California National Bank of San Francisco v. Thomas

This was an action sounding in tort, but styled 'A Bill of Complaint in Equity,' for an accounting and settlement of a trust by Richard P. Thomas, Robert R. Thompson, and Robert A. Wilson. The action was instituted in the superior court of San Francisco by John Chetwood, Jr., for himself and as the representative of all the stockholders of the California National Bank, which bank had failed and was at the time in the hands of a receiver.

The bill alleged that the failure was due to the negligence of Richard P. Thomas, president, Robert R. Thompson, vice president, and Robert A. Willson, a director, composing the executive committee of the corporation, who had, as such committee, contrived together to injure and deceive the said corporation by neglecting to conform to its bylaws, and, as such committee, had made worthless loans, whereby the money of the corporation was wasted, misused, and lost to the amount of about $200,000.

Among the duties and powers of the committee, as set forth in the by-laws adopted by the bank, were an immediate supervision of all the officers and business of the bank, auditing all bills for current and other expenses, discounting and purchasing bills, notes, and other evidences of debt, and reporting to the directors at each regular meeting all bills, notes, and other evidences of debt discounted or purchased by them for the bank. It was further provided by the by-laws that the president should have general control and supervision of the bank, and be responsible for its condition to the directors. The vice president was to assist the president in the discharge of his duties.

The bill alleged that 'it was the duty of each of said members of the executive committee to exercise, concurrently with his associates on said committee, diligence and fidelity in performing the duties of said committee,' but that 'they negligently permitted the cashier of said bank to control and manage the whole business of the said bank as he saw fit, and without consulting or in any wise informing said defendants,' and that by reason of the negligence of said defendants, and the acts and misconduct of the cashier, negligently permitted as aforesaid, the bank suddenly failed on December 15, 1888, owing about $450,000, and the comptroller of the currency had placed a receiver in charge of said bank and its affairs, and thereafter levied an assessment of $75,000 upon the stockholders, which sum was all paid except $20,000 assessed against Richard P. Thomas, the president of the bank.

The prayer of the bill was that a decree might be entered holding Richard P. Thomas, Robert R. Thompson, and Robert A. Wilson to an accounting of their trust, and that a joint and several money judgment be entered against them for the sum of $400,000, with legal interest thereon from the time of such loss.

The defendants answered the bill, denying the allegations as to negligence on their part.

Upon the cause being submitted to the court, a judgment was 'entered in favor of the plaintiff and against Richard P. Thomas, Robert R. Thompson, and Robert A. Wilson,' and the case was referred to a master, who found the actual loss of the bank to be $166,919. Before a final judgment was rendered by the court, however, the suit was dismissed by the plaintiff as to Robert R. Thompson and Robert A. Wilson, from whom had been collected the sum of $27,500, thus leaving a net loss to the bank of $139,419, and judgment for this amount was rendered against Richard P. Thomas.

Thereupon Thomas appealed to the supreme court of the state of California, by which court the judgment was reversed, and the case remanded to the trial court, with directions to enter a judgment in favor of the defendant Thomas. 113 Cal. 414, 45 Pac. 704.

The plaintiff thereupon sued out a writ of error to this court assigning as the principal ground to give this court jurisdiction that the judgment of the supreme court of the state was rendered without due or any process of law, and deprived the plaintiff of its property without due process of law, contrary to the constitution, etc., and Revised Statutes (section 5136), relating to national banks.

Eddy Knapp, Robert Rae, and John Chetwood, Jr., for plaintiff in error. A. H. Ricketts, for defendant in error.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.