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business or occupation, or in his peace and security of charge its workmen and employ themselves, and to
themselves, and did not combine or operate for a reA wanton, unprovoked interference by a combina sult mischievous, meddlesome and oppressive toward tion of many with the business of another, for the others. But even in that case the court, after suppurpose of constraining that other to discharge faith posing the case of a combination for the ultimate and ful and long-tried servants, or to employ whom he laudible object of reducing by mere competition the does not wish or will to employ-an interference in price of bread to themselves and their neighbors, said: tended to produce, and likely to produce, annoyance “The legality of such an association will therefore deand loss to that business-will be restrained and pun pend upon the means to be used for its accomplishished by the criminal law, as oppressive to the indi ment. If it is to be carried into effect by fair and vidual, injurious to the prosperity of the community, honorable means it is, to say the least, innocent; if and subversive of the peace and good order of society. by falsehood or force, it may be stamped with the
The recent case of State v. Glidden, already referred character of comspiracy." Force may be operated to, decided by the Supreme Court of Connecticut, is either physically or mechanically, or it may be coerboth in principle and features, ide:itical with the case cion by fear, threat or intimation of loss, injury, oblounder review. The Carrington Publishing Company quy or suffering. had in their employ a number of printers known as The evidence in this case shows that while Baugh“non-union men” or “rats." The Typographical man Brothers were engaged in their 'lawful business Union, the Knights of Labor, the Trades' Council, the as stationers and printers, the plaintiff in error and Cigarmakers' Union, and other affiliated secret or the other member of the Richmond Typographical ganizations, waited upon the company and demanded Union No. 90, conspired to compel Baughmau Broththat their office be made a union office within twenty ers to make their office a union office, and to compel four hours. Upon the refusal of the company to make them not to employ any printer who did not belong their office a union office a boycott was instituted to the said union. That upon the refusal of Baughagainst them, which though not openly published, as man Brothers to make their office (for business) a in this case, was fully proved. The court, in its opin. union office, the plaintiff in error and others, composjon, said: “If the defendants have the right which ing the said Richmond Typographical Union No. 90, they claim, then all business enterprises are alike sub- | conspired and determined to boycott the said firm of ject to their dictation. No one is safe in engaging in Baughman Brothers as they had threatened to do; business, for no one knows whether is business affairs and sent circulars to a great many of the customers of are to be directed by intelligence or ignorance; the said firm, informing them that they had, “ with whether law and justice will protect the business, or the aid of the Knights of Labor and all the trades orbrute force, regardless of law, will control it; for it ganizations in this city (Richmond), boycotted the esmust be remembered that the exercise of the power, tablishment of Messrs. Baughman Brothers;" and if conceded, will by no means be confiued to the mat- | formally notifying the said customers that the names ter of employing help. Upon the samo principle, and of all persons who should persist in trading, patronizfor the same reasons, the right to determine what ing or dealing with Baughman Brothers, after being business others shall engage in, when and where it | notified of the boycott, would be published weekly in shall be carried on, etc., will be demanded, and must the Labor Herald as a black-list, who in their turn be conceded. The principle, if it once obtains a foot-|
would be boycotted until they agreed to withdraw hold, is aggressive, and is not easily checked. It | their patronage from Baughman Brothers: and acthrives on what it feeds on, and is insatiate in its de. cordingly the employees of Baughman Brothers were mands. More requires more. If a large body of ir. mercilessly hounded, by publication after publication, respousible men demand and receive power outside of for months, in the Labor Herald (which was the law, over and above law, it is not to be expected that boasted engine of the boycotting conspirators), they will be satisfied with a moderate and reasonable whereby it was attempted to excite public feeling use of it. All history proves that abuses and excesses against them, and prevent them from obtaining even are inevitable. The exercise of irresponsible power by board and shelter; and the names of the customers men, like the taste of human blood by tigers, creates and patrons of the said firm were published in the said an unappeasable appetite for more.” “Confidence is
sheet under the standing head of “Black-List.”. the corner-stone of all business-confidence that the
| The length of this opinion will preclude the mengovernment, through its courts, will be able to pro
tion of even a tithe of these incendiary publications, tect their rights; but if their rights (of business men) week after week, for months; but not only Baughman are such ouly as a secret, irresponsible organization is Brothers and their employees and their customers, willing to give, where is that confidence which is es
but the hotels, boarding-houses, public schools, railsential to the prosperity of the country?" "The end
roads and steamboats conducting the business travel would be anarchy, pure and simple, and the subver- i and transportation of the city, were listed and pubgion not only of all business, but also of law and the lished under the obloquy and denunciation of the government itself.” “They (defendants) had a right “ Black-List." One or two specimens will suffice: to request the Carrington Publishing Company to dig. “Boycott Baughman Brothers and all who patron
ize them." "Watch out for Baughman Brothers' ACKER, J. The court below sustained general de.
