
    Harley Bartholomew vs. Benjamin Bentley and others.
    A special action on the case may be maintained for a fraud resulting in damage, and it is no defence that the fraudulent acts were done in the capacity of corporators.
    If the design be to defraud the public generally, any one suffering injury thereby may maintain his action.
    The declaration should charge the fraudulent intent in positive terms, and not leave it to be inferred from the falsity of the facts stated in the declaration.
    This case was reserved in Wayne County, and comes before the Court upon a Demurrer to the Declaration.
    The action is in case, and the declaration contains two counts. The first count states, in substance, that the defendants, on the 23d of July, 1838, associated themselves together, with, sundry other persons, under the name and character of the German Bank of Wooster, and assumed to act ás a company duly incorporated.by'law, and'authorized to',execute all.the powers, privileges’ arid'immunities óf a bank, under and by virtue of the act entitled an ,¿ct to’incorporate certain banks'.therein.named, and to extend the .charters of existing incorporated banks, passed February. 23d, 1816 ; that the defendants, béing so associated!, and pretending to act under the authority aforesaid,, from the . day and year aforesaid, continued to exercise the customary powers, privileges and immunities of - an incorporated Joarik, .by, lending money, issuing notes and'-., bills for circulation, and performing the other ordinary business of a bank of issue, and of discount and deposit and exchange, for the space of threé years;.' that the'defendants,- while so associated, and while assuming to act under the pretended authority aforesaid, through the-agency of their offiee,rs in said pretended bank, did issue arid: put in circulation, as bank notes and bills, duly authorized'by law and correct banking usage, the several- notes and bills thereafter set forth, in .each of which said several notes, and bills the defend- ■ ants bound themselves, in the name and style of the President, Directors arid Company of the German Brink of Wooster, to pay to the persons therein named, or bearer, the amount thereof on demand,' and each of- which notes arid bill's was subscribed by the. said Benjamin Bentley, as Cashier; and' by-William M. Combs, .-or by Hiram B. Wellman, i as President-of said ■ prer tended bank; and then followed a .pertinent description of the ' notes'and bills on which the plaintiff claimed, to recover.
    In Bank.
    Dec. Term, 1846.
    The declaration then further, averred that the plaintiff, confiding in the pretensions and .'professions made to 'the public by the defendants.,' that-they were duly incorporated, and authorized to act and exercise the bariking powers and privileges aforesaid, and also confiding in-the pretensions and professions of the defendants, that they, were, in- good faith, and-according to Saw, exercising the powers, privileges and'immunities of á bank, received in good faith, and for a.valuable consideration became the holder of, the aforesáid notes'and bills, and that he was .still the holder thereof.- ,
    
      The declaration then further alledged that the said law, entitled as aforesaid, passed February 23, 1816, so far as the same related to the incorporation of the stockholders of the German Bank of Wooster, by the name and style of the President, Directors and Company of the .German Bank of Wooster, had been violated, and said corporation had become liable to a decree of forfeiture, for abuse of the corporate franchise, and for non-user, prior to the time when the defendants so associated themselves together; and that the defendants, when so associated, and when in the exercise of the powers, privileges and immunities of a bank, under said pretended authority, and when they issued and put into circulation the notes and bills set forth in the declaration,, were not duly organized, nor acting either in the proper corporate name, or by a board of directors and officers duly elected and constituted in conformity to said act of incorporation, and under which they pretended to act, but, on the contrary,, wholly failed to comply with all and singular the requisitions and duties required of them by said laws, according to the true intent and meaning thereof; and, also, that the defendants, so associated as aforesaid, were not possessed of a proper and suitable bona fide capital for said bank, and did not conduct the business of their said bank in good faith, but deceitfully and fraudulently confederating and combining together, and contriving to cheat and defraud the community at large, as well as the plaintiff — -as the holder of said notes and bills — after issuing and putting into circulation the notes and bills of their said bank, to the amount of $125,000, and after contracting a large indebtedness to sundry persons, for money deposited in said bank and otherwise, the defendants, so associated as aforesaid, closed their said bank, and ceased to do any further business as such, professing that said bank had become insolvent, and refusing to redeem its notes and bills, so held by the plaintiff as aforesaid, as well as the notes and bills generally of said bank, according to the tenor and effect thereof, and to discharge the other liabilities of said bank, although often requested so to do. And the defendants, in order the more effectually to defraud the plaintiff, and their creditors generally, and to secure in their own hands the property which they had acquired by the said banking operation, after having lent out the funds and money of said bank, to the amount of i$ 150,000, to several of the defendants, individually, on the day and year aforesaid, discharged, or pretended to discharge, the said liabilities of the said several defendants to said bank, by authorizing and permitting each of said defendants, so indebted to said bank, to transfer to said bank the amount of stock therein held by them, respectively, although the same had become wholly worthless. By means of which said several premises the defendants falsely and fraudulently deceived the'plaintiff, and caused him to lose and lay out of a large amount of money, to wit, &.c., and otherwise greatly injured the plaintiff, &c.
    The second count was the same in substance as the first, except that the notes and bills held by the plaintiff were not specifically described.
    The defendants filed a general demurrer, and to decide the questions thus raised, the case was reserved for decision here.
    
