Lankford v. Schroeder

• Decision Date: 09 February 1915
• Docket Number: Case Number: 3990
• Parties: LANKFORD, State Bank Com'r, v. SCHROEDER.
• Court: Oklahoma Supreme Court

1915 OK 86

147 P. 1049

47 Okla. 279

LANKFORD, State Bank Com'r, v. SCHROEDER.

Case Number: 3990

Supreme Court of Oklahoma

Decided: February 9, 1915

Syllabus

¶0 1. PLEADING-- Demurrer. Where a petition fails to state a cause of action, the better practice is to take advantage of such failure by demurrer.

2. APPEAL AND ERROR--Pleading--Objection--Presentation Below--Sufficiency. Where the petition fails to show any right of the plaintiff against the defendant for the relief sought, the defendant may, at the trial of the case, before any evidence is introduced, object to the introduction of any evidence in plaintiff's behalf, and the overruling of such objection, if excepted to, is error for which the case will be reversed.

3. BANKS AND BANKING-- Depositor--Misappropriation of Money. Where one who purchase notes from a state bank, paying cash therefor, leaves the notes in the bank under an agreement with the cashier that the bank will collect the notes and place the money received to the purchaser's credit account in the bank, and the bank afterwards collects the notes and, without the purchaser's knowledge or consent, appropriates the money to its own use without giving the purchaser credit therefor, and the bank afterwards, without paying the purchaser his money, except a very small part thereof, fails and goes into the control of the State Bank Commissioner under the state banking law, held, the purchaser of the notes is not a depositor of the failed and insolvent bank, and is not entitled to payment of his claim against the bank out of the bank's assets in the hands of the bank commissioner and necessary for the payment of the bank's depositors, or out of the state guaranty fund.

4. STATES-- Right to Sue--State Banking Board--Bank Commissioner. The State Banking Board and the State Bank Commissioner constitute a part of the executive department of the state government, and cannot be sued without the state's consent.

5. BANKS AND BANKING--State Guaranty Fund--Reimbursement--Lien on Bank's Assets. The state guaranty fund is the property of the state as much as ad valorem taxes collected for the state's maintenance, and the state has a first lien on assets of a failed bank in the hands of the State Bank Commissioner, to secure reimbursement of the guaranty fund for sums paid therefrom to the depositors of such bank, and no suit can be maintained by a creditor of the bank against the commissioner for the application of such assets or guaranty fund to the payment of his claim.

6. STATES--Suit Against the State--Action Against State Bank Commissioner. A suit against the State Bank Commissioner to compel him to pay a debt against a failed bank out of the state guaranty fund or out of the assets of such bank in his hands as such officer under the banking law is, in effect, a suit against the state and cannot be maintained without the state's consent.

7. APPEARANCE-- Effect--Parties--Action Against State Bank Commissioner--Suit Against State. In a suit by a creditor of a failed bank against the State Bank Commissioner to compel him to pay the creditor's debt out of the state guaranty fund or out of assets of the bank in the commissioner's hands for the purpose of winding up the bank's estate, where the commissioner appears by his attorneys and defends such suit, held, such appearance does not have the effect of making the state a party to the action.

Error from District Court, Oklahoma County; Geo. W. Clark, Judge.

Action by Charles W. Schroeder against J. D. Lankford, State Bank Commissioner. Judgment for plaintiff, and defendant brings error. Reversed, with directions to dismiss cause.

Stuart, Cruce & Gilbert, for plaintiff in error.

Everest, Smith & Campbell, for defendant in error.

BROWN, J.