rats,' and find out where they board. It is dangerous murrers to the petition and dismissed the guit, froin for honest men to board in the same house with these which judgment this appeal is taken. It now decreatures. They are so mean that the air becomes volves on us to determine whether or not, on the case contaminated in which they breathe."
stated in the petition, appellant is entitled to recover. "Boycott Baughman Brothers every day in the It is alleged in the petition that on the 19th day of week.” “Boycott Baughman Brothers because they December, 1885, and for one year preceding that date, are enemies of honest labor." "Boycott Baughman appellees were directors of the banking corporation Brothers' customers wherever you meet them. "The “The City Bank of Houston," actively directing and Lynchburg boys will begin to play their hand on Messrs. controlling its affairs and the conduct of its said busiBaughman's boycotted goods in a short time. The bat ness, and represented themselves and were generally tle will not be fought in Richmond only, but in all and publicly known as such, and well knew and ougbt Virginia and North Carolina will be raised the cry, to have known, and by the use of ordinary care, such *Away with the goods of this tyrannical firm.'” “Let as it was their duty to bave exercised, might have our friends remember it is the patronage of the Chesa. kuown all and singular the particulars and condition peake & Ohio, Richmond, Fredericksburg & Potomac, of said corporation in respect to the matters hereinRichmond & Danville, and Richmond & Alleghens after mentioned, at the time when they severally railroads that is keeping Baughman Brothers up." transpired and took place. That during the period "We are sorry to see the Exchange Hotel on the black aforesaid the said defendants, who were all well and list. There will be two thousand straugers in this publicly known as possessed of remarkable business city in October, none of whom will patronize a hotel capacity, carried on the business of said bank, and or boarding house whose name appears on that list." held it out to the public as of undoubted financial "The boycott on Baughman Brothers is working so ability and deserving of public confidence, and daily good that a man cannot buy a single bristol-board and continuously caused to be published, by their aufrom the 'rat' firm without having his name put upon thority and direction, in the interest and behalf of the black-list.” “The old 'rat' establishment is said bank, advertisements in the Houston Daily Post, about to cave in. Let it fall with a crash that will be a daily newspaper and journal of general and wide a warning to all enemies of labor in the future.”
circulation throughout the State of Texas and else. It was proved that the conspirators declared their where, published in said city of Houston; and in the
where, published in said city of Houston; a set purpose and persistent effort to crush Baughman
city directory of the city of Houston, a printed book Brothers; that the minions of the boycott committee of reference in general public use; and upon conspicudogged the firm in all their transactions; followed
ous sign-boards kept and exposed to the public at and their delivery wagon; secured the names of their pa
near the door of the place of business of said bank; trons, and used every means short of actual physical
and upon printed letter-heads, upon and with which force to compel them to cease dealing with Baughman
the business correspondence of anid bank was conBrothers, thereby causing them to lose from 150 to 200 ducted, and so generally circulated among all persons. customers and $10,000 of net profit. The acts alleged
including this plaintiff, having any transactions or corand proved in this case are unlawful, and incompati respondence with said bank, advertisements, stateble with the prosperity, peace and civilization of the ments and representations to the effect and in subcountry; and if they can be perpetrated with inipuli
stance that the said bank had a capital of $500,000, ity by combinations of irresponsible cabals or cliques,
was in sound financial conditioni, fully solvent, and there will be the end of government and of society
wholly reliable and well deserving of public trust and itself. Freedom, individual and associated, is the
confidence. That in truth and in fact the said adrerboon and the boasted policy and peculium of our
tisements, statements and representations, so caused country; but it is liberty regulated by law; and the
to be published by said defendants, were, at the time motto of the law is, “Sicutere tuo, ut alienum non
they were severally 80 published, wholly false and unladas."
true, and the said bank at the same time did not hare The plaintiff in error was properly convicted, and
a capital of $500,000, and was vot in sound financial the judgment of the Hustings Court consplained of is
condition, nor solvent, nor reliable, nor in any mauaffirmed.