      T. W.- Bartley, for Plaintiff.
    It is the boast of the common law, that for every injury it furnishes a remedy. In cases of fraud and deceit, the comprehensive remedy is an action on the case; and no principle is better settled than that, in all cases of fraud, where damage results, the action will lie. Paisley v. Freeman, 3 T. Rep. 51; Hay croft v. Creasy, 2 East’s Rep. 92; Tapp v. Lee, 3 Bos. and Pul. Rep. 367; Hamer v. Alexander, 5 Ibid. 241; Wise v. Wilcox, 1 Day’s Cases in Error, 22; Upton v. Vail, 6 John. Rep. 181; Barney v. Dewey, 13 Ibid. 233; 1 East’s Rep. 318; 1 Camp. N. P. 277.
    The fraud may be perpetrated by any fraudulent device, pretence, or management. And it is sufficient if the intention be to defraud the public generally, without showing an intention to defraud the plaintiff in particular. Allen v. Adding-
      
      ton, 7 Wend. Rep. 9; Gordon v. Preston, 2 Day’s Rep. 205; Williams v. Wood, 14 Wend. Rep. 126.
    The action lies whenever the plaintiff is aggrieved and damnified by unlawful acts done by the defendants, in pursuance of a combination or a conspiracy. Mott v. Danforth, 6 Watt’s Rep. 306; Griffith v. Ogle, 1 Binn. Rep. 172; Penrod v. Mitchel, 8 Serg. and Raw. Rep. 522; Tappan v. Powers, 2 Hall’s Rep. 277; Jones v. Baker, 7 Cow. Rep. 445; Gardner v. Preston, 2 Day’s Rep. 209; Patton v. Gurney, 17 Mass. Rep. 186 ; 8 Wend. Rep. 676; 2 Murph. Rep. 329.
    In view of these well settled principles of common law, does not the declaration show a good cause of action ? Can the defendants shelter themselves behind their bank charter, when, as we claim, it has been violated, and is therefore void ?
    The charter of the German Bank of Wooster, may be found in Chase’s Stat. 913. The 43d section contains this provision: “If any bank, or the officers of any bank, shall fail to comply £ with all and singular the requisitions and duties required of £ them respectively by this act, according to the true intent and £ meaning thereof, such failure shall forfeit all and every ad- ‘ vantage, privilege, and benefit of this act; and, from the time £ of such failure, shall be placed, adjudged, and considered in £ the same condition and situation as if this act had never been £ passed.” Hence, then, by the very terms of this charter, if there has been a failure to comply with any of its provisions, from the time of such failure the charter was void, and conferred no power upon the defendants.
    Now, the declaration charges, in express terms, that the charter of the bank had been forfeited; that the defendants acted without legal authority — were guilty of fraudulent acts; and that the plaintiff has been damnified thereby. And by the demurrer, these allegations are .admitted. On what pretence, then, can it be said that the charter of the forfeited bank can protect these defendants from responsibility for their fraudulent acts?
    
