Lundquist v. First National Bank, 7894

• Decision Date: 23 February 1937
• Docket Number: 7894
• Citation: 65 S.D. 95,271 N.W. 664
• Parties: C. F. LUNDQUIST, Respondent, v. FIRST NATIONAL BANK OF BERESFORD, et al, Appellants.
• Court: South Dakota Supreme Court

65 S.D. 95

271 N.W. 664

C. F. LUNDQUIST, Respondent, v. FIRST NATIONAL BANK OF BERESFORD, et al,

Appellants.

South Dakota Supreme Court

Appeal from Circuit Court, Union County, SD

Hon. Lucius J. Wall, Judge.

#7894—Affirmed.

Alan Bogue, Parker, SD

Thomas McInerny, Elk Point, SD

Attorneys for Appellants.

Henry C. Mundt, Sioux Falls, SD

Norman Jaquith, Vermillion, SD

Attorneys for Respondent.

Opinion filed Feb 23, 1937

POLLEY, J.

Plaintiff, Lundquist, brought this action to recover damages in the sum of $2,000 claimed to have been caused by the fraud and deceit, and the concealment of such fraud and deceit, by the defendants, First National Bank of Beresford, J. J. DeLay, president, of said bank, and A. A. Soderstrom, cashier. On or about the 6th day of March, 1922, H. H. Soderstrom made a loan of $3,500 from plaintiff, Lundquist, and as security for such loan said Soderstrom gave to plaintiff a mortgage for the amount of such loan on 40 acres of land in Lincoln county. Said note and mortgage were due and payable on the 16th day of June, 1927. Plaintiff and the said H. H. Soderstrom were not personally acquainted, and the above transaction was negotiated wholly by the defendants DeLay and A. A. Soderstrom. In February or March, 1924, the plaintiff was approached by the defendants A. A. Soderstrom and DeLay with the request that a second mortgage on said 40 acres of land be substituted for the first mortgage he already had. This proposition was flatly rejected. Shortly thereafter defendants again approached plaintiff with the proposition that he accept a payment of $500 on the note and a new note for the balance of $3,000. Plaintiff agreed to accept such payment and have the same apply on the $3,500 note, and leave the note so reduced and the mortgage stand as they were; but defendants represented to plaintiff that the note was about due anyway and that it would be better to make out a new note and mortgage; that the new mortgage would be a first mortgage on the 40 acres of land; that they (the defendants) would see to it that nothing would come between the new mortgage for $3,000 and the one he already had. Plaintiff, relying on the representation so made by said defendants, consented to this latter proposition. Defendants then requested that plaintiff give them the abstract of the title to said 40 acres of land, in order that they have it brought down to date, and plaintiff gave them such abstract. Plaintiff then turned over to defendants the note and satisfaction of his mortgage and defendants paid him $500 in cash and also gave him a new note for $3,000 and a new mortgage signed by H. H. Soderstrom. Defendants represented to plaintiff, and the mortgage so stated on its face, and plaintiff ‘believed, that this mortgage constituted a first lien on said land. H. H. Soderstrom paid the interest on said $3,000 note as it became die for several years.

It afterwards developed that on the 21st day of February, 1924, shortly prior to the time defendants requested plaintiff to accept the new note and mortgage, the said H. H. Soderstrom had executed a mortgage on said 40 acres of land together with another tract of land to the Federal Land Bank of Omaha to secure a loan of $19,500. This mortgage had been recorded on the 25th day of February, 1924, so that it became a first lien on the land the instant the satisfaction of plaintiff’s $3,500 mortgage was recorded; the result of these transactions was, that instead of having a first mortgage lien on said 40 acres of land for $3,000 as said defendants represented to him that he had, he found that his mortgage was subsequent to a mortgage for $19,500. Of this amount a considerable sum of money was paid to the defendant bank and applied on an indebtedness owing to the bank by said H. H. Soderstrom, so that said bank was a direct beneficiary of the fraudulent transaction by its officers as above set out. Later on H. H. Soderstrom paid plaintiff $1,000, which was applied on said $3,000 note.

When the defendants received the abstract of the title to the 40 acre tract of land described in plaintiff’s mortgage, they sent it to an abstracter in Canton and had it brought down to date. Shortly thereafter plaintiff asked defendants for the abstract, but was told by them that the abstracter was busy and had not yet returned the abstract. He called for it again, but was told that it had been mislaid some place in the bank and they couldn’t: find it just then. Upon a later request defendants told plaintiff that the abstract was lost. What they really did with the abstract was to have it brought down to date and then turned it over to the Federal Land Bank of Omaha and plaintiff never did see it again, and it was because of this fact that the plaintiff did not know until a long time thereafter that his mortgage was subsequent to and inferior to the $19,500 mortgage that had been given to the Federal Land Bank at Omaha. Soderstrom never paid the $19,500 mortgage, and the Federal Land Bank foreclosed the same and sold all of the mortgaged property. It is shown by the evidence that the defendants knew that the $3,000 note and mortgage given to secure the same were absolutely worthless at the time they were executed and delivered to the plaintiff.

Defendants demurred to the complaint, but the demurrer was overruled and defendants answered. For answer defendants interposed a general denial, and pleaded the six-year statute of limitations.

It is true that the transaction out of which the controversy arose took place more than six years before the commencement of the action, but plaintiff claims that this action is governed by the provisions of subdivision 6 of section 2298, R. C. 1919.

Verdict and judgment were for plaintiff, and defendants appeal.

Without further comment, we hold that the complaint states a cause of action, and that the evidence is sufficient to support the verdict. But defendants contend that the facts do not bring the case within...