knowing the insolvent condition of the bank, | claims and demands are cognizable in a suit fraudulently disposed of their stock to avoid to wind up the business of a bank and disstatutory liability thereon. Liability of the tribute its assets. "Those rights of the bank stockholders under the statute in amounts are choses in action, which are equitable asequal to their respective subscriptions and in sets in the sense that they are rights to readdition thereto, as security for creditors, cover for breaches of trust. They are aswas asserted, and the benefit of the statute signable, and survive against the personal invoked. A demurrer to the cross-bills, as- representative of the deceased officer. signing their insufficiency as a whole and the │* * This right of the creditor can never insufficiency of certain parts thereof, was be insisted upon except when the bank is overruled except as to three portions, those insolvent, for as long as the bank is able charging liability on account of the dividends to pay, and does pay, its creditors, no credideclared, the fraudulent assignment of the tor is injured by or can complain of the offistock by Benedum and Fox, and the statuto- cer's breach of his duty toward the bank. ry liability of the stockholders in excess of But, the bank being insolvent, two principles their subscriptions. Thereupon Benedum filed come into play: First, the assets ought to be his answer and special reply to the cross-equally distributed among the creditors; and, bills, and put in issue all of the allegations second, the suit being a creditors' bill, all thereof against him. creditors have a right to come into the action, and must come into the action. This fact being conceded, the necessity for a judgment at law and a return of 'nulla bona' is dispensed with. Such being the nature of the action, it is quite useless for us to say that without a statute such an action does not lie at law, because no creditors' bill lies at law. But, since the right against the officer which the creditor is asserting belongs to the bank, the corporation must be made a party, just as the debtor whose rights are being asserted must be made a party. In the next place, if the bank has an assignee or a receiver, he must be made a party, because the bank's choses in action belong to him; and since he is the custodian of those rights, if he is a receiver, an officer of the court, no suit ought to be brought, unless he has refused to bring a suit, and thus renounced his intention of enforcing the obligation on behalf of the bank." Zane on Banks and Banking, § 86. As the officers of a bank are virtually its trustees, or, at least, may be treated as such, losses occasioned by their negligence and certainly funds misappropriated are proper charges in the settlement of their accounts. Personal representatives of deceased persons are chargeable with such items. Pinckard v. Woods, 8 Grat. (Va.) 140; Hooper v. Hooper, 32 W. Va. 541, 9 S. E. 937; Anderson v. Piercy, 20 W. Va. 324; Evans v. Shroyer, 22 W. Va. 581; Reitz v. Bennett, 6 W. Va. 417. Guardians are chargeable with such items. Hunter v. Lawrence, 11 Grat. (Va.) 111, 62 Am. Dec. 640; Truss [1, 2] The propriety of the overruling of the demurrer is challenged upon two prineipal grounds, the exclusive right in the receiver to take into his possession all of the assets of the corporation and enforce liabilities of the stockholders and others, and the relation of the matters or grounds of relief set up in the cross-bill to the subject-matter of the original bill. The admitted insolvency of the bank wholly changed its character and gave rise to new rights on the part of creditors, depositors, and stockholders. Its assets immediately became a fund to which all had the right to resort. In them they ipso facto acquired interests. The liability of the officers constituted a part of the assets of the bank. Though the relation of trustee and cestui que trustent did not previously exist between the officers of the bank and the depositors, the liabilities of the officers as agents or trustees of the corporation were assignable and constituted part of the bank's assets, and in them the creditors had an interest as well as in its other assets. Though they were in the possession of the receiver or he had title to them, and could sue for and recover them, his possession was for and on behalf of all the interested parties, including the depositors and other creditors. He alone no doubt could have instituted separate actions at law against the derelict or fraudulent officers of the bank, had that course of procedure been adopted, for he had, as successor of the bank, the legal title or right of possession, but this argues nothing against the right of the creditors