      The plaintiff is not precluded from pursuing this remedy by ^le act entitled “ an act to prohibit the issuing and circulating of unauthorized bank paper,” passed January 27, 1816. The remedy provided by that act is cumulative. If a statute gives a remedy, and does not, in express words, or by implication, withhold the common law remedy for a matter which was actionable at common law, the party has his option to pursue the common law or the statutory remedy. 2 Inst. 200; 2 Rol. 49; 5 Johns. Rep. 175; Scidmore v. Smith, 13 Johns. Rep. 322; Farmers’ Turnpike Company v. Coventry, 10 Johns. Rep. 389; Bowen v. Huntington, 3 Conn. Rep. 423; Miles v. O’Harra, 1 Serg. and Raw. Rep. 32.
    It is where a statute creates a new right, and prescribes a particular remedy for the enjoyment of it, that he who claims the right must pursue the statutory remedy. Gedney v. Tewksbury, 3 Mass. Rep. 307; Smith v. Drew, 5 Mass. Rep. 514.
    But where a' new right is created, and no remedy is prescribed, the common law will furnish an adequate remedy. Bigelow v. Cam. and Cone. Turnpike Corporation, 7 Mass. Rep. 202; Colden v. Eldred, 15 Johns. Rep. 220.
    But assuming that the German Bank of Wooster had a legal existence at the time of the injuries complained of, does it protect these defendants ? A corporation is a mere creature of the law, and derives all its powers and capacities from the laws of its creation. It has no power except such as is expressly granted by its charter, or as is necessary to carry into effect the powers expressly granted. 2 Kent’s Corn.' (2d Ed.) 298; 2 Cranch’s Rep. 127; 8 Ohio Rep. 286.
    The directors or managers of an incorporation are but its ■ agents, to exercise its lawful powers; when they exceed them, they act not as corporators but as individuals, and are liable as individuals. Ang. &. Ames on Cor. (late ed.,) 242, 446, 450; Salem Bank v. Gloucester Bank, 17 Mass. Rep. 29; Lincoln and Kennebec Bank v. Richardson, 1 Greenl. Rep. 81; Lawrence v. Tucker, 7 Greenl. Rep. 195; Thayer v. Boston, 19 Pick. Rep. 516; Stow v. Wise, 7 Conn. Rep. 219; Goodloe v. Cincinnati, 4 Ohio Rep. 513. 1
    It will hardly be contended, I imagine, that the wrongful acts complained of in the declaration were authorized by the charter of the bank. They were the acts of individuals, as individuals.
    The following authorities support this proposition: “ If any ‘ number of persons combine with intent' to injure and defraud 1 another, they cannot defend themselves against an action by ‘ showing they did the act in the character of corporators, un- ‘ der any charter whatever.” Fose v. Grant, 15 Mass. Rep. •488; Spear v. Grant, 16 Mass. Rep. 15.
    So, too, are corporators personally liable in an action on the case, for improperly obtaining and disposing of the funds or property of the company. Franklin Insurance Co. v. Jenkins, 3 Wend. Rep. 131; 2 Am. C. L. 579; Fose v. Grant, 15 Mass. Rep. 488.
    
      John Harris and Levi Cox, for Defendants, maintained —
    First: That if the German Bank of Wooster had violated its charter, as claimed by plaintiff’s counsel, and as alledged in the declaration, whether by nonuser or misuser, and if, in consequence, as further claimed, the corporation had ceased to exist, and was wholly void and inoperative, then, under the act of 1824, the paper issued by these defendants, intended to pass as money, was wholly void.
    Second: That if it was intended to treat the bank as one authorized by law, whose paper was valid, then no mere irregularity in its organization, or in its business transactions, could be inquired into, collaterally, for the purpose of charging its officers and stockholders, in their individual capacity, with its indebtedness.
    Third: That this attempt to charge corporators individually for acts done by them as members of a corporation, even though fraudulent in an action on the case, and not in chahcery, was a novelty in judicial proceedings, and that none of the the authorities cited by the plaintiff’s counsel went so far as to sustain such an action; while some of them sustained the position, distinctly, that such an action was not maintainable.
    Fourth: That if this action could be sustained, endless litigation would ensue, and that it would be impossible to do equal justice to all the creditors, whereas, in chancery, the fund to be subjected could be appropriated among all the creditors and bill holders of the bank, pro rata.
    Fifth: That the declaration was uncertain, and did not charge the fraud upon the defendants in such positive and direct terms as to call upon them to meet it.
   Birchard, J.

