Wenzlaff v. Tripp State Bank
| Decision Date | 05 April 1926 |
| Docket Number | 5644. |
| Parties | WENZLAFF v. TRIPP STATE BANK et al. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Hutchinson County; R. B. Tripp, Judge.
Suit by Sallie Edith Wenzlaff against the Tripp State Bank and another. From a judgment for plaintiff and an order denying a new trial, defendants appeal. Reversed, with directions.
Hitchcock & Sickel, of Mitchell, for appellants.
French Orvis & French, of Yankton, for respondent.
Plaintiff brought this action against the Tripp State Bank, now in process of liquidation, to foreclose a mortgage upon the bank building. From a judgment of foreclosure in favor of the plaintiff and from an order denying defendant's motion for a new trial, defendant appeals.
Plaintiff is the wife of Salomon Wenzlaff. He is the father of Waldemar Wenzlaff, who was the president and managing officer of the Tripp State Bank until it closed on May 24, 1922. Waldemar during all the times mentioned in this opinion was the owner of 270 out of the 400 shares of stock in the bank, and at the time of the execution of the mortgage in question was the owner of 310 shares. Some of the balance of the stock was also owned by relatives in the bank's employ.
In furtherance of a plan of putting up a new bank building Waldemar purchased three lots in the city of Tripp in August 1918, taking title in his own name. The purchase price was $12,000. Whether this money was Waldemar's money or the bank's money is not clear. In the spring of 1920, while the title was still in his name, the bank began the construction of a new bank building on a part of these lots and at that time an account called the new bank building account was opened upon the records of the bank. Out of this there was paid up to December 19, 1920, an aggregate sum exceeding $20,000. Plaintiff claims that certain of the deposits or credits to this account were made by Waldemar, and the books show numerous book additions to the assets of the bank by Waldemar; but a careful scrutiny of the accounts discloses that on several occasions when Waldemar added to the book assets of the bank he left it worse off than before.
On July 29, 1920, Waldemar conveyed that portion of the three lots actually occupied by the building to the defendant bank. The consideration named therein was $7,500. Respondent contends that no consideration passed. Appellant introduced evidence tending to show that Waldemar received credit from the bank in that sum. However, this transfer was made at the direction of the then superintendent of banks, Waldemar being told that he must transfer the bank property to the bank until such time as certain bad notes could be taken care of, otherwise the superintendent would close the bank.
On March 10, 1921, the Tripp State Bank, without any resolution of the board of directors, without any satisfactory evidence to show that the bank's condition was any better off than it was when the premises were deeded to it in the July previous, executed a warranty deed of the bank premises to Waldemar Wenzlaff. This deed was signed by Waldemar himself as president. It was countersigned by Raebel, not as cashier, but as secretary. It was acknowledged before Lee S. Kepler, who was the attorney for, a stockholder in, and a director of, the bank at that time.
On March 9, 1921, apparently in anticipation of the execution of the foregoing deed, Waldemar and his wife executed a mortgage on said premises in the sum of $10,000 to Western Surety Company, the proceeds of which mortgage went into the bank, but approximately half of that sum was used to take up cash items, the nature of which is not disclosed. On July 1, 1921, Wenzlaff and wife executed the mortgage in suit for $17,500 on the bank building. This mortgage was made payable to the defendant bank. It is admitted that the bank paid nothing to Waldemar for this mortgage, and it is equally admitted that Waldemar paid nothing to the bank for the execution of the deed from the bank to Waldemar the previous March. On July 12, 1921, this mortgage was assigned by the Tripp State bank by Waldemar as president to Salomon Wenzlaff. On July 25, 1921, Waldemar and wife executed a warranty deed of the bank premises back to the bank. This deed was subject to two mortgages of $10,000 and 17,500. On the same date, at a special meeting of the board of directors of the bank, a resolution was adopted as follows:
"That whereas an examination of the assets of the Tripp State Bank disclosed that the record title to various tracts of land and city property now stands in the name of said bank or has been deeded to it this day, and are a part of its assets, it is hereby ordered that under no circumstances shall any of said land or city property be conveyed or encumbered without the specific direction of the department of banking and finance at Pierre, South Dakota."
On January 4, 1922, Salomon assigned the mortgage in suit to his wife, the plaintiff, without any consideration. The acknowledgment to same was taken by Waldemar as notary public and recorded on April 19, 1922. On May 24, 1922, the bank closed.
At the time when on July 12, 1921, the Tripp State Bank assigned this mortgage to Salomon Wenzlaff, Waldemar Wenzlaff had assumed the responsibility of raising a 100 per cent stockholders' assessment, which had been levied by the bank under orders from the banking department. The mortgage was executed by Waldemar to the bank for convenience in assigning to whoever would purchase the same. The assignment of the mortgage was...
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