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CURTIS V. CONNLY, 257 U. S. 260 (1921)

U.S. Supreme Court

Curtis v. Connly, 257 U.S. 260 (1921)

Curtis v. Connly

No. 69

Argued November 16, 17, 1921

Decided December 12, 1921

257 U.S. 260


1. The state statute of limitations applies to a suit in a federal court by a receiver of a national bank against its former directors to recover for losses sustained by the bank through improper loans and investments and dividends paid out of capital. P. 257 U. S. 262.

2. Such a suit being based on the common law right of the bank, the statute will not be tolled upon the ground of fraudulent concealment of the cause of action (Gen.Laws, R.I., 1909, c. 284, § 7) where the bank was put on notice by the entries on its own books. P. 257 U. S. 262.

3. Where the misrepresentations relied on for suspending the statute of limitations were the entering at their face value upon the books, and in reports made to the Comptroller and published, of loans and investments known by the defendant directors to be improper or worthless, held:

(a) that the bank was chargeable with notice of the parties to whom loans had been made and the specific character of assets;

(b) that the representations to be implied from the reports could not be taken as continuing after they had been superseded by later reports;

(c) that the misrepresentations of value imported by the valuations on the books were not a concealment of the cause of action after new directors, not in conspiracy with the defendants, came upon the board and knew the facts, since their knowledge was imputable to the bank, even if they also proved unfaithful. P. 257 U. S. 264.

4. The running of a statute of limitations on a cause of action of a bank against directors will not be suspended by its fraudulent concealment

Page 257 U. S. 261

beyond a period in which new director, performing their duty to learn the bank's affair, would presumably have discovered it. P. 257 U. S. 264.

5. The fiduciary relation between a bank and it directors ceased when they left the board. P. 257 U. S. 264.

264 F. 650 affirmed.

Appeal from a decree of the circuit court of appeals affirming a decree of the district court dismissing the bill, as to the appellees, in a suit brought by the appellant receiver to charge them with losses suffered by the bank.

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