LaRson v. Baird, 5935.

• Decision Date: 19 May 1931
• Docket Number: No. 5935.,5935.
• Citation: LaRson v. Baird, 60 N.D. 775, 236 N.W. 634 (N.D. 1931)
• Parties: LARSON v. BAIRD.
• Court: North Dakota Supreme Court

60 N.D. 775

236 N.W. 634

LARSON

v.BAIRD.

No. 5935.

Supreme Court of North Dakota.

May 19, 1931.

Syllabus by the Court.

Permission to sue a receiver is not a prerequisite to jurisdiction of the court, and failure to obtain such permission is an irregularity which may be cured at any stage of the proceedings.

Syllabus by the Court.

A claim for bonds left with a bank for safe-keeping, filed with the receiver of such bank and allowed by him, construed, and held in the instant case to be a sufficient claim for the return of said bonds as the property of the claimant.

Syllabus by the Court.

Where such claim has been filed within the time fixed by statute for the filing of claims against an insolvent bank, and the receivership is still in progress, the receiver cannot set up the statute of limitations as a defense to an action for the bonds or their value merely because the action was not commenced within six years after the filing of the claim.

Syllabus by the Court.

Where the customer of a bank left with said bank bonds, his own property, for safe-keeping, and said bank, without his knowledge or consent, appropriates such bonds to its own use and uses them as collateral to its own indebtedness, and, after becoming insolvent, such indebtedness is liquidated by the receiver and part of the collateral returned to him and thereafter the customer learns of the misappropriation of his bonds and files a claim therefor with the receiver, such creditor has a preferred claim against such bank on any funds of the bank in the hands of the receiver, obtained by him from such returned collateral.

Syllabus by the Court.

The owner of such bonds is entitled to recover from the receiver the face value of the bonds with interest according to their tenor.

Appeal from District Court, Ward County; George H. Moellring, Judge.

Action by Lars Larson against L. R. Baird, as receiver of the Sawyer State Bank of Sawyer, North Dakota. Judgment for the plaintiff, and the defendant appeals.

Modified, and, as modified, affirmed.

Halvor L. Halvorson, of Minot, for respondent.

Dickinson & Johnson, of Minot, for appellant.

BURR, J.

The plaintiff was the owner of ten unregistered Liberty Loan bonds aggregating $1,000, and on June 27, 1919, he placed the same “with the Sawyer State Bank for safe-keeping.” The bank closed, and one Mostad was appointed receiver. The plaintiff filed a claim showing him to be a creditor of the Sawyer State Bank for “Liberty bonds left for safe-keeping with the Sawyer State Bank,” in the amount of $1,000 and obtained from the receiver a certificate of proof of claim to this effect.

It is the claim of the plaintiff that the officers of the bank converted these bonds to the use of the bank; that, when he learned of this, he demanded from the receiver in charge the return of the bonds or their value; that the receiver has neglected to account to the plaintiff for the value; that the proceeds received by the bank from the sale of these bonds constituted a trust fund; that this fund is still in the hands of the receiver; and so he asks the receiver be enjoined from disbursing this fund until the plaintiff be reimbursed and that the court order and adjudge that the amount of these bonds with interest at 6 per cent. be paid by the receiver to him.

The defendant alleges: That no authority was granted to sue the receiver; that the claim filed by the plaintiff was a mere general claim of creditor to participate in the general assets of the bank; “that more than six years have elapsed since the filing of the claim in this action”; and that this action is barred by the statute of limitations and especially by the provisions of chapter 98 of the Session Laws for the year 1927, barring claims not presented within two and a half years from the date of the mailing of the notice to present claims.

The court found for the plaintiff, and judgment was entered against the receiver for $1,315.42, including interest at the rate of 6 per cent. from July 2, 1928, decreeing that plaintiff's claim is a preferred claim, directing the receiver to pay this amount out of the fund in his hands, and impressing such fund with a trust for the payment of this claim.

