Ainsworth v. Kruger
| Decision Date | 09 November 1927 |
| Docket Number | 6172. |
| Citation | 260 P. 1055,80 Mont. 468 |
| Parties | AINSWORTH v. KRUGER. |
| Court | Montana Supreme Court |
Appeal from District Court, Sanders County; Theodore Lentz, Judge.
Action by A. S. Ainsworth, as receiver of the Farmers' & Merchants' State Bank of Plains, Montana, against John R Kruger. From a judgment in favor of defendant, plaintiff appeals. Affirmed.
A. S Ainsworth, of Thompson Falls, for appellant.
Leon L Bulen and Murphy & Whitlock, all of Missoula, for respondent.
In the year 1922, and thereafter until January 25, 1924, the Farmers' & Merchants' State Bank of Plains, a Montana corporation, hereafter referred to as the bank, was engaged in banking. It was capitalized for $20,000. Messrs. Robison, Bulen, Larse and Kruger were the directors; Robison was president and Larse cashier.
During the year 1922 the bank, in order to obtain its share of the funds of Sanders county for deposit, was required to furnish the county a depositary bond to the amount of $50,000. This the bank gave; Robison becoming surety for $20,000, Kruger for $20,000, and Larse for $10,000.
A meeting of the board of directors was held on December 29, 1922, all present. Mr. Kruger advised his associates that he had been visiting relatives in the "Blackfoot country," one of whom had signed a bond for the bank at Ovando, which closed, with result that he was "cleaned out." Mr. Kruger told the other directors that he "was done being a bondsman; that was all there was to it," as a witness testified.
It was supposed that the county treasurer who would soon take office would require a new bond. The directors discussed the matter, cited the fact that it would cost a considerable sum to pay the premium on a surety bond, and finally proposed to protect Kruger by giving him collateral consisting of "slow real estate paper"-notes secured by mortgages upon real estate, the signers whereof were considered good, but slow in paying their debts. To this Kruger assented. and a resolution was adopted unanimously, Kruger not voting, authorizing the transfer and delivery of certain notes secured by mortgages, specifically named, to Kruger, as collateral security to protect him from liability by reason of his suretyship upon the depositary bonds of the bank then in existence, or thereafter to be executed, as the court found, and, we think, correctly. The notes mentioned in the resolution, with the exception of the Miller note, were indorsed, and all were delivered to Kruger. At the same time the bank executed to him a written assignment of all the notes and mortgages. Kruger, referred to hereafter as the defendant, thereafter held, and still holds, these notes and mortgages, except in instances where substitutions have been made, and except as stated hereafter.
On May 8, 1923, defendant signed a new depositary bond which was in contemplation when the resolution was adopted.
The notes assigned to the defendant aggregated $18,000 in round numbers.
All the foregoing acts were reported to the superintendent of banks, who made no objection.
On January 12, 1924, at the annual meeting, a resolution was passed which in effect ratified the foregoing transactions between the defendant and the bank.
There is not any evidence tending to show that the bank was insolvent when the original resolution was passed, and we think the record justifies the conclusion that, when the resolution of January 12, 1924, was adopted, none of the directors deemed it insolvent, and that its closing was not then within their contemplation. The evidence indicates that the reason for its closing upon January 25, 1924, was the result of a run caused by the failure of the American Bank & Trust Company at Missoula.
The bank having closed, Robison was appointed receiver which position he held until he was succeeded by A. S. Ainsworth, the plaintiff. After the receiver was appointed, Sanders county brought suit upon the depositary bond of May 8, 1923, and secured judgment against the defendant in the sum of $20,000, which judgment has become final.
Payment in full of the Louis Vacura note, held by the defendant, amounting to $4,331.25, was made to receiver Robison, who placed the amount received in his own name under the designation "trustee for owner." The same action was taken respecting $100 received upon the Clark note. The receiver was obliged to obtain the Vacura note from the defendant in order that he might accept the payment tendered and deliver the note to the maker. He also obtained the Clark note in order to indorse payment thereon.
It was deemed advisable to commence action to foreclose what is known as the Miller mortgage, and for that purpose the defendant, by agreement with receiver Robison, placed the Miller note and mortgage in the hands of Mr. Bulen, who is an attorney at law, for foreclosure. He brought action thereon, secured judgment, and caused the mortgaged property to be sold. For convenience, as the court found, the suit was prosecuted in the name of the receiver. At the sale, there being no other bidder, the receiver bid in the property in his own name, and, pursuant to this agreement with the defendant, made before the action was begun, assigned the certificate to the defendant.
The plaintiff brought this action to recover of the defendant the securities above mentioned and to prevent him from enforcing collection thereof and from receiving the collections already made thereon.
The court made findings of fact from which it concluded that all the notes and mortgages in question were delivered to the defendant in good faith, as collateral security, to secure him from liability upon the depositary bond, and that he is entitled to hold them, and to enforce and exhaust the same to the extent required to satisfy his liability; that he is entitled to have paid over to him all sums collected by the receiver upon the pledged notes, and likewise is entitled to hold the real estate bid in on the Miller foreclosure; and that the plaintiff has no interest in any of the notes, mortgages, or cash, except in so far as there may be an overplus after the defendant's liability to Sanders county shall be satisfied; and entered judgment in favor of the defendant. The plaintiff caused to be settled a bill of exceptions, in which is included all of the testimony taken at the trial, and appealed from the judgment.
1. At the outset counsel for plaintiff challenges the authority of the board of directors of a state bank to pledge the assets of the bank to indemnify a surety upon a bond given by the bank to secure deposits of county money, and also the right of a director to accept the pledge.
Upon the first point it is suggested that the provisions of section 4767, R. C. 1921, and that section as amended by chapter 89 of the 1923 Session Laws, p. 237, have some application; but this is not so. This legislation relates to the duties of county commissioners and county treasurers respecting the deposit of public funds and the security required for their protection, and can have no reference to the situation in the case at bar. Whether the bank could lawfully have pledged to the county treasurer assets other than those mentioned in the statute, or whether the county commissioners could have approved the same as security for a deposit of county funds, is not in this case.
The statute permitted the bank to give to the treasurer an indemnity bond, and it did so. A bank, in the absence of a statute to the contrary, and in Montana we have none, has a right to pledge its securities to indemnify a surety who signs a bond in its behalf in order that the bank may obtain a deposit of public funds. McFerson v. National Surety Co., 72 Colo. 482, 212 P. 489; Page Trust Co. v Rose, 192 N.C. 673, 135 S.E. 795; and see Cameron v....
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