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The civil liability of national bank directors, then, in respect to the making and pub
lated, any of the provisions of this title.", cuniary liability which the statute imposing Mark the contrast between the general com- the duty did not contemplate. mon-law duty to "diligently and honestly administer the affairs of the association" and the distinct emphasis embodied in the prom-lishing of the official reports of the condition ise not to "knowingly violate, or willingly permit to be violated, any of the provisions of this title." In other words, as the statute does not relieve the directors from the common-law duty to be honest and diligent, the oath exacted responds to such requirements. But as, on the other hand, the statute imposes certain express duties and makes a knowing violation of such commands the test of civil liability, the oath in this regard also conforms to the requirements of the statute by the promise not to "knowingly violate, or willingly permit to be violated, any of the provisions of this title."
And general considerations as to the spirit and intent of the national bank act (Easton v. Iowa, 188 U. S. 220, 47 L. ed. 452, 23 Sup. Ct. Rep. 288; Davis v. Elmira Sav. Bank, 161 U. S. 275, 40 L. ed. 700, 16 Sup. Ct. Rep. 502) also render necessary the conclusion that the measure of responsibility concerning the violation by directors of express commands of the national bank act is, in the nature of things, exclusively governed by the specific provisions on the subject contained in that act. Thus, a contrary conclusion would lead to a varying measure of responsibility in the several states in which the question of liability might arise, depending upon the conceptions of the state courts of last resort as to the meaning of the act of Congress imposing the duty. Hence, it would follow that the same provision of the statute might mean one thing in one state and a different thing in another. The confusion which would result is aptly illustrated by a review made by the supreme court of Ohio in the recent case of Mason v. Moore, 73 Ohio St. 275, 4 L.R.A. (N.S.) 597, 76 N. E. 932, of the conflicting state adjudications as to the proper rule to be applied to fix the liability of bank directors to third persons in an action of deceit at common law. The frustration of the public policy embodied in the national bank system by the crippling of the usefulness of such institutions, which would result from holding that directors, in performing the duties imposed upon them by the national bank act, might be held liable civilly, not by the standard of conduct which the act provides for a violation of its express commands, but by another and different one, is apparent. Under such a conception it might well be that prudent and responsible persons would decline to assume the discharge of the duties imposed by the statute because of the hazard of an uncertain pe
of the bank, a duty solely enjoined by the statute, being governed by the national bank act, it is self-evident that the rule pressed by the statute is exclusive, because of the elementary principles that where a statute creates a duty and prescribes a penalty for nonperformance, the rule prescribed in the statute is the exclusive test of liability. Farmers' & M. Nat. Bank v. Dearing, 91 U. S. 29, 35, 23 L. ed. 196, 199, and cases cited. The error in the decision below becomes at once apparent when its correctness is tested by the rule that the statute is applicable and prescribes the exclusive test of liability. The doctrine, as we have seen, upon which the court below rested its judgment, was that directors of a national bank who merely negligently participated in or assented to the making and publishing of an untrue official report of the condition of the bank were civilly liable to anyone deceived to his injury by such report. Indeed, in one aspect, the ruling below went further than this, since it was, in substance, decided that, despite the exercise of diligence by the director, if he attested an untrue report he was civilly liable, because he did so at his risk, since it was his duty to know or to refrain from acting. That this imposed a higher standard of conduct than was required by the statute is obvious, but is clearly also established by previous decisions of this court, pointing out that where by law a responsibility is made to arise from the violation of a statute knowingly, proof of something more than negligence is required; that is, that the violation must in effect be intentional. McDonald v. Williams, 174 U. S. 397, 43 L. United States, 155 U. S. 438, 446, 39 L. ed. ed. 1022, 19 Sup. Ct. Rep. 743; Potter v. 214, 217, 15 Sup. Ct. Rep. 144, and cases cited. See, also, Utley v. Hill, 155 Mo. 232, 264, et seq. 49 L.R.A. 323, 78 Am. St. Rep. 569, 55 S. W. 1091, and cases cited.
