State v. Holdrege State Bank

• Decision Date: 01 October 1923
• Docket Number: 23443
• Citation: State v. Holdrege State Bank, 110 Neb. 814, 195 N.W. 120 (Neb. 1923)
• Parties: STATE OF NEBRASKA, APPELLANT, v. HOLDREGE STATE BANK ET AL., APPELLEES
• Court: Nebraska Supreme Court

195 N.W. 120

110 Neb. 814

STATE OF NEBRASKA, APPELLANT, v. HOLDREGE STATE BANK ET AL., APPELLEES

No. 23443

Supreme Court of Nebraska

October 1, 1923

APPEAL from the district court for Phelps county: WILLIAM A DILWORTH, JUDGE. Reversed.

REVERSED.

O. S Spillman and George W. Ayres, for appellant.

Stout Rose, Wells & Martin, Bernard McNeny and G. Norberg, contra.

Stiner & Boslaugh, amici curiae.

Heard before LETTON, DEAN, DAY and GOOD, JJ.

OPINION

GOOD, J.

The state of Nebraska has appealed from orders of the district court, allowing a claim for $ 187,815.80 against the receiver of the Holdrege State Bank and in favor of the Citizens State Bank of Holdrege, and directing the payment of the claim from the depositors' guaranty fund. For convenience, the Citizens State Bank will hereafter be referred to as the claimant and the Holdrege State Bank simply as the Holdrege bank.

At the outset, it is contended by the claimant that the appeal is from a judgment denying an application to vacate an order or judgment rendered at a previous term of the district court, and that the question of the merits of claimant's right to the allowance of its claim and the payment thereof from the guaranty fund is not before the court. On December 18, 1922, the claim was presented to and allowed by the district court without objection. In February, 1923, the state filed an application to set aside the orders and for permission to make defense to the allowance and payment of the claim from the depositors' guaranty fund. On the 13th of February, 1923, the court entered an order directing that on the 5th of March, 1923, a hearing be had on this application, and directing that the orders entered on December 18, 1922, be suspended until the further action of the court. It may here be observed that the record does not disclose when the term of court, at which the claim was allowed, adjourned, and whether the subsequent proceedings were at the same or at a subsequent term of court. Issues were joined by the state, the claimant and others, as interveners, upon the merits of the claim and a hearing was begun on March 5 and concluded on March 16, 1923. On the hearing there seems to have been some doubt in the minds of the counsel as to whether the orders entered December 18 had been vacated, and whether the hearing was upon the merits of the claim. Counsel for the state made inquiry of the court and the court made this statement:

"This proceeding will go into the merits of the proposition, just as though it was an application for the order which was first made here. This is in order that all concerned will have a full and complete investigation of the matter. * * * So far as any evidence, except on the merits of the case as to whether there was a claim or whether there was not, that is what is before the court now, and I think we will save time by so considering it in that way. We will go right to the merits of the case, as to whether the order should have been made or whether it should not."

Upon further inquiry by counsel as to whether this was a hearing upon the claim filed by the claimant, and as to whether or not it should be allowed, as if no order had been made, the court answered: "Yes; that is the position of the court." The hearing proceeded and evidence was taken upon the merits, and at the close of the hearing the court rendered a decision upon the merits of the case and entered it as of that date. The claimant now takes the position that the orders of December 18 were never vacated or set aside, and that the question as to the merits of the allowance of the claim is not before the court. It is true that the order entered suspended and did not technically vacate the orders made on December 18, 1922, but it was treated by the court and by counsel for the respective parties as though the first orders had been vacated, and the hearing was upon the merits of the claim. Under these circumstances, this court will disregard any technical question as to procedure and treat the matter as did the trial court and determine it upon its merits.

The question for determination is whether the claimant, having paid the depositors of the Holdrege bank the amount of their deposits, pursuant to an agreement between the two banks, is entitled to be subrogated to the rights of the depositors whose claims were paid. There is practically no conflict in the evidence. The record shows that on the 23d day of May, 1921, the Holdrege bank was insolvent, and that its affairs would have been placed in the hands of a receiver unless some satisfactory arrangement had been made for the payment of its depositors. On that date the Holdrege bank entered into a written contract with the claimant, by the terms of which the latter guaranteed and agreed to pay the claims of depositors of the Holdrege bank, amounting in the aggregate to $ 338,695.87. The Holdrege bank, as a part of the agreement, transferred to the claimant a part of its bills payable, amounting to $ 137,162.40, and also executed a promissory note to the claimant for $ 209,150.38, and this note was secured by the pledge of all of its other assets, including the remaining bills receivable, its furniture, fixtures, banking house and other real estate, and all of its assets of every name and nature. The contract provided that the claimant should take over and guarantee the payment of the depositors of the Holdrege bank in the amount due such depositors at the close of business on May 22, 1921, in the amount above stated. The contract further provided:

"Both parties hereto, recognizing that under section 53, article 16, title V, chapter 190, of the Laws of 1919, that the depositors of the Holdrege State Bank have a lien upon all its assets for the payment of such deposits, it is the declared intention of both parties hereto that the Citizens State Bank shall become subrogated to all the rights of deposits taken over and guaranteed, and in consideration of the guaranty and payment by the Citizens State Bank of all the depositors of the Holdrege State Bank in the amount set forth above, the Holdrege State Bank hereby assigns, delivers, and sets over," etc.

The contract contained this further provision: "It is the general purpose of this contract for the Holdrege State Bank to pledge and assign all of its assets of every kind and nature to the Citizens State Bank, to protect the Citizens State Bank in the guaranty of the deposits of the Holdrege State Bank. * * * After the Citizens State Bank shall have collected from the total assets of the Holdrege State Bank an amount equal to the sum of $ 359,195.87, being the amount of the deposits and the bills payable, which are assumed by the Citizens State Bank, with interest from May 23, 1921, the excess of such collateral notes and real estate and other assets taken over is to again become the...