by charter or statute. But officers and di-, or positive wrong, and they may be so liable rectors may be held liable to corporate cred- jointly with the corporation. . The itors for fraudulently diverting or misapply-directors of a corporation are not in general, ing the corporate assets so as to defraud in the absence of statutes making a different such creditors." In 15 Enc. Pl. & Pr., the same rule is given, and it is said, relative to the remedy (page 68): "If the demand of the creditor | is based on misrepresentations of the latter [director), the remedy of the creditor is in a court of law by an action for damages resulting from such misrepresentations." In 10 Cyc. 824, it is said: "Directors, like other agents, are liable to their principal, the corporation, or its legal representative, for nonfeasance, or for the nonexecution of the duties of their agency. They are also liable to strangers for misfeasance action in deceit at law can be maintained by him. Smith v. Hurd, 12 Met. 371, 46 Am. Dec. 690; Abbott v. Merriam, 8 Cush. 588; and Clark v. Lawrence, Brunner, Col. Cas. 631, Fed. Cas. No. 2,827, are particularly in point. This, of course, is not equivalent to holding that no suit in equity could be maintained by him in case he suffered loss and common to other creditors. It was held in Priest v. White, 89 Mo. 609, 1 S. W. 361, that a creditor of a corporation has no right of action at law for deceit, against the directors of the corporation, based upon the allegation that they had turned in property to the corporation at an exorbitant valuation in exchange for capital stock, for the wrong alleged was against the corporation, and not against its future creditors. But in Hauser v. Tate, 85 N. C. 81, 39 Am. Rep. 689, it was held that the liability of the president and directors of a spurious bank, to the creditors thereof, is direct and original, where they have, by fraudulent representations, induced the creditor to place faith in the bank and act upon that faith to his injury and loss. In Townsend v. Williams, 117 N. C. 330, 23 S. E. 461, the vice president and director of a bank had, when the bank was insolvent, induced a depositor to allow his deposit to remain in the bank by assuring him of the sound financial condition of the bank, and the court held that, while the directors were not insurers of creditors, yet they were trustees, and liable as such for losses attributable to their bad faith, misconduct, or want of care. It is the duty of directors of a state bank to know that a statement published by them concerning the financial condition of the bank is true, and when false stateinents are published by them, it is not essential, in an action for deceit, to allege that they knew the statements to be false. Solo. mon v. Bates, 118 N. C. 311, 54 Am. St. Rep. 725, 24 S. E. 478; Seale v. Baker, 70 Tex. 283, 8 Am. St. Rep. 592, 7 S. W. 742. But an action in deceit wil not lie against the directors of a corporation in favor of a bondholder, for misrepresenta rule, liable to creditors of the corporation for squandering the assets through breaches of their trust, since this is regarded as nonfeasance and primarily as a wrong to the corporation merely." In 2 Purdy's Beach on Private Corporaions, § 766, the rule is also stated as follows: "An agent is personally liable to third persons for his own misfeasances and positive wrongs; but he is not, in general, liable to them for mere nonfeasance or omissions of duty in the course of his employment. His liability, in these cases, is solely to his principal; there tions made by them whereby he was induced to purchase the bonds, if it be shown that they acted in good faith, using every precaution and relying upon advice of counsel in making the representation. Lane v. Fenn, 65 Misc. 336, 120 N. Y. Supp. 237. An And the same principles were applied in Arthur v. Griswold, 55 N. Y. 400, 7 Mor. Min. Rep. 46, where a fraudulent prospectus had been published, a company organized, and a few months later a certificate of some shares of stock was issued to defendant, and he was elected trustee, attended a few meetings as such, and allowed his name to be published as trustee. attempt by one who loaned money to the corporation later was made to hold him liable in an action for deceit for the amount of the loan, but the court held that he was not so liable in the absence of a showing that he knew the false and fraudulent character of the prospectus, and permitted the use of his name for the purpose of deceiving the public, and the further showing that the plaintiff was actually deceived by defendant's actions, and, relying thereon, had made the loan. A depositor in a bank, upon hearing rumors affecting the financial condition of the bank, went to one of its directors, who was also a member of its finance committee, told him of the rumors and spoke of withdrawing the deposit, but allowed it to remain in the bank because the director said: "It can't be so unknown to me and Mr. Monks. We are on the finance committee. There