#### L. R. BAIRD, Receiver of the Loraine State Bank, Loraine, North Dakota, a Corporation, Respondent, v. J. B. SWITZER, Appellant.

(228 N. W. 813.)

Opinion filed January 15, 1930.

Rehearing denied February 10, 1930.

*G. D. Aalcer,*for appellant.

*F. J.'Funke*and *J. E. Bryans,*for respondent.

Nuessle, L.

The plaintiff sues as receiver to recover on account of the secondary liability of the defendant as a shareholder in an insolvent state banking corporation.

The following facts are disclosed by the record: The defendant held twenty-seven shares of capital stock of the Loraine State Bank, a domestic banking corporation. On October 31, 1923, this bank was closed as insolvent and placed in the hands of a receiver. The plaintiff is the receiver of insolvent state banks appointed by the district judge designated by the Supreme Court to liquidate and wind up the affairs *177of insolvent state banks pursuant to tbe provisions of chapter 137, Sess. Laws 1923 (§§ 5191bl-5191bl9, Supplement) and chapter 99, Sess. Laws 1927. On January 21, 1924, an assessment was duly made against the shareholders of the Loraine State Bank for the full amount of their secondary statutory liability. See § 5168, Oomp. Laws 1913. This suit is to recover of the defendant on account of such assessment. It was begun on September 8, 1927. Certain real property belonging to the defendant was attached. Service of the summons and complaint was made upon the defendant pursuant to § 7431, Comp. Laws 1913, at Wolf Point, Montana, on September 23, 1927. The defendant at the time of the bringing of the action and for some time prior thereto, was a nonresident of the state of North Dakota, residing at Wolf Point. On September 28, George Laney, the agent of the plaintiff Baird, went to Wolf Point and endeavored to collect the amount of the'assessment from the defendant. The defendant said that he was in financial straits; that he was compromising his debts; that he could not and would not pay the full amount of the assessment. The parties then attempted to negotiate a compromise. Laney apparently had investigated as to the property of the defendant in Montana. It does not appear that he knew the defendant had any property in North Dakota. Neither does it appear that Laney was or was not aware that suit had been begun in North Dakota and the defendant’s property there attached. In any event, the defendant said nothing to him about the suit. After considerable dickering Laney offered to accept $1,000 in satisfaction of the claim against the defendant. The defendant agreed to pay this amount providing he could borrow the money. Both parties then went to the local bank. Defendant talked with the banker and arranged to borrow $1,000 on his representation that he could settle his liability with the receiver for that amount. Both he and the banker inquired of Laney as to the latter’s authority to make the settlement and Laney exhibited a writing from the plaintiff authorizing him to “act for and on behalf of the receiver, with full power to collect money, execute any and all proper and necessary receipts and acquittances, to engage attorneys, agents, or other representatives as in his judgment may seem necessary and proper.” Laney further said that compromises *178■of suck claims as tbe receiver bad against tbe defendant would be based on tbe debtor’s financial condition, age and earning capacity, and tbat “I (Laney) bad no right to come to bim and say tbat I would take fifty cents on tbe dollar and tbat tbe receiver deal in North Dakota was bandied along tbe same line tbat tbe International Harvester bandied their settlements with compromise settlements and financial statements, and I said if bis financial statement was such I could give bim a compromise.” Switzer stated tbat if be paid tbe $1,000 it would have to be final. In response Laney said tbat be bad been getting those settlements all over the country and they always bad been approved by the receiver. The defendant at Laney’s request then filled out a statement showing such property as be bad in Montana and on tbe advice of tbe banker signed tbe same. He omitted any mention of property in North Dakota. He then procured from tbe banker and gave to Laney a draft for $1,000 payable to tbe receiver and Laney executed and delivered to bim a written statement showing a compromise and settlement of tbe liability signed in tbe name of L. H. Baird, receiver, by Laney as assistant receiver. Laney forwarded tbe draft to Baird who accepted tbe same and cashed it on October 6, 1921. Apparently nothing further was said or done about tbe matter for some time. Then tbe defendant wrote tbe receiver requesting a release of tbe North Dakota attachment. In response tbe receiver on October 27, wrote:

> “The proposed settlement which Mr. Laney made with you when be called upon you was based upon a financial statement furnished by yourself, which, if we are correctly informed, does not exactly reflect your true financial standing. Until tbat matter has been definitely settled I cannot agree to release tbe attachment which has been filed in North Dakota. If you have any explanation to make as to tbe financial statement furnished us, kindly communicate tbe same direct to Mr. J. P. Beeve at Burlington, North Dakota, who has direct charge of tbe affairs of this bank, and be will immediately place himself in touch with attorney Bryans of Mokall.”

