289 P. 396 | Kan. | 1930
The opinion of the court was delivered by
The action was brought against defendant by the plaintiff as receiver of the Midwest State Bank of Fort Scott. A motion to strike certain allegations from the amended answer of the defendant was sustained, and from the order sustaining the motion to strike the defendant appeals to this court.
The defendant filed a third amended answer to the petition, and the court sustained a motion to strike out paragraphs 8 to 16, inclusive, from that answer. In these paragraphs the defendant pleaded by way of set-off a balance of $613.84, which it had on deposit, together with the amount which it alleged it paid to the bank for the negotiable notes, making a total of $19,275.45, which it asked to have set off against the claim of the plaintiff. Defendant further pleaded plaintiff should be estopped to deny validity of the transaction by reason of the fact that the bank had received full value for the notes and mortgages transferred to defendant and that plaintiff had failed to tender to defendant the consideration paid by it or any dividend on that consideration. Further, that plaintiff be estopped because after the transaction and up to the closing of the bank, the bank recognized and honored the checks of defendant on the bank. Defendant pleaded further by way of set-off that when the bank was closed one P. Y. Miller and one Fred W. Bayless, acting as agents of the plaintiff receiver,'took charge of the property and assets of defendant, locked its vault and assumed full control of its books and records; that these persons refused defendant access to its office, and on account of the wrongful taking possession of its property and assets the public confidence in defendant was injured; that many demands were made on defendant for withdrawal of funds, and the assets were reduced from about $200,000 to $147,000. Defendant alleged it had been damaged by the unlawful acts of plaintiff, his agents and representatives, in withholding its property and assets and in withholding the use of its vault, in the sum of $5,000; and further damaged in the loss of the confidence of its stockholders and depositors in the sum of $15,000. Defendant therefore prayed judgment for the sum of $613.84 due on its balance when the bank was closed; further judgment by way of'set-off against plaintiff for $19,275.45, b'eing the amount paid for the assets, plus the $613.84 remaining on deposit when the bank was closed, and an additional judgment offsetting any claim of plaintiff in the sum of $20,000 for damages for the wrongful taking and holding of defendant’s property. The foregoing portions of the answer as set out are those which were stricken by the court.
In support of its position the appellee cites R. S. 9-142, which reads:
*241 “No bank, bankers or bank officer shall give preference to any depositor or creditor by pledging the assets of the bank as collateral security. . . .”
The section does not apply. This section relates to a pledge of assets as collateral security, whereas the transaction set up in the petition is one of sale and transfer of assets in fraud of creditors. The action of plaintiff is grounded upon fraud on the part of the officers of the defendant. It amounts to a cause of action against the defendant based upon the fraud of its officers who, while officers of the bank, had knowledge that the bank was insolvent and thereupon undertook to transfer the assets of the bank to the defendant in-order to prefer the defendant and advance their own,personal interests in defendant corporation and thereby defraud the other creditors of the bank.
The defendant takes the position that it should be permitted to recover by way of set-off the balance of its deposit to its credit when the bank closed, together with the amount which it paid for the assets taken over from the bank. Is this position correct? To permit this set-off to plaintiff’s claim would be to say that plaintiff might come into court and establish the fraud alleged by him and yet go empty handed because of the set-off pleaded by the defendant; that notwithstanding plaintiff should prove that defendant had defrauded the other creditors of the bank, no recovery could'be had. Dfefendant’s position, if tenable, would mean that plaintiff could establish a cause of action, but it would avail him nothing — that matters would then be in statu quo. This is not sound nor logical. It is not just.
If the transaction complained of by the plaintiff is set aside, then of course it logically follows that the amount paid by the defendant to the Midwest Bank for the assets should be reinstated as a deposit and that the defendant would be entitled to dividends upon the total of its deposit as thus reestablished, the same as all other creditors of the bank. • The trial court has full power to see that equity is done in such a situation.
The appellant relies upon the general rule which is stated in the note to Prudential Realty Co. v. Allen, 25 A. L. R. 938, 241 Mass. 277, 135 N. E. 221, as follows:
“The general rule followed by the great weight of authority is that a depositor in an insolvent bank may set off his deposit therein against a bona fide indebtedness of his own to the bank.”
The appellant further contends that because the bank continued to honor checks of the defendant after the transaction was had (and this arrangement continued for almost a week) that plaintiff is estopped; that he is further estopped by reason of the fact that after accepting the benefits of the amount paid by defendant for the notes, namely, $18,661.81, the receiver did not give any credit for the amount nor any part thereof. So far as any action of the bank prior to the appointment of the receiver is concerned, there could be no estoppel under the facts charged by the receiver, because if the transaction was one which occurred through the fraud of the officers of both institutions, then the party acting for the creditors should not be estopped by reason of the acts of the parties to the fraud. The receiver should stand ready to pay defendant its proportionate part of all dividends paid to creditors of the bank upon the full amount of its deposits after again crediting the $18,661.81 as a deposit in the event the receiver is successful.in obtaining judgment against the defendant in this action. Inasmuch as the trial court can take care of the situation at the proper time and the position of the defendant is not altered for the worse by any failure of the receiver to tender such dividends, there is no estoppel on that point. Of course it would be inequitable to permit the receiver to recover the value of the securities from the defendant and then not allow defendant its proper share of dividends the same as all other creditors upon the total amount of its deposit after restoring and adding thereto the amount which defendant paid for the securities obtained from the defunct bank.
Is there any merit in the cause of action pleaded by way of set-off by the defendant based upon wrongfully taking possession of its property and assets? There is not. The receiver was appointed for the purpose of taking charge of the affairs of the defunct bank. If he overstepped the bounds of his authority and took possession of
In 34 Cyc. 410 the rule is stated as follows:
"... A receiver is liable only in his individual capacity by reason of transactions outside of or in excess of his authority. As to other property than that in the custody of the court, the management of which is voluntarily assumed and over which the court had no control, he stands in his natural person and responsible for its careful and proper management to all those whose relations to it are such that they may suffer from his neglect of duty, and if he assumes wrongfully to take and hold property not embraced in the order of appointment, or forcibly to take property from a stranger, he is not acting as the officer or representative of the court, but is a mere trespasser, and the rightful owner of the property may sue him in any appropriate form of action for damages or to recover possession of the property illegally taken or detained.”
The reason is apparent. The assets so placed in charge of the receiver become a trust fund for the benefit of creditors. If an action based on a tort of the receiver were permitted to be brought against him in his official capacity, then the trust estate might be dissipated by judgments obtained against the receiver. To permit this would be to defeat the ends of receivership, i. e., to secure the preservation of the assets of an insolvent debtor and a ratable distribution thereof to the creditors.
The action of the trial court in striking out paragraphs 8 to 16, inclusive, was proper.
The judgment is affirmed.