can be nothing wrong with that bank unknown to me and Mr. Monks. Don't believe any of these false reports; believe me; take my word for it. The bank is good, paying 6 per cent, the best in the state. If all that is in Jersey tells you that the bank is bad, don't believe it till I tell you," He also said that there was a surplus of over $6,000 after all dividends were paid. As a matter of fact, the bank was insolvent at the time, but reports from the president and other transactions were such as would naturally lead the director to believe all the statements that he had made. It was held in Cowley v. Smyth, being no privity between him and out- are regarded as the agents of the comsiders. The party injured must, in the pany, and in some sense as the trustees latter event, look to the principal. of the stockholders, are neither the Such is the general doctrine of respon- agents deat superior. These familiar principles, applicable in the case of positive torts committed by servants and ordinary agents, must be applied to the misfeasances of directors also. It has never been held that 'the actual, active perpetration of a wrong to the rights of property of another can find protection under the charter of a corporation any more than in the command or authority of a natural superior.'" In Machen's Modern Law of Corporations, § 1645, it is said that directors, by lack of diligence, are guilty of wrongs against the corporation alone. Taylor on Private Corporations, 5th ed. § 755, says that directors are not liable to a third person for fraud or other tortious act of an inferior agent. Clark on Corporations, 517, says that directors are not liable for torts, unless they have personally taken part therein. The weight of authority sustains the views thus voiced by the text writers; but we shall not extend this opinion by citing the cases from other jurisdictions. We come now to a consideration of our own cases on the subject, which, we think, are determinative of the question. Frost Mfg. Co. v. Foster, 76 Iowa, 535, 41 N. W. 212, was an action brought by the creditors of a corporation against its directors, for negligent and wilful mismanagement, amounting to a fraud upon the creditors. Their acts were held not to be fraudulent in view of the circumstances, and on the question of negligence it was said: "It has often been held that the assets of an insolvent corporation constitute a trust fund for the payment of its debts, and that one having such assets in his hands is liable as trustee to the creditors, and that is perhaps, the settled law in this country; but when the corporation is solvent, officers or directors who manage its business, while they 46 N. J. L. 380, 50 Am. Rep. 432, that, in an action on the case for deceit by the depositor against the director, it should be left to the jury to decide, upon the evidence, whether the defendant made the representations with a fraudulent purpose to deceive, or whether he made them in good faith and in the honest belief that they were true. And practically the same principle as to actions for deceit forms the basis of the holding in Drake v. Grant, 36 Hun, 464. Officers of a cemetery association are not liable to the holder of corporate bonds for a misappropriation, where they, acting in good faith, but through a mistake in law, appropriate the funds of the corporation to nor trustees of the creditors. They are not answerable to them, either for the management of the affairs of the company, or the disposition they may make of its property, unless made so either by the provisions of the charter or some general statute, neither of which is claimed to exist here. While the corporation is solvent, and continues in business, the creditor has no interest in or lien upon the property by virtue of the fact merely that he is a creditor. In the present case, no complaint is made of the disposition of the property made by the officers after the insolvency of the company. . . . But the ground of the complaint is that by their mismanagement of its affairs they have reduced it to insolveney. That they are not answerable to the creditors for such mismanagement is clear, both upon principle and authority." In Warfield v. Clark, 118 Iowa, 69. 91 N. W. 833, the action was against an officer of the corporation for deceit, and it was said in considering an instruction on the question of negligence: "This action is founded on active and conscious misrepresentation as to the condition of the company, and can only be sustained by proof of intentional fraud. It cannot be predicated on negligence, however gross." In Hubbard v. Weare, 79 Iowa, 678, 44 N. W. 915, the suit was in equity for fraud and misrepresentations as to the condition of the corporation, inducing the purchase of stock, and, while the precise question now before us was not there considered, it was held that that action could not be maintained without proof of scienter. And such was the holding in Boddy v. Henry, 113 Iowa, 462, 53 L.R.A. 769, 85 N. W. 771, both of which