260 P. 1055 | Mont. | 1927
Appellant contends that the only authority under which a state bank could, at the time here material, pledge its securities to guarantee deposits is Charter 89 of the Laws of 1923, which requires the county treasurer to take security of a certain kind, namely, surety bonds, personal bonds or government or state bonds or county warrants or other securities supported by general public taxation. From this counsel argues that a bank has no right to pledge for such purpose any other or different kind of security. Counsel overlooks the fact that the purpose of Chapter 89, Laws of 1923, and the existing law which it amended, was not to give authority to state banks to furnish security for county deposits but to protect county funds, and to that end the security required is the very best possible security that a bank would be likely to hold, namely, government, state or county bonds or warrants. There is nothing in the depositary law indicating an absence of power, so far *470 as the bank is concerned, to give such other security for such deposits as it desired. In fact, the implication from the law is that such power existed, but the purpose of the law was to designate the kind of security that would be acceptable to the public authorities.
The only authorities cited which in any way supports the contention that a state bank has no power to pledge its assets to secure deposits is the case of Commercial Bank Trust Co. v.Citizens Trust Guaranty Co.,
It is admittedly the law that banks may borrow money for corporate purposes, and the right to borrow carries with it the right to secure the indebtedness by mortgage or otherwise. (7 C.J. 592; 3 R.C.L. 427.) The privilege of banks to borrow money and pledge their assets as security for the payment thereof is so well established and recognized throughout the nation that it would hardly seem necessary to cite further authority for such a broad proposition. In view of the holding in this state that the relationship between a bank and its depositors is that of debtor and creditor (Stankey v. Bank,
We entirely agree with the general statement of law announced by the appellant as to the position of trust and confidence occupied by the directors of a corporation, and particularly a banking corporation, but these rules only require that his dealings be in good faith and not for personal profit or advantage, and they do not in any sense prohibit transactions between a bank and its directors merely because of the relationship existing. The situation in that regard is not different from an ordinary corporation. (Fletcher on Corporations, p. 2326; Rawlings v. New Memphis Gas-Light Co.,
A voluntary redelivery by the pledgee to the pledgor for a special purpose will not defeat the right of the pledgee, when that purpose has been fulfilled, to recover the pledged property. (Schumann v. Bank of California Nat. Assn.,
During the year 1922, the bank, in order to obtain its share of the funds of Sanders county for deposit, was required to furnish the county a depositary bond to the amount of $50,000. This the bank gave, Robison becoming surety for $20,000, Kruger for $20,000 and Larse for $10,000.
A meeting of the board of directors was held on December 29, 1922, all present. Kruger advised his associates that he had been visiting relatives in the "Blackfoot country," one of whom had signed a bond for the bank of Ovando, which closed, with result that he was "cleaned out." Kruger told the other directors that he "was done being a bondsman; that was all there was to it," as a witness testified.
It was supposed that the county treasurer who would soon take office would require a new bond. The directors discussed the matter, cited the fact that it would cost a considerable sum to pay the premium on a surety bond, and finally proposed to protect Kruger by giving him collateral consisting of "slow real estate paper" — notes, secured by mortgages upon real estate, the signers whereof were considered good but slow in paying their debts. To this Kruger assented, and a resolution was adopted unanimously, Kruger not voting, authorizing the transfer and delivery of certain notes secured by mortgages, specifically named, to Kruger, as collateral security to protect him from liability by reason of his suretyship upon the depositary bonds of the bank then *473 in existence, or thereafter to be executed, as the court found, and, we think, correctly. The notes mentioned in the resolution, with the exception of the Miller note, were indorsed, and all were delivered to Kruger. At the same time the bank executed to him a written assignment of all the notes and mortgages. Kruger, referred to hereafter as the defendant, thereafter held, and still holds, these notes and mortgages, except in instances where substitutions have been made, and except as stated hereafter.
On May 8, 1923, defendant signed a new depositary bond which was in contemplation when the resolution was adopted.
The notes assigned to the defendant aggregated $18,000 in round numbers.
All the foregoing acts were reported to the superintendent of banks who made no objection.
On January 12, 1924, at the annual meeting, a resolution was passed which in effect ratified the foregoing transactions between the defendant and the bank.
There is not any evidence tending to show that the bank was insolvent when the original resolution was passed and we think the record justifies the conclusion that when the resolution of January 12, 1924, was adopted none of the directors deemed it insolvent, and that its closing was not then within their contemplation. The evidence indicates that the reason for its closing upon January 25, 1924, was the result of a run caused by the failure of the American Bank Trust Company at Missoula.
The bank having closed, Robison was appointed receiver, which position he held until he was succeeded by A.S. Ainsworth, the plaintiff. After the receiver was appointed Sanders county brought suit upon the depositary bond of May 8, 1923, and secured judgment against the defendant in the sum of $20,000, which judgment has become final.
Payment in full of the Louis Vacura note, held by the defendant, amounting to $4,331.25, was made to receiver Robison, who placed the amount received in his own name *474 under the designation "trustee for owner." The same action was taken respecting $100 received upon the Clark note. The receiver was obliged to obtain the Vacura note from the defendant in order that he might accept the payment tendered and deliver the note to the maker. He also obtained the Clark note in order to indorse payment thereon.
