This section is from the book "The Law Of Banks And Banking", by John Maxcy Zane . Also available from Amazon: The law of banks and banking.
It is everywhere conceded that if an officer or director commits a tort he is responsible to the person injured whether that person is a stockholder or not. But the right of action does not arise because the tort-feasor is an officer of the bank nor because the injured party is a stockholder. The officer is liable just as another person not an officer would be liable. Thus, if a bank officer makes false and fraudulent representations to a stockholder upon which the latter acts to his injury; if he, assuming a duty to act, acts negligently about the stockholder's private affairs, not the bank's affairs; or if he commits any other tort against the stockholder, he will be liable in the appropriate kind of an action, even if the corporation be also liable to the stockholder injured.' The director and the stockholder are considered simply as private individuals not interested in the same corporation. But merely as an officer of the bank, the officer owes no duty to the stockholder as such that he does not owe as an individual to the stockholder as an individual. Therefore as a general rule the stockholder cannot sue the bank officer for a breach of the duty which the officer owes to the bank, either at law or in equity.2 This arises from the fact that the incorporated bank is one person and the stockholder is another person who does not own the rights of the corporation. But the law recognizes that a stockholder has certain rights in the corporation. One of those is to bring a suit in equity to enforce a right of the bank, when the controlling officers of the bank refuse to enforce the right, either because they are the wrong-doers or for some other reason.3 But it is plain that in the latter case he sues in right of the bank, and in such a suit the bank is a necessary party. The fruits of the litigation do not belong to the stockholder, but to the bank.4 If this distinction had been kept clearly in view no confusion would have resulted, but the stockholder in this latter suit has been allowed to mingle rights which belonged to him as an individual with rights which he was asserting in the name of the bank.5 But it is possible that in such a litigation a court could by its decree separate those rights and give one kind of a judgment to the stockholder as an individual and another kind of a judgment to him for the corporation.
22 O'Brien v. Fitzgerald, 143 N. Y. 377. A receiver's suit; but the same principle would apply to the corporation's suit. This latter case is inconclusive as to the nature of the action, whether at law or in equity. 1 See dissenting opinion in Wilson v. First Nat. Bank, 1 Wyo. 108, for a legal curiosity.
2 Conway v. Halsey, 44 N. J. Law, 462; Craig v. Gregg, 83 Pa. 19; Rich v. Shaw, 23 Me. 343; Smith v. Hurd, 12 Met. 371. These last three cases are in states which originally had no system of equitable remedies.
But the principle is plainly correct. But if the statute gives the stockholder a remedy that is another matter. Buell v. Warner, 33 Yt 570.
3 Smith v. Rathbun, 22 Hun, 150; Brinckerhoof v. Bostwick, 99 N. Y. 185; Wallace v. Lincoln Sav. Bank, 89 Tenn. 630; Ackerman v. Halsey, 37 N. J. Eq. 356; Nelson v. Burrows, 9 Abb. N. C. 280.
4 Dewing v. Perdicaries, 96 U. S. 193, as to a creditor's suit, to which the same rule must apply, if the suit is allowed. Chester v. Halliard, 34 N. J. Eq. 341.
5 Hand v. Atlantic Nat. Bank, 55 How. Pr. 231. A case that presents a remarkable confusion of ideas is found in Utah. Warren v. Robison, 57 Pac. R 287. The case was a suit by creditors and stockholders against the directors, charging negligence in making loans and managing the affairs of the bank, whereby its funds were dissipated.
The suit was not, of course, one by depositors alleging the reception of deposits while the bank was insolvent. Therefore it was a suit by the creditors and stockholders in right of the bank. To such a suit the bank was a necessary party. The receiver was a party, but he had been discharged. And although the point is made in the briefs, the court does not even notice it. The opinion makes a remarkable suggestion, and that is that the stockholders and creditors may have been guilty of such contributory negligence as to defeat their recovery. The learned court evidently supposed that the stockholders and creditors were suing for being run down by a railroad train. Contributory negligence in such a case as this is impossible. The plaintiffs had no control of the corporation. The opinion is by Bartch, J., who has won a deserved immortality.
 
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