Court Opinion

ID: 8037317
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:22:25.127814+00
Date Added: 2024-06-11T16:37:11.104420
License: Public Domain

Messmore, J.,
dissenting.
The 1930 legislature, for the purpose of creating a fund with which to pay depositors in state banks previously closed, provided for the creation of a “depositors’ final settlement fund,” levying an assessment of two tenths of one per cent, of the average daily deposits on all corporations engaged in the business of banking, said assessments to continue for a period of 10 years, beginning with the year 1931. During the time that the action was pending in the supreme court of this state in which the constitutionality of the act was being tested, assessments were made against Jorgenson’s bank at Staplehurst, in the aggregate amount of $16,-961.04. Three sight drafts were drawn for the payment of these assessments which were refused. The bank was examined by the department of banking under date of April 22, 1930, as shown by defendant’s answer. The report of the department showed: “Guaranty fund assessments, all unpaid assessments up to and including 1930 should be set up on the books and shown as liability.” May 16, 1931, the examiner, on behalf of the department of banking, ordered the bank to set up on its books a reserve account for guaranty and final settlement funds. In obedience to this order, the bank set up on its books an account entitled *8“Contingent Reserve for Depositors’ Final Settlement Fund,” and entered in that account a credit of $12,434.04. As an offset entry the undivided profits account was debited with a like sum. Immediately prior to this order the account was overdrawn in the amount of $5,198.66, and the additional debit charge of $12,434.04 resulted in increasing the deficit to $17,632.70. On February 20, 1932, a further credit was entered on the “Contingent Reserve for Depositors’ Final Settlement Fund” account in the sum of $1,365.97, and a like amount debited to the profit and loss account, creating a total credit in the final settlement fund of $13,800.01, resulting in a deficit in the undivided profits account of $13,864.73. While the undivided profits account was overdrawn in the amount of $13,864.73, of this sum $13,800.01 was created by the credits to the contingent reserve account. Eliminating the credits to the contingent reserve account, it would leave the profit and loss account overdrawn in the sum of $64.72.
On January 4, 1932, another examination of the bank was made, and the examiner- reported that there existed a deficit in the undivided profits account in the sum of $12,-444.19. This of course indicated an impairment of the capital structure, and Mr. Jorgenson was directed to restore this impairment which had been caused by the credits to the contingent reserve account. On February 29, 1932, Mr. Jorgenson put up the two items in controversy, to wit, a note and mortgage of L. C. Ocken for $8,000, and cash from his personal funds in the sum of $4,000, and, as an offset entry, this 12,000-dollar fund was credited to the undivided profits account. The journal entry of this $12,000 is as follows:
“Note #24910 L. Ocken placed to take care of Res(erve) for Dep(ositors) Guar (antee) Fund set up previously by orders of Banking Dept.........................$8,000
“Cash put in by J. L. Jorgenson. Same as above................................................$4,000”
This entry of figures to the credit of this account did not *9create a reserve. To create a reserve it is necessary to make a transfer from an existing reserve account, or to put up new assets. The entry of a credit of $12,434.04 to the contingent reserve account and a debit of a like amount to the undivided profits account would effect a transfer of reserve assets, provided there were assets in the account that could be transferred; but there were none.
On this bookkeeping, as shown by placing the 12,000-dollar fund in the account of profit and loss, the department of banking contends that the funds were intermingled and constituted an asset of the bank and were voluntary contributions made for that purpose, and there is evidence to this effect by the oral statement of a bank clerk of Jorgenson. However, the evidence is more persuasive that Jorgenson put up this 12,000-dollar fund, and it was carried and designated as “Contingent Reserve for Depositors’ Final Settlement Fund,” carried in the same title on the books of the banking department, and shown in the published reports. In other words, the fund was so placed under the direction of the department of banking that it constituted a condition contingent on the validity of the act of March 18, 1930. The reason for examining the bank in the first instance, the notations made relative to the funds of the bank, all relate to the assessments; that is the history previous to the closing of the doors of the bank. In this connection, and as stated in the majority opinion, Mr. Jorgenson did contribute more than $40,000 of his own personal funds in an effort to protect his depositors and creditors, truly commendable and unusual. In this connection the majority opinion states: “If that item was a trust fund in the bank, it was an additional liability of the bank when in an insolvent condition, a precarious place for a trust fund within the knowledge of Jorgenson.”
We are concerned with a specific fund which Jorgenson was directed and ordered to put up for a specific purpose. He was not in a position to much longer refuse, and when this fund was put up by him the validity of this act was being questioned. No one knew whether it would be held *10valid, but, inasmuch as it was in existence, Jorgenson was requested to comply with it, and he did so.
Some contention is made that there was no agreement between the department of banking and Jorgenson, oral or written, as to how the fund should be carried, or that he was to receive it back in the event that the act should be declared void, or, if valid, whether the fund would be used for the purpose for which the act was created. This issue was one of intention. The intention with which the money was placed in the reserve fund controls, and the evidence in this case, without question, supports the plaintiff. Mathiesen, who worked for Jorgenson and was later assistant receiver in the department of banking, and Dahl, who also worked for Jorgenson, testified that the 12,000-dollar fund was placed in the undivided profits account to cover the contingent reserve for depositors’ final settlement fund. This evidence is not controverted. The intention of the parties may be inferred from all the facts and circumstances surrounding the transaction. This principle of law is too well established to require citation of authority.
Without further setting out the documentary evidence, but repeating that throughout the record this fund was carried through all of the reports, as far as I am able to ascertain from the documentary evidence in this record, it shows that the fund was a contingent reserve for depositors’ final settlement fund. This court declared the act of March 18, 1930, void, and its final death-blow occurred May 22, 1933, when a petition on writ of certiorari was denied by the United States supreme court. Therefore, all of the funds accruing during the life of the act would be released; they could not be legally used for the purpose intended by the act. Mr. Jorgenson died before the act in question was finally adjudicated. The plaintiff here was not familiar with the situation, and had to acquaint himself with the facts as best he could. He filed this action in time.
I believe the position of the plaintiff, that this 12,000-dollar fund was put up by Mr. Jorgenson for a specific purpose, conditioned upon the validity of the act of March 18, *111930, and that this was the only reason therefor, is well taken. This fund was his money, and it was not taken out of the bank or out of any other fund in the bank, as shown by the record. In the event of the failure of this condition, upon which this money was placed by Jorgenson, his estate is entitled to the fund.