It was deemed advisable to commence action to foreclose what is known as the Miller mortgage and for that purpose the defendant, by agreement with receiver Robison, placed the Miller note and mortgage in the hands of Mr. Bulen, who is an attorney at law, for foreclosure. He brought action thereon, secured judgment, and caused the mortgaged property to be sold. For convenience, as the court found, the suit was prosecuted in the name of the receiver. At the sale, there being no other bidder, the receiver bid in the property in his own name and pursuant to this agreement with the defendant, made before the action was begun, assigned the certificate to the defendant.
The plaintiff brought this action to recover of the defendant the securities above mentioned and to prevent him from enforcing collection thereof and from receiving the collection already made thereon.
The court made findings of fact from which it concluded that all the notes and mortgages in question were delivered to the defendant in good faith, as collateral security, to secure him from liability upon the depositary bond, and that he is entitled to hold them, and to enforce and exhaust the same to the extent required to satisfy his liability; that he is entitled to have paid over to him all sums collected by the receiver upon the pledged notes, and likewise, is entitled to hold the real estate bid in on the Miller foreclosure; and that the plaintiff has no interest in any of the notes, mortgages or cash except in so far as there may be an overplus after the defendant's liability to Sanders county shall be satisfied; and entered judgment in favor of the defendant. The plaintiff caused to be settled a bill of exceptions, in *475 which is included all of the testimony taken at the trial, and appealed from the judgment.
1. At the outset counsel for plaintiff challenges the[1] authority of the board of directors of a state bank to pledge the assets of the bank to indemnify a surety upon a bond given by the bank to secure deposits of county money, and also the right of a director to accept the pledge.
Upon the first point it is suggested that the provisions of section 4767, Revised Codes 1921, and that section as amended by Chapter 89 of the 1923 Session Laws, page 237, have some application; but this is not so. This legislation relates to the duties of county commissioners and county treasurers, respecting the deposit of public funds and the security required for their protection, and can have no reference to the situation in the case at bar. Whether the bank could lawfully have pledged to the county treasurer assets other than those mentioned in the statute or whether the county commissioners could have approved the same as security for a deposit of county funds is not in this case.
The statute permitted the bank to give to the treasurer an indemnity bond and it did so. A bank, in the absence of a statute to the contrary, and in Montana we have none, has a right to pledge its securities to indemnify a surety who signs a bond in its behalf in order that the bank may obtain a deposit of public funds. (McFerson v. National Surety Co.,
In Page Trust Co. v. Rose, supra, the court said: "In the instant case the Bank of Hamlet, located and doing business in Richmond county, has express authority to protect funds of said county, deposited with it by the board of commissioners, by a bond, with either personal or corporate sureties. The bank has implied power, at least, to pay a reasonable premium to a corporation duly organized to become surety *476 on its bond. It must be held also that it has power, when required to do so, to protect personal sureties, by transfer or assignment, in good faith, of assets in value reasonably proportionate to the liability of such sureties, under the bond which is given to protect and thereby secure the deposits, such bond having been authorized and required by statute." McFerson v. National Surety Co., supra, is directly in accord.
Commercial Banking Trust Co. v. Citizens' Trust Guaranty Co.,
As to defendant's being a director when the resolution of[2] December 29, 1922, was passed: As we have seen, the lower court found, and the evidence sustains the finding, that the transaction was in entire good faith. In view of our own decisions relating to the powers and obligations of corporations and directors between themselves, this point would hardly seem to be debatable.
In O'Rourke v. Grand Opera House Co.,
In Duffy v. Hastings,
In Rawlings v. New Memphis Gas-light Co.,
2. It is next insisted by counsel for plaintiff that the[3] defendant lost his right to the securities he claims to have held in pledge by permitting the receiver to collect thereon and to retain the proceeds of the collections made, to bring suit as receiver upon a mortgage, bid in the property as receiver, and pay the costs of the foreclosure suit from the *478
funds of the receivership. The plaintiff relies upon section 8294, Revised Codes 1921, which provides that "the lien of a pledge is dependent on possession, and no pledge is valid until the property pledged is delivered to the pledgee or to a pledge holder, as hereafter prescribed," and Brunswick-Balke-CollenderCo. v. Higgins,
3. Finally, the plaintiff insists that as the defendant did[4] not suffer any loss under the 1922, but did under the 1923, bond, he cannot retain the pledged securities under the resolution of December 29, 1922. The answer is that the court found in effect that that resolution contemplated the execution of the 1923 bond, which the subsequent actions of the *479 parties confirmed. This conclusion is fortified by the resolution of January 12, 1924, which was passed at a time when the parties did not anticipate the closing of the bank, nor contemplate its insolvency. The 1924 resolution was in effect a ratification of the acts of the parties with respect to the pledged securities and the substitutions which had been made in the interim. There is no doubt that the defendant, under the facts disclosed, was entitled to hold the securities which he received while the 1922 bond was in force to indemnify him from liability under the 1923 bond.
The bank secured the benefits derived from the deposits which[5] were made as a consequence of the execution of the 1923 bond and the receiver, acting for the corporation, cannot now escape the burdens of the transaction by setting up the plea that the transaction was in effect ultra vires. As is stated inCameron v. Christy, supra: "To do so would be unconscionable and is therefore impossible in a court of equity. He who seeks equity must do equity. The cases are legion, and from many courts, in which this sound rule of equity and common honesty has been enforced."
The judgment is affirmed.
Affirmed.
ASSOCIATE JUSTICES MYERS, STARK, MATTHEWS and GALEN concur. *480