cases lend support to the conclusion we reach herein. In Williams v. Dean, 134 Iowa, 216, 11 L.R.A. (N.S.) 410, 111 N. W. 931, an action was brought against the directors of a fair the payment of its expenses, which funds should have been applied upon the bonds. Seymour v. Spring Forest Cemetery Asso. 4 App. Div. 359, 38 N. Y. Supp. 726, affirmed in 157 N. Y. 697, 51 N. E. 1094. The publication of a false statement in a newspaper and on a depositor's pass book, "Directors and Stockholders Personally Responsible," by the directors of a savings bank, acted upon in good faith by the depositor, will make the directors liable to him in an action for deceit; but it does not operate as a contract between the directors and the depositor so as to make them liable on the contract. Westervelt v. Demarest, 46 N. J. L. 37, 50 Am. Rep. 400. J. W. M. association, where the liability of the corporation itself was not involved, and we said: "We have yet to determine the liability of the defendants, who are the officers and directors of the society. The action sounds in tort, and is manifestly for trespass, or, perhaps, trespass on the case. Defendants were, of course, agents of the society. They were not the society itself, but were acting purely in a representative character. If liable at all, it is because of what they did. If they were guilty of some misfeasance or trespass, as distinguished from mere nonfeasance, then they were and are liable, and they cannot shield themselves by saying that they were acting as agents for the society. And in this connection it is entirely immaterial whether their acts were ultra vires or within the scope of their authority. No one is permitted to say, in an action against him for trespass or for misfeasance, that he was acting as an agent in doing the matters complained of, and is therefore not liable. Nor is his liability to be measured by the extent of the authority conferred upon him. On the other hand, no agent is liable to a stranger simply for nonfeasance; that is to say, for failure to do some act which his principal commits to his care." While some of our own cited cases do not treat fully the question under present consideration, they all lend more or less support to our conclusion, because they recognize the rule that we here announce. The appellant does not claim that liability for negligence is imposed on the directors by the statute, but bases its claim on general principles. Nor do we know of any statute which creates liability for negligence only. Under the statute, directors and officers are liable for wilful wrongs only, and in actions under §§ 1620 and 1621, we have always held that there can be no recovery, except upon the ground of deceit, with scienter proven. Hoffman v. Dickey, 54 Iowa, 135, 6 N. W. 174; Frost Mfg. Co. v. Foster, 76 Iowa, 535, 41 N. W. 212; Hubbard v. Weare, 79 Iowa, 678, 44 N. W. 915; Swartley v. Oak Leaf Creamery Co. 135 Iowa, 573, 113 N. W. 496. And in the last case cited, it was expressly held that, as only a money judgment was demanded against the defendants, the action was purely legal, and should be prosecuted on the law side of the calendar, and we think the holding determinative of the present question of transfer to the law docket. Our conclusion is that, where a creditor of a corporation sues in his own personal right to recover from a director losses which he has sustained by extending credit to the corporation, his action must be founded on deceit, and not upon negligence, and that it must ordinarily be brought at law, and not in equity. It was alleged that La Rue made the deposits as administrator of the two estates, referred to in counts 1 and 2 of the petition, and that he wrecked the bank by his own criminal acts. If this be true, we do not see upon what theory of the law it can be said that the plaintiff suffered loss by the false and fraudulent representations of the defendant directors. It was not alleged that they were active in the management of the bank. On the contrary, it was averred that La Rue was the manager of and knew and was responsible for the bank's insolvent condition when he made the deposits, and that the defendant directors were liable for negligence in not knowing of such condition. Surely a legal fiction cannot be built up that La Rue the banker and La Rue the administrator were separate and distinct personalities, and on the strength thereof say that La Rue was misled by any negligent or affirmative act of the directors. We are of the opinion, therefore, that the demurrer to counts 1 and 2 of the petition was rightly sustained. The judgment of the trial court should be and it is affirmed A (Hart, J., dissents.) (December 9, 1912.) PPEAL by defendant from a judgment of the Circuit Court for Lee County in plaintiffs' favor in an action brought to Note. For relation of new pleadings to statute of limitations, see notes to Missouri, K. & T. R. Co. v. Bagley 3 L.R.A. (N.S.) 259, and Bourdreaux v. Tucson Gas, E. L. &. P. Co. 33 L.R.A. (N.S.) 196; and later