Court Opinion

ID: 6691652
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:38:33.438375+00
Date Added: 2024-06-11T16:01:07.818184
License: Public Domain

FO’LLEY, J.
(dissenting). I am not able to agree with the majority of the court in this case. In holding that the money belonging to the minor children of Mrs. Nelson is a part of the assets of the bank to ’be distributed among the general creditors of the bank, the court has gone further in support of the doctrine that the assets of an insolvent bank constitute a trust fund for the benefit of the creditors than it has ever gone before, and further, I think, than any other court has ever gone. The placing of this money in the bank by Estensen, knowing the condition of the bank, as 'he did, was wrongful from the beginning. As to the owners of the money who had no voice in its disposition it was fraudulent. It was pointed out by this court in City of Sturgis v. Meade County Bank, 38 S. D. 317, 161 N. W. 327, that money wrongfully or unlawfully deposited in a bank did not become a part of the fund for the benefit of the general creditors when the bank became insolvent. This is the general rule applicable to this class of deposits. Yellowstone County v. Bank, 46 Mont. 439, 128 P. 596; State v. Bruce, 17 Idaho, 1, 102 P. 831, L. R. A. 1916C, 1, 134 Am. St. Rep. 245.
In view of the trust fund doctrine now firmly established in this state, when a person deposits his money in a 'bank, he does so with the understanding that, if the bank should become insolvent *7while his money is still on deposit, it will be applied ratably in paying off the creditors of the bank. By making the deposit, he impliedly consents that this may be done. But, when a man’s money comes unlawfully into the possession of the bank, then no such consent is implied, and the creditors of the bank have no right to have such money applied to the payment of their debts.
In this case the creditors of the bank are creditors because they have voluntarily put something in the bank in some form. What they put in now .constitutes the fund that is to be .distributed among them. But 'Mrs. Nelson’s minor children did not put anything into the bank, and their money that was unlawfully acquired by the bank never .became a part of the fund for the payment of creditors, and such fund was in no wise depleted when the money, or its equivalent, belonging to Mrs. Nelson’s children, was returned to them.
The majority opinion stresses the fact that Mrs. Nelson and her attorney went to -Sherman on Sunday to secure a settlement with Estensen, and that both Mrs. Nelson and Estensen went to Sioux Falls that same evening. I am unable to see how this has any ¡bearing whatever on the case. She did merely what she would-have done long before, if she had been properly advised. There is nothing to show that she learned anything about the condition of the bank, or that she knew the -bank was less safe than it had been at any previous time. It appears from the record that about 60 days before the -bank closed it had been examined by the superintendent of banks. He permitted it to continue business. There is nothing in the record to indicate that the bank was any less insolvent then than when it closed, so that, if the defendant secured a preference by accepting payment after the bank was insolvent, so did every one else who drew money out of the bank during that time. The state through its superintendent of banks, having held-the bank out to the public as a solvent -banking institution, should not now be permitted to recover from defendant for doing business with the bank because it was insolvent. The situation is similar to that described by Judge Elliott in Sioux Falls Trust & Savings Bank v. Homer W. Johnson Co., (D. C.) 20 F. (2d) 693, wherein he said:
“It is repugnant to the instincts of honesty and common decency to say that the state can authorize, a bank to open its d’oors *8for the transaction of a banking business, that it will supervise, regulate, and control the transactions of that institution, and in effect say that as long as it is permitted to continue that business it is a continuing invitation for depositors to place their money there for the purpose of checking and the transaction of a banking 'business in the usual way, and then to say that, notwithstanding this, a man may walk into that bank in the best of good faith and deposit, as did the defendants here, more than $13,000, and notwithstanding the fact that in the transaction between these defendants and Frank H. Johnson, not a single account was overdrawn, the money was there belonging to the parties drawing the checks, the transfer was made in the usual way, in good -faith, and notwithstanding that the bank had had the benefit of the deposit of this large amount, with no appreciable change upon the face of the record in the position of the bank, except an increased demand for cash on the part of the depositors, the plaintiff here may maintain an action to impress the amount that the defendants, under those circumstances, legitimately drew from those deposists, with a trust and recover the amount so drawn by the defendants, keeping the balance of the deposit made by the defendants, and complaining only that by a legitimate banking transaction, with no thought or intent to prefer a creditor, checks were drawn, and the balances due these defendants in the bank were legitimately reduced. No such purpose or intent should be, nor in my judgment can be, reasonably attributed as the intent and purpose of the Legislature in the enactment of the South Dakota statute relied upon by plaintiff in this action. There is an entire absence of fraud, or intent to prefer, and, in my judgment, both must concur to present facts actionable under this statute.”