City of Williston v. Ludowese
| Decision Date | 05 February 1926 |
| Docket Number | 4880 |
| Court | North Dakota Supreme Court |
Rehearing denied March 16, 1926.
Appeal from the District Court of Williams County, Moellring, J.
Modified and affirmed.
Affirmed.
O'Hare & Cox, for appellants.
The law contemplates, and was evidently framed to insure fair and uniform dealings by the banks with all of their depositors. A secret pledge to secure one, while others are left without security, although it may be without specific intent to defraud, would nevertheless, in case of loss, justify such an interference. Public policy will not, therefore, tolerate a practice which might, sooner or later, in the event of financial trouble with the bank, enable it to pay and protect the favored few at the expense of the equally deserving many. Commercial Banking & Trust Co. v. Citizens Trust & G Co., 153 Ky. 566, 45 L.R.A.(N.S.) 950, 156 S.W. 160.
The doctrine of estoppel in pais is applicable to municipal corporations, and it is equally true that city counsels or public authorities will be estopped or not, as justice and right may require. State v. McIlravy, 181 N.W. 554.
John J Murphy, City Attorney, and Fisk, Craven, & Taylor, Special Counsel, for respondent.
It would be a very unreasonable interpretation of the statute to hold because a public officer violates the law, and does an act that he has no right to do, that therefore the people lose their money. Buhrer v. Baldwin, 137 Mich. 263, 100 N.W. 468.
It is no defense to an action upon a bond of a cashier of a national bank for the misappropriation of money and excessive loans that the bank or its receiver has obtained judgments upon the notes wrongfully taken by the cashier for such money and loans. Westervelt v. Mohrenstecher, 34 L.R.A. 477, 76 F. 118.
Neither the knowledge nor acts of the members of the board of commissioners nor the sanction of the board of commissioners, could estop the city under the undisputed facts in this case. U. S. F. & G. Co. v. State, 81 Kan. 660, 26 L.R.A.(N.S.) 865, 106 P. 1040; Yellowstone Co. v. Bank (Mont.) 128 P. 596; Meyers v. Board of Education (Kan.) 32 P. 650.
Receiver stands, as to assets of bank over which he has charge, in the place of the bank, and is chargeable with knowledge of all facts known to the bank affecting the character of the assets. People's State Bank v. Francis, 8 N.D. 369, 70 N.W. 853.
Conmy, Young, & Burnett, and Pierce, Tenneson, Cupler, & Stambaugh, amici curiae.
PUGH, District Judge. BIRDZELL, BURKE, and NUESSLE, JJ., concur. JOHNSON, J., dissents. CHRISTIANSON, Ch. J., did not participate; Honorable THOS. H. PUGH, Judge of the Sixth Judicial District, sitting in his stead, by request.
