The State of Oklahoma, ex rel. Freeling v. National City Bank of Kansas City

• Citation: 274 S.W. 945,220 Mo.App. 474
• Parties: THE STATE OF OKLAHOMA, EX REL. S. P. FREELING, ATTORNEY-GENERAL, RESPONDENT, v. NATIONAL CITY BANK OF KANSAS CITY, MISSOURI APPELLANT
• Decision Date: 15 June 1925
• Court: Court of Appeals of Kansas

274 S.W. 945

220 Mo.App. 474

THE STATE OF OKLAHOMA, EX REL. S. P. FREELING, ATTORNEY-GENERAL, RESPONDENT, v. NATIONAL CITY BANK OF KANSAS CITY, MISSOURI APPELLANT

Court of Appeals of Missouri, Kansas City

June 15, 1925

Appeal from the Circuit Court of Jackson County.--Hon. Samuel A Dew, Judge.

AFFIRMED.

Judgment affirmed.

Johnson & Lucas, Halbert H. McCluer, and Omar E. Robinson for appellant.

McCune Caldwell & Downing and George F. Short for respondent.

BLAND J. Arnold, J., concurs; Trimble, P. J. absent.

OPINION

BLAND, J.--

This is a suit brought by the State of Oklahoma at the relation of its Attorney-General to recover for the use of the depositors' guaranty fund of said State the sum of $ 5000 with interest. The case was tried by the court without the aid of a jury, resulting in a judgment in favor of plaintiff in the sum of $ 6000 and defendant has appealed.

The facts show that the Mineral Belt Bank, a State bank located at Tar River (now Cardin), Oklahoma, with a capital of $ 15,000 carried on account with the defendant; that Truman Elmore, President of the Mineral Belt Bank, about July 14, 1918, asked the postmaster at Tar River, who was also a director of that bank, to hold all mail coming from the banks whose names appeared on a slip of paper that he handed to the postmaster. The names of four banks appeared on the paper, one of which was the name of the defendant. A similar slip of paper was handed to the assistant postmaster by Elmore. The postmaster agreed to comply with the request. Elomre left Tar River that day. On July 16, 1918, Elmore appeared at defendant's bank at Kansas City and procured the cashier thereof to cash his check in the sum of $ 5000. On the same day defendant mailed this check to the Mineral Belt Bank at Tar River and the envelope had upon it the information that it was to be returned if not called for in five days. The letter arrived at Tar River on the afternoon of July 17 or the morning of July 18. The postmaster did not put this letter in the bank's box but acting under Elmore's direction placed it in a pigeon hole in his office where it remained. Elmore did not have sufficient funds in the Mineral Belt Bank to meet the check.

On July 22, 1918, Elmore committed suicide in a hotel in Kansas City. On July 23, after learning of Elmore's death, and having received no communication from the Mineral Belt Bank, defendant charged said sum of $ 5000 against the account of said bank. On July 27, 1918, the Mineral Belt Bank was declared insolvent by the State Bank Commission of Oklahoma who thereupon took charge of its affairs. About this time, probably the same day, the letter containing the Elmore check was delivered to the agent of the Bank Commissioner by the postmaster. The check was not paid but was protested. The Bank Commissioner found the bank insolvent and proceeded to wind up its affairs and in doing so large sums of money were advanced out of the depositors' guaranty fund of the State of Oklahoma to pay the depositors. Most of the assets were sold to the Cardin State Bank and claims of the depositors were liquidated through that bank. The sum sued for herein is for money due from the defendant to the Mineral Belt Bank upon the deposit of the Mineral Belt Bank with defendant.

