Berg v. Union State Bank

• Decision Date: 15 July 1932
• Docket Number: No. 28916.,28916.
• Citation: 186 Minn. 529,243 N.W. 696
• Parties: BERG v. UNION STATE BANK.
• Court: Minnesota Supreme Court

243 N.W. 696

186 Minn. 529

BERG v. UNION STATE BANK.

No. 28916.

Supreme Court of Minnesota.

July 15, 1932.

Appeal from District Court, Hennepin County; A. W. Selover, Judge.

Action by John G. Berg against the Union State Bank. Verdict for the plaintiff. From an order denying its alternative motion for judgment notwithstanding the verdict or a new trial, the defendant appeals.

Order affirmed.

Ueland & Ueland, of Minneapolis, for appellant.

George Beaverson and Mortimer H. Boutelle, both of Minneapolis, for respondent.

DIBELL, J.

Action to recover money claimed to have been converted by the defendant. There was a verdict for the plaintiff. The defendant appeals from an order denying its alternative motion for judgment notwithstanding the verdict or a new trial. The case was here before and is reported as Berg v. Union State Bank, 179 Minn. 191, 229 N. W. 102. The facts are stated and considered at length there and abbreviated here.

1. On the first trial below, reported on appeal in 179 Minn. 191, 229 N. W. 102, 103, the court directed a verdict for the plaintiff. This court held that the direction was in error. It said: "It is uniformly held that, if the bank has notice or knowledge of the true ownership of the fund, or if it has knowledge of facts and circumstances sufficient to require inquiry on its part, which inquiry, if made, would have disclosed the true ownership, it cannot apply the fund to an individual indebtedness owing to it by the agent or trustee depositing the same."

And referring to the effect of notice and knowledge of the true ownership of the fund the court said:

"When it comes to the question of whether the bank, where it has no notice or knowledge of the true ownership of the fund and no notice of circumstances calling for inquiry, can apply the fund to an indebtedness owing to it by the trustee or agent individually and thereby escape liability to the true owner, there is a sharp division in the authorities. The more numerous decisions and weight of authority appear to be that in such case the bank may apply the fund or deposit in payment of a debt owing to it by the trustee or agent individually without thereby becoming liable to the true owner.

"A substantial number of the courts however have adopted and follow a modification of this rule, referred to as the equitable rule. That rule is that a bank, even though it has no express or implied knowledge of the true ownership of the fund deposited in his own name by the trustee or agent, cannot apply such fund to the individual debt of such trustee or agent where the lack of knowledge has not resulted in any detrimental change in the bank's position and no superior equities have arisen in its favor."

Our other cases, before and after, are in accord with both propositions announced. Wegerslev v. Midland National Bank & Trust Co., 184 Minn. 393, 238 N. W. 792; Rodgers v. Bankers National Bank, 179 Minn. 197, 229 N. W. 90; Agard v. People's National Bank of Shakopee, 169 Minn. 438, 211 N. W. 825, 50 A. L. R. 629; Neilsen v. Union State Bank, 165 Minn. 25, 205 N. W. 453. The case of Cardozo v. Fawcett, 158 Minn. 57, 196 N. W. 809, though the approach to a somewhat similar question was from a different angle, is interesting to note; and in 50 A. L. R. 629-635, is a comprehensive note to Agard v. People's Nat. Bank, 169 Minn. 438, 211 N. W. 825.

2. The merits of the case therefore are to be solved by determination whether the evidence supports a finding favorable to the plaintiff on the propositions of law stated on the former appeal and repeated above. A finding favorable to the plaintiff on either, if sustained by the evidence, supports a verdict for him. The verdict was general. We cannot say upon which or whether upon both the jury found for the plaintiff. Therefore unless the evidence supports a finding in favor of the plaintiff upon a controlling issue error inheres in the verdict; this upon the general ground stated over and over that where two rights of recovery are submitted and the verdict is general if one of such rights is not sustained by the evidence the verdict cannot be upheld. Roy v. Dannehr, 124 Minn. 233, 144 N. W. 758; Lindemann v. Chicago, etc., R. Co., 154 Minn. 363, 191 N. W. 825; Vasey v. Saari, 141 Minn. 103, 169 N. W. 478; General Electric Co. v. Florida, etc., Co., 183 Minn. 178, 235 N. W. 876; 5 Dunnell, Minn. Dig. (2d Ed. & Supp.) § 7168, and cases.

3. Stevens & Co., a corporation, was a brokerage house in Minneapolis. It had sold to the plaintiff warrants of Richland county, Montana, aggregating $3,772.72. On February 16, 1922, it notified Berg that if he would bring in his warrants it would collect them for him. Berg brought them in. He left them with Stevens & Co. for collection. His name was not upon them. They last appeared under the indorsement of the First National Bank of Minneapolis. Stevens & Co. attached the warrants to a draft in its own favor on a local Montana bank and received credit in the defendant bank,...