do or not to do, as to directors, consociations are forbidden to become indebted tained in the national bank act, and besides or become in any way liable exceeding the specifies the nature of the conduct of diamount of their capital stock except on ac-rectors from which their civil liability for count of specified demands; by $ 5203, Rev. violation of such commands may arise, it Stat., U. S. Comp. Stat. 1901, p. 3495 (for- results that liability cannot be entailed upon merly section 37 of the act of 1864), a restric-them by exacting a different and higher tion is imposed upon the use of circulating standard of conduct as regards such comnotes; by § 5204, Rev. Stat., U. S. Comp. mands than that established by the statute Stat. 1901, p. 3495 (formerly s 38 of the act without depriving directors of an immunity of 1864), the withdrawal of the capital of conferred upon them. That the words "shall an association while continuing its opera- knowingly violate, or knowingly permit,” tions is forbidden, either in the form of div. etc., found in the first sentence of § 5239, idends or otherwise; and § 5206, Rev. Stat., Rev. Stat., were intended to express the U. S. Comp. Stat. 1901, p. 3496 (formerly s rule of conduct which the statute estab39 of the act of 1864), embodies a restriction lished as a prerequisite to the liability of upon the use of notes of other banks. In directors for a violation of the express proaddition to these sections of course may be visions of the title relating to national considered the various sections enjoining the banks, is additionally shown by the oath making and publishing of periodical reports which a director is required to take, whereof the association, to which we have here- in, as already stated, he swears “that he tofore referred.

will, so far as the duty devolves on him, It thus becomes obvious that the national diligently and honestly administer the afbank act imposes upon directors duties which fairs of such association, and will not knowwould not rest upon them at common law, 'ingly violate, or willingly permit to be vio