ner or wise deserving of public trust and confidence: but on the contrary, had long before lost all of its
capital and a greater portion of its funds and assets FRAUD) – FALSE REPRESENTATIONS - LIA
which had come into its hands from its creditors, deBILITY OF DIRECTORS.
positors and customers, and was and long had been
hopelessly and irretrievably insolvent; for several TEXAS SUPREME COURT, MARCH 20, 1888.
ears its current expenses had exceeded its earnings:
it affairs had been and continued thereafter growing SEALE V. BAKER.
daily worse ; it had been and then was and thereafter The directors of a bank are personally liable, at the suit of a
continued doing business upon a wholly fictitious depositor juduced to place money in an insolvent bank
credit; and from and after September 20, 1885, if not solely by the false representations of its solvency, made
before that time, all reasonable hope and prospect of by them, whether such representations are made with
retrieving its solvency was utterly gone, and it was a the intent to defraud or not, where the directors, by
mere question of a very short time when the true collthe use of ordinary care, might have kuown that such
dition of said bank would necessarily become notorirepresentations were false.
ous, and it would be compelled to suspend business, NOMMISSIONERS' decision.
to the great loss of its crcditors and customers, and in the exercise of good faith and justice to the public its
business should have been suspended and wound up Scott & Levi, for appellant.
long before the 8th day of December, 1885. That plainHutchinson, Carrington & Sears, for appellees B. F. tiff read and believed said advertisements, statements Weems, R. Brewster and 8. K. McIlhenny.
and representations; and relying thereon and induced
thereby, and not otherwise, he did, on the 8th day of Baker, Botts & Baker, for appellees F. A. Rice and
December, 1885, place in said bank for collection, and W. B. Botts.
to be placed to his credit, a draft for $2,500, which was Goldthwaite & Ewing, for appellee W. R. Baker. collected by said bank, and the proceeds placed to his
credit therein as a customer of said bauk. That ou the circumstances stated in the second and third of these
appellees that they made the representations as direc-
corporation and the directors, but also the relation of himself of what would appear by an inspection of the trustee and cestui que trust exists between them and books of the institution of which he was one of the the stockholders and creditors. Accordingly they | ostensible managers; and he cannot urge a want of have no right to enter into or participate in any com- | notice arising from a neglect of duty." bination, the object of which is to divest the company The case of Morse v. Swits, decided by the Supreme of its property and obtain it for themselves to the Court of New York, and reported in 19 How. Pr. 286, prejudice of members or creditors. Nor are they en- | was an action by a stockholder against the directors titled to any share of capital stock or any dividends of of a bank to recover of them personally damages for a profits, until its creditors are paid. This doctrine false statement published concerning the affairs of would of course be applicable in all cases of fraudu- the bank, by which the plaintiff was induced to purlent or wrongful disposition of the corporate funds or chase stock of the bank. Gould, J., delivering the property by directors; for as agents and trustees of the opinion of the court, says: "I think the tendency of corporation, as well as the stockholders and creditors, all the later decisions in this country and in England they would be bound to perform their duties and ad- | is in favor of extending the liability of every one who minister the trust in good faith. The fiduciary char makes a public representation which he knows to be acter of directors referred to is such that the law will | false, and upon faith in which any one has been led not permit them to manage the affairs of the corpora into a business transaction whereby ho suffers dantion for their personal and private advantage when age. I do not understand that it is at all necessary to their duty would require them to work for and use the right of action that the representation should have reasonable efforts for the general interest for the cor been intended for the party sustaining the loss, or in poration and its stockholders and creditors. The con- | any way addressed to him. If it be made openly and fidence thus reposed in them cannot be thus abused 1 publicly, so that it might well come to bis ears, and with impunity, and they cannot use their position to be acts upon it, the party making it shall answer to promote their own interest, in respect to any thivg bim for his damages. He shall not be at liberty to sow thus intrusted to them to the prejudice of creditors or falsebood broadcast without being responsible for the other members."