Of course, in what has been said we have confined ourselves to the precise question arising for decision, and therefore must not be understood as expressing an opinion as to whether and to what extent directors of national banks may be civilly liable by the principles of the common law for purely voluntary statements made to individuals or the public, embodying false representations as to the financial condition of the bank, by which one who has rightfully relied upon such representation has been damaged. And because we have applied in this case to the duty expressly imposed by
bar to a recovery in another action between the same parties under a petition which sets up a right to recover for the individual loss. suffered, as distinct from the right of the
the statute the standard of conduct established therein we must not be considered as expressing an opinion upon the correctness of the views enunciated by the court below concerning the standard which should be applied solely under the principles of the common law, to fix the civil liabilities of directors in an action of deceit. See Briggs Argued March 8, 11, 1907. Decided May 13, v. Spaulding, 141 U. S. 132, 35 L. ed. 662, 11 Sup. Ct. Rep. 924.
[Nos. 231, 232, 233.]
There is a suggestion that the subject-N ERROR to the Supreme Court of the matter of this controversy is so inherently Federal that, although the judgments of the circuit court and of the circuit court of appeals, remanding the cause to the state court, may not be re-examined (25 Stat. at L. 435, chap. 866, U. S. Comp. Stat. 1901, p. 509), nevertheless it should now be decided that the state court was wholly devoid of jurisdiction. This claim is predicated upon the provision of § 5239, Rev. Stat., conferring exclusive jurisdiction on courts of the
United States to declare a forfeiture of the charter of a national bank as the result of wrongs committed by the directors, and the contention that a declaration of such for
feiture is a prerequisite to an action to enforce the civil liability of directors, and that such action could only be brought in the court of the United States after a forfeiture has been adjudged. We content ourselves with saying that we think these contentions are without merit.
State of Nebraska to review judgments affirming judgments of the District Court of Seward County, in that state, in favor of plaintiffs in actions to charge the directors and officers of a national bank with liability for false representations as to the bank's financial condition. Dismissed for want of prosecution as to some of the plaintiffs in error, and reversed as to the others, and remanded for further proceedings.
See same case below (Neb.) 105 N. W.
The facts are stated in the opinion. Messrs. Halleck F. Rose, J. W. Deweese, and Frank E. Bishop for plaintiffs in error.
Messrs. Lionel C. Burr, John J. Thomas, Charles L. Burr, Richard S. Norval, and William B. C. Brown for defendant in er
Mr. Justice White delivered the opinion of the court:
It follows from what has been said that, as to Mosher and Outcalt, two of the persons named as plaintiffs in error in the writ and These are the actions referred to in the citation, the writ of error is dismissed for opinion just announced in No. 230, Yates want of prosecution; as to the other plain- V. Jones Nat. Bank [206 U. S. 158, 51 L. ed. tiffs in error, the judgment below is reversed 1002, 27 Sup. Ct. Rep. 638], as companion and the case is remanded for further pro-actions with that case and as having been ceedings not inconsistent with this opinion.
tried with it. The issues raised below and the questions of law which here arise for decision are, therefore, the same as in No. 230, and the reasons given in the opinion in that
CHARLES E. YATES et al., Plffs. in Err., case require a reversal of the judgments in
In the Bailey Case (No. 232), however, others, which, if determined in favor of the there is a question not presented in the plaintiffs in error in that case, will finally settle that particular controversy. Refer
CHARLES E. YATES et al., Plffs. in Err., ring, therefore, to the opinion in the Jones
BANK OF STAPLEHURST. (No. 233.)
A judgment sustaining a demurrer to the petition in an action by a creditor of a national bank against the directors, because the court was of the opinion that the petition only stated a right to recover for violations of the national bank act, causing damage to the bank as such, the right to recover for which was an asset of the bank, enforceable only by its receiver, is not a
Nat. Bank Case for the general grounds of reversal in the three cases, we come to consider the particular ground which is additionally relied upon in the Bailey Case as establishing that the decree of reversal in that case should be made conclusive of the entire controversy.
