Olesen v. Retzlaff

• Decision Date: 18 September 1931
• Docket Number: No. 28340.,28340.
• Citation: 184 Minn. 624,238 N.W. 12
• Parties: OLESEN v. RETZLAFF et al.<SMALL><SUP>*</SUP></SMALL>
• Court: Minnesota Supreme Court

238 N.W. 12

184 Minn. 624

OLESEN v. RETZLAFF et al.^*

No. 28340.

Supreme Court of Minnesota.

September 18, 1931.

Appeal from District Court, Redwood County; A. B. Gislason, Judge.

Action by Paul Olesen against F. H. Retzlaff and others. From an order overruling a demurrer to the amended complaint, defendants appeal.

Affirmed.

Somsen, Dempsey & Flor, of New Ulm, for appellants.

Jesse A. Schunk, of New York Mills, for respondent.

DIBELL, J.

Action against the defendants who were directors of the State Bank of Lamberton. There are six causes of action. The first five are to recover money deposited by the plaintiff in the bank at various times when, so it is alleged, the bank was unsafe and insolvent as the defendants knew or had good reason to know. The sixth is a common count for money had and received. There was an original and an amended complaint. The defendants demurred to the amended complaint. The demurrer was overruled and the defendants appeal.

1. The action was commenced March 7, 1930. The bank closed March 11, 1924, and was taken in charge by the commissioner of banks for liquidation. The amended complaint was served April 10, 1930. The time elapsing between the closing of the bank and the commencement of the action was four days less than six years; between the closing of the bank and the amended complaint was six years and thirty days. The deposits were made at various times from June 1, 1923, to March 7, 1924. Most of them were made after January 1, 1924. The last one was made on March 7, 1924.

The question is on the bar of the statute of limitations; and that question involves the nature of the causes of action pleaded.

The parties emphasize March 7, 1930, when the action was commenced, March 11, 1924, when the bank closed, and April 10, 1930, when the complaint was amended. The cause of action accrued on the various dates when the deposits were made from June 1, 1923, to March 7, 1924. See Swan v. Burnham, 70 N. H. 580, 49 A. 93; Bassett v. St. Albans Hotel Co., 47 Vt. 313; Long v. Schutz, 26 Ariz. 432, 226 P. 529; Thomas v. Richter, 88 Wash. 451, 153 P. 333; Wells v. Black, 117 Cal. 157, 48 P. 1090, 37 L. R. A. 619, 59 Am. St. Rep. 162; Willius v. Albrecht, 100 Minn. 436, 111 N. W. 387, 112 N. W. 862. Only one, the fifth, accrued as late as March 7, 1924, and within the period of the six-year statute. This date is of controlling importance only as to the fifth cause.

The first five causes of action alleged in the original complaint, and realleged in the amended complaint with additions, are based upon Gen. St. 1923 (2 Mason, 1927), § 10407, which makes it an offense in directors to receive deposits in an unsafe or insolvent bank knowing or having good reason to know its condition. The statute does not assume to impose civil liability upon the directors nor to give the depositors a cause of action against them. The liability arises from the application of the general principle that when a statute is enacted for the protection of a class one of the class who suffers damage from its violation may recover of the violator. We applied the doctrine when this statute was involved in Baxter v. Coughlin, 70 Minn. 1, 72 N. W. 797; Johnson v. Larson, 177 Minn. 60, 224 N. W. 466; and Johnson v. Floan, 183 Minn. 461, 237 N. W. 23.

2. The statute of limitations, upon which the plaintiff relies, is Gen. St. 1923 (2 Mason, 1927), § 9191(6), which dates the accrual of actions for relief on the ground of fraud from the time of the discovery of the facts constituting the fraud:

"The following actions shall be commenced within six years: * * *

"6. For relief on the ground of fraud, in which case the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud."

The plaintiff claims that his cause of action under section 10407 is for relief on the ground of fraud within section 9191(6). If not so the limitation is six years within the general six-year provision of that statute. He alleges that he did not discover the fraud until within six years prior to the institution of the action; and therefore he claims that the lapse of time is not a bar.