loss it causes. The falsehood may have been made In Morse Banks, 131, et seq., it is said: “ Whatever for one purpose and published for that; but being knowledge a director has or ought to have officially, publisbed, the public, or any individual of the public, he has or will be conclusively presumed at law to have has the right to believe it. It must have been the inas a private individual. Thus a director is affected tention of the persons publishing it that it should be with notice of the condition and transactions of the believed. And if believing it, any one of the public bank. If the bank is insolvent, or if it offers him for | acts on that belief, the makers and publishers of the parcbase notes which could only be legally sold by au- | falsehoods are to be held liable for the consequences thority of a directorial vote which has not been given, they have caused." See authorities cited in note at he is affected with knowledge of the insolvency and of | end of this decis the illegality of the notes." Lyman v. Bank, 12 How. 1 The case of Society v. Underwood, 9 Bush, 617, was 225. The same author, p. 133, says: “It bank direc- an action against the directors of a bank to recover to tors do not manage the affairs and business of the them personally damages for loss of deposits wrongbauk according to the directions of the charter and in fully converted, and it was there said: “The question good faith, they will be liable to make good all losses here presented is whether the directors, who had which their misconduct may inflict upon either stock knowledge of these alleged wrongful sales, can be held holders or creditors, or both. They may be held to to answer personally for the deposits so converted. account to an injured party in a court of chancery, or Appellees insist that they cannot be so beld because they or any one of their number who shared in the of want of privity between the depositors and themwrong doing may be sued at law for damages."
selves. They concede that for gross negligence or mislo 3 Suth. Dam.587, 588, it is said: "If the person mak management upon their part, resulting in loss to the ing the representations which are material, and which bank, they may be held to account to it; but urge that he intends should influence another, knows them to | inasmuch as their undertaking was to the corporabe false, the case is clear. Some question has been tion, they can be proceeded against by it alone, and raised whether positive representations, made without that appellants must look to the bank, and not to knowledge, and believed to be true by the party mak them. This position is plausible, but it cannot, in our ing them, will sustain an action for damages in the opinion, be maintained. Bank directors are not mere nature of deceit. But the doctrine which seems sup agents, like casbiers, tellers and clerks. They are ported by the great weight of authority is, that it a trustees for the stockholders, and as to their dealings person states as of his own knowledge material facts with the bank, they not only act for it and in its name. which are susceptible of knowledge to one who relies but in a qualified sense are the bank itself. It is the and acts upon them as true, it is po defense to an ac- duty of the board to exercise a general supervision tion for deceit that the person making them believed over the affairs of the bank, and to direct and control them to be true. The falsity and fraud consist in rep. the action of its subordinate officers in all important resenting that be knows the facts to be true of his own transactions. The community have a right to assume knowledge when he bas not such knowledge. It is that the directory does its duty, and to hold them vot necessary that the false representations be made perkopally liable for neglecting it. Their contract is to deceive the plaintiff in particular.”
not alone with the bank. They invite the public to In 3 Wait Act. & Def. 436, it is said: “It has been deal with the corporation, and when any one accepta laid down as settled law that if a party makes repre
their invitation, he has the right to expect reasonable Bentations in such a manner as to import a knowledge diligence and good faith at their bands; and if they in him of facts, while in fact he has no knowledge of fail in either, they violate a duty they owe, not only the facts, and the representations are made with tbe to the stockbolders, but to the creditors and patrons intent that another sball rely on them, and these rep 1 of the corporation." resentations turn out to be false, it is as much a fraud The case of Bartholomeio v. Bentley, 15 Ohio, 666, as if the party making them knew them to be untrue.”
was a suit by an individual creditor of an insolvent See also Kerr Fraud & M. 111, 324, 325.
bank against the officers of the bank to make them In Gillet v. Phillips, 13 N. Y. 117, it is said : “By personally liable for losses sustained by the plaintiff accepting the office of director be assumed a duty to
by reason of his relying and acting upon false reprethe stockholders and creditors of the bank to inform sentations made by the defendants. It is there said:
“It may be regarded as a well-settled principle that separate and distinct from that sustained by the others,
to the purposes of the trust; and if they misappro-
held that the directors were individually liable to the The case of Cazeaux v. Mali, 25 Barb. 578, was an depositor. The judgment of the appellate court was action brought by a stockholder of a corporation affirmed by the Supreme Court in June, 1887. 12 N. E. against the officials and directors to recover of them | Rep. 676. personally the loss sustained by plaintiff by deprecia! The case of Edgington v. Fitzmaurice, decided by tion in the value of stock, caused by the fraudulent the Court of Appeal of England in March, 1885, and issue of stock beyond the authorized amount. It was published in the Central Law Journal of January 22, there held that the action was properly brought by the 1886, page 81, was an action by a purchaser of debenplaintiff in his own name, without joining the other tures of a corporation against the directors to recover stockholders; the injury to each stockholder being of them personally damages for false representations