By a "second defense," the defendants pleaded as res judicata a judgment asserted to have been rendered in their favor in an action brought by the same plaintiff in Lancaster county, Nebraska, which was re
*Ed. Note.-For cases in point, see vol. 30, Cent. Dig. Judgment, §§ 1089-1094.
moved into the circuit court of the United | sustained on the ground that no cause of States, where, upon the sustaining of a demurrer to the petition, a judgment of dismissal was entered which was, by the circuit court of appeals, affirmed. 11 C. C. A. 304, 27 U. S. App. 339, 63 Fed. 488.
Despite the introduction in evidence of the judgment roll in the case just referred to, which, for convenience, we term the Lancaster county action, the jury in this case, over the objection and exception of the defendants, were in effect instructed that the judgment in the former action did not operate as a bar to a recovery in the present case. Each defendant, in a motion for a new trial, alleged the commission of error by the court in "failing to give full faith and credit" to the judgment of the circuit court of appeals in the Lancaster county action. The supreme court of Nebraska considered the subject, and as its conclusion was that the judgment of the circuit court of appeals was not res judicata of the issues in this cause, it therefore decided that, in refusing to give effect of res judicata to such judgment, the trial court had not wrongfully denied the validity of an authority exercised under the United States. The correctness of this conclusion is the particular question to be considered which, as we have said, distinguishes this case from the others.
Whilst the court below found that the Lancaster county action was between the same parties, and, in its opinion, was based substantially upon the same facts, as in the present action, it based its ruling denying the effect of res judicata to the prior judgment upon the conclusion that, taking into view both the pleadings and the opinion in the previous action, it must be considered as certain that the case involved a different cause of action from the one presented here. In so concluding we think the court was right.
The judgment relied upon was rendered upon a demurrer. This fact, however, does not affect the cogency of the judgment if otherwise efficacious to bring into play the presumption of the thing adjudged. Northern P. R. Co. v. Slaght, 205 U. S. 122, 133, 51 L. ed. 738, 27 Sup. Ct. Rep. 442, and authorities there cited. To determine whether the judgment in the former case was conclusive in this, in view of its uncertainty, we must address ourselves to the pleadings in that case and consider the opinion of the court for the purpose of ascertaining precisely what was concluded by the judgment upon the demurrer. National Foundry & Pipe Works v. Oconto Water Supply Co. 183 U. S. 216, 234, 46 L. ed. 157, 169, 22 Sup. Ct. Rep. 111, and cases cited. Coming to do so, we find that the demurrer was
action in favor of the plaintiff was stated in the petition, because the circuit court of appeals was of the opinion that the petition only stated a right to recover for violations of the national bank act, causing damage to the bank as such, the right to recover for which was an asset of the bank, enforceable only by its receiver. In so deciding the court expressly held that the averments in the petition relative to the fraud and deceit claimed to have been practised upon the plaintiff through reports to the Comptroller of the Currency were mere matter of inducement or surplusage, and did not constitute averments of a substantive cause of action. In other words, the previous case was decided exclusively upon the ground that, as the plaintiff had not set up any individual wrong suffered by him, but solely an injury sustained in common with all other creditors of the bank, the resulting damage was only recoverable by the receiver. As, adopting the construction given in the Jones Nat. Bank Case to a petition like unto the one in this case, we hold that the petition in this case sets up a right to recover for the individual loss suffered as distinct from the right of the bank, it follows, if we accept the construction given by the circuit court of appeals to the pleadings in the case wherein the judgment relied upon was rendered, that case and this involve different causes of action. But it is insisted that if a correct analysis be made of the facts set out in the previous case the result will be to demonstrate that that case and this are identical, and, therefore, the judgment in the previous case is controlling here. This, however, is but to assert that the previous judgment was wrong, and, therefore, in determining its effect as res judicata we must treat it as embracing matters which it did not include. To give full force and effect to the judgment we must necessarily exclude those things which the judgment excluded. To hold to the contrary would be to decide that the former judgment must be accepted as correct, and yet it must be extended to controversies which are beyond its reach, because the judgment was wrongfully rendered.
