Lowden v. Northwestern Nat. Bank & Trust Co.
| Decision Date | 17 June 1935 |
| Docket Number | No. 2789.,2789. |
| Parties | LOWDEN et al. v. NORTHWESTERN NAT. BANK & TRUST CO. OF MINNEAPOLIS, MINN. |
| Court | U.S. District Court — District of Minnesota |
O'Brien, Horn & Stringer, of St. Paul, Minn., for plaintiffs.
Cobb, Hoke, Benson, Krause & Faegre, of Minneapolis, Minn., for defendant.
The court, having duly heard and considered the evidence and arguments of counsel, makes the following findings of fact:
I. That at and during all the times herein mentioned and referred to, the Chicago, Rock Island & Pacific Railway Company, hereinafter called the Rock Island, was and still is a consolidated corporation organized under the laws of Illinois and Iowa, respectively, and was at all times a common carrier by railroad, engaged in the transportation of persons and property in interstate and intrastate commerce in the states of Illinois, Iowa, Minnesota, South Dakota, Nebraska, Kansas, Missouri, Colorado, Arkansas, Louisiana, Oklahoma, Tennessee, and New Mexico, and was not a street, suburban, or interurban electric railway, and that during the six months immediately preceding June 7, 1933, it had had, and on said date had, its principal operating office in the city of Chicago, Ill., in the Northern District of Illinois, Eastern Division.
II. That each of the plaintiffs was at all times herein stated, and still is, a resident and citizen of the state of Illinois.
III. That the defendant was at all times herein stated, and still is, a national banking association duly organized under the laws of the United States, to wit, the so-called National Banking Act, and was at all times, and is, located and engaged in doing a general banking business in Minneapolis, Hennepin county, Minn., within the District of Minnesota, and within the Fourth Division thereof, and said defendant was, and is, a citizen of the state of Minnesota.
IV. That this cause is a suit of a civil nature wherein the matter in controversy exceeds, exclusive of interest and costs, the sum and value of $3,000, and is wholly between citizens of different states.
V. That on June 7, 1933, at 9:55 o'clock a. m., Central Standard Time, said Rock Island, desiring to effect a plan of reorganization pursuant to section 77 of chapter 8 of the Acts of Congress relating to bankruptcy (11 USCA § 205), filed with the United States District Court for the Northern District of Illinois, Eastern Division, in a certain proceeding therein pending entitled "In the Matter of The Chicago, Rock Island and Pacific Railway Company, Debtor No. 53209," its petition, a copy of which is attached to the complaint herein and marked Exhibit A (petition No. 1). Upon the filing of said petition, said court did on June 7, 1933, enter in said cause its certain order, a copy of which is attached to the complaint and marked Exhibit B (order No. 1). That each of said exhibits is hereby made a part hereof by reference.
VI. That during banking hours on June 7, 1933, said Rock Island did deposit in its said checking account with said defendant the additional sum of $14,808.44, making the total amount on deposit in its said account with the defendant at the close of business on June 7, 1933, the sum of $45,362.94.
VII. That all statements and allegations contained in Exhibit A of the complaint herein were and are in fact true; that on and ever since June 7, 1933, said Rock Island was, has been, and still is unable to meet its debts as they mature.
VIII. That for many years prior to June 7, 1933, the Rock Island had maintained, and on said date did maintain, an ordinary checking account with the defendant, the funds therein being subject to withdrawal upon proper checks or orders of the Rock Island. On June 6, 1933, at the close of business on that date, there was on deposit in said account the sum of $30,554.50.
IX. That at the close of business on June 7, 1933, the amount on deposit in said checking account with the defendant was the sum of $45,362.94.
X. That of the additional deposits made in said account on June 7, 1933, items aggregating at least $6,354.22 were made before 9:55 a. m., Central Standard Time on said day.
XI. That on June 8, 1933, the Rock Island deposited in said account an additional amount of $13,378.49; on June 9, 1933, the sum of $19,124.89; and on June 10, 1933, the sum of $11,885.30; but on said June 10, 1933, the defendant bank paid a check on said account drawn by the Rock Island, and dated June 9, 1933, in the sum of $50,000. The amount, therefore, on deposit in said account in defendant bank at the close of business on June 10, 1933, was the sum of $39,751.62.
