Agricultural Credit Corp. v. Scandia American Bank of Crookston
| Decision Date | 24 July 1931 |
| Docket Number | 28,407 |
| Citation | 237 N.W. 823,184 Minn. 68 |
| Parties | AGRICULTURAL CREDIT CORPORATION v. SCANDIA AMERICAN BANK OF CROOKSTON, BY A. J. VEIGEL |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county to recover on a claim for $33,156 against the defendant bank. There were findings for plaintiff, and defendant appealed from an order Dickinson, J. denying its motion for a new trial. Affirmed.
Bank and banking -- insolvency -- provable claim.
1. Plaintiff loaned $50,000 to defendant bank, which had deeded to a realty company certain of its real estate for the purpose of having said company act as an agency in executing and delivering to plaintiff a mortgage on the real estate. Plaintiff was cognizant of this situation. The money thus obtained was placed in the assets of the bank and used exclusively for its own purposes. The bank from time to time made substantial payments thereon to plaintiff. Plaintiff filed its claim with the commissioner of banks, who had taken over defendant bank for liquidation. The claim was disallowed. On appeal to the district court from such disallowance plaintiff prevailed. The findings of facts recited in the opinion were amply sustained by the evidence correct conclusions of law followed.
Bank and banking.
2. Defendants' contention that under the complaint and the facts the bank was not liable upon the mortgage or for payment of the loan is not sustained. First Nat. Bank v. Thorpe Brothers, 179 Minn. 574, 229 N.W. 871, distinguished upon the facts.
Bank and banking -- plaintiff not estopped to assert bank's liability.
3. Plaintiff was not estopped from asserting liability against the bank.
Bank and banking -- bank was primarily liable.
4. The bank was primarily liable. No subsequent occurrence changed the relationship so as to constitute the bank a surety.
Bank and banking -- rights of parties fixed upon closing of bank.
5. The rights of the plaintiff and defendant became fixed at the time of the closing of the bank and were not affected by later transactions. We are not called upon here to determine the method by which the final rights of the secured creditors can be ultimately determined.
Pleading -- amendment of complaint.
6. The granting of or refusal to grant a motion to amend the complaint rested largely within the discretion of the trial court. There was no abuse of such discretion.
Bank and banking -- insolvency -- claim properly allowed.
7. There were no errors in rulings on the admission of evidence. Plaintiff's claim was properly allowed in the amount of the loan remaining unpaid at the time the commissioner took over the bank.
Boutelle, Bowen & Flanagan, for appellant.
Cobb, Hoke, Benson, Krause & Faegre and Tracy J. Peycke, for respondent.
1. The Scandia American Bank of Crookston, a Minnesota corporation, was closed by the Minnesota commissioner of banks on August 13, 1927, who has ever since been and is now engaged in its liquidation. Plaintiff is a Delaware corporation engaged principally in the business of loaning money to banks in the northwest and with its principal place of business in Minneapolis, Minnesota. The bank was desirous of borrowing money from plaintiff for the purpose of replenishing its reserves and for other corporate purposes. On or about June 24, 1924, its board of directors properly adopted a resolution, by the terms of which the officers of the bank were authorized to borrow from plaintiff such amounts as plaintiff might be willing to loan it and to secure such sums by a pledge of the assets of the bank.
The resolution further authorized the officers of the bank to take loans from time to time from plaintiff and to execute notes and obligations of the bank therefor, and also authorized the transfer of any real estate owned by the bank to a corporation known as the Crookston Realty Company for the express purpose of permitting such realty company to mortgage such lands to plaintiff as security for loans made by plaintiff for the use and benefit of the bank. Said resolution also authorized the realty company to borrow money from plaintiff for the use and benefit of the bank and to issue its own paper therefor. One Conger was president and managing officer of both the bank and the realty company. The same management controlled both concerns.
