Court Opinion

ID: 3432074
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:00:55.138434+00
Date Added: 2024-06-11T13:43:18.442024
License: Public Domain

I join in the dissent written by Morling, J. I cannot harmonize the conclusion reached by the majority with certain decisions of this court cited in the dissent of Justice Morling.
There is one special matter which I desire to emphasize, and which, in my judgment, must result in a reversal of this cause. This action was commenced to compel specific performance of a contract to repurchase a certain note and mortgage negotiated by the defendant to the plaintiff. Briefly said, the appellant Trust Company sold to the plaintiff Securities Fire Insurance Company, a certain promissory note signed by Milo D. Morse and his wife. The note was in the principal sum of $8,000. The note was secured by a real estate mortgage covering a quarter section of land in Mower County, Minnesota. This note and mortgage sold to the plaintiff (appellee) under the written agreement set forth in the majority opinion. The Central Trust Company of Des Moines was a bank, as is evidenced by the fact that it is now, and has been for a long time, in the hands of the superintendent of banking of Iowa, as receiver.
The statute defines what indebtedness or liability a state bank can create, and the written agreement to which reference herein is made clearly created a liability on the part of the bank, and is within the prohibition of the statute which defines the indebtedness or liability which a state bank may lawfully contract. The statute is explicit, and provides that a state bank may contract indebtedness or liability for two purposes only, to wit: (1) For necessary expenses in managing and transacting its business; (2) for deposits and to pay depositors. But it is provided that, in pursuance to an order previously adopted by the board of directors, "other liabilities not in excess of amount equal to the capital stock may be incurred." Section *Page 299 
9222, Code, 1924. No resolution, as contemplated by the statute aforesaid, was ever adopted.
If it be conceded (for the purpose of argument only) that the Central Trust Company, as a bank, could agree with the appellee Fire Insurance Company, as it did agree, that, in case "this mortgage is ever foreclosed for non-payment, that we will repurchase mortgage for its face value plus all interest and costs on same," the Trust Company was never given that privilege. It may be observed at this point that no notice of any intention to foreclose, nor notice of actual foreclosure, and no notice of the sale, was given to the Central Trust Company. It could not protect itself by being present at the sale or advising in connection therewith, or by exercising the option to repurchase prior to the sale.
The record shows that, on February 18, 1918, after the making of the note and mortgage, which were dated October 28, 1915, Morse and his wife conveyed the property to Edward T. Kenevan, who assumed and agreed to pay the plaintiff's note and mortgage; but in the foreclosure proceedings, to which reference will presently be made, the assuming grantee was not made a party, nor was any personal judgment prayed or obtained against him. On February 28, 1922, Kenevan conveyed the land to one Lundeen, who likewise assumed and agreed to pay plaintiff's note and mortgage involved in this case; but in the said foreclosure proceedings, he was not made a party, nor was any personal judgment prayed or obtained against him. The mortgage, however, was foreclosed; and at the sheriff's sale, the plaintiff Fire Insurance Company bid therefor the total amount due and payable on the note and mortgage, in the sum of $8,670.65, and thereby satisfied in toto
the mortgage indebtedness, and fully canceled its claim against the makers of the note and mortgage and the subsequent purchasers of the property, who had assumed and agreed to pay the note and mortgage.
Under the statute of Minnesota, and by the terms of the sheriff's certificate, the period of redemption expired on May 16, 1926, and the plaintiff Fire Insurance Company at that time became the sole and absolute and unqualified owner of the property. It follows, therefore, that, by and through the course pursued by the plaintiff, it canceled and surrendered the note and mortgage, and it relinquished its right and the right of the *Page 300 
defendant Trust Company, as well, to a personal judgment against Morse and his wife and the subsequently assuming grantees. The plaintiff by its foreclosure suit converted its personal property into real estate, and thereby changed the status quo at the time it is claimed the repurchase agreement was made. It may further be observed that all of these acts were done without the knowledge, concurrence, or consent of the Central Trust Company, and resultantly, by the plaintiff's own act, discharged the promissory note and released the liability thereon of all the parties heretofore named.
Under the circumstances, it must be presumed that the promissory note was worth its face value, plus accrued interest. When the note was discharged and released, and the real estate taken in lieu thereof, the Central Trust Company, defendant, had its status quo changed, and it was therefore impossible for the plaintiff (appellee) to put the Central Trust Company, defendant, in status quo.
The plaintiff could not, on its own motion, have canceled the note and bid in the property for full value without the authority of the Central Trust Company. In my judgment, the tender of plaintiff has not been kept good. The plaintiff has not tendered back what it received. The decree entered should be reversed.