State ex rel. Miller v. Buttzville State Bank

• Decision Date: 15 November 1913
• Citation: State ex rel. Miller v. Buttzville State Bank, 26 N.D. 196, 144 N.W. 105 (N.D. 1913)
• Parties: STATE ex rel. MILLER, Atty. Gen., v. BUTTZVILLE STATE BANK et al.
• Court: North Dakota Supreme Court

26 N.D. 196

144 N.W. 105

STATE ex rel.MILLER, Atty. Gen.,

v.BUTTZVILLE STATE BANK et al.

Supreme Court of North Dakota.

Nov. 15, 1913.

Syllabus by the Court.

A state bank failed in July, 1910, having $1,207.80 of money belonging to the state of North Dakota upon deposit therein. Upon that date section 7387, R. C. 1905, gave the state a preference right in making distribution of the assets of said bank, but this preference was taken away by chapter 101, S. L. 1911, which, however, only became effective July 1, 1911. Under these facts, held:

That the repeal of the preference right in 1911 did not operate to defeat the claim of the state which had accrued at the time of the failure of the bank in 1910, and that the Dakota Trust Company, which had been surety upon the bond of the bank and had paid the state the amount of the deposit, was subrogated to all the rights of the state, and should be paid under said chapter 7387, R. C. 1905.

Appeal from District Court, Ransom County; Allen, Judge.

Action by the State, on the relation of Andrew Miller, Attorney General, etc., against the Buttzville State Bank, a corporation, and the Dakota Trust Company claimed as a preferred creditor. From an order disallowing the preference, the trust company appeals. Reversed.

Watson & Young, of Fargo, for appellant.

BURKE, J.

The Buttzville State Bank was incorporated in the year 1909 under the state law; on the 7th day of February, 1910, it applied to the board of auditors of the state of North Dakota to be named as a depositary of state funds, and the Dakota Trust Company became surety upon its bond for the faithul performance of its duties as such. Thereafter the state treasurer deposited various sums in the said bank in accordance with the state law upon that subject, and on the 18th of July, 1910, had the sum of $1,207.80 in said depositary, when the bank closed its doors and suspended payment. The assets of the bank at that time consisted of $2,802.86 in cash, and some bills discount, furniture, and other items, amounting in all to about $8,000. Its liabilities, including the amount due to the state of North Dakota, amounted to $8,146.89. At the time the Dakota Trust Company became surety upon the bond of the said bank for its faithful performance of its duties as a state depositary, section 7387, R. C. 1905, gave the state the preference in making distribution of dividends of defunct banks, said section reading as follows:

“If in any such action it shall be adjudged that a corporation has forfeited its corporate rights, privileges and franchises, judgment shall be rendered that such corporation be excluded from such corporate rights, privileges and franchises and be dissolved; and thereupon the affairs of said corporation shall be wound up by and under the direction of a receiver to be appointed by the court and its property sold and converted into money; and the proceeds after paying the costs and expenses shall be distributed in the following order:

(1) For the payment of taxes and debts due the United States, the state of North Dakota and any county, town or village therein.

(2) For the payment of the legal and equitable liens upon the property of such corporation in the order of their priority.

(3) The wages of laborers and employés accruing within six months previous to the commencement of the action.

(4) For the payment of the other just debts of the corporation.

(5) The residue of such moneys, if any, shall be distributed among the stockholders thereof.”

However, this said section was expressly repealed by chapter 101, S. L. 1911, which became effective July 1, 1911, and after said date the state enjoyed no preference right whatever, the said section being at that time re-enacted with the exception that the first subdivision was amended to read merely: “(1) For payment of taxes.” The action for a receiver was commenced August 5, 1910, and suit was shortly thereafter begun against the Dakota Trust Company as surety upon the bond for the recovery of the amount of money due the state from such depositary, and such sums recovered from said trust company in the said action.

Under these facts the Dakota Trust Company served upon the receiver a notice claiming to be a preferred creditor, and asking that it be paid in preference to and before the payment of any dividend whatever to the general creditors of the said insolvent bank. The matter came up for hearing before the district court of Ransom county on the 12th day of April, 1912, in the absence of the attorneys for the said trust company, and at that time an order was entered by the said cour...