110 Kan. 520 | Kan. | 1922
The opinion of the court was delivered by
The American State Bank of Wichita, as the holder of ten certificates of deposit for $5,000 each, issued by the Kansas State Bank of Salina, which is insolvent and has been closed since May 26, 1919, being now in the hands of a receiver, brought this proceeding seeking by mandamus to compel the state bank commissioner to issue to it as a depositor in such insolvent bank certificates payable so far as may be necessary out of the bank depositors’ guaranty fund, as provided by the statute. (Gen. Stat. 1915, § 598.)
The statute creating the bank depositors’ guaranty fund contains these provisions:
“All deposits not otherwise secured shall be guaranteed by this act. The guaranty as provided for in this act shall-not apply to a bank’s obligation as endorser upon bills rediscounted, nor to bills payable, nor to money borrowed from its correspondents or others.” (Gen. Stat. 1915, § 600.)
The corresponding provisions of the original act were:
“Deposits which do not bear interest and the following deposit only shall be guaranteed by this act: Time certificates not payable in less than six months from date, and not exceeding more than one year, bearing interest at not to exceed three per cent per annum and on which interest shall cease at maturity. . . . Deposits which are primarily rediscounts or money borrowed by the bank, and all deposits otherwise secured, shall not be guaranteed by this act.” (Gen. Stat. 1909, § 542.)
It is contended that the plaintiff has no valid claim against the guaranty fund for these reasons:
1. Its certificates.of deposit were received on account of a credit given on its books, no money having actually been deposited in the Salina bank.
2. Apart from the consideration just stated the transaction in which the certificates were received did not amount to the making of a deposit in the Salina bank but rather to a loan of money to it.
3. If what was done is regarded as amounting to a deposit of money in the Salina bank the bank paid a higher rate of interest' than 4 per cent, the maximum approved by the bank commissioner.
4. The certificates of deposit by virtue of having a personal endorsement were otherwise secured than by the guaranty fund.
In March, 1919, the Salina bank had for some months been under the supervision of a bank examiner. Its loans were excessive and there had been steady withdrawals of deposits on account of the well-known fact that its financial condition was bad. About the 12th of that month H. J. Lefferdink, its cashier, had an interview with R. E. Crummer, the general manager of the Brown-Crummer Company, of Wichita, which was engaged in buying and selling bonds and other securities, in which he (Lefferdink) sought help in effecting a sale of bonds to be secured-by a New Mexico ranch. Crummer declined to entertain the proposition. Lefferdink then told him that the Fourth National Bank of Wichita held certificates of deposit for $50,000 issued by the Salina bank which were about to mature and which it desired.to raise money to take up, and proposed that his company make a deposit of that amount with it, receiving therefor its certificates of deposit. Crummer said that if this were done $5,000 would have to be deposited with his company as.assurance that the certificates would be paid when due, to be forfeited in the event of a default, but principally to cover the expense for making an investigation of the bank and a fair amount for the services of the company in handling the certificates, any balance to be returned to the person advancing it, who must be some one not interested in or connected with the bank. He also said that assurance would be required from the state bank commissioner as to the standing of the bank’s affairs and its condition, and as to the money if’ advanced being protected by the guaranty fund. The company wrote to the then bank commissioner, Walter E. Wilson, asking information on these matters and received an answer from an assistant commissioner that the return of the ten certificates (which had been drawn and signed on the day of the first negotiations) had been called for, so that a further statement was unnecessary. These certificates were accordingly canceled.
About March 24 Crummer received from Kansas City a check
At the time of the closing of the Salina bank practically all the $50,000 had been withdrawn from the plaintiff bank upon drafts drawn under the supervision of a representative of the bank commissioner.
The following is a copy of one of the certificates, the others being in the same form:
“Certificate of Deposit THE KANSAS STATE BANK Sauna, Kansas,
March 21, 1919. No. 1333.
“This certifies that R. E. Crummer has deposited in this Bank Five Thousand Dollars 100 Dollars, $5,000.00 payable to the order of himself in current funds on'the return of this certificate properly endorsed three months after date with interest at the rate of 4 per cent per annum for the time specified only. Not subject to check.
63 976 M. M. Hansen, A. Cashier.