Pursuant to the resolution and other proper authority, the bank on or about June 26, 1924, by warranty deed conveyed to the realty company some of its real estate for the purpose of permitting the realty company to mortgage the same as security to the plaintiff for money to be borrowed from plaintiff for the use and benefit of the bank. On June 30, 1924, the realty company made, executed, and delivered to plaintiff its promissory note in the sum of $50,000 and on said date made, executed, and delivered to plaintiff a mortgage covering the real estate referred to. Thereupon plaintiff upon the express direction of the realty company paid over and loaned to the bank the sum of $50,000, which sum was received and used by it for its own benefit.
On June 30, 1924, the realty company by warranty deed conveyed said real estate to the bank, and by the terms of said deed it was provided that said bank should and said bank did assume and agree to pay said mortgage.
On June 22, 1927, the bank by its warranty deed conveyed to the realty company a portion of the real estate above referred to, and by the terms of said deed the realty company assumed and agreed to pay the mortgage dated June 30, 1924. Plaintiff had no knowledge or notice until on or about May 1, 1930, of the terms of said deed or of the provision therein whereby the realty company assumed and agreed to pay said mortgage. During the month of September, 1928, plaintiff took from said realty company a renewal note and extended the time of payment of the balance then remaining upon the indebtedness above referred to for a further period of three years, such extension being without the knowledge or consent of defendant commissioner of banks.
From time to time the bank made payments to plaintiff on account of principal and interest on said indebtedness and, upon the maturity of the note and the renewals thereof, procured the realty company to execute and deliver to plaintiff renewals thereof, and on July 2, 1927, procured the realty company to execute and deliver to plaintiff a renewal note evidencing the balance of said indebtedness in the sum of $33,156, said note being payable on or before December 1, 1928; that there was then due and owing from said bank to plaintiff said sum.
On or about October 3, 1927, plaintiff presented its claim to the commissioner of banks covering the indebtedness referred to, asking for its allowance as a claim. Plaintiff therein expressly stated that it did not waive any right to the security pledged to it to secure the claim. On January 11, 1929, the commissioner disallowed the claim and has not paid plaintiff any part of the claim. The foregoing constitutes in substance the findings of fact.
As conclusions of law drawn therefrom the court found: (1) That the bank was indebted to plaintiff in the sum of $33,388.09 because of the principal amount of $33,156 and interest up to the date of the closing of the bank; (2) that the claim was duly filed by plaintiff; (3) that neither the bank nor the commissioner has been discharged or released in any manner from such indebtedness or obligation; (4) that plaintiff is not estopped to assert and have allowed said claim. Judgment was ordered allowing plaintiff's claim in the sum of $33,388.09.
Defendants moved for certain amended findings of fact and conclusions of law. The motion was denied. Defendants appeal from the order denying their motion for a new trial.
Considering the view taken by the trial court of the evidentiary facts, its findings of fact were amply supported by the evidence and must stand; amended findings were properly denied. As shown by exhibit A (the resolution of the board of directors of the bank attached to the complaint) and defendants' exhibit 7 (the resolution adopted by the board of directors of the realty company) as well as by other documentary and oral evidence, the loan was a loan to the bank; the money was received therefrom and used by the bank. The realty company was only an agency used by the bank for its own purposes, to hold the title to the land and execute the necessary instruments to secure the loan. Plaintiff so understood it.
2. Defendants' contention that under the complaint and the facts the bank is not liable upon the mortgage or for payment of the loan cannot be sustained. The contrary is true. The case of First Nat. Bank v. Thorpe Brothers, 179 Minn. 574, 229 N.W. 871, largely relied upon by defendants is clearly distinguishable on the facts from this case. That case turned upon a finding of fact by the trial court supported by the evidence that by the terms of a contract fully performed and satisfied defendants had no obligation to pay notes and a second mortgage given by another person to plaintiff; plaintiff had relied upon the land and notes for its sole security. In the Thorpe case plaintiff contended that because defendants received the land conveyed there was an implied obligation to pay therefor. The parties had expressly agreed to the contrary. In the case at bar there was no express contract of any such nature made between plaintiff and the bank. Nothing indicated anything inconsistent with the bank's liability. The manner of conducting the entire transaction and the actions of the parties throughout indicated that the purpose of all concerned was that the bank was obligated for the loan and should pay it. It made substantial payments thereon. Here there was...
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