The same judgment must therefore be ordered in each of these cases as was directed to be entered in the Jones Nat. Bank Case, viz., as to Mosher and Outcalt, two of the persons named as plaintiffs in the writ of error and citation, the writ of error in each action is dismissed for want of prosecution; as to the other plaintiffs in error, the judgment below in each action is reversed and the case is remanded for further proceedings not inconsistent with this opinion.
CINCINNATI, HAMILTON, & DAYTON | applying this classification to the varying RAILWAY COMPANY et al., Appts.,
INTERSTATE COMMERCE COMMISSION.
1. The Interstate Commerce Commission, in making an investigation of a complaint filed by soap manufacturers as to the freight rate for common soap promulgated in a classification adopted to govern in official classification territory, had the power, in the public interest, unembarrassed by any supposed admissions contained in the complaint, to consider the whole subject, and the operation of the classification in the entire territory, and also how far its going into effect would be just and reasonable, would create preferences, or would engender discrimination.
Interstate Commerce Commission-judicial enforcement of order.
2. Any supposed admissions in a com
rates is to leave soap in less than car-load
cided May 13, 1907.
plaint filed by soap manufacturers with the Argued January 31, February 1, 1907. DeInterstate Commerce Commission as to the freight rate for common soap promulgated
in a classification adopted to govern in of:
ficial classification territory are ineffectual to deprive a Federal circuit court, in a proceeding to enforce an order of the Commission directing the carriers to desist from enforcing this classification as to soap in less than car-load lots, of the power to test the validity of such order by the scope
of the act to regulate commerce. Carriers-rates-classification.
3. The disturbance in the relations between freight rates for soap in car-load and less than car-load lots created by advancing the former from class 6 to class 5, and the latter from class 4 to class 3 in a new classification adopted to govern in official classification territory, was not cured by classifying soap in less than car-load lots at 20 per cent less than third class, but not less than fourth class, where the result of applying this modified percentage classification to the varying rates is to leave soap in less than car-load lots in the fourth class in portions of the territory and in a higher class in other portions. Appeal-review of facts.
A United States for the Southern District APPEAL from the Circuit Court of the of Ohio to review a decree enforcing an order of the Interstate Commerce Commission directing carriers to cease and desist from further charging the freight rate for mulgated in a classification adopted to govcommon soap in less than car-load lots proern in official classification territory. firmed.
See same case below, 146 Fed. 559.
Messrs. L. A. Shaver and P. J. Farrell for appellee.
Mr. Justice White delivered the opinion of the court:
Official classification territory embraces that portion of the United States lying between Canada on the north, the Atlantic ocean on the east, the Potomac and Ohio rivers on the south, and the Mississippi 4. Findings of the Interstate Commerce river on the west. This territory includes Commission that a classification of freight what is known as Central Freight Associarates adopted to govern in official classification territory and Trunk Line territory, both tion territory produces preferences and discriminations will not be interfered with on appeal when concurred in by a Federal circuit court unless the record establishes that clear and unmistakable error has been committed.
5. Unlawful preferences and discriminations are created by fixing the freight rate for common soap in less than car-load lots in a new classification adopted to govern in official classification territory at 20 per cent less than third class, but not less than fourth class, at which that commodity had previously been rated, where the result of
being governed by the official classification. The Central Freight Association territory comprises the area west of Pittsburg and Buffalo, including the lower peninsula of Michigan and east of a line from Chicago to St. Louis, the Mississippi river from St. Louis to Cairo, and north of the Ohio river. Trunk Line territory lies north of the Potomac river and east of Pittsburg and Buffalo. Whilst official classification governed throughout the whole of official classification territory, the rates throughout the whole of the official classification territory
were not uniform, because of a difference, operation of the railroads; and that, "by of rates prevailing in the subdivision; that such course defendants have subjected and is, in the Central Freight and Trunk Line do thereby subject the said traffic in the territory. Thus, although on shipments articles changed, including common soap in from points in the Central Freight Associa- car loads and less than car-load lots, to an tion territory to points in the Trunk Line undue and unreasonable prejudice and disterritory or vice versa rates were the same advantage with respect to the traffic in all for similar distances, yet, on shipments be- of the articles whose classification was not tween termini wholly within one or the changed in official classification No. 20." It other of these territories, the rates varied was further alleged as follows: because of the different rules governing rates which prevailed as to traffic exclusively moving in that particular territory.