The Williams County State Bank, hereinafter referred to as the Williston State Bank, became a depository for $ 10,000 of the public funds of the plaintiff, the city of Williston, on or about June 6, 1921, under the provisions of chapter 56 of the Laws of 1921, which sum was placed and deposited in said bank between June 15th and August 1st of that year by defendant N. B. Ludowese, then, and until and including the year 1923, the city treasurer of said city. On the 14th day of April, 1923, the defendant Ludowese, city treasurer, deposited of the public funds of the city in said bank an additional sum of $ 17,580.23, and received from the bank a paper known as a certificate of deposit, dated that day, reciting that the city of Williston has deposited in said bank said sum of money payable to the order of itself six or twelve months after date with interest at the rate of 6 per cent per annum; and at the same time, as security for the payment of said sum, the bank by its president and cashier executed and delivered to said Ludowese a warranty deed conveying to said Ludowese in his individual name two certain tracts of land within the city of Williston, then occupied by tenants, and also executed and delivered to Ludowese in his own name a certain assignment of rentals due or to become due from the tenants occupying said premises. And, further, the bank delivered to said Ludowese mortgages owned by it, aggregating approximately $ 4,500, covering farm lands. Said additional deposit of $ 17,580.23 was so made by defendant Ludowese without the authority, approval or knowledge of the city commission of the city of Williston. The defendant Ludowese did not record said deed in the office of the register of deeds. It appears that the defendant Williston State Bank was in financial difficulties. This condition however was not known to Ludowese at the time of said over-deposit, so-called. On or about the 24th day of January, 1923, Rodman, the president of the bank, endeavored to secure a loan for the bank of $ 50,000 from the depositors' guaranty fund commission and the Bank of North Dakota, and offered as security therefor certain real estate of the bank, including the real estate situated in the city of Williston involved in this action. The Bank of North Dakota thereupon or shortly afterwards advanced to defendant bank upon said proposed loan the sum of $ 15,000, for which collateral security, consisting of notes owned by the bank, was given. In connection with the making of this loan a Mr. Desmond, representing the depositors' guaranty fund commission, went to Williston, checked up the bank and the securities offered by the president and made report thereon to the said depositors' guaranty fund commission. Later a meeting of the commission and the State Bank Examiner was held at Max, North Dakota, and the proposition of the loan was discussed. It was then learned that certain of the securities the bank had promised as security for the loan aforesaid were not available; and that the city real estate of the bank located in the city of Williston had been parted with, pledged or conveyed so that the title was not in the same condition as when the agreement for the loan was made. Thereafter and on or about May 20, 1923, upon a request by telephone, C. R. Green, manager of the Bank of North Dakota, went to Williston for the purpose of completing the loan, provided this could be accomplished under the terms as to security formerly agreed upon. Desmond was then at Williston. Green met and had consultations with one or two groups of business men of the city, which included the president of the city commission and one or two other members thereof, the object of which was to devise means by which the loan aforesaid might be consummated. Desmond was present at one or both of such meetings. Green remained during Monday, the 21st, and thereafter returned to Bismarck. Desmond remained at Williston to close the transaction for the loan. The bank executed and delivered to him a mortgage dated May 23, 1923, conveying to the Bank of North Dakota the real estate in question and other real estate and collateral notes to secure to it the payment of $ 50,000 on demand. On the same day this mortgage was filed for record in the office of the register of deeds in and for Williams county and recorded therein. After the filing of the said mortgage in the office of the register of deeds, and on the same day, Desmond went to the office of Ludowese and after some short delay, but on the same day, received from him the deed and assignment of rents which had been executed and delivered to Ludowese by the Williston State Bank. The Williston State Bank was closed to business June 12, 1923, and in due course L. R. Baird became the receiver thereof under appointment of the court, took charge, and now has charge, of the affairs of said bank. On August 4, 1923, Ludowese executed and delivered to the Bank of North Dakota an assignment to it of the assignment of the rents which had been delivered to him by the Williston State Bank. He did not at any time execute and deliver to the Bank of North Dakota, or anyone for it, a deed to the premises described in the deed delivered to him by said bank. September 12, 1923, the plaintiff, city of Williston, instituted this action. The complaint recites the facts relative to said deposit of $ 17,580.23, the giving of the security therefor by the said Williams County State Bank, the delivery of the said warranty deed and of the assignment of the rentals to the Bank of North Dakota, the insolvency of the bank, and alleges that the delivery of said deed and assignment by defendant Ludowese to the Bank of North Dakota was wholly beyond his power and authority so to do, and praying that the plaintiff be declared to have a lien prior and superior to any claim or lien of the defendant state of North Dakota, doing business as the Bank of North Dakota, upon the real estate in said deed described; that the defendant surrender to the plaintiff said deed and said assignment of rentals or in the event of failure so to do the decree of the court stand in lieu thereof.
The defendant, the state of North Dakota, doing business as the Bank of North Dakota, and hereinafter referred to as the Bank of North Dakota, in answer to the complaint, interposed a general denial, and further alleged: ...
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