Two questions are presented for our consideration by this demurrer —

First: Can a special action on the case for fraud, which has resulted in damage of the plaintiffs, be maintained in a case like this, upon sufficient declaration ?

Second: Is this declaration good upon demurrer 1

It may be regarded as a well settled principle, that for every fraud or deceit which results in consequential damage to a party,.he may maintain a special action on the case; Upton v. Vail, 6 Johns. Rep. 182. The principle is one of natural justice, long recognized in the law; Barney v. Dewy, 13 Johns, Rep. 236. And it matters not, so far as the right of action is concerned, whether the means of accomplishing the deception be complex or simple — a deep laid scheme of swindling or a direct falsehood —a combined effort of a number of associates or the sole effort of a solitary individual — provided the deception be effected and the damage complained of be the consequence of the deception. A valid act of incorporation, or an invalid and pretended right to exercise corporate franchises, is alike powerless to secure the guilty from the consequences of their fraudulent conduct, where it has been knowingly resorted to as the mere means of chicane and imposition, and used to facilitate the work of deception and injury. Were it otherwise, it would be a reproach to the law.

If the defendants, with the design to defraud the public generally, have knowingly combined together and held forth false and deceptive colors, and done acts which were wrong, and have thereby injured the plaintiff, they must make him whole by responding to the full extent of that injury, and they cannot place between him and justice, with any success, the charter of the German Bank, of Wooster, whether it be valid or void, forfeited or in esse. Neither a good nor a bad thing may be falsely used for purposes of deception and made a scapegoat for responsibility. Nor is it material that there should have been an intention to defraud the plaintiff in particular. If there was a general design to defraud all such as could be defrauded by taking their paper issues, it is sufficient, and the plaintiff may maintain his suit, provided he has taken the paper and suffers from the fraud. Allen v. Addington, 7. Wend. Rep. 22; Williams v. Wood, 14 Wend. Rep. 126.

The act incorporating the President and Directors of the German Bank of Wooster, admitting it to be in force, conferred no authority upon any person to hold out false colors to deceive the public, no authority to issue bills without the means of redeeming them, and those who combined to use it for the purposes of swindling, acted for themselves rather than as agents of the bank.

They would make themselves liable, at all events, upon the general principle applicable to natural persons. The agent may bind himself, if he exceed the authority of the principal, and conduct himself fraudulently when the principal is a natural person. The same rule applies to the agents of artificial persons. In Vose v. Grant, 15 Mass. Rep. 519, it is said: “If c the stockholders of a bank, whilst their charter is in force and { their bills in free circulation, should suddenly determine to 1 divide and withdraw their capital, and if the funds left in the * bank should be insufficient to pay their debts, it would ap- ‘ pear impossible to reconcile their conduct with honesty and ‘ good faith, and they would be liable to all persons injured by the measure. * * * If any number of persons combine, { with intent to injure and defraud another, they cannot defend * themselves against an action by showing that they did the act t jn character of corporators, under any charter whatever.”'

These are safe principles, founded in good sense,- which we recognize as law. ■ •

On a question of so much importance in point of principle,, and of some novelty, we owe it to the profession to notice, the ■objections urged in argument to sustaining an action in a case of this nature. ■ . ■

It is first said, that to allow bill holders who have been defrauded to sue the members of the company individually at law, will produce endless litigation, and. when applied, the remedy cannot by possibility do equal justice' to all the creditors, or' to the members of the company.

