Court Opinion

ID: 8192324
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:15:25.817899+00
Date Added: 2024-06-11T16:40:39.065862
License: Public Domain

Winslow, C. J.
(dissenting). I have been unable to agree with the conclusions of the court in this case and I wish to state very briefly my reasons. The purpose of sec. I791e, Stats., is to make it certain that the creditors of a trust company shall have a substantial amount of collateral security in the hands of the state treasurer at all times during the existence of the company, to which they may resort for payment of their claims in case the trust company fails to pay them. The duty to keep the securities intact up to the very moment when the trust company ceases to exist is absolute. State ex rel. Sheldon v. Dahl, 150 Wis. 73, 135 N. W. 474. It is established here that the securities were surrendered during the life of the trust company, that they are no longer within the reach of the creditors, that the relators, or at least a part of them, are creditors of the trust company for whose benefit the deposit existed, that they have exhausted their remedy against the trust company, and that they are still unpaid. That these facts make a prima facie case of breach of the treasurer’s official bond resulting in injury to the relators cannot be doubted. This is only met by the argument that the evidence conclusively shows that no damage resulted to the relators by reason of the surrender of the securities just *288before the legal decease of the company, because they would have been surrendered with exactly the same result a day or two later, just after the legal decease of the company, when their surrender would have been authorized and legal. In my opinion this is pure speculation. What in fact happened __ after March 1st furnishes no persuasive proof of what would have happened had there been no delivery of the securities on that day. . To my mind it seems extremely probable that the treasurer would not have delivered them at all had he waited until March 2d. At that time both the trust company and the Northern Blue Grass Land Company were financially embarrassed and practically bankrupt. The Wisconsin Blue Grass Land Company turned over all .its assets to the Northern Blue Grass Land Company in March, 1908, the latter corporation assuming to pay all liabilities of the former. As a matter of fact, the personnel of the two companies was the same. There had been a period of “high finance” at Hudson and the harvest of bankruptcy and ruin was being reaped. The officers of the trust company and the two land companies were the same, and they juggled securities back and forth whenever necessity required. On March 1, 1909, there were no securities left in the hands of the trust company to protect the bond issue of the Wisconsin Blue Grass Land Company. The trust company had on November 13, 1908, borrowed $35,000 from the Union Investment Company of St. Paul for the purpose of paying up its indebtedness, which at that time was about $50,000, besides $55,000 face value of the bonds of the Wisconsin Blue Grass Land Compafiy outstanding. The Union Investment Company knew nothing of these last named bonds nor of the agreement of the trust company to hold securities for their, protection, and hence knew nothing of the claims which might be made against the trust company for breach of its contract with reference to those bonds. When the negotiations were on between Mr. Haven, acting for the trust company, Mr. Nye, acting for the Union *289Investment Company, and Mr. Dahl, for tbe surrender of tbe securities in question, nothing was said about any possible liability on tbe Blue Grass Company bonds. Tbe situation was delicate; there might be an explosion at any time if this additional liability was discovered. Dahl was finally persuaded to turn over $45,000 face value of the securities, retaining $5,000 as a measure of safety. At that time be bad received no claim from any one. An inquiry bad been made by one Ring on February 26th, but no claim made. On the morning of March 2d Dahl received a letter from Ring stating that be bad a claim against tbe trust company as trustee and asking that tbe securities be retained until it was satisfied. On March 4th Mr. Dahl received a like letter and demand from one Greer. He at once wrote letters to tbe trust company and to Haven expressing surprise, demanding an explanation, and stating that be would bold tbe remaining $5,000 of securities for a time. There was at once activity on tbe part of Bailey; Ring was paid by check, and tbe Greer claim was bought by tbe Northern Blue Grass Land Company by giving a mortgage on some of its lands. Bailey and Haven wrote letters on March 5th and 6th respectively explaining that tbe claims bad been settled. In these letters Mr. Dahl first learned of tbe bond issue, but was assured that tbe claims were not valid. On April 14th Mr. Haven sent to Mr. Dahl written statements signed by Greer and Ring that they bad no claims against tbe trust company, and on April 17th following Mr. Dahl surrendered tbe remaining $5,000 of securities to Mr. Haven. My proposition is that no one can say what would have happened bad Mr. Dahl held tbe securities until March 2d instead of surrendering them on March 1st. At that time be would have been in possession of tbe letters from Greer and Ring making definite claims on tbe fund. It is, most improbable that be would have ignored these claims; bis letters of surprise to Bailey and Haven are proof enough of this. He would doubtless have *290retained the entire $50,000 of securities. What effect would this have had on the attitude of the Union Investment Company, which was financing the trust company’s retirement and knew nothing of the liability resulting from the bond issue?. The investment company advanced $10,700 of new money to the trust company on March 19th. Would Bailey have been able to raise the money to buy up the Ring and Greer claims if the true situation had become known, the securities retained by Dahl, and the investment company thereby delayed in obtaining the securities for which it was clamoring ? Is it- not extremely probable that there would have been an explosion had the investment company been unable to obtain the securities, especially when it learned for the first time of the bond issue? Would not the treasurer have ascertained the utter falsity of the affidavit of Bailey to the effect that the trust company -owed no debts or obligations of any kind when in fact it owed many thousands of dollars to the investment company and was contemplating a further loan? Would not the treasurer have demanded a complete investigation of the whole situation before releasing the securities if these facts had been before him ?
The events of life are complicated and interdependent. A comparatively insignificant circumstance may lead on to the most momentous consequences. No man is wise enough to say what would have been the result had the apparently insignificant circumstance never happened. That must always remain pure conjecture. So I say in the present case that no one can say with any certainty what would have happened had the treasurer performed his duty as the statute lays it down, and hence I think the -prima facie case of damage resulting from the treasurer’s breach of duty is not met. It seems to me that a law expressly framed to protect the creditors against the dishonesty or business inefficiency of officers of trust companies has not been enforced in this case, and I regret the result.