214 N.W. 792 | Minn. | 1927
We have given attentive consideration to the argument of counsel for the defendants to the effect that the Converse case is distinguishable because of the supposed greater equity in favor of these defendants. The notes here sued upon are for borrowed money. They were not taken from those interested in the bank to make good impaired assets as were some of the obligations involved in the Converse case. But we cannot see that the character of the obligation or the nature of its source can make any difference in the result so long as it is a legal claim for money in the hands of the bank at the time of the receivership. That event has a sort of crystallizing influence upon the whole situation, particularly with respect to the status of both creditors and debtors. The former then become entitled to a ratable distribution of the assets of the bank and the latter become obligated to pay what they owe the bank; and what they owe is arrived at, if they happen to be creditors as well as debtors, by striking a balance between what they owe the bank and what the bank owes them.
No such balance can be struck as of the moment when the receiver is appointed in the case of sureties on bank depository bonds, for at that time the bank owes the surety nothing for it has paid nothing on its bond. But that fact alone would not be an insurmountable obstacle to a set-off if the rights of principal and surety were the only things involved, for a surety has the right to exoneration in the case of an insolvent surety even though as yet he has paid nothing and has suffered no loss as surety. That fact we recognized explicitly in the Converse case and explained our reason for not letting it control as against what we considered the superior equity of the creditors of insolvent banks. We then said that the right to exoneration, if any, in such cases came into being with the insolvency and was qualified by the insolvency. In the instant *82
cases, we consider the defendants in just as strong a position as though they had actually paid the claims against them on the depository bonds upon which they are liable. Considering their status from that viewpoint, it is plain that their claims could be given effect as of the time or before the receivership only through the doctrine of relation, and that cannot be done for the very good reason stated in U.S.F. G. Co. v. Wooldridge,
We decided the question in Veigel v. Converse,
Orders affirmed. *83