cases, Cotulla v. Urbahn, 34 L.R.A. (N.S.) 345, and Neubeck v. Lynch, 37 L.R.A. (N.S.) 813. recover possession of certain real estate. title to said lands by inheritance as the Modified. Statement by Wood, J.: sole heirs at law of the said Josiah Hawkins, deceased, who died intestate in 1890. The court further finds that said On November 4, 1904, the appellee and lands in controversy were at all times unother heirs of Josiah Hawkins brought this improved and uninclosed until the suit against appellant to recover the pos- day of June, 1903, at which time the desession of a certain tract of land in Lee fendants took actual possession of said county. Josiah Hawkins died in 1890, leav- lands, and since said date have held actual, ing surviving him the appellee and other open, notorious, continuous, and adverse children and grandchildren. In their com- possession of said lands, claiming title plaint the plaintiff's alleged that their thereto under the tax deed and deed of ancestor died intestate, and deraigned title mesne conveyance as set forth in defendthrough him from the government. They ants' answer. That defendants, etc., have alleged that defendants were in the unlaw- had color of title to said lands under the ful possession of the lands. They set up said several deeds of conveyance hereinthat appellant claimed title under purchase before referred to, and have, under said at a tax sale. They tendered the taxes and color of title, claimed to be the owners of prayed judgment for the possession of the said lands." And the court, in part, de land. The defendants answered, denying clared the law as follows: "(2) The acthe allegations of the complaint, and set- tual possession of the defendants of the ting up tax title and adverse possession lands in controversy does not constitute of the lands for more than two years be- a bar to this action, under any statute of fore the commencement of the suit, plead- limitations of this state. (3) Under the ing the two-year statute of limitations. At terms of the will introduced in evidence, the April term, 1912, the plaintiffs amend- all of the title of said Josiah Hawkins to ed their complaint, setting up that Josiah said lands passed to Linnie B. Hawkins Hawkins, their ancestor, died testate, hav- | Walker." ing willed his property to appellee, and The appellants requested the court to that she, by virtue of the will, became the declare the law, in part, as follows, which owner of the entire interest in the lands the court refused, to wit: "The court declaimed. The defendants answered the clares the law to be that the amendment to amended complaint, admitting that Josiah the original complaint made this date by Hawkins died testate, having willed the interlineation, alleging the ownership of land in controversy to the appellee, and the lands in controversy to be in the plainalleged that they (the defendants) had tiff Linnie B. Hawkins Walker (Mrs. J. "been in the open, notorious, exclusive, J. Walker), to the exclusion of the other continuous, visible, and adverse possession of the lands involved in this action for more than eight years next preceding the filing of the amendment to said complaint," and claiming title as alleged in the original answer. In their answer they also asked the court to dismiss the amended complaint for the reason that plaintiff's "did not, prior to the filing of said amendment, make the affidavit of tender of taxes and improvements, as required by the statute." The court overruled the motion to dismiss the complaint. There was an agreed statement of facts and depositions of witnesses, from which the court found in part as follows: "That Josiah Hawkins died in 1890, leaving a will through which and under which Linnie B. Hawkins (now Mrs. J. J. Walker) was devised the lands in controversy. That this action of ejectment was filed in November, 1904, by plaintiffs J. A. Hawkins, Gus Hawkins, Mrs. S. Alma Salmon, Mrs. H. A. Bernard, Mrs. J. J. Walker, Mrs. E. D. Moore, Irby Gibson, and Gertrude Gibson, minors, by II. C. Gibson, their father and regular guardian, who claims plaintiffs, by reason of a devise to her contained in the last will and testament of Josiah Hawkins, who died testate in 1890, constituted a new cause of action on behalf of the said plaintiff, Linnie B. Hawkins Walker (Mrs. J. J. Walker), and the statute of limitations as to the claim set up by the said Linnie B. Hawkins Walker in the complaint as amended was not tolled until this date." The court rendered judg ment in favor of the appellee for the possession of the land in controversy, from which judgment appellant duly prosecutes this appeal. Messrs. W. W. Hughes, Danaher & Danaher, and Daggett & Daggett, for appellant: By the amendment a new cause of action is stated, and the statute is a complete bar to the action. Sims v. Cumby, 53 Ark. 418, 14 S. W. 623; Sparks v. Farris, 71 Ark. 117, 71 S. W. 255, 945; 29 Cyc. 1557; Sannoner v. Jacobson, 47 Ark. 31, 14 S. W. 458; Choctaw, O. & G. R. Co. v. Hickey, 81 Ark. 579, 99 S. W. 839; Wood