State ex rel. Davis v. Exchange Bank of Ogallala
| Decision Date | 08 June 1926 |
| Docket Number | 23984 |
| Citation | 209 N.W. 249,114 Neb. 664 |
| Parties | STATE, EX REL. CLARENCE A. DAVIS, ATTORNEY GENERAL, APPELLEE, v. EXCHANGE BANK OF OGALLALA: HESTER WELPTON, INTERVENER, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Keith county: J. LEONARD TEWELL JUDGE. Reversed.
REVERSED.
Halligan Beatty & Halligan and Carl E. Herring, for appellant.
W. C Dorsey, L. O. Pfeiffer and C. M. Skiles, contra.
Heard before MORRISSEY, C.J., ROSE, DEAN, DAY, GOOD, THOMPSON and EBERLY, JJ.
Hester Welpton, plaintiff and intervener, prosecutes this appeal from a final order of the district court for Keith county, denying a claim filed in the above-entitled cause, and adjudging "that the said sums ($ 66,525) were placed in the said bank by the said intervener, Hester Welpton, under an arrangement whereby the said bank agreed to pay interest upon the said sums at a rate in excess of 5 per cent. per annum; that each and all of said sums constitute and was a loan to said bank and not a deposit, and that said Hester Welpton is not entitled to have said sums repaid to her out of the state bank guaranty fund of the state of Nebraska."
At the time of the inception of the transactions which form the basis of this controversy, the Exchange Bank of Ogallala was a state bank duly organized as such and a going concern. The intervener was its president, though not active, and was owner of 595 shares of the 750 shares of stock at $ 100 a share which formed the capital stock of this institution. Her daughter, Mabel, who was a director and stockholder, was owner of 30 shares of this capital stock, and the remaining 125 shares were owned by persons other than the parties herein named.
The Welpton Investment Company also forms a party to the transaction out of which the litigation before us in this case arises. This company was a corporation organized as such under the laws of Nebraska, having a paid up capital stock of 697 shares, each share with a face value of $ 100. Hester Welpton was the president of this company and the owner of 258 shares of its stock. Mabel Welpton was the owner of 405 shares of its stock of similar denomination, and 34 shares of stock were owned by persons who, so far as the record discloses, had no connection whatever with the Exchange Bank of Ogallala.
It would seem that the following provisions of our statute are applicable to some of the different phases which make up this transaction: Section 284, Rev. St. 1913, provides: This act was amended in 1919 so that at the time of this transaction it read as follows: Section 7982, Comp. St. 1922.
In construing that portion of the language found in section 284, Rev. St. 1913, which is identical with section 7982, Comp. St. 1922, both of which are quoted above, this court said: State v. Morehead, 99 Neb. 146, 155 N.W. 879. This language was approved in the opinion of Rose, J. (dissenting), in State v. Morehead, 100 Neb. 864, 161 N.W. 569.
Section 8029, Comp. St. 1922, provides that under conditions specified the department of trade and commerce shall communicate certain facts to the attorney general who shall thereupon cause an application to be made in the district court of the county where such corporation maintains its bank for the appointment of a receiver to take charge of the business and assets and property of the corporation and to wind up its affairs.
Section 8033, Comp. St. 1922, provides that the claims of depositors, for deposits, and claims of holders of exchange shall have priority over all other claims, except federal, state, county and municipal taxes, and, subject to such taxes, shall at the time of the closing of a bank be a first lien on all the assets of the banking corporation. There is the further provision that, in event the cash in the hands of the receiver, available for the purpose of paying such claims, be insufficient, the court, in which the receivership is pending, shall determine the amount required, which, in the manner therein specified, shall be paid upon the order of such court out of the state bank guaranty fund and applied on the claims of depositors and holders of such exchange.
Section 8035, Comp. St. 1922, provides for the subrogation of the department of trade and commerce for the use and benefit of such guaranty fund to all rights of creditors thus paid, and to participate in the assets of the bank.
The evidence in the record is undisputed as to the following facts: Prior to November 5, 1921, the Exchange Bank of Ogallala was in critical condition. The depositors had been making withdrawals to such an extent that the officers of the bank were unable to meet the same from current collections. Following an examination by the state banking department, attorney general Davis, representing the department of trade and commerce, went to Ogallala, together with another representative of that department, and called Hester Welpton and Mabel Welpton to the bank for a conference. The result of that conference was that, in reliance upon the unconditional statement of the then attorney general and the representative of the department of trade and commerce, then present, that the moneys to be raised and deposited as hereinafter set out would be and constitute a general deposit, and as such would be within the protection of the state bank guaranty law, in compliance with the recommendations and pursuant thereto, an agreement was entered into and arrangements were made by and between Hester Welpton, Mabel Welpton, and the Welpton Investment Company, a corporation, that the private property of Mabel Welpton, Hester Welpton, and the Welpton Investment Company should be pledged to secure the loan of approximately $ 40,000, with provisions for its increase to an aggregate not to exceed $ 75,000, and that the proceeds thus secured should be placed in the possession and control of Hester Welpton and deposited as a general deposit in the Exchange Bank of Ogallala in a manner to bring it within the protection of the state bank guaranty fund, to be subject to use by her for certain restricted purposes only, which were deemed to be for the benefit, not only of Hester Welpton and Mabel Welpton, but of the Welpton Investment Company also. In pursuance of such arrangement to provide the necessary funds for the purpose contemplated, a trust agreement was drawn and executed by Hester Welpton, Mabel Welpton, and the Welpton Investment Company, and notes of the face value of $ 40,000, bearing interest at 10 per cent. per annum from maturity, were made and signed in the name of Hester Welpton, and which were secured by the provisions of the trust agreement and the conveyances to be made pursuant thereto by Hester Welpton conveying to the trustee named in the agreement 2,984 acres of land of a value not stated, and by the Welpton Investment Company conveying to the same trustee 2,930 acres of land of a value not stated, and by Hester Welpton pledging as additional security 258 shares of stock of the Welpton Investment Company, and by Mabel Welpton pledging 405 shares of stock of the Welpton Investment Company. These notes and this agreement were then delivered to and received by the Attorney General Davis. The record, as an entirety, supports but one inference which is the condition of delivery that Attorney General Davis was to and did proceed to Omaha and consummate the transaction, and that the net proceeds thereof were to be deposited in the Exchange Bank of Ogallala to the credit of Hester Welpton as contemplated by the trust agreement "as a general deposit" and "not a loan."
It was also contemplated that said deposit thus made would and could be used by Hester Welpton as trustee solely for the purpose of "financially assisting the Exchange Bank of Ogallala or the Welton Investment Company, both or either, and for no other purpose." Such, indeed, were the terms of the trust deed after it had been finally corrected and executed by Hester Welpton and Mabel Welpton in their own behalf and by the Welpton Investment Company, and after the same had been formally accepted by the First Trust Company of Omaha, trustee, for the banks for whose benefit it was given. It is admitted by the record that there was actually turned over to the bank as net proceeds of this first...
To continue reading
Request your trial