State ex rel. Sorensen v. State Bank of Belvidere

• Court: Nebraska Supreme Court
• Writing for the Court: DEAN, J.
• Citation: State ex rel. Sorensen v. State Bank of Belvidere, 122 Neb. 797, 241 N.W. 755 (Neb. 1932)
• Decision Date: 18 March 1932
• Docket Number: 28150
• Parties: STATE, EX REL. C. A. SORENSEN, ATTORNEY GENERAL, v. STATE BANK OF BELVIDERE, APPELLANT: JOE M. BURBACH ET AL., APPELLEES

241 N.W. 755

122 Neb. 797

STATE, EX REL. C. A. SORENSEN, ATTORNEY GENERAL, v. STATE BANK OF BELVIDERE, APPELLANT:

JOE M. BURBACH ET AL., APPELLEES

No. 28150

Supreme Court of Nebraska

March 18, 1932

APPEAL from the district court for Thayer county: ROBERT M PROUDFIT, JUDGE. Reversed.

REVERSED.

Syllabus by the Court.

1. The purchaser of a bank draft is a purchaser of a bank's credit and a holder of exchange, and, as such, is entitled to share pro rata with depositors and other holders of exchange in the assets of a failed state bank and in the depositors' final settlement fund, but, in the absence of special circumstances, is not entitled to have his claim allowed as a trust fund.

2. The former rule, that a bank check or a draft is an assignment pro tanto of the fund in the drawee bank, having been changed by statute (Comp. St. 1929, § 62-1606) the decisions in Fonner v. Smith, 31 Neb. 107, 47 N.W. 632, 11 L.R.A 528, 28 Am.St.Rep. 510,Columbia Nat. Bank v. German Nat. Bank, 56 Neb. 803, 77 N.W. 346, and Falls City State Bank v. Wehrli, 68 Neb. 75, 93 N.W. 994, are no longer applicable.

Appeal from District Court, Thayer County; Proudfit, Judge.

Proceedings by the State, on the relation of C. A. Sorensen, Attorney General, against the State Bank of Belvidere, wherein a receiver was appointed for the defendant bank, and Joe M. Burbach and another intervened. From a judgment in favor of the interveners, the receiver appeals.

Reversed.

F. C. Radke, Barlow Nye and W. A. Crossland, for appellant.

W. C. Weiss, contra.

Heard before GOSS, C. J., ROSE, DEAN, GOOD, EBERLY, DAY and PAINE, JJ.

OPINION

DEAN, J.

The State Bank of Belvidere was taken over by the department of trade and commerce on or about September 21, 1929, and thereafter, namely, on April 12, following, the bank was declared insolvent and a receiver was appointed by the district court for Thayer county to take charge of its affairs. And on July 30 of the same year, the court allowed certain claims of Joe M. Burbach and Joe Wiedel as preferred claims that were entitled to payment from the assets of the failed bank and the depositors' final settlement fund on the same basis as that of claims of depositors and holders of exchange therein. The interveners objected to the classification so made, and, upon trial, the court sustained their contention and decreed that the claims of the interveners should be allowed as trust funds payable in full and prior to the claims of depositors and holders of exchange. The receiver has appealed.

In respect of Burbach's claim, the parties stipulated that he was indebted to the Northwestern Mutual Life Insurance Company of Milwaukee, and that, on or about September 17, 1929, Burbach purchased a draft for $ 504.20 from the Belvidere bank, payable to the insurance company. The draft was drawn on the First National Bank of St. Joseph, Missouri, and was paid for by a check in favor of the cashier of the Belvidere bank. In due course the draft was returned to the St. Joseph bank, but payment thereon was refused on the ground that the Belvidere bank was then in the hands of a receiver.

It was also stipulated that Wiedel purchased a draft from the Belvidere bank, on or about September 21, 1929, in the sum of $ 163, payable to the Securities Investment Corporation of Omaha, and also drawn on the St. Joseph bank, the draft being paid for by Wiedel in cash or its equivalent. In due course this draft was presented to the St. Joseph bank for payment, after the Belvidere bank came into the hands of a receiver, but payment thereon was refused. Subsequently the draft was returned and Wiedel filed his claim against the Belvidere bank.

The parties also stipulated that neither Burbach nor Wiedel was the owner of an account in the Belvidere bank and that the bank was not indebted to either of them except in the amounts of the drafts in question here. And it was also stipulated that, at the time the bank was closed, it had cash on hand and credit with its correspondent banks in a sum greater than the amounts of the drafts.

The receiver contends that the interveners are merely holders of exchange and purchasers of the bank's credit. We agree with counsel. We have held that, in order to create a deposit which will be protected by the guaranty law, it is essential that money or the equivalent of money shall, in intention and in effect, be placed in the bank or at its disposal under circumstances which are in accord with the specific limitations of the bank guaranty law. State v. Farmers State Bank, 111 Neb. 117, 196 N.W. 908. And we have held that a bank draft, drawn upon another bank ...