Penney v. Haugan
| Decision Date | 07 June 1895 |
| Docket Number | Nos. 9290 - (126).,s. 9290 - (126). |
| Citation | 61 Minn. 279 |
| Parties | ROBERT L. PENNEY, Assignee, v. ANDREW C. HAUGAN.<SMALL><SUP>1</SUP></SMALL> |
| Court | Minnesota Supreme Court |
Henry J. Gjertsen, for appellant.
A. Ueland, Wm. P. Roberts, Rome G. Brown, and D. F. Simpson, for respondents.
The plaintiff, assignee of the American Exchange Bank under the insolvent law of 1881, brought this action to recover some $17,000 of promissory notes transferred June 24, 1893, by the insolvent bank to the defendant as collateral security for the payment of $12,415 due him as a depositor of the bank. The ground upon which the assignee sought to recover was that the transfer was made for the purpose of giving the defendant an unlawful preference over the other creditors of the bank. The city of Minneapolis intervened, claiming that the money deposited by defendant with the bank belonged to it.
The cause was tried, and by the court submitted to the jury, wholly upon the issues between the plaintiff and defendant, and without any reference to the claim of the intervenor. The court submitted to the jury three questions of fact, to wit: (1) Was the American Exchange Bank insolvent at the time the securities in question were transferred by it to defendant? (2) Were the securities given to the defendant with the intention on the part of the bank to give him a preference over other creditors of the bank? (3) Had defendant reasonable cause to believe that the bank was insolvent at the time he received the securities? The court instructed the jury that, if they answered all three of these questions in the affirmative, they must find a verdict for the plaintiff; otherwise, for the defendant. The jury answered the first and third questions in the affirmative, but answered the second in the negative. Consequently, in accordance with the instructions of the court, they found a general verdict in favor of the defendant. Thereupon the plaintiff made a motion to set aside the verdict, and for a new trial. This appeal is from an order denying that motion.
The plaintiff assigns nearly 70 alleged errors. But inasmuch as those which relate to the rights of the intervenor (which are not involved) are immaterial, and those which relate exclusively to the first or third special findings (which are in plaintiff's favor) were, at most, error without prejudice, it follows that it is only necessary to consider such assigned errors as might have affected the second special finding, or which go to the sufficiency of the evidence, in view of the other two special findings, to support the general verdict.
To correctly understand the case, it is neccessary briefly to outline the situation of the parties at the time these securities were transferred, and the circumstances under which the transfer was made. The American Exchange Bank was a small institution, with $65,000 capital, and "did its clearing" through the State Bank, with which it kept a large deposit. One Kortgaard was largely interested in the latter bank. On June 23 the State Bank, being insolvent, suspended payment, and closed its doors, owing the American Exchange Bank a deposit of over $38,000. The next morning the defendant went to the American Exchange Bank to draw out his balance of $12,415, and being informed by Nelson, the cashier, either that he was unable to pay it, or that it would be inconvenient to do so, the defendant then demanded collateral security, to which the cashier consented, and turned out to him (defendant's own selection out of the entire discounts of the bank) the notes in controversy, to the amount of $17,000.
At the date of this transaction the assets of the American Exchange Bank were nominally about $176,000, of which (using round numbers) $124,000 were discounts or bills receivable; $3,500, real estate; $2,500, furniture and fixtures; cash on hand and with correspondents in New York and Chicago, less than $7,500; tied up in the insolvent State Bank, over $38,000. Nelson, the cashier, admits that he knew that the $38,000 due from the State Bank was unavailable at the time, and of course the amount that might ultimately be realized on it was uncertain. Of the discounts, or bills receivable, about $92,000 consisted of paper of various corporations, in which Kortgaard was interested, and which Nelson says the bank had discounted mainly on the faith of Kortgaard's indorsement. He also admits that he knew that the failure of the State Bank, in which Kortgaard was so largely interested, had impaired the value of this paper; that it had no present market value, and could not have been negotiated at the time, and that whether it was ultimately collectible he had no...
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