Mahlon Pitney

“ And if, either on this ground or on the ground that the transfer was put through for the advantage of one corporation at the expense of the other, by officers or directors acting at the same time for both and without the authority of the stockholders, the transaction was voidable by the stockholders and they resolved to avoid it, it would savor of absurdity to sustain defendant's contention that this was done in order to enable the bank to sue him ”

“ In view of certain contentions urged here in behalf of defendant, and perhaps acceded to by the courts below, it should be said that the question whether defendant knowingly participated in or assented to the making of a loan in excess of the limit prescribed by section 5200 is not to be confused by any consideration of the supposed standing of the borrowers, personal or financial. The statutory limit is a special safeguard prescribed by Congress for the very purpose (among others) of preventing undue reliance upon the financial standing of borrowers. ”

“ The averment of a breach of duty relates to an alleged excessive loan or loans made on or about the date last mentioned to Fred Fleming and D. A. Templeton, who for a considerable time had been engaged in business as private bankers in Corsicana and in several other towns in Texas under the firm name of Fleming & Templeton, and also had conducted at Corsicana a branch bank for the Western Bank & Trust Company, a state institution of which Fleming was president and Templeton vice president and whose main banking house appears to have been at Dallas, about 50 miles from Corsicana. ”

“ Every action other than for the recovery of real estate, for which no limitation is otherwise prescribed, shall be brought within four years next after the right to bring the same shall have accrued, and not afterward. ”

“ Stat., as amended June 22, 1906 (34 Stat. 451, c. 3516 [Comp. St. § 9761] ) , by participating as such director and vice president in a loan of the bank's funds to an amount exceeding one-tenth of its paid-in capital and surplus.
The action appears to have been commenced in February, 1910, and, after delays not necessary to be recounted, was tried before the District Court with a jury. A verdict was directed in favor of defendant, and the judgment thereon was affirmed by the Circuit Court of Appeals, no opinion being delivered in either court. The judgment of affirmance is now under review. ”

“ Of course, whatever of value the bank recovered from the borrowers on account of the loan would go in diminution of the damages; but the responsible officials would have no right to require the bank to pursue its remedies against the borrowers or await the liquidation of their estates. The liability imposed by the statute upon the directors is a direct liability, not contingent or collateral.
(6) The question is raised whether the entire sum loaned, plus interest and less salvage, should be treated as damages sustained by the bank through the violation of the provisions of section 5200, Rev. ”

“ And the liability extends to 'all damages which the association, its shareholders, or any other person, shall have sustained in consequence of such violation.' In the present action the bank represents the interest of its shareholders, as well as of its creditors ”

“ Defendant, among other defenses, pleaded the two-year statute of limitations of the state of Texas. Plaintiff demurred on the ground that this limitation was not a bar, and also replied, setting up certain facts that need not now be recited. The demurrer was overruled.
The provisions of the Texas statutes upon the subject are Vernon's Sayles' Tex. Civ. Stat. 1914, arts. ”