¶1 This cause originated in the district court of Oklahoma county upon the petition of Charles W. Schroeder as plaintiff against J. D. Lankford, as State Bank Commissioner of the state of Oklahoma, in possession of the Planters' & Mechanics' Bank, a corporation, under the banking laws of said state. After alleging that the bank was a corporation doing business in Oklahoma under the state banking laws, plaintiff's petition stated, in substance, as follows: That the defendant, J. D. Lankford, is the duly appointed and acting bank commissioner of the state of Oklahoma and as such was in possession and control of all the assets, affairs, rights, and property of said Planters' & Mechanics' Bank. That plaintiff was a creditor of said bank and was a depositor therein at the time the bank was taken in charge by the defendant Lankford, as bank commissioner, and that plaintiff's claim arose as follows: About the 21st day of November, 1907, plaintiff, at the request of the officers of the bank, purchased from it certain notes described in the petition aggregating $ 4,150. That after purchasing said notes plaintiff left them in the bank for collection, and, he says, the cash when collected was to be deposited to his account and credit in the bank. Plaintiff says that at the time he purchased the notes he paid the bank said $ 4,150. It is further alleged that the notes were afterwards collected by the bank, but, instead of placing the amounts collected to plaintiff's credit, the bank appropriated the cash to its own use, and substituted, or attempted to substitute, other notes therefor; that the substitution of other notes and the appropriation of his money by the bank was without plaintiff's knowledge; and that he never accepted or received the substituted notes. It is alleged that the notes purchased by plaintiff bore interest at the rate of 12 per cent. per annum, and that after the purchase thereof he received certain credits, a part of the interest and principal, on the notes. He alleges that all the notes purchased by him were paid to the bank prior to February 16, 1909, on which date the bank gave him credit for $ 450 collected on certain notes, but none of the notes or amounts collected by the bank thereon had been placed to his credit or account in the bank, except those above mentioned. Plaintiff alleges that, under the agreement between him and the bank at the time he purchased the notes referred to, the moneys paid on the notes ought to have been placed as a special deposit to his credit and so considered at the time of the failure of the bank, and should be paid out of the bank's assets and the state guaranty fund provided for the payment of depositors in failed banks, but he says the said moneys were not on deposit at the time of the bank's failure; and he says, if he was not a depositor, then the appropriation of his money by the bank constituted said money a special trust fund belonging to plaintiff and was a preferred claim which plaintiff was entitled to receive in cash. He alleges a demand upon Lankford for payment of said sum, which was by said bank commissioner refused. The insolvency of the bank and the insufficiency of its assets to pay off its liabilities is alleged, and that defendant Lankford was State Bank Commissioner, and as such took full possession and control of the bank's assets and affairs as provided by law and was proceeding to wind up the estate and affairs of the bank as such bank commissioner at the date of filing plaintiff's action; and that therefore defendant was trustee for said bank and its creditors and stockholders, and as such it was his duty to prorate the bank's assets among the lawful creditors, first paying preferred claims, which it is alleged plaintiff's claim is.

¶2 The defendant first answered by general denial, and afterwards by leave of court filed amended answer admitting the incorporation and insolvency of the Planters' & Mechanics' Bank, and admitted that he, as bank commissioner, took possession and control of the bank's assets and that the same were insufficient to pay its depositors in full. He denies that plaintiff purchased the notes mentioned in his petition, and says, if he did so, it was under a secret agreement with the bank's cashier by which the cashier was to conceal said transaction from the other officers of the bank and from the makers of the notes; and that the notes were never paid, but were renewed from time to time and carried as assets of the bank and were so carried at the time he took possession of the bank's affairs; and that plaintiff was at all times a director in the bank and had knowledge of its acts relative to said notes, and is estopped from asserting his claim herein.

¶3 The case was regularly reached and called for trial March 18, 1912, in the district court of Oklahoma county, and both parties appeared by their counsel and announced ready. A jury being called by the court, the defendant objected to a trial by jury, which objection was overruled, and a jury impaneled.

¶4 Plaintiff being sworn and offered as a witness in his. own behalf, the defendant thereupon objected to the introduction of any evidence on the ground that the petition did not set out a cause of action against the defendant. The objection was overruled by the court, the defendant excepted, and plaintiff testified as a witness for himself. After plaintiff closed his evidence, defendant moved the court to instruct a verdict for him, which motion was refused. The trial resulted in a verdict for plaintiff for $ 4,332.62, and judgment was rendered by the court for the amount found by the jury in favor of the plaintiff and against the defendant Lankford as State Bank Commissioner of Oklahoma, and defendant was ordered forthwith to pay said sum to plaintiff out of the assets of the failed bank in defendant's possession and control, as State Bank Commissioner, and, in the event the same was insufficient to pay plaintiff the sum stated, then that defendant pay the same out of the state guaranty fund of Oklahoma in his possession or hands as State Bank Commissioner. The judgment was excepted to by defendant, and in due time he filed a motion for new trial, alleging as grounds therefor...