Balch v. Wilson

• Decision Date: 04 October 1878
• Citation: 25 Minn. 299
• Parties: FOSTER L. BALCH, Receiver, <I>vs.</I> EUGENE M. WILSON and another.
• Court: Minnesota Supreme Court

25 Minn. 299

FOSTER L. BALCH, Receiver,vs.

EUGENE M. WILSON and another.

Supreme Court of Minnesota.

October 4, 1878.

The plaintiff, as receiver of the National Exchange Bank of Minneapolis, brought this action in the district court for Hennepin county, against the defendants Eugene M. Wilson and William M. Kimball, on a promissory note for $500 made by them to the bank, bearing date April 18, 1877, and payable one month thereafter. The complaint shows that on April 24, 1877, the bank suspended payment and closed its doors, and that on May 29, 1877, the plaintiff was appointed receiver, by the comptroller of the currency, pursuant to the provisions of the National-Bank Act, and holds the note as such receiver.

The defendants in their answer admit the statements in the complaint, and allege that on September 8, 1876, the defendant Kimball recovered judgment against T. W. Tidd and E. B. Fales, partners as Tidd & Fales, for $3,130.90, and on March 3, 1877, caused execution thereon to be levied on a large quantity of saw-logs in the possession of the bank, being portion of a larger quantity, which, on March 16, 1876, Tidd & Fales had transferred to the bank to secure a present indebtedness and future advances, all which had prior to the levy been paid out of the proceeds of sales of the property so transferred. That Kimball also caused proceedings supplementary to the execution to be instituted, and summoned the bank to appear before the court and make disclosure of all property of Tidd & Fales under its control, etc., and caused the bank to be enjoined from disposing of any such property.

That on April 16, 1877, the bank, desiring a release of the levy and a dismissal of the supplementary proceedings, and an extension of time for payment of the judgment, agreed with Kimball that in consideration of such release, dismissal and extension, it would join with Tidd & Fales in executing to Kimball three promissory notes for $1100 each, dated April 16, 1877, and payable, respectively, twelve, fifteen and eighteen months thereafter. Pursuant to the agreement, the notes were made by Tidd & Fales payable to their own order, were endorsed by the cashier of the bank, as such, and afterwards delivered by the bank to Kimball, who caused the levy to be released, the other proceedings to be dismissed, and the judgment to be satisfied. That prior to the commencement of this action, Kimball, for a good consideration, assigned one-half of the notes to his codefendant Wilson, and that no part of the notes has been paid. That a claim for the amount of the notes was duly made upon the plaintiff as receiver, at the time and in the manner required by law, and was by him disallowed; that the assets of the bank are insufficient to pay its indebtedness, and there will be nothing left to pay these notes when their validity as claims against the bank may have been established by action at law; and that Tidd & Fales are insolvent and can pay no part of the notes.

The defendants pray judgment that so much of their demand as may be necessary be set off against plaintiff's demand in payment of the same, and for general relief. A demurrer to the answer was sustained by Young, J., and the defendants appealed.

Wilson & Lawrence, for appellants.

Atwater & Babcock, for respondent.

CORNELL, J.

The note sued on was a joint note of the defendants given to the bank, dated on April 18, 1877, and payable one month after its date. The bank was put into the hands of the receiver, under the national banking law, on May 29, 1877, which was after the maturity of said note. Giving to the averments of the answer the most favorable construction claimed by defendants, the three several notes set up as a ground for the equitable relief sought, originated in the settlement of a transaction between the defendant Kimball alone, and the bank and Tidd & Fales. Said notes were given to Kimball by the bank and Tidd & Fales, as...