to assert v. Old, 6 Rand. (Va.) 556, 18 Am. Dec. 748; in this suit their equitable claims against Roush v. Griffith, 65 W. Va. 752, 65 S. E. such sums as are due from the officers of 168. Trustees eo nomine fall under the same the bank, on account of losses, misappropria- rule. Perry on Trusts, § 848. These crosstions, and preferences, as parts of the fund bills are, in effect, creditors' bills, not mere to which they have a right to resort for sat- declarations against the corporate officers isfaction of their claims, if such liabilities for injuries occasioned by their alleged demay be enforced in this suit. The assertion ceit and fraud. Claims of the latter class of these rights here did not disturb the pos- for unliquidated damages might not be gersession or title of the receiver nor in any mane to the purpose of the bill, nor provaway interfere with the exercise of his pow- ble before the commissioner. These crossbills charge the assets of the bank, including all sums due from its trustees, with debts, ers. Though there are some decisions to the [3] Though a number of decisions say un- | assets until all the other creditors shall have willingness, neglect, failure, or refusal of the been paid. As authority to sustain this disreceiver to sue must be shown by a creditor crimination, Elliott v. Farmers' Bank of as a prerequisite to his right of action, many Philippi, 61 W. Va. 641, 57 S. E. 242, is reof them are instances in which creditors lied upon. The court's holding in that case, sought by their suits to withdraw from the however, was based upon the special and custody of the receiver and the jurisdiction particular facts disclosed by the record. In of the court in particular cases the assets of the opinion Judge Miller said: "The court the insolvent corporation. That is not the below, acting on the principles of these aucharacter of these cross-bills. They are filed thorities, evidently concluded, and we think in a cause in which a receiver had been ap- rightly, that there had been such gross negpointed, and do not attempt any interference ligence and inattention to the business of the with his possession or custody. While they bank on the part of the directors, before and relieve him of the necessity of suing to get after insolvency, in relinquishing rights, and in these assets or filing in this cause the in acquiring for themselves unjust advannecessary pleading to accomplish that result, tages over other creditors, as to require that they set up no right of withdrawal of any they should be postponed until the claims of assets or interference therewith. Their sole all other creditors had been fully satisfied." purpose is to charge the officers and directors The conclusion evidently rested upon the asof the bank. Treating these claims against sumption of undue advantages obtained, lossthe officers as causes of action arising out of es occasioned and never made good, misapbreaches of trust and assets of the corpora- |propriations not restored, and other acts by tion to which creditors may resort for satis- which the complaining stockholders and offaction of their claims, as well as its other ficers had profited to the detriment of the assets, the matter of the cross-bills was ger-general creditors. Here the position is difmane to the subject-matter of the bill; and, ferent. The decree deprives Benedum of all although the creditors might appear before preferences, makes good all losses occasioned the commissioner and file their claims and by the negligence and misconduct of the dihave them adjudicated, no reason is perceiv-rectors and officers, and compels restoration ed why they might not also set up in this of all misappropriations, so far as ascertaincause these breaches of trust without any in-ed and determined. trusion upon the right of the receiver. De- The theory of the trial court seems to have crees for the amounts due by reason thereof been to make available for the depositors, by would be in his favor and for the benefit of the postponement, a sort of general liability the creditors. The original bill might proper- on the part of the managing officers for unly have contained the allegations of the defined and general damages for wrecking cross-bills and likely would have done so, had the bank by violations of law and other it been filed by a creditor or some person wrongs of omission and commission. This not indebted or liable to the bank on any ac-view, however, goes beyond both the pleadcount; and failure to include them necessi-ings and the evidence, and includes a species tated further allegations of vital matters req- of liability not germane to the bill or subuisite to bring into the suit all the creditors ject-matter of the suit. These depositors