Defendant's first point is that the petition fails to state a cause of action, and that the court erred in refusing to sustain its demurrer offered at the close of all the evidence. The petition pleads certain laws of the State of Oklahoma contained in the Revised Statutes of Oklahoma of the year 1910; that section 264 of said revised statutes provided that upon the violation of the banking laws of the State of Oklahoma by any officer or director of any State bank, the Bank Commissioner was authorized to close and liquidate the bank and annul its charter; that section 276 provided that any bank posting a notice on its front door that "This bank is in the hands of the State Bank Commissioner" would be sufficient to place all the assets of the bank in the possession of said commissioner and should operate as a bar to any attachment proceedings; that section 278 provided when a bank should be deemed insolvent; that section 302 provided that when any State bank became insolvent or whenever its rights or franchise had been adjudged to be forfeited, and whenever the Bank Commissioner should become satisfied of the insolvency of the bank, he might, after examination of its affairs, take possession of its assets and wind up its affairs; that section 303 provided that where the Bank Commissioner took possession of a State bank, the depositors thereof should be paid in full; that where the cash available or that that could be made immediately available, is insufficient to discharge the obligations to the depositors, he should draw from the depositors' guaranty fund an amount necessary to make up the deficiency "and the State shall have for the benefit of the depositors' guaranty fund a first lien upon the assets of said bank or trust company, and all liabilities" against certain persons "and against all other persons, corporations or firms and that such liability might be enforced by the State for the benefit of the depositors' guaranty fund;" that section 304 provided that the Bank Commissioner should take possession of the books, records and assets of every description of such a bank, collect debts due from claims belonging to it and might upon order of the district court or judge thereof sell the real and personal property of such insolvent bank and might if necessary pay the debts of such bank.

The petition further pleaded that section 1 of chapter 22 of the Session Laws of the State of Oklahoma, 1913, provided that the banking board should be composed of the Bank Commissioner and three other persons to be appointed by the Governor, which should have supervision and control of the depositors' guaranty fund and should have power to adopt all necessary rules and regulations not inconsistent with law for the management and administration of said fund; that section 6 of chapter 22 of the Session Laws of the State of Oklahoma, 1913, provided for annual assessments to be made against each bank organized under the laws of the State of Oklahoma for the purpose of creating a depositors' guaranty fund, which should be used solely for the purpose of liquidating the deposits of failed banks and retire warrants provided for in the act. The petition then pleaded the insolvency of the Mineral Belt Bank and the taking of possession thereof by the Bank Commissioner for the purpose of winding up its affairs and collecting its debts, and that the cash available in said bank, the proceeds of sale of certain assets of the bank and the collection of the notes and other obligations due it, were and are insufficient to discharge the obligation to the unsecured depositors of said bank so that the plaintiff, through its Bank Commissioner and banking board, was compelled to and did pay such depositors and to the Cardin State Bank, for the use and benefit of said depositors, the sum of $ 34,560.16 out of the depositors' guaranty fund, in addition to and after using all the cash and the cash available from the sale of certain assets of the bank; that by reason of the operation of the laws of the State of Oklahoma as therein pleaded, the State had "title to and is vested with a first prior and superior lien upon all the assets of said bank for the use and benefit of the depositors' guaranty fund of the State of Oklahoma."

The petition further alleged that among the assets of said bank that was adjudged insolvent by the Bank Commissioner was a balance on account and a deposit of money and credit in the sum of $ 5000 in and with the defendant, which deposit under the laws of the State of Oklahoma then and there became the property of the plaintiff herein for the use and benefit of the depositors' guaranty fund; that demand had been made on defendant for said sum of money but that defendant had refused to pay the same and plaintiff prayed judgment against it for said sum with interest and costs. The answer pleaded a defense based upon the acts of Elmore and the postmaster of Tar River in their official relation with the Mineral Belt Bank in respect to said check, the withholding of it at the time and circumstances under which it was presented, and protest for non-payment; and certain statutory provisions of the State of Oklahoma as to presentments and protest of commercial paper, charging that under the facts and said provisions, the Mineral Belt Bank had accepted the check. There is no controversy as to the existence of the various provisions of the Statutes of Oklahoma pleaded by the parties.

In connection with the point now made, defendant insists that "a lien created by the statute of one State is not operative on property outside of the limit of the state passing the statute. No State law is valid as against persons or property when beyond the boundaries of the State." Defendant misconceives the effect of section 303, and the other provisions of the laws of Oklahoma. Plaintiff is not claiming that it has any right or title to any specific fund or money. It is held that in taking possession of the assets of an insolvent bank by the Bank Commissioner of Oklahoma, the absolute title to the assets of an insolvent bank vests completely in the State for the benefit of the depositors' guaranty fund and is as much a fund of the State as the common school fund or any other fund of which the State is administering. [State ex rel. v Cockrell, 27 Okla. 630, 632, 633; State ex rel. v. Smith, 77 Okla. 277; Lankford v. Platte Iron Works, 235 U.S. 461, 473.] The effect of the statute is to vest the title to the assets of the failed bank...