v. Wood, 59 Ark. The It that was her 446, 28 L.R.A. 157, 43 Am. St. Rep. 42,, a one-eighth interest, as 27 S. W. 641; Buck v. Davis, 64 Ark. 345, share of the land in controversy. When 42 S. W. 534; Warmack v. Askew, 97 Ark. the amendment to the complaint was filed, 19, 132 S. W. 1013; Patrick v. Whitely, 75 it changed the cause of action entirely as Ark. 465, 87 S. W. 1179, 5 Ann. Cas. 672; to all the lands except her undivided oneUnion P. R. Co. v. Wyler, 158 U. S. 285, eighth interest; for by the amendment to 39 L. ed. 983, 15 Sup. Ct. Rep. 877. the complaint she claimed title to and the Mr. H. F. Roleson, for appellees: right of possession of the whole tract unThe court allowed the amendment. der a will from her father. The amenddefendant asked for no continuance. ment to the complaint, in legal effect, was was not prejudiced in any way. The sound a dismissal of the original cause of action discretion of the court was controlling, except as to the appellee. Prior to the and there was no abuse of such discretion. filing of the amendment to the complaint Bloom v. Home Ins. Agency, 91 Ark. the appellee did not set up any claim of 377, 121 S. W. 293. title to or right to the possession, in her The common-law rule, so often disas-own name, of the entire tract of land in trous to the pleader, and so often resulting controversy. The allegations of the amendin injustice and wrong, has been entirely abrogated by our Code. McDonald v. Nebraska, 41 C. C. A. 278, 101 Fed. 182; King v. Caldwell, 26 Ark. 407; Patterson v. Fowler, 23 Ark. 476; Bank of Malvern v. Burton, 67 Ark. 426, 55 S. W. 483; Covington v. Berry, 76 Ark. 460, 88 S. W. 1005; Gannon v. Moore, 83 Ark. 196, 104 S. W. 139. ment to the complaint as to the right of possession of all the lands in controversy, except the undivided one-eighth interest claimed by the appellee, are entirely inconsistent with the evidence which would have been required to establish the allegations of the original complaint. The evidence which would have been required to establish the allegations of the amendment to the complaint would have de Wood, J., delivered the opinion of the feated the allegations of the original court: complaint to all the lands except the undivided interest of the appellee. The evidence of title exhibited with the amendment to the complaint proves that all the plaintiffs except the appellee were not entitled to any interest in the lands in controversy, and that she was entitled to recover the entire interest unless barred by the statute of limitations. If there had been no amendment to the complaint and the cause had proceeded to judgment in favor of the original plaintiffs, such judgment would have been a bar to recovery by appellee of any interest in the land except her undivided one-eighth; for as to the remaining seven-eighths, the judgment would have been in favor of the other tenants in common with her. The allegations of the original complaint showed that appellee and others, the heirs of Josiah Hawkins, deceased, brought this suit as tenants in common, setting up that their ancestor died intestate, leaving them as his heirs, and that as such they inherited the land in controversy. They therefore set up title to the land by descent. The facts alleged in the complaint showed that the appellee was not seeking to recover the entire tract for the benefit of the other tenants in common. We do not decide therefore in this case the question as to whether one tenant in common can maintain ejectment in this state for the benefit of himself and the other tenants in common for the lands owned by them as tenants in common. That question is not "It has been declared to be a fair test, raised under the allegations of the origi- in determining whether a new cause of acnal complaint. All the tenants in common tion is alleged in an amendment, to inquire join in the suit for lands which they claim if a recovery had upon the original comby descent. Under our statute of descents plaint would be a bar to any recovery unand distributions, where lands are ownedder the amended complaint, or if the same by tenants in common by descent, they are evidence would support both." 1 Enc. Pl. distributed in equal shares to the tenants & Pr. 556, and cases cited; Black; Judgm. in common. Kirby's Dig. § 2636; 29 Cyc. § 726; Whalen v. Gordon, 37 C. C. A. 70, 95 Fed. 305. 1557. So far as the individual tenants in com- In the case of White v. Moss, 92 Ga. mon are concerned, the original complaint 244, 18 S. E. 13, Sarah White and others, must be treated as a suit by them to re- as joint plaintiffs, brought an action in cover their several and individual inter-ejectment against Moss and Childs for ests in the land in controversy as tenants the recovery of a tract of land. The action in parcenary, or in equal shares. The ap- was brought at the September term, 1884. pellee Mrs. Walker was claiming title and and the cause was dismissed at the Sep the right to recover the possession of only tember term, 1886. On February 12, 1887. |