The opinion of the court was delivered by
Veazey, J.
This case stands on demurrer to the declaration which was framed upon that part of section 7 of the charter of the St. Albans Trust Company, which reads as follows:
“ The said directors shall be liable to the creditors and stockholders of said corporations for any loss which may be sustained iu consequence of any incompetency, unfaithfulness, or remissness in the discharg'e of their official duties hereinbefore or hereinafter prescribed, and any number of such directors may be sued in the same action by any claimant under these provisions.”
It is insisted that no action, at law can be maintained by a creditor upon this statute, and that the action given is a suit in equity. The plaintiff was a creditor of said company by reason of being a depositor. The authorities in the different states upon the point here made cannot be fully reconciled. The conflict, however, is largely explainable upon the difference of the statutes and of the remedial systems of the several states.
The language of this charter is appropriate to a remedy at law, hut is not restricted to it. Such a provision, therefore, should be construed so as to provide the most complete, convenient, comprehensive, and equitable remedy which its language will admit of. That a proceeding in chancery would furnish such a remedy, and that a suit at law would not, is very apparent. It is not equitable that one depositor should get any advantage over the others of the same class. It is just that the directors guilty of the delinquencies specified should reimburse depositors for any loss resulting from such delinquencies; but if they have not the means to make up the loss to all, there should be a distribution in proportion to the respective deposits affected by the loss. If the [632] action is to recover a penalty the defendants can only be liable to one action and to one penalty. If this action is construed as not providing for the recovery of a penalty, so that one action would not be a bar to others, then a delinquent director would be liable to as many actions as there are depositors and stockholders, with a probability that the parties first suing would get pay in full or all the means that the directors had, and the others nothing. A suit at law to recover a loss to the plaintiff of $100, where the company is insolvent, would involve about the same complication of inquiry as a suit in equity adjusting all. the affairs of the company, and that too by a jury, the tribunal least adapted to such inquiry. The liability is only for such loss as the creditor or stockholder sustains. That can occur only through a loss sustained by the company by reason of the official delinquencies specified. So far as the assets, including those derivable from the proceeds of the capital stock, are sufficient to pay the creditors, there is no loss sustained by them, and consequently no liability of the directors to them. Therefore, in order to determine that there has been a loss to a depositor all the debts of the company must be shown, the amount of the assets established, the proper application of assets to different classes of losses fixed, having regard to dates of deposits and losses with reference to each other. These are but illustrations of the many complications that a suit at law by a creditor for his loss involves. It lacks convenience, economy, and justice; whereas a suit in equity is adapted to give to the creditors adequate relief, and to the directors adequate protection. The remedy is in its nature appropriate to a Court of Chancery. The powers and instrumentalities of that court enable it to ascertain all the propositions of fact upon which relief and recovery must be based, with all parties in interest before the court and bound by its decision, whereas a trial under the rigid rules of the common-law proceeding, would render this practically impossible. It is only when [633] the company becomes insolvent that loss to a creditor can occur. The liability is “ to the creditors and stockholders ”; and the act conveniently provides that any one may bring the action. As said by Justice Miller, in Hornor v. Henning, 93 U. S. 228: “This course avoids the injustice of many suits against defendants for the same liability, and the greater injustice of permitting one creditor to absorb all or a very unequal portion of the sum for which the directors are liable, and it adjusts the rights of all concerned on the equitable principles which lie at the foundation of the statute.”
This is the construction adopted as to statutes substantially like this by the Supreme Court of the United States in the case last cited and others; also by the highest courts of several of the states. Pollard v. Bailey, 20 Wall, 520 (87 U. S.); Stone v. Chisolm, 113 U. S. 302; Bank v. Stevenson, 10 Gray, 232; Crease v. Babcock, 10 Met. 525; Buchanan v. Iron Co. 3 Bradw. 191; Same v. Low, Ib. 202; Thomp. on Liability of Officers, p. 456.
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The opinion of the court was delivered by
Veazey, J.
This case stands on demurrer to the declaration which was framed upon that part of section 7 of the charter of the St. Albans Trust Company, which reads as follows:
“ The said directors shall be liable to the creditors and stockholders of said corporations for any loss which may be sustained iu consequence of any incompetency, unfaithfulness, or remissness in the discharg'e of their official duties hereinbefore or hereinafter prescribed, and any number of such directors may be sued in the same action by any claimant under these provisions.”
It is insisted that no action, at law can be maintained by a creditor upon this statute, and that the action given is a suit in equity. The plaintiff was a creditor of said company by reason of being a depositor. The authorities in the different states upon the point here made cannot be fully reconciled. The conflict, however, is largely explainable upon the difference of the statutes and of the remedial systems of the several states.