[Endorsed] E. J. Guilbert,
R. E. Crummer.”
The statute recognizes a difference between a bank’s borrowing money on the one hand and on the other receiving it on deposit for a stated time. It is not easy to formulate any specific test by which to determine in a given case into which class a transaction falls. Definitions stated and distinctions made in one connection may not be particularly helpful in another. In Farrens v. Farmers State Bank, 101 Neb. 285, the right of several holders of certificates of deposit of a closed bank to share in the guaranty fund was contested on the ground that the transaction which they evidenced was a loan and not a deposit, inasmuch as the payees were officers of the bank. The certificates were held to be charges against the
“The principal point now urged in the brief of the attorney-general is: These certificates do not represent money placed with the bank as a deposit, but represent merely a loan to the bank. It is admitted that the bank got the benefit of the money. If it was placed in the bank as a deposit, it is protected by the depositors’ guarantee fund; while if it was merely a loan to the bank, it is not so protected. . . .
“The evidence shows that prior to the issuance of these certificates each claimant was a director of the Farmers’ State Bank of Decatur; that the bank was in need of money; that it borrowed from the Security State Bank of South Omaha $16,000, and pledged as collateral security notes of the face value of $22,000, and of the admitted value of $20,000. Claimants, who were not experienced bankers or business men, each borrowed from the Security State Bank $7,500, then deposited this amount with the Farmers’ State Bank of Decatur, and took as evidence thereof the certificates heretofore mentioned. The Decatur bank then paid off its indebtedness to the Security State Bank and redeemed the paper that had been put up as collateral security. The Decatur bank got the full value for each certificate. Had the money been deposited by some party not an officer or director of the bank, there would be no question as to his right to be listed as a depositor. The attorney-general argues that these parties were merely making a loan to the bank and that the relation of creditor and debtor exists. In a certain sense this is true. ...
“These certificates are in the usual form. The transaction was such on its face as occurs every day in the banking business. If claimants are to be denied the rights of a depositor, it must be solely because they were directors of the bank.
“As the statute stood at the time of the transaction, an officer was not forbidden to become a depositor, or denied any privilege accorded to others doing business with the bank. The legislature not having denied this privilege, the court cannot. The legislature which has just adjourned has enacted a statute to meet such situations. House Roll No. 201, approved April 19, 1917. The fact that it took such action may be regarded as a legislative construction of the statute, and we may assume that, when our bank act was originally passed, it was not intended to exclude directors from the benefits of the act. If so, claimants fall within its protection. Again, it may be pointed out that the equities of the case are with the claimants. The bank got the benefit of their money; with their money it redeemed its collateral security, which was worth considerably more than the amount for which it was pledged. Not only the bank, but the depositors’ guaranty fund, received the benefit of their money, and claimants are still liable for the penalty as stockholders. Indeed, the judgment of the district court directed the receiver to withhold the amount for which they are liable as stockholders. Thus all parties are amply protected and justice is done.” (pp. 286, 287.)
It is-quite clear, however, that the creation of an obligation on the part of a bank may, within the meaning of the guaranty law, amount
In a case arising upon statutory provisions similar to but not identical with our own a decision has been made the force of which is indicated by this paragraph of the syllabus:
“Where money purporting to be a deposit is placed in a state bank, for which the bank issues and delivers to the purported depositor certificates of deposit in terms providing for payment of 5 per cent annual interest, and where by an understanding between the parties the bank pays to such person a bonus of 1 per cent above the lawful rate of 5 per cent interest, held, such transaction does not constitute a deposit within the meaning of the bank depositor’s guaranty act (Rev. St. 1913, Secs. 280-345), but is a mere loan of money to the bank.” (Iams v. Farmers State Bank, 101 Neb. 778, syl. ¶[ 1.)
The plaintiff places considerable reliance upon Farish v. State Banking Board, 235 U. S. 498. There a bank operating under the Oklahoma bank guaranty law without authority sold bonds in its custody and used the proceeds to pay depositors. It was held that the owner of the bonds was subrogated to the rights of the depositors who received his money and that he was entitled to reimbursement but of the guaranty fund. If Crummer or the plaintiff had been fraudulently induced to take the certificates, of deposit the cases would probably be parallel. But no intentional misstatement-is shown to have been made by the bank commissioner. So far as. Crummer or the plaintiff was misled it was upon matters of opinion. They were not entitled to rely upon the advice of the bank commissioner upon a question of law. The fact that neither Crummer nor the plaintiff would have taken the certificates except for the belief, induced by the opinion of the bank commissioner, that they were
The application for a peremptory writ is denied.