If there are any qualities and conditions which, though not considered by defendants at the time of the adoption of said classifiThe first classification adopted by the cation No. 20, justify, nevertheless, the railroads to control in the territory above making of any or part of said changes, the described as official classification territory same, at any rate, do not apply to comwas made contemporaneously with the go- mon soap in car loads or less than car-load ing into effect of the act to regulate com- lots. The same should, at least, have remerce, presumably to comply with that act, mained in sixth class in car-load lots, as orand took effect on April 1, 1887. From that dered by this Commission as aforesaid, and date until January 1, 1900, nineteen gen- in fourth class in less than car-load lots, eral classifications of freight, numbered so as to maintain the proper relation and from 1 to 19, were, at various times, adopt- difference of rates between car-load and less ed to govern in official classification terri- than car-load lots. The changing of partory. The articles embraced in these classi- ticular articles as aforesaid from lower to fications were divided into classes, numbered higher classes for the sole purpose of infrom 1 to 6, the rate increasing as the num-creasing the revenues of the railroads inber of the class decreased. From the be- terested therein is not a condition or cirginning, until June 1, 1891, common soap cumstance justifying the said change of in boxes in car loads was rated as fifth classification in common soap." class, and fourth class for less than car loads. On the last-named date, in consequence of an order entered by the Commission on a complaint as to the classification of common soap in car loads, made by Procter & Gamble, soap manufacturers, of Cincinnati, Ohio, soap in car loads was renduced to sixth class. This classification continued to govern until January 1, 1900, when a new classification, known as official classification No. 20, went into effect, by virtue of which soap in car loads was advanced from sixth to fifth class, and soap in less than car loads was advanced from fourth to third class.
After the going into effect of classification No. 20. the Procter & Gamble Company, successor to the firm of Procter & Gamble, complained to the Interstate Commerce Commission in respect to the alterations made in the classification of common soap. The petition recited the prior complaint by the firm of Procter & Gamble, and the making, in 1890, of the order which led to the reduction from fifth to sixth class, heretofore referred to.
It was prayed that an order might be entered requiring the Cincinnati, Hamilton, & Dayton Railroad Company and seven other named railroad companies, forming various connecting and joint lines of railroad in the territory governed by official classification No. 20, to "cease and desist from refusing to carry common soap in car-load lots at sixth-class rates, and from refusing to carry common soap in less than car-load lots at fourth-class rates." After the filing of the petition, and before answer, official classification No. 20 was, in part, changed by making a new class, intermediate classes three and four for soap in less than car-load lots and on some other articles, this class being determined by giving the articles in question the benefit of a reduction on the third-class rate of 20 per, cent, provided the application of the 20 per cent reduction did not reduce the charge below the fourth-class rate, in which event the 20 per cent reduction should not be fully applied, but would only be applied to the extent necessary to make the rate not less than fourth class. The classification
less than third class, but not less than fourth class, and we shall speak of it hereafter in this way.
It was charged in the petition that, in thus operating is spoken of as 20 per cent official classification No. 20, there had been an inequitable selection of particular articles and an increase in the rates upon such articles alone by the device of changing them from a lower to a higher class, for the sole purpose of increasing revenues to cover an alleged increase of cost of
In the answers filed the defendants in substance denied that common soap was improperly classified in official classification No. 20, originally or as modified, or that