To make a cause of action it was not necessary to allege actual fraud or fraud which conceivably might be actionable at common law. It was necessary to allege and prove the facts made essential by the statute and damages resulting. Johnson v. Floan, 183 Minn. 461, 237 N. W. 23, and cases cited. Usually we have referred to liability as resting upon the statute and nothing more. A violation of it followed by damages justifies a recovery. Occasionally when making an unnecessary explanation, or unnecessarily suggesting the basis of the statute, we have referred the general ground of liability to fraud or to a fraudulent representation. In some of the cases we find negligence or the violation of a trust relationship used by way of explanation. A violation of the statute gives the right of action. Nothing more is necessary if damage accrues. It may be said that the purpose of the statute is to make directors in fact direct the bank and to penalize them when they do not; and thus to protect a depositor. Simple disobedience to the statute brings liability without the existence of other wrongdoing. The same rule applies to the violation of a statute when the right enforced is suggestive of negligence or a tort of the defendant. Thus in Dohm v. R. N. Cardozo & Brother, 165 Minn. 193, 206 N. W. 377, 378, the court said: "We must not lose sight of the fact that in certain cases the violation of an imposed statutory duty results in liability, irrespective of such conduct as would constitute negligence in the absence of a statute. * * * Liability in such cases rests upon the fact that one for whose protection the law was enacted is injured as the result of its violation. Some of the decisions refer to this liability as negligence per se. Upon any theory it is recognized as a delinquency."

The court in this case cites Schaar v. Conforth, 128 Minn. 460, 151 N. W. 275; Farrell v. G. O. Miller Co., 147 Minn. 52, 179 N. W. 566; and Frederick v. McRae, 157 Minn. 366, 196 N. W. 270. They illustrate the principle.

Section 10407 imposes a harsh liability upon bank directors. There is no such action as this at common law. A banker, if the statute is understood as it reads, must determine, when deposits are offered at his counter, between the last one which he may take and the first one which he must refuse. Courts enforce the statute as it is written; but there is no policy which suggests that the statute of limitations, section 9191(6), be construed unnecessarily in favor of a depositor so as to permit an action to be brought as an action for relief on the ground of fraud, when there is no actual fraud, but only an offended state policy; and the ample term of six years be extended to the end of six years beyond discovery. See 37 C. J. p 792, § 133; Id. p. 937, § 306 et seq. We hold that an action which is based alone on section 10407 is not an action to recover on the ground of fraud within section 9191(6).

3. The plaintiff's complaint goes further than an action under section 10407. He claims, as to the first five causes of action, that there was actual fraud in the defendants in falsely and with intent to deceive representing that the bank was solvent and had sufficient assets to pay its debts. That there may be actual and actionable fraud justifying a recovery, apart from the statute, and within the meaning of section 9191(6), is without much doubt. Hinson v. Drummond, 98 Fla. 502, 123 So. 913; Blumer v. Ulmer (Miss.) 44 So. 161; Tate v. Bates, 118 N. C. 287, 24 S. E. 482, 54 Am. St. Rep. 719; Solomon v. Bates, 118 N. C. 311, 24 S. E. 478, 54 Am. St. Rep. 725; Minton v. Stahlman, 96 Tenn. 98, 34 S. W. 222. Cases involving the point are noted in 3 L. R. A. (N. S.) 438; 3 R. C. L. p. 469, §§ 99-103; Am. Dig. Bk. & Bank. § 82(5).

The language of the amended complaint is as follows:

"7. That at all times between the 31st day of May, 1923, and the 11th day of March, 1924 the defendants represented to the public and to this plaintiff that the said State Bank of Lamberton was a solvent institution and had sufficient assets with which to pay its creditors; that the defendants made these representations, knowing them to be false and having good reasons to know them to be false and with intent to deceive this plaintiff and others; that plaintiff relied upon the representations so made by the defendants and believing said representations to be true, was thereby induced to make the aforesaid deposit * * * in the said State Bank of Lamberton.

"8. That plaintiff did not discover the fraud practiced upon him as hereinbefore alleged until within six years before the commencement of this action, and believed and relied upon the representations made by the defendants as aforesaid to and including the date of the closing of the aforesaid bank."

We take these allegations at their face. They go further than charging a violation of section 10407. The trial court expressed its view as follows "Here the complaint charges knowledge of insolvency and receiving of deposits in an insolvent bank. It, in effect, charges a deliberate secret and intentional injury to plaintiff in his property rights. * * * Where there is an...