were entitled to. The cross-bills were filed by sue here as creditors of the bank, and aspermission of the court, and did not conflict sert and prosecute the bank's claims and with any proceedings instituted by the re- demands against the officers, not their own ceiver. He had not sued to get in these causes of action for fraud and deceit. For assets. injury occasioned by misrepresentation as to [4] The decree holds Benedum liable, in- the bank's solvency, inducing deposits and dividually in some instances, and, in others, thus causing loss, each depositor would likejointly and severally with Fox and others, ly have to sue alone and at law. The cause on notes amounting, together with their in- of action would be his, not the bank's, and terest, to $32,480.93; on account of losses sole, not joint with other depositors, and the from the discounting of bad notes, amount-recovery would be his own, not a mere asset ing with their interest to $64.709.76; jointly of the bank applicable to repayment of his and severally with Fox in two instances, and with Fox and Harkins in one, for overdrafts amounting to $15,311.24; for a preference amounting with interest to $29,200, in a transaction relating to a note for $30,000, secured by a deed of trust, which he took over to himself partly in exchange for certificates of deposit in the bank; and for withdrawals amounting to $10,144.97. Though required by the decree to restore to the assets of the bank these preferences and losses, all that have been decreed against him so far, he is de deposit as a debt. Nor is the bank or anybody on its behalf suing for general damages, if such a demand could be asserted by a cestui que trust against the trustee, in a court of equity-a very doubtful proposition to say the least. The remedy of cestui que trustent against trustees is an accounting in equity. If the property has been lost or misappropriated or sold for inadequate prices or other wrongs done by the trustee, the property loss, not damages for wrongs, is the basis of the accounting. Norman's Ex'r v. he could buy, such interests as they had. Of course, he took them subject to any existing equities in favor of the bank. Piatt, 3 How. (U. S.) 333, 11 L. Ed. 622; Baker v. Whiting, 3 Sumn. 475, Fed. Cas. No. 787; Freeman v. Cook, 6 Ired. (41 N. C.) 373; Bradley v. Luce, 99 Ill. 234; Trecothick [5] Denial of the right to set off his dev. Austin, 4 Mason, 16, 29, Fed. Cas. No. 14,- posits against his liability on certain notes 164; Johnson v. Ames, 11 Pick. (Mass.) 181. is complained of by the appellant. In propBut if the stockholders or creditors could er cases the right of set-off is available beassert, against the officers, a claim for such tween an insolvent bank and its depositors. general damages in a creditors' suit, the data Morse on Banks & Banking, § 337; Bolles for the assessment thereof would have to on Banking, p. 856; Jones on Insolvent & be produced in evidence. All losses of every Failing Corp. § 552; Bank v. Armstrong, 146 form, gains prevented, and loans and debts U. S. 499, 13 Sup. Ct. 148, 36 L. Ed. 1059. lost could not be charged up, without refer- Until insolvency occurs, depositors are mere ence to the conduct of the officers in the par- creditors of the bank, and this relation is ticular instances, because of unlawful acts not destroyed by the broader or more intior misconduct not contributing in any way to mate one of trustee and cestui que trust, rethe results in such cases. Bad loans may sulting from the fact of insolvency. It inhave been made and lost despite the utmost cludes the former, but does not extinguish it. diligence and good faith. Advantageous bar- A claim of this kind was denied in Lamb v. gains may have escaped and profits been lost, Pannell, 28 W. Va. 663, but only because the notwithstanding an honest exercise of judg- claims were not mutual. It was an attempt ment and diligent inquiry. Surely a court on the part of a surety to set up his liability of equity will not inflict punitive damages as such against his individual debt. In anor decrees for smart money. We do not con- other aspect of the case the claimant was strue these cross-bills as asserting any such endeavoring to obtain the benefit of a prefclaims, nor see in the evidence data for an erence, which the law did not allow. Only assessment of such damages. While the an- mutual debts are allowable under the law swer charges in general terms the failure of as set-offs. Liabilities on account of misapthe bank on account of the bad and improvi-propriation or attempted preferences are not dent management of Benedum and Fox, this within that class, for the obvious reason that charge seems to have been intended as the a set-off thereof would conflict with legal