Dodd v. Wilkinson

*579The opinion of the court was delivered by

The present bill is exhibited by the receiver of the Newark Savings Institution against its former managers, to charge them with the loss sustained by the institution resulting from their improper disposition of the corporate property.

The defendants have interposed several demurrers, and the questions thereby raised are now to be decided.

The first point taken by the demurrants is that the suit was prematurely brought, “ because it does not appear, from the facts stated in the bill, that any loss has yet been sustained by reason ■of the alleged illegal loans or investments.”

The bill charges that one of these loans, consisting of United ■States bonds, worth $2,329,600, was made to Fisk & Hatch, bankers of New York city; that before the loan was repaid, Fisk & Hatch failed, and the complainant was constrained to make a settlement with that firm, by which he received from them, in satisfaction of the debt, securities the value of which then was, and ever since has been $400,000 less than the value of the bonds loaned. This is a sufficient allegation of loss. That these securities have not yet been turned into cash and possibly may rise in value before sale, does not do away with the fact that ever since the receiver took possession, the assets of the institution have been $400,000 less than they would have been had this loan not been made.

The other points presented on behalf of the demurrants generally, are to the effect that Fisk <& Hatch, to whom the improper loan was made, should have been included in the bill as defendants, and that the receiver, by executing a certain agreement with that firm, which is set out in the bill, has released them from all liability for the bonds loaned, and thereby has discharged the defendants, who, on making good the alleged loss, would have been entitled, it is claimed, to all the rights which the institution originally had against Fisk & Hatch for the recovery •of the loan.

The fault charged against the defendants consists in their *580having negligently or willfully loaned the bonds to Fisk & Hatch without adequate security. Upon the making of this loan, the institution acquired two causes of action : one against its agents, the defendants, for their misconduct, the other against Fisk & Hatch for their indebtedness. The agreement mentioned appears, by express averment on its face, to have been made for the purpose of settling the differences between the receiver and the firm arising out of said indebtedness, and we have not been able to see upon what principle of law or equity this should be held to have satisfied the claim of the corporation against the' defendants for their misconduct. If the corporation had been able to insist that the defendants’ act in making the loan was-beyond the scope of their authority, and had repudiated that act, and sued its agents for a conversion of its property or in any form for a restoration of the trust fund, then the settlement with Fisk & Hatch would have afforded them a conclusive defence, for it would have been totally inconsistent with such a position. But there is no inconsistency in the corporation’s present claims. It admits that it is bound by the loan made by its agents, but it avers that those agents omitted to take proper care of its interests in making that loan. These claims are perfectly distinct and independent, and the obligation of Fisk & Hatch as to one, and that of the defendants as to the other, are both primary, there is no reason for holding that the corporation may not pursue these claims separately, or that it must preserve unimpaired its claim upon the loan as a condition to its seeking a remedy for the wrong of its agents. On the hypothesis that the loan was a corporate act, there existed no relation whatever, legal or equitable, between the defendants and Fisk & Hatch, and therefore there is no ground for applying to them the rules which pertain to principal and surety, or to those who are primarily and secondarily, or jointly, liable for the same debt or duty. Even if Fisk & Hatch took part in the wrong-doing of the defendants, there would be no right of contribution among them as tort-feasors, and the institution would not be required to involve itself in litigation with third parties, in order to call its agents to account for their breach of duty.1

*581It may be that, while the corporation held its claim for the debt against Fisk & Hatch, the defendants were equitably entitled to tender full re-imbursement to the corporation and ask an assignment of the debt, and that this privilege is now lost to them; ■but that loss has arisen solely from their omission to make the tender in due time, and not at all from any inequitable conduct -of the receiver. Indeed, as soon as the control of affairs passed into his hands he became subject to the operation of the rule that the damages for which even wrong-doers are responsible are only those that happen in spite of due diligence to prevent them, and if the receiver had been remiss in his efforts to collect the debt and greater loss had thereby ensued, the defendants might justly have denied their liability therefor. If the receiver, by his settlement with Fisk & Hatch, has secured from them as much as was practicable, then he has done all that the defendants can be supposed to have been capable of doing, if' his claim had been assigned to them. If he has not realized so much, the loss will fall on the institution, and not on the defendants.

We are therefore of opinion that the receiver, by his settlement with Fisk & Hatch for the loan, is not barred from his remedy .•against the defendants, and that Fisk & Hatch are not concerned in, and hence are not necessary parties to, the present controversy.

The last point to be noticed is taken on behalf of the executors ■of'Abner S. Reeve, a manager who died subsequently to the misconduct complained of. It is insisted that his estate cannot be .held responsible for his default. The case is covered by our statute (Rev. p. 396 § 5) as heretofore interpreted (Ten Eyck v. Runk, 2 Vr. 428; Tichenor v. Hayes, 12 Vr. 193), and in that interpretation we concur.

The decrees below, overruling the demurrers, should be affirmed.

Decrees unanimously affirmed.