Court Opinion

ID: 3994718
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:53:28.037042+00
Date Added: 2024-06-11T14:18:40.527077
License: Public Domain

I dissent. It is essential, of course, in deciding this case, to understand the intention of the parties and the effect of the transaction by which the Nooksack bank, through Mr. Hamm, its cashier and manager, delivered to Mr. Moody, the supervisor, its draft on a Seattle bank, payable to the Northwestern National Bank of Bellingham, to be delivered to the latter bank by the supervisor on May 23, 1931, to take care of outstanding drafts issued by the Farmers bank.
Mr. Hamm of the Nooksack bank, Mr. Stone, cashier, and other directors of the Farmers bank, and the supervisor, were in all of the conferences to and including the one at which the Nooksack bank decided to furnish the money. Mr. Hamm, testifying with reference to his delivering the draft to be delivered to the Northwestern National Bank, said:
"Q. It was your understanding it would be credited to the account of the Farmers  Merchants Bank? A. Yes, sir." *Page 90 
Mr. Moody testified:
"Q. When he [Mr. Hamm] gave you the draft on Saturday morning, it was payable to the Northwestern National Bank. What did you do with the draft? A. I took it down and gave it to the Northwestern. Q. What did they do with it? A. They credited it to the Farmers  Merchants Bank. Q. They didn't return to you the remittance drafts? A. No."
Manifestly, the transaction was a loan to the Farmers bank — so intended and understood by all the parties. Nor did the fact that a part of it, intended to pay outstanding drafts in favor of the Federal Reserve Bank in Seattle, was not used for that purpose because those drafts were not presented for payment, deprive that which was used and that is involved in this action of its character as a loan.
In consonance with this theory is the admitted fact that the outstanding drafts that were taken up by the Northwestern National Bank were paid by the money furnished on behalf of the Farmers bank, and the drafts thus taken up and cancelled were forwarded to and received by the Farmers bank prior to the closing of its doors for the transaction of business. Respondent bank did not expect the cancelled drafts to be returned to it.
That is all there is to this case. The respondent bank became nothing more than a common creditor — one who had loaned money to, and for the benefit of, the insolvent bank.
Nor can the judgment appealed from be sustained upon the principle or equitable doctrine of subrogation, under the rules relied on as they are mentioned in Ruling Case Law and Pomeroy's Equity Jurisprudence. When respondent supplied funds to the credit of the Farmers bank, the respondent had no interest whatever to protect. It was a mere volunteer. It was *Page 91 
under no legal or moral obligation to merge with the Farmers bank, and could have dropped the scheme of merging without advancing any money and without incurring any liability whatever. The supervisor had no power or authority to bind the Farmers bank or its assets, because that bank was still open and doing business, and, indeed, the supervisor has at all times since the closing of the bank, including his appeal to this court, taken the position that the respondent bank had no right whatever other than that of a common creditor.
If it shall be held, as suggested in the majority opinion, that the respondent is entitled to be subrogated to the rights of the holders of the outstanding drafts of the Farmers bank, that would not give it any preference over common creditors. The holders of those drafts had no liens or preferred claims against the Farmers bank or its assets at any time. Nor would they have had any if they had still held the drafts when the Farmers bank closed its doors. The substance of the transaction in this case in this respect centers about the holding in the majority opinion that:
"There can be no question in this case, under the findings of the court, that it was the intention of the parties concerned in the transaction that respondent was to have a preferred claim tothe same extent that the payee banks had."
The words italicized refer to what I fear has been confusing. As already stated, the payee banks had no preferred claims. The Farmers bank did not give, nor attempt to give, them any. The supervisor gave them none. The controversy at the trial, as to any representations made by the supervisor to the respondent bank as to its legal rights upon advancing money, whether according to his or its version of those representations, was immaterial. That controversy related *Page 92 
to a pure matter of law upon a subject concerning which the supervisor had no more power of binding the assets of the Farmers bank at that time than any other person.
Nor did the holders of the drafts have any preferred claim under the statute, Rem. Rev. Stat., § 3292-13 (2); nor would they have had any preferred claim had they held the drafts at the time the bank closed. The statute referred to in this case, reads:
"2. Except in cases where an item or items is treated as dishonored by non-payment as provided in section 3292-11, when adrawee or payor bank has presented to it for payment an item or items drawn upon or payable by or at such bank and at the time has on deposit to the credit of the maker or drawer an amount equal to such item or items and such drawee or payor shall failor close for business as above, after having charged such item or items to the account of the maker or drawer thereof or otherwise discharged his liability thereon but without such item or items having been paid or settled for by the drawee or payor either in money or by an unconditional credit given on its books or on the books of any other bank, which has been requested or accepted so as to constitute such drawee or payor or other bank debtor therefor, the assets of such drawee or payor shall beimpressed with a trust in favor of the owner or owners of suchitem or items for the amount thereof, or for the balance payableon a number of items which have been exchanged, and such owner orowners shall be entitled to a preferred claim upon such assets, irrespective of whether the fund representing such item or items can be traced and identified as part of such assets or has been intermingled with or converted into other assets of such failed bank." (Italics mine.)
Obviously, that statute is not applicable here, because it was not the drawee or payor bank but the maker or drawer bank
that failed or closed for business. *Page 93 
It follows, therefore, that, if the respondent be allowed a claim to the extent that the payee banks had, it would be nothing more than a common claim, which is the character or rank in which it was considered and allowed by the supervisor, but for a different and proper reason.
Nor is the respondent entitled to be ranked as a preferred creditor by subrogation on the score of advancing money on the invitation of the public, entitling it to be favored as a matter of public policy. No such doctrine is applicable here. Public policy is neither concerned with nor involved in the matter of a merger with an insolvent bank, nor in giving, in the name of subrogation, a preference right to one who advances money to such insolvent bank to take up the claims of some of its common creditors; and even in void judicial sales cited in the majority opinion as falling within this doctrine (25 R.C.L., pp. 1322, 1356), no preference is given to the purchaser beyond or above the extent or class of the right or security to which his money was applied — not a preferred or superior claim in lieu of a common one.
To emphasize my views of error in the judgment appealed from and to take issue with it, I refer to two statements near the close of the majority opinion. It is said that the depositors of the Farmers bank will not be in any worse condition by giving the respondent preference than they would have been if the respondent had not advanced any money at all. This conclusion, in my opinion, is wrong. The Farmers bank is and was insolvent, and if its drafts had still been outstanding when the bank closed, the holders thereof would have been common creditors only and entitled to less of the assets of the Farmers bank than is now awarded to the respondent bank as a preferred *Page 94 
creditor. The preference given unduly reduces the assets otherwise available for the common creditors.
Still further, it is said: "The depositors, therefore, can not expect a gratuitous enrichment of the bank's assets built solely upon respondent's loss." Of course not; nor should the respondent bank expect or be given an advantage as a preferred creditor in the bank's assets, enriched by deposits, made in the utmost good faith, by the farmer, the grocer and the laborer, presumably on the same day the respondent bank advanced money to the credit of the Farmers bank to meet paper the Farmers bank had issued in payment of, and upon the faith of, checks drawn upon it by other of its depositors and common creditors.
MAIN, MILLARD, and BLAKE, JJ., concur with MITCHELL, J.