basis of several and personal liability on principles, denying the benefit of misapprotheir part for the specific losses and misap-priations and unlawful preferences. Nor does propriations pointed out and complained of. the law permit the set-off of a joint liability As Benedum is required to make good and against an individual one. Elliott v. Bell, 37 restore all these, so far as his liability has W. Va. 834, 17 S. E. 399; Choen v. Guthrie, been fixed, and other similar claims against 15 W. Va. 100; Perkins v. Hawkins, 9 Grat. him seem to be pending and undetermined, (Va.) 649; Porter v. Nekervis, 4 Rand. (Va.) no reason for postponement of his debts to 359. But joint and several demands may be those of other creditors, as regards the as- set off. Elliott v. Bell, cited. Nor can a sets reported by the receiver, is perceived. surety set off the debt of his principal against The only safe and just course is to ascertain his own individual debt or his individual his entire liability, and then allow him to claim against a debt for which he is liable participate in the distribution, on payment to as surety, except under peculiar circumthe receiver of a sufficient amount to insure stances. Choen v. Guthrie, 15 W. Va. 100; ratable distribution of the assets among all Edmunds v. Harper, 31 Grat. (Va.) 637. This the creditors including himself. Should it rule denies the right of set-off to persons libecome necessary to resort to unpaid sub-able as indorsers, because they are sureties. scriptions or amounts recovered under the statute, the rule applicable to distribution of such assets may be different. [6] The decree further discriminates against Benedum by postponing him in the distribution of the assets as the owner of the following deposits, appearing upon the books of the bank: Bowman Farm Oil Company, $34.50; British Columbia Company, $419.13; Hammet Farm Oil Company, $272.55; Ingram Farm Oil Company, $136.93; Ingram Farm Oil Company, $474.50; and Owens Farm Oil Company $40.75-amounting in the aggregate to $2,107.23. There is no basis for such discrimination. He could justly and fairly purchase these deposits, assuming that he did purchase them wholly or in part. It involved no injustice to other creditors. His Bank v. Baker, 93 Va. 510, 25 S. E. 550; Under these principles the court properly refused to allow Benedum to set off against his deposits the decree against him and Fox for $14,139.45 on account of a promissory note executed by one Bostock and others to them and indorsed by them; the decree against him for $500 on a note executed by him jointly with J. B. Myers and Fannie Myers; the decree for $6,755.55 against him, Fox and Harkins, on account of a joint note, payable to the First Citizens' Bank, signed by the Cameron Glass Company, on the face thereof, and by them on its back; and the decree for $3,839.17 against him and Fox on account of a note discounted for the Upshur Glass Company and the proceeds of company; it being a concern largely managed | bank closed. Both attended the meeting of and controlled by Benedum. Substantially the directors on the 23d day of December, this last item was a misappropriation of the 1903, and participated in the proceedings bank's funds. But he is entitled to set off then had, looking to the winding up of the against his deposits the decree for $1,500 | corporation, closing its doors, and procuring Benedum against him and Fox on account of their the appointment of a receiver. was then elected note made jointly and severally with Edgar himself says Kincaid H. Bostock, and the decree against him for president because there was a doubt as to $100 on account of a joint and several note whether he (Benedum) was president. After the tender of his resignation in July, executed by him and J. L. Fisher. 1903, much of the bad paper of the business concerns in which he and Fox were interested together was still carried by the bank and Benedum continued to be its largest customer, the bank holding large deposits of his as In view well as a good deal of his paper. of all these circumstances, we are unable to say the court erred in finding he was a de facto officer until December 23, 1903. [8] As some of the decrees against the appellant are founded upon official negligence and misconduct as a director and president of the bank, his relation to the institution is a question discussed at great length in the briefs. Having made an alleged sale of his stock to one Englehart on the 26th day of July, 1903, a date prior to some of the transactions complained of, and having at or about that time rendered his resignation, [7] The decree holds the appellant liable which the board of directors did not accept, for the amounts of the following notes, to it is urged