It' may be that numerous suits will be prosecuted ; and if the averments of the declaration are' true, and over one hundred and twenty-five thousand dollars in paper was fraudulently put in circulation, it is more than probable that a great many persons have been defrauded by it, and have sustained injury,, for which they will prosecute those who contrived to cheat them. And yet the doctrine, that because they have cheated' thousands they are safer than théy would be if only one man had suffered, does not obtain in courts of justice.

■ Concerning the other branch of the argument, “ the impos- * sibility to do equal justice to all the creditors,” there may be some mistake. So far as a right of action is given to each there will be equality. And if equal vigilance is pursued, no one will gain any advantage- of the other bill holder.

Again, it is said the fund sought is a trust fund, and a bill in chancery is the proper remedy. . There would be much propriety in the position, were.it in point of fact true, that a party who has been defrauded by the'act of another'has no redress save out of a fund composed solely of the proceeds of the imposition. In that case strict equity might require that ail those whose injuries had been the source of'the fund should share' equitably in it. But the rule that a person sustaining damage by fraudulent acts of another can only look to a particular fund of the wrongdoer for redress, never existed any where. Whenever the judgment shall be obtained, the sheriff will collect it out of any property liable to sale which he can find belonging to the defendants.' This is applicable to all judgments recovered in special actions on the case. In this case the damages to be recovered should be commensurate with the injury done to the plaintiff, which will not in any sense depend upon the state of the .assets of the bank, or its solvency. The judgment, therefore, that may be recovered will not affect trust funds, strictly so called, but general funds, the rights, credits and effects of the individuals instrumental in committing the fraud complained of. The rules of right are not so narrow as to compel the plaintiffs to put up with less than a full compensation in damages, and the extent of that damage in no sense depends upon the profits of the banking speculation entered upon by the defendants. It is not of any moment that the defendants should have 'made a profit by their frauds. That is an inquiry that cannot affect the plaintiff’s rights'. The gist of his complaint is, that they by their acts have imposed upon him, and that he has sustained an injury by means of the imposition.

The second branch of our inquiry relates to the sufficiency of the declaration. For my own part I should not find much difficulty in holding, upon general demurrer, that it contains a substantial cause of action. Two of my brethren are clear in the opinion that the declaration is insufficient, and out of .respect to them, arid entertaining some doubts upon the subject, I, with the other members of the Court, unite with them, much preferring to subject the party to the expense and trouble of amending, than that he should run any risk of a trial upon an insufficient declaration; and this the more readily, inasmuch as it will not delay the final disposition of the cause. The objection taken by counsel is a want of certainty. The action is founded on a fraudulent combination, and for holding out false colors at the commencement of the banking operations, and at various subsequent periods. The only direct charge of a fraudulent intention is in the withdrawal of the funds, and fo*8; for aught that appears, may have been long since the bills plaintiff’s hands were issued. Besides, the declaration does not directly charge that the false pretence of- acting, under the charter of 1816, was made, or that the association was entered into with a fraudulent intent, nor that the excessive issue of paper was so made. It is thought that the averment of a fraudulent design should have been made in positive terms, as to each specific act relied upon to sustain the action. That although it may appear, by inference, that the original design, or those subsequently formed, was to impose upon community, inasmuch as deception must necessarily result from the alledged pretences, which the declaration falsifies, yet, that the Court will not, in support of pleading, infer a criminal intention where the pleader has not ventured directly to affirm that it existed. The issue of the bills which have come to the plaintiff’s hands was the cause of his loss. These bills were, in fact, fraudulently issued, if put forth without capital to sustain them ; and to pretend that the charter of 1816 authorized the assumed operation under it, when it did not in fact confer such authority, owing to the causes assigned in the declaration, was doubtless the employing of false pretences well calculated to deceive the public; and the charge should be made in direct terms, that, in using these means, the design was to defraud. It should not be' left to inference.

On motion, leave was given to amend the declaration, and the cause continued.  