Court Opinion

ID: 4010716
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:12:52.615732+00
Date Added: 2024-06-11T07:44:43.540834
License: Public Domain

* Motion for rehearing denied, with $25 costs, on September 16, 1942.
Orders to show cause in a receivership proceeding why certain funds on deposit with the banks therein named should not be paid to A. P. Gawronski, receiver of the Cosden Oil Company, were issued by the circuit court for Milwaukee *Page 73 
county directed to the named banks, Citizens State Bank of Sheboygan, Bank of Elkhart Lake, and Farmers  Merchants Bank of Menomonee Falls; these orders were issued upon three separate petitions filed by the receiver.
The receiver's petitions were substantially similar in content, and alleged that the defendant banks had on deposit certain sums therein deposited by the Sterling Oil Company; that the Sterling Oil Company had been adjudicated a bankrupt in the United States district court for the Eastern district of Wisconsin on April 4, 1931; that on August 31, 1931, the assets of the Sterling Oil Company were duly sold in the bankruptcy proceedings and assigned to Cosden Oil Company by the trustee in bankruptcy; that said assets included the funds on deposit in the defendant banks; and that petitioner had been appointed receiver of Cosden Oil Company in a receivership proceeding commenced by Rowland W. Stebbins in the circuit court for Milwaukee county.  It was further alleged in respect to the Citizens State Bank that the money had originally been deposited by Sterling Oil Company in the Cedar Grove State Bank of Cedar Grove; that said Cedar Grove State Bank subsequently ceased doing business, and that all the assets of such bank had been taken over by the Citizens State Bank.  These petitions, by order of the court, were made to stand as complaints against the three banks and no objections were raised to such order.
The answers of the banks alleged that:  The Sterling Oil Company, in order to finance the erection and equipment of an oil station in the villages of Cedar Grove, Elkhart Lake, and Menomonee Falls, issued and sold "participating operation certificates" to residents in and near those villages.  The repayment of the indebtedness evidenced by the certificates was secured by trust deeds executed and delivered to the banks in question as trustees.  The trust deeds provided:
"If at the end of ten (10) years from the date of this certificate the total amount due upon the same shall not have been paid out of the proceeds from sales of gasoline, kerosene *Page 74 
or other merchandise, as hereinabove provided, the total amount of certificates then unpaid shall be deemed to become due and payable, and unless the same shall be thereupon paid by the company, the trust deed given to secure this certificate may be foreclosed by the trustee as a mortgage for the total amount of the certificates of this series then outstanding and unpaid;" —
and were delivered to and accepted by the named banks as trustees on or about the date of the issuance of the certificates. These deeds were recorded in the office of the register of deeds of the proper county.  The certificates were issued in units of $300 each, $150 representing the purchase of the certificate and $150 representing the purchase of stock in the Sterling Oil Company.  The certificates provided that the money received from the sale thereof would be used for the purpose of installing and equipping the proposed filling stations, and that if such stations were not under construction within one year from the date thereof the $150 would be refunded to the purchaser with interest.  The participating operation certificates provided that the purchaser be entitled to receive one cent for every gallon of gasoline and kerosene sold by the Sterling Oil Company at the stations to be established and five per cent of the gross sales of all other goods and merchandise from such station "which amounts shall be deposited in the [designated] bank to the credit of the certificate holders in said station."  It was further provided that the fund so created be divided monthly among the certificate holders until each should have received the sum of $300, and that the Sterling Oil Company guaranteed the payment of said sum "on or before ten (10) years from the date hereof."  The answers of the banks prayed that the court determine that the petitioner has no interest in the deposits but that such deposits belong to the certificate owners.
Dr. A. Voskuil joined in the answer of the Citizens State Bank and Louis Moersch joined in the answer of the Bank *Page 75 
of Elkhart Lake, the codefendants alleging that they were certificate holders and that they sought on behalf of themselves and other certificate holders to be made parties to the proceedings.  By order of the court these codefendants and A. B. Walterlin, who was given leave to file a petition, were made parties to the proceedings in their own behalf and in a representative capacity for the other certificate holders in the same service stations.
When the matter came on for hearing, the only testimony produced was that of the cashiers of the defendant banks who testified concerning the manner in which the deposits in question were handled.  The parties stipulated that one judgment be entered and findings of fact and conclusions of law were made and the court ordered that the receiver of the Cosden Oil Company recover from the defendant banks the money on deposit therein.  From this judgment the banks and the interpleaded certificate holders appeal.
Respondent raises several objections to the appellate procedure in this case.  The first ground of objection pertains to the appeal attempted to be taken by the interpleaded certificate holders.  This defect, if any, is immaterial because the questions necessary for consideration are sufficiently presented for a determination upon the appeal of the banks which was properly taken.
It is apparent that the banks stand in relation to the different certificate holders as stakeholders.  The certificates, the controlling evidence in the matter, show that the holders thereof have a claim to the deposits in the respective banks and that *Page 76 
no ground for a claim by the successor or assignee of the Sterling Oil Company exists.  The certificates, containing the contract I between the Sterling Oil Company and the purchasers, show upon their face that each holder was entitled to a certain return upon the sales of oil and other merchandise sold at a given station, and that these amounts "shall be deposited in the [designated] bank to the credit of the certificate holders in said station," and this contract was contained in the trust deeds accepted by the banks.  When the money earned by the certificate holders was once so deposited it is clear that the Sterling Oil Company no longer had any right or title to the deposit but that full interest thereto attached in favor of the certificate holders subject, as a matter of convenience, only to the provision fixing the time of distribution.
The suggestion in the pleadings that one certificate holder may represent the other holders in the receivership and the order interpleading the three certificate holders in a representative capacity need not be here considered.  Each claim is several and distinct from that of the others. Sec. 260.12, Stats.; George v. Benjamin (1898), 100 Wis. 622,76 N.W. 619, 69 Am. St. Rep. 963.  The individual claimants, numbering from some thirty to some sixty in the case of the respective banks, have not manifested their attitude toward the proceeding and each may maintain an action against the bank in his own name.  Should, in any subsequent proceeding, it become evident that the number of certificate holders is so great as to make it impracticable to bring all the parties before the court in one action, the court may then determine whether one or more may sue or defend for the benefit of the whole under sec. 260.12.  Hodges v. Nalty (1899), 104 Wis. 464,80 N.W. 726; Marshall v. Wittig (1931), 205 Wis. 510,238 N.W. 390.
From the foregoing it follows that neither the Sterling Oil Company nor a fortiori its successors or assigns have any *Page 77 
interest in the funds on deposit in the respective banks.  We are also persuaded that appellant banks have no interest in the funds superior to the certificate holders but that the relation between the certificate holders and the banks is one of bank and depositor.
We have not the material in this record from which to ascertain the extent of the separate and individual rights of the various certificate holders in the funds and therefore find it necessary to dismiss the present action and relegate the certificate holders to a proper action to establish their rights against the banks.
By the Court. — Judgment reversed, and cause remanded with directions to dismiss the proceedings.