that from and after that date he none of which he was a party as maker, inwas not an officer or director of the corpora- dorser, or guarantor, on the theory that they tion. Though the severance of his relation were bad debts, negligently and recklessly as a stockholder rendered him ineligible to made, and partially for his benefit as the the office of director or president, that cir- promoter of the enterprises executing them: cumstance is not conclusive, since he could A Marshall Window Glass Company note for still be liable as a de facto officer; and, if $29,650, a note of the same company for thereafter he assumed to act for and on be- $4,500, a note of the Upshur Glass Company half of the corporation and was in fact, for $7,500, and a note of the Wetzel Glass Company for $3,580.83. Benedum was the though not in name, the president, he was a de facto officer. Hulings v. Lumber Co., promoter and president, and Fox the treasur38 W. Va. 351, 361, 18 S. E. 620; Clark & whose indebtedness to the bank, represented er of the Cameron Glass Company, a part of Marshall, Corp. § 662; Cook, Corp. § 623. As has been stated, Benedum's resignation ten- by notes and overdrafts, was converted into a note of its successor, the Marshall Window dered in July, 1903, was not accepted, nor Glass Company, for $29,650. In violation of was the vacancy filled until December 23, both the statutory law and the by-laws of 1903. If the bank had any president during the bank, the Cameron Glass Company had this interim, Benedum must have been the been allowed to become largely indebted to incumbent of the office. Witnesses say he the bank. On December 23, 1901, it had an did exercise the powers of the office and a overdraft of $4,628.23, and on March 4, 1902, few instances of official action are shown. of $16,982.81. On April 1, 1902, a note for On the 12th day of October, 1903, he in- $16,588.45 was given for the Cameron Comdorsed the bank's name on a note, designat-pany's overdraft and the form of the indebting himself as president. In the same month he transformed $20,000 of certificates of deposit in the bank into a well-secured note of J. Fay Watson which the bank had held. On the face of the matter the bank demanded payment of Watson, who applied to Benedum for a loan which was made, and $20,000 of the Watson debt to the bank was paid in its own certificates of deposit, Benedum taking a new note from Watson well secured. This transaction was very much for the benefit of Benedum and to the detriment of the bank. Two days before the bank closed its doors a $10,000 transaction took place between it and stockholders of the Wetzel Window Glass Company, in which Benedum and Fox were considerably interested. He and A. E. Fox were business associates, interested together in the bank and many other enterprises. Both claimed they had disposed of their stock and resigned at the same time. Fox, notwithstanding the tender of his resigna edness changed. Thereafter its overdrafts were as follows: October 4, 1902, $17,188.39; April 9, 1903, $22,633.88; July 19, 1903, $21,000; December 23, 1903, $6,042.40, increased on the same day to $9,022.12 by the transfer of a fund or overdraft on another account known as the federation account. In the meantime, about April 27, 1903, the Cameron Company sold and transferred its plant, machinery, and everything, except the glass on hand, to a new company known as the Marshall Window Glass Company for $29,650, taking its note therefor. At that time the plant was estimated to be worth only about $30,000 and constituted all the property the Marshall Window Glass Company had, so far as the record discloses, and the Cameron Glass Company, having thus sold its plant and being largely indebted, was insolvent, so that its indorsement constituted no security. A deed of trust was taken on the plant to secure the note, but that security decree for $224.20 as interest on the same overdraft. Another is for $135.30 on account of the overdraft of the S. D. Outward Farm Oil Company account. Lastly, there is one for $1,698,89 on account of an overdraft in the name of M. L. Benedum, agent. We perceive no error in any of these. But in this connection there is an erroneous charge against him as to a withdrawal of $3,920.59, pertaining to the same account. On December 21, 1903, there was in the bank to the credit of that account $3,139, against which checks were drawn on that date amounting to $3,920.59. This created an overdraft of $781.59 which, with the interest thereon and on other overdrafts to December 24, 1903, aggregated $1,171.65. The checks constituted a withdrawal to the extent of the amount of money then in the bank to the credit of that account, $3,139, but not $3,920.59, and an overdraft