First Nat. Bank v. Kreig

• Decision Date: 07 April 1893
• Citation: 32 P. 641,21 Nev. 404
• Parties: FIRST NATIONAL BANK OF WINNEMUCCA v. KREIG et al.
• Court: Nevada Supreme Court

32 P. 641

21 Nev. 404

FIRST NATIONAL BANK OF WINNEMUCCA v. KREIG et al.

Supreme Court of Nevada

April 7, 1893

Syllabus by Bigelow, J.

1. National banks are only subject to state taxation upon the shares of stock owned by the shareholders therein, and upon their real estate. Mortgages held by such banks are not subject to taxation.

2. An absolute deed made by the owner of property for the purpose of securing money due to third persons, in connection with a written acknowledgment by the grantee that he holds it for that purpose, is a mortgage.

3. Where property so held is deeded back to the grantor, with the consent of the beneficiaries, the lien of the mortgage is lost; and anch consent need not be in writing.

Appeal from district court, Humboldt county; A. E. Cheney, Judge.

Action by the First National Bank of Winnemucca against George Kreig and others to foreclose a mortgage. There was judgment for plaintiff, and defendants' motion for a new trial being denied, they appeal. Affirmed.

The other facts fully appear in the following statement by BIGELOW, J :

The facts deemed material to the decision of the case are as follows: The property in controversy, together with a large number of cattle and horses, was originally owned by Isabella Sloan and her two children, James Sloan and Mary S. Kreig wife of George Kreig, but prior to July 25, 1889, with unimportant exceptions, it had all been conveyed to James who then owed his mother thereon about $23,000, and his sister about $11,000, and was largely indebted to the First National Bank, plaintiff herein. On that date defendant George Kreig purchased the property for $80,000, assumed James' indebtedness to the parties mentioned, and borrowed more money from the bank, so that he owed the latter about $40,000. To secure these various sums, for which he had given notes, Kreig made an absolute deed of the property to George S. Nixon, cashier and managing agent of the plaintiff who gave back to Kreig a writing certifying that the deed was executed simply as security for the payment, first, of the money due the bank; next, that due Mrs. Sloan; and then, that due Mrs. Kreig. The notes to the bank became due that fall but Kreig was unable to raise the money to pay them, and applied to Nixon to help him do so, as did Mrs. Sloan. Nixon ascertained that $25,000 could be borrowed upon a mortgage to be made by Kreig and wife upon the whole property, provided the title was found to be perfect in them. Nixon testified that he explained this to all the parties, and told them that the title would have to be placed back in Kreig; that all consented to its being done, and upon this understanding the money was obtained, the mortgage given, and he made a deed of all the property back to Kreig, who promised to return the defeasance made by Nixon July 25, 1889, but failed to do so, and Nixon forgot about it. Kreig still owed the bank upon his note a balance of $2,400, but the note was surrendered, and it was charged to his open account. By July 28, 1890, this had increased to $7,646, for which the bank took a mortgage upon the property. On August 14, 1891, the mortgage was renewed, and this action is brought to foreclose the last-named mortgage. Over $50,000 worth of the cattle and horses perished during the winter of 1889-90. Mrs. Sloan was made a party, as claiming some interest in the property, and Mary Kreig became a party at her own request. Mrs. Sloan's and Mrs. Kreig's answers set out various transactions between the parties, alleged that the plaintiff's mortgage was fraudulent and void as to them, that Nixon's deed to Kreig was made without their consent, and asked that it be decreed that they still held a lien upon the property to secure the sums due them from Kreig, and that the lien be foreclosed and the property sold. The court rendered a decree in favor of the plaintiff, and directed a sale of the property to pay the plaintiff's mortgage.

M. S. Bonnifield, for respondent.

BIGELOW, J., (after stating the facts.)

The defendants plead that the mortgage to the plaintiff of July 28, 1890, was canceled, marked "Satisfied" upon the records, and the new mortgage of August 14, 1891, taken, for the purpose of escaping taxation thereon; and for this reason it is claimed that the latter mortgage is void, under the authority of Drexer v. Tyrrell, 15 Nev. 114, upon the ground that it was taken and made for the purpose of defrauding the revenues of the state of Nevada. To this it is replied that the mortgage, being the property of a national bank, was not subject to state taxation, and it seems admitted that, if not, there could be no fraud in attempting to escape such taxation which would be sufficient to defeat the mortgage. In State v. First National Bank of Nevada, 4 Nev. 348, it was held that such mortgages were not subject to state taxation. The defendants, however contend that this decision was erroneous, and ask us to overrule the doctrine there announced. But we are of the opinion, aside from that case, that it is now well settled by the decisions of the supreme court of the United States, which in such matters is the final arbiter, that national banks are only subject to state taxation upon their real estate, and upon the shares of stock in the bank owned by the stockholders. Talbott v. Silver Bow...