Tbe receiver, however, did not return or offer to return tbe amount of tbe compromise payment. Although defendant’s attorney repeatedly asked bim whether be was going to return tbe money, be could get no answer. On January 28 defendant assigned bis interest in tbe $1,000, *179tlius belcl by the plaintiff, to tlie Wolf Point bank which, had advanced the money to make the payment. Demand was thereupon made by the hank for the return of the same but no return was made. Mr. Aaker, attorney for the defendant and for the assignee bank, also wrote Mr. Bryans, plaintiff’s attorney in this particular matter, inquiring as to the return of the money. On March 2, Bryans, writing in response, said that the receiver had not accepted the money paid as a settlement and that he was holding it to apply on such judgment as might be obtained in his action against Switzer. On April 12, Mr. Eeeve, in direct charge of the affairs of the Loraine bank under the receiver, .wrote that the proposed compromise settlement was rescinded and void and that the receiver was willing to return the money paid on delivery •of all papers given by Laney to the defendant at the time of the alleged compromise. Here the matter rested until the trial of the action in July, 1928. At that time the money was paid into court to await the •outcome of the suit. It was then stipulated that if judgment should be finally entered against the defendant for the amount.of the assessment on the theory that there had been no settlement, the money should be paid to the Wolf Point bank pursuant to the assignment of January 28, 1928, otherwise it should be returned to the plaintiff. On this record the court made findings of fact favorable to the plaintiff, among ■other things, finding: “The court further finds that on or about the 28th day of September, 1927, the defendant made an attempt to make a settlement of this cause of action with an employee of the plaintiff and to that end gave to said employee of the plaintiff a draft in the sum of $1,000, which said draft was to be accepted in full payment of the amount due under the cause of action herein, but that the said settlement was made subject to the approval of the plaintiff herein and of this district manager; that said settlement was never approved but that said plaintiff held the sum of $1,000 and kept possession thereof from the said 28th of September, 1927, to and until the 19th day of July, 1928,” and ordered judgment for the plaintiff. Judgment was thereupon entered accordingly and the defendant perfected the instant appeal.

The sole question raised in this case is as to whether or not the record •discloses such conduct on the part of the receiver and his agents as *180precludes bim from repudiating tbe attempted settlement and maintaining tbe action.

It may be that Laney did not intend to make an absolute compromise and settlement at tbe time be received tbe $1,000 from tbe defendant and executed tbe statement showing sucb settlement. However, wbat be said witb respect to tbe matter was exceedingly vague and might well have led tbe defendant to believe that tbe settlement thus made was complete and final. In any event, defendant acted on tbe assumption that it was a complete and final settlement. It cannot be argued that there was any fraud on bis part because be said nothing about tbe attachment suit or about bis property in North Dakota. Laney came to see tbe defendant shortly after tbe defendant was served witb process. It was only reasonable for defendant to assume that Laney was apprised of all tbe facts witb reference to tbe matter, and be was later justified in this assumption because tbe receiver knowing of tbe suit and attach' ment cashed tbe draft and kept tbe money. Tbe record is wholly silent as to whether Laney did in fact know anything about tbe suit or about tbe North Dakota property. But whatever tbe immediate result of tbe negotiations between Laney and tbe defendant was, that result is immaterial for tbe reason that tbe receiver by bis subsequent conduct and that of bis agents evidenced an approval of such settlement. He retained its fruits. First, absolutely, and then later that they might be applied on sucb judgment as might be secured. Though a return was demanded be refused to give tbe defendant’s money back to bim. He could not witb tbe same breath blow both hot and cold. If be did not want to approve of tbe settlement be should, at least, have promptly notified tbe defendant to that effect and returned the money. And not having done so be must be held to have approved tbe settlement.

It was intimated during tbe argument that tbe money paid into court during tbe trial of tbe case in tbe lower court may have been paid over to tbe defendant or bis assignee. There is nothing in tbe record to apprise us of wbat was done in this regard. But to make certain that each party shall secure that to which be is entitled, the case will be remanded to tbe district court to enable testimony to be taken with respect to this matter. If it shall appear that tbe money paid into court remains there pending tbe result of this appeal, judgment will be *181ordered for tbe defendant and the money returned to the plaintiff. If it shall appear that the money has been paid to and received by the defendant or his assignee, then judgment will be ordered for the plaintiff.

BueKe, Oh. J., and Bueb, Bikdzelx, and Chbistianson, JJ., concur.