State v. American State Bank

• Decision Date: 28 March 1922
• Docket Number: 22183
• Citation: State v. American State Bank, 108 Neb. 111, 187 N. W. 762 (Neb. 1922)
• Parties: STATE OF NEBRASKA v. AMERICAN STATE BANK. JULIA A. STRAUSS ET AL., APPELLEES, v. A. F. ACKERMAN, RECEIVER, APPELLANT
• Court: Nebraska Supreme Court

187 N.W. 762

108 Neb. 111

STATE OF NEBRASKA v. AMERICAN STATE BANK. JULIA A. STRAUSS ET AL., APPELLEES, v. A. F. ACKERMAN, RECEIVER, APPELLANT

No. 22183

Supreme Court of Nebraska

March 28, 1922

APPEAL from the district court for Hamilton county: GEORGE F CORCORAN, JUDGE.Affirmed.

AFFIRMED.

Charles E. Matson, for appellant.

Hainer Craft & Edgerton, contra.

Heard before MORRISSEY, C. J., ALDRICH and ROSE, JJ., HOBART and PAINE, District Judges.

OPINION

ROSE, J.

This is a controversy between A. F. Ackerman, receiver of the American State Bank of Aurora, an insolvent corporation, and Julia A. Strauss and her four children, John L. Strauss, Anna R. Livingston, Mamie E. Kingston and Alvin A. Straussclaimants.

Through the agency of the Wentz Companyclaimants in 1919 sold 200 acres of land near Aurora, Nebraska, to Roscoe C. Thompson, James Winters and Frank Hogg for $ 40,000.The purchasers paid in cash $ 28,000 and the balance of $ 12,000 was paid by two notes, one for $ 8,000 and the other for $ 4,000, secured by mortgage on 120 acres of the land sold.Of the proceeds of the sale Charles W. Wentz, managing officer of both the bank and the Wentz Company, received for claimants, directly from the purchasers, $ 13,000 in cash and the notes and the mortgage for $ 12,000.Claimants had deeded their land to the purchasers, but they have never received the $ 25,000 thus paid to Wentz, who took the notes in his own name as payee.Claimants have, however, traced their funds and their securities through Wentz, the Wentz Company and the bank into the hands of the receiver.They charge the bank with Wentz's knowledge of their ownership and with the obligation to restore to them their property.

In a proceeding by the state of Nebraska to wind up the affairs of the bank, claimants, by formal pleas, presented for allowance the following items: A claim that they are the owners of the two notes described, one for $ 8,000 and the other for $ 4,000, aggregating $ 12,000, payable on their face to Charles W. Wentz and secured by mortgage on 120 acres of land sold by claimants to Roscoe C. Thompson, the knowledge of Wentz being imputed to the bank and the latter being obliged to restore the property of claimants to them; a claim for the cancelation and the surrender of two promissory notes, one for $ 5,000 and the other for $ 3,750, aggregating $ 8,750, payable to the bank, executed by claimantsJulia A. Strauss and Mamie E. Kingston, respectively, payment having been made according to agreement out of the proceeds which Wentz received for claimants directly from the purchasers of the land sold by claimants, $ 25,000 of the same, in money and securities, having been deposited in the bank to the credit of the Wentz Company, the bank knowing the rights of claimants; a claim for the balance of the purchase money to the extent of $ 4,250, being part of what Wentz received and deposited in the bank to the credit of the Wentz Company, claimants asserting the rights of depositors.

The receiver pleaded that the notes were assets of the bank and that it owed claimants nothing as depositors or creditors.

The trial court found the issues in favor of claimants and directed the receiver to turn over to them the purchase money notes and securities in controversy; to cancel and surrender as paid the notes executed by claimantsJulia A. Strauss and Mamie E. Kingston, respectively; to allow and pay as a deposit the claim for $ 4,250.From this judgment the receiver has appealed.

Questions of fact, of agency and of imputed knowledge are presented by the appeal and require a more detailed statement of the case.

The American State Bank commenced business as a commercial enterprise March 8, 1918.An officer of the state took charge of it in an insolvent condition March 17, 1920, and was succeeded by Ackerman, receiver, May 14, 1920.The bank has not since been open for the transaction of a general banking business.

The Wentz company was a corporation dealing in real estate, farm loans, mortgages and insurance.

Charles W. Wentz was vice-president and managing officer of the bank.It had a president in name only.It had a cashier, but he recognized Wentz as the superior officer and deferred to him.In some capacity Wentz had exclusive control and management of the Wentz Company.The business of both corporations was generally transacted in the same building with Wentz the controlling spirit in both enterprises.The transactions of the corporations were more or less intermingled.The bookkeepers in the bank kept the books for the Wentz Company.The two corporations occupied the same room and used the same counter, the same vault and the same safe.Each paid half the office rent.The officers of the Wentz Company were officers of the bank.There was no public sign to identify the corporate hand that transferred paper in possession of the Wentz Company or disbursed funds in the bank.The Wentz Company had kept a checking account in the bank, but it was overdrawn more than $ 20,000 when the crash came.

Is there error in the order requiring the receiver to transfer to claimants their purchase money notes?He takes the position that this ruling is without support in the evidence and that it is contrary to law.He argues that in all the transactions relating to the sale, to the drawing of the papers, to the collection of the purchase price, and to the handling of the funds, Charles W. Wentz and the Wentz Company were the agents of claimants and not of the bank; that in these respects Wentz did not act in the interest of the bank; that he procured the funds in controversy as agents of claimants while absent from the bank; that his knowledge was not imputable to it; that the bank or the state department of trade and commerce or the receiver became an innocent holder for value before maturity and that the purchase money notes went into the hands of the receiver by mesne assignments as assets of the bank.These propositions are skillfully argued, but they cannot be accepted as determining factors in the case.

The purchase money notes were the property of claimants.Others could hold, use or transfer them as trustees only unless protected by the negotiable instruments law as innocent purchasers or holders for value before maturity.The notes were traced into the hands of the receiver in the following manner: When the account of the Wentz Company was heavily overdrawn and the bank itself was in danger of going to the w...