The language of this charter is appropriate to a remedy at law, hut is not restricted to it. Such a provision, therefore, should be construed so as to provide the most complete, convenient, comprehensive, and equitable remedy which its language will admit of. That a proceeding in chancery would furnish such a remedy, and that a suit at law would not, is very apparent. It is not equitable that one depositor should get any advantage over the others of the same class. It is just that the directors guilty of the delinquencies specified should reimburse depositors for any loss resulting from such delinquencies; but if they have not the means to make up the loss to all, there should be a distribution in proportion to the respective deposits affected by the loss. If the [632] action is to recover a penalty the defendants can only be liable to one action and to one penalty. If this action is construed as not providing for the recovery of a penalty, so that one action would not be a bar to others, then a delinquent director would be liable to as many actions as there are depositors and stockholders, with a probability that the parties first suing would get pay in full or all the means that the directors had, and the others nothing. A suit at law to recover a loss to the plaintiff of $100, where the company is insolvent, would involve about the same complication of inquiry as a suit in equity adjusting all. the affairs of the company, and that too by a jury, the tribunal least adapted to such inquiry. The liability is only for such loss as the creditor or stockholder sustains. That can occur only through a loss sustained by the company by reason of the official delinquencies specified. So far as the assets, including those derivable from the proceeds of the capital stock, are sufficient to pay the creditors, there is no loss sustained by them, and consequently no liability of the directors to them. Therefore, in order to determine that there has been a loss to a depositor all the debts of the company must be shown, the amount of the assets established, the proper application of assets to different classes of losses fixed, having regard to dates of deposits and losses with reference to each other. These are but illustrations of the many complications that a suit at law by a creditor for his loss involves. It lacks convenience, economy, and justice; whereas a suit in equity is adapted to give to the creditors adequate relief, and to the directors adequate protection. The remedy is in its nature appropriate to a Court of Chancery. The powers and instrumentalities of that court enable it to ascertain all the propositions of fact upon which relief and recovery must be based, with all parties in interest before the court and bound by its decision, whereas a trial under the rigid rules of the common-law proceeding, would render this practically impossible. It is only when [633] the company becomes insolvent that loss to a creditor can occur. The liability is “ to the creditors and stockholders ”; and the act conveniently provides that any one may bring the action. As said by Justice Miller, in Hornor v. Henning, 93 U. S. 228: “This course avoids the injustice of many suits against defendants for the same liability, and the greater injustice of permitting one creditor to absorb all or a very unequal portion of the sum for which the directors are liable, and it adjusts the rights of all concerned on the equitable principles which lie at the foundation of the statute.”
This is the construction adopted as to statutes substantially like this by the Supreme Court of the United States in the case last cited and others; also by the highest courts of several of the states. Pollard v. Bailey, 20 Wall, 520 (87 U. S.); Stone v. Chisolm, 113 U. S. 302; Bank v. Stevenson, 10 Gray, 232; Crease v. Babcock, 10 Met. 525; Buchanan v. Iron Co. 3 Bradw. 191; Same v. Low, Ib. 202; Thomp. on Liability of Officers, p. 456.
I think there is no case where, under a similar statute, the liability was for a loss, not a debt, and the point was made as in this case, any court has held that the remedy was not in chancery. The cases where the point was made and a legal remedy was maintained, are those in which the liability was for a fixed sum or amount, regardless of the solvency of the company, and where the right of recovery depended only on showing the delinquency of the officer. In the case of Buell v. Warner, 33 Vt. 570, which stood on demurrer to the declaration, this question was not raised. It was not alluded to in the causes of demurrer assigned, or in the opinion of the court or elsewhere in the report of the case. The demurrer was based solely on the insufficiency of the declaration, without question as to the forum. It is suggested that the eminence of counsel for the defendants precludes that the point could have been overlooked. That may be true, but they, as I think, had good reason for [634] not wishing to drive the plaintiff to resort to the superior efficiency of a. chancery proceeding, preferring to let him flounder amid the complications of his' suit at law. It is beyond reason that the eminent judge who pronounced the opinion of the court, should not have alluded to the point if it had been made. I have the liberty of saying that he regards that case as no authority upon this point, and that he concurs in-the construction of this charter as here taken. The decision in Bassett v. Hotel Co. 47 Vt. 313, also cited by plaintiff, was based on the particular wording of the statute, and the remedy at law involved no complication or embarrassment of fact, and worked no injustice as between a class of creditors as depositors in a bank. The question is untrammelled by previous decisions in this State. There are now several trust companies in the State holding in the aggregate a large amount of deposits and numbering depositors by thousands; and the charters all have this same provision, except that some of them omit the last clause wherein it is provided that any number of directors may be sued in the same action by any claimant. Without this clause there would be nothing to indicate a remedy at law more than in chancery. Effect is given that clause by treating it as a provision in respect to parties in the bringing of the suit in the first instance.
In view of its broad' application it is important to give section 7 a construction that will be efficient and just. The equitable remedy is as certain to operate as a spur to official faithfulness as the remedy at law, and is much more convenient," economical, just, and effective, and has the support of the best authority. It is now made the remedy by express statute in Massachusetts. This view renders it unnecessary to notice the other points raised by the demurrer.
Judgment affirmed.