The defendant appeals from the judgment and the whole thereof, demands a new trial in this court, and alleges the court erred in finding that the bank had converted the bonds; that the plaintiff had demanded the return of the bonds from the receiver; that the proceeds from the sale of the bonds constituted a trust fund; that the claim filed was a claim for the return of the bonds; that the plaintiff had received permission to sue the receiver; and that there were funds now in the hands of the receiver belonging to the bank approximating $9,000, “against which fund said trust can be and in justice ought to be imprest.” The errors of law specified are in harmony with these specifications as to erroneous findings.

There are five main issues to be determined: Did the plaintiff have permission to sue the receiver? Did the bank convert the bonds? Did the plaintiff file a proper claim therefor? Was this action commenced in time? Are the funds in the hands of the receiver impressed with a trust for the payment of this claim?

[1] When the bank became insolvent, a receiver was appointed by the district court of Ward county, and later the defendant was appointed receiver under the general law for receiver of closed banks. When the plaintiff commenced his action, he applied to the district court of Ward county for permission to sue the receiver, and received permission. Under the law of this state, sections 5191b1-5191b19, of the Supp., the appointment of the receiver and the designation of the judge to have charge of matters dealing with closed banks is vested in this court. At the time of the commencement of this action, Hon. Thos. H. Pugh, district judge, had been appointed by this court and was in charge of such matters. After the commencement of the action the plaintiff applied to Judge Pugh for leave to sue the receiver, and such permission was granted; the order being made nunc pro tunc. Thus, when the case was tried, plaintiff had permission to sue the receiver. This was sufficient permission. Leave to sue is for the purpose of preventing suits which the court or its representatives might desire to pay without the expense of suit. It is not jurisdictional, and failure to obtain is an irregularity which may be cured at any stage of the proceedings. Southwestern Surety Ins. Co. v. Pacific Coast Co., 92 Wash. 654, 159 P. 788. See, also, Mulcahey et al. v. Strauss, 151 Ill. 70, 37 N. E. 702; note, 29 A. L. R. 1460; note, 74 Am. St. Rep. 286. When the court gives permission to sue, it may grant such permission as of the time of the commencement of the action. Hirshfeld v. Kalischer et al., 81 Hun, 606, 30 N. Y. S. 1027;De La Fleur v. Barney et al., 45 Misc. Rep. 515, 92 N. Y. S. 926. The receiver is not in position to object to the act of the court that appoints him. He is the servant of the court.

The proof of conversion is conclusive. The receipt for the bonds, given by the bank to the plaintiff, gives the number of each bond. The records of the bank show these bonds, together with other securities, were placed by the bank with the American National Bank of St. Paul, Minn., as collateral to debts owed by the Sawyer State Bank, and the St. Paul bank sold them. When the American National Bank collected its debt and returned the remaining collateral, it listed the returned collateral, and these bonds were not returned. Defendant makes no pretense of showing they were returned. Thus the bonds were taken illegally by the bank, converted to its own use, and have never been returned.

[2] The claim filed by the plaintiff is sufficient in form. He filed with the receiver of the bank a claim for bonds which he had left with the bank “for safe-keeping.” He did not file a claim for money due him from the bank or for a debt. He specified he had deposited bonds for safe-keeping, and he wants the bonds returned. They were his property, and were not delivered to him. The receipt given by the receiver, and the proof of claim furnished, show the plaintiff is a creditor of the bank because of these bonds left for safe-keeping, specifying the amount. Defendant now says the amount is $950, not $1,000. The claim allowed by the receiver is for $1,000 in bonds.

[3] The defense of the statute of limitations is not well taken. The claim was filed in time and allowed; the receivership is still in progress; none of the bonds has been returned. It is true the action was not commenced within six years after the proof of claim was filed; but no cause of action against the receiver accrues merely because of the filing of the claim. Defendant's claim that the action is barred by the statute of limitation is based upon the theory that the claim filed was a claim of a general creditor and not a claim for preference, and that the time has expired for the filing of a claim by a preferred creditor. Defendant says: “Plaintiff at that time, and from the time of filing the general claim, until the commencement of this action, never attempted to assert any preferred claim, and no attempt has ever been made by plaintiff to file a preferred claim. In other words, he never proposed to the Receiver of said...