Farmers' State Bank v. County of Marshall
| Decision Date | 05 October 1928 |
| Docket Number | No. 26898.,26898. |
| Parties | FARMERS' STATE BANK OF GATZKE v. COUNTY OF MARSHALL. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Marshall County; William Watts, Judge.
Replevin by the Farmers' State Bank of Gatzke, by A. J. Veigel as Commissioner of Banks, against the County of Marshall. From an order denying a motion for amended findings or for a new trial, plaintiff appeals. Reversed and remanded.
A. N. Eckstrom, of Warren, for appellant.
W. O. Braggans, of Warren, for respondent.
Replevin by the commissioner of banks, as the liquidator of the Farmers' State Bank of Gatzke, for certain promissory notes pledged to the defendant, county of Marshall, to secure certain moneys due it. So far as concerns the one issue on this appeal, the decision below was for defendant. Plaintiff, having moved for amended findings or a new trial and the motion having been denied, appeals.
For some time previous to January, 1927 the State Bank of Gatzke was a legally designated depository of defendant county, the deposit being secured by personal bond. The county board insisted that it be replaced by a surety bond, which the bank could not furnish. Neither was it convenient for it to repay the deposit, which was permitted to remain with the bank upon its pledge to the county, as security, of the notes here in question.
The case was decided below before our decision in Farmers' & Merchants' State Bank v. Consolidated School District, 174 Minn. 286, 219 N. W. 163. We there held that a commercial bank organized under the laws of this state has no power to pledge any of its assets, particularly bills receivable, to secure the repayment of deposits, except as such pledge is authorized by statute to secure deposits of public funds. 1 Mason's St. 1927, §§ 1973-1 to 1973-3; G. S. 1923, 1 Mason's St. 1927, § 107. The pledge of notes such as those now in issue is not authorized by statute. L. 1927, p. 379, c. 257, 2 Mason's St. 1927, §§ 7699-14 to 7699-19, prohibiting any lien upon or charge against the assets of a bank except to secure public deposits, was not in effect at the time of the transaction here involved.
The argument for respondent is, first, that the rule of Farmers' & Merchants' State Bank v. Consolidated School District does not apply where, as here, payment is demanded but refused and the depositor forbears collection in consideration of a pledge of bills receivable; that it is an ordinary case of debtor and creditor; and that the bank, like any other debtor, has the power to secure such indulgence by giving security. In our former decision, we tried to show that the duty of a bank to its depositors put it in a situation different from that of the ordinary debtor, and that among its powers was none generally to pledge its assets to secure deposits. We see no reason why that rule should not apply, whether an attempted pledge is to obtain a deposit at the outset or later to prevent its withdrawal. If the power does not exist in the one case, it...
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