to the extent of the difference between these two sums, $781.59. As this is the amount decreed as an overdraft, together with interest, the error is in the decree for the withdrawal, and the extent thereof $781.59 as of the 21st day of December, 1903. year the plant was destroyed by fire so that! or finding the existence of overdrafts. One it wholly failed. At the time of this trans- of these was for $13,081.07, made by the formation of the Cameron Glass Company Cameron Glass Company. Related to it is a into the Marshall Window Glass Company, the former owed the bank in notes about $34,400 and large overdrafts. Besides, there was a heavy overdraft in the federation account of the company, for which it was liable, so that its indebtedness to the bank was $50,000 or $60,000, and it owed other debts to other persons. The note for $29,650 was substituted for the Cameron Company's notes to that extent, leaving a balance of $5,750 on account thereof, no settlement for which is shown. Both the Upshur Glass Company and the Wetzel Glass Company were organized by Benedum and Fox. The former seems to have been the older, and was largely financed by overdrafts for the purpose in the name of Benedum, agent. Some time after its organization, Benedum and Fox sold out their interests in it to other persons for $14,200, taking a series of notes therefor, executed by W. H. Howard as agent of the makers, the stockholders of the company. These notes were discounted by the Citizens' Bank of Cameron and the proceeds placed to the credit of M. L. Benedum, agent. They were never paid, but in December, 1903, a note of the Wetzel Window Glass Company for $10,000 on which there was a balance due of $9,450 with some interest was substituted for a part of them. It seems that the proceeds of the Howard, agent, notes discounted by the bank were largely used in the promotion of the Wetzel Window Glass Company. All these enterprises seem to have been mere speculative ventures, having no solid basis, and, of course, Fox and Benedum, the promoters and managers thereof, knew all about their condition, and must have known their assets constituted no sufficient security for their large notes discount-pany, $217.43; and British Columbia Comed and overdrafts permitted in the bank. Whether Benedum can be said to have received the benefit of these sums of money, or is responsible for having made the loans and permitted the overdrafts with knowledge of the insufficiency of the security, the result is the same. If he actually received the benefit thereof, he is bound to make restoration, and, if he knowingly made bad loans or permitted them by his inattention to the business of the bank, he is liable for the losses resulting, and in neither case can he be permitted to set off his deposits against these liabilities, for, in the former, he would obtain a preference, and in the latter take the benefit of his own wrong. In view of the facts here stated and others disclosed by the record, we are of the opinion that the circuit court did not err in holding him liable for these notes. These observations, principles, and conclusions apply with equal force to the overdrafts decreed against Benedum, except in those in [9] On account of funds withdrawn from the bank from November 9, 1903, to December 21, 1903, most of them in December, and all after the insolvency of the bank must have been apparent, the court decreed against Benedum sums aggregating $10,144.97, and with their interest at the date of the decree to $14,709.18. They were as follows: Benedum and Fox account, $550; M. L. Benedum, agent, $3,920.59; Buckhannon account, M. L. Benedum, agent, $750; Benedum Bros., $235.70; C. Y. Benedum, Trustee, $3,000.25; Bowman Oil Company, $715; Hammet Oil Com pany, $756. As these accounts were under Benedum's control, he is properly chargeable with them in so far as the findings as to amounts are correct. He either got the benefit of them, or was the instrumentality of their wrongful withdrawal. The amount charged on account of the withdrawal from the M. L. Benedum, agent, account is too large, however. Deducting from the total the erroneous charge of $781.59, with its interest from December 21, 1903, to June 11, 1911, found to be $352.01, the amount the court should have decreed on account of these withdrawals is ascertained to be $13,575.48, and the decree will be modified accordingly. [10] The charge on account of the J. Fay Watson transaction is sustained by the evidence. Seeing the failing condition of the bank, and holding certificates of deposit therein for large amounts the bank was unable to pay in cash, he took over the Watson secured debt in exchange for $20,000 of these certificates and $10,000 in cash, and so obtained a |