XII. That on June 12, 1933, the Rock Island deposited in said account an additional sum of $25,624.56; on June 13, 1933, the sum of $10,068.22; and on June 14, 1933, the sum of $11,035.73; but on said June 14, 1933, the defendant bank properly charged against said account the sum of $111.23, items previously deposited but not paid on presentation. The amount, therefore, on deposit in said account at the close of business on June 14, 1933, was the sum of $86,368.90.
XIII. That on June 15, 1933, the Rock Island deposited in said account the sum of $18,048.81; and on June 16, 1933, the sum of $16,238.93; but on said June 16, 1933, the defendant bank paid from said account a check, dated June 14, 1933, drawn by said Rock Island thereon in the sum of $75,000. The amount, therefore, on deposit in said account at the close of business on June 16, 1933, was the sum of $45,656.64.
XIV. That on June 17, 1933, the Rock Island deposited in said account the sum of $15,332.34, and on June 19, 1933, the sum of $16,446.18, which would have made the amount on deposit in said account at the close of business on June 19, 1933, the sum of $77,435.16, except for the debit to said account described in the next paragraph hereof.
XV. That on said June 19, 1933, the defendant deducted from said account and debited it in the sum of $45,362.94 (the amount on deposit in said account at the close of business on June 7, 1933), making the amount on deposit in said account, according to the books of said bank at the close of business on June 19, 1933, the sum of $32,072.22. At a later date, however, on June 23, 1933, the defendant bank restored the sum of $5,611.32 of the amount so deducted and debited on June 19, 1933, by crediting said amount to said account, making the net deduction and debit therefrom the sum of $39,751.62 (the amount on deposit in said account at the close of business on June 10, 1933).
XVI. That below is a tabular statement showing the state of said account between June 6, 1933, and June 19, 1933:
Balance at
Checks and Close of
1933 Charges Deposits Business
June 6 $30,554.50
June 7 $14,808.44 45,362.94
June 8 13,378.49
June 9 19,124.89
June 10 $50,000.00 11,885.30 39,751.62
June 12 25,624.56
June 13 10,068.22
June 14 111.23 11,035.73 86,368.90
June 15 18,048.81
June 16 75,000.00 16,238.93 45,656.64
June 17 15,332.34
June 19 16,446.18 77,435.16
That from this balance of June 19, 1933, the defendant deducted $45,362.94, of which it restored on June 23, 1933, $5,611.32, making the net deduction $39,751.62.
XVII. That for some time prior to June 7, 1933, the defendant had been, and on that date was, the owner of $100,000 par value unregistered first and refunding gold bonds of the Rock Island. That said bonds were all payable to bearer, were dated April 1, 1904, and were due April 1, 1934. That they bore interest at the rate of 4 per cent. per annum, payable April 1st and October 1st of each year. That such interest was evidenced by coupons attached to the principal bond. That all interest on said issue of bonds had been paid up to and including April 1, 1933, including the bonds owned by defendant. That the form of each of said bonds was that indicated on pages 3 to 5, inclusive, of the copy of the trust deed attached to plaintiffs' reply as Exhibit A, and said bonds were all secured by a trust deed or mortgage, a copy of which is attached to said plaintiffs' reply as Exhibit A. That the defendant, when it acquired said bonds, did not purchase or acquire them from the Rock Island, but bought them on the open market, $75,000 from Guaranty Company of New York, and $25,000 from National City Company of New York, the said purchases being made on or about the following dates and at the following rates per hundred dollars of par value: November 18, 1927, $25,000 at 96; July 19, 1928, $50,000 at 94¾ October 8, 1930, $25,000 at 99 3/8 .
That said issue of bonds was an authorized issue of $163,000,000, of which on June 7, 1933, in excess of $104,000,000 was issued and in the hands of the public. That while certain of said issue of bonds were registered, the defendant at no time owned any such registered bonds.
XVIII. That on June 7, 1933, Carl Nyquist, vice president, secretary and treasurer of the Rock Island, sent by United States mail from New York, N. Y., to defendant a letter, a copy of which is attached to the stipulation of facts herein as Exhibit 5, and made a part hereof by reference, which letter was received by defendant on June 9, 1933, and on June 10, 1933, said Nyquist mailed by United States mail from Chicago, Ill., a letter to defendant, a copy of which is attached to said stipulation as Exhibit 6, and made a part hereof by reference, with which was inclosed a copy of the court's said order of June 7, 1933, which letter and copy of order were received by the defendant on June 12, 1933. That said letter of June 7, 1933, did not come to the notice or attention of any executive or other...
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