Northwestern Trust Co. v. Smith

247 N.W. 379, 61 S.D. 179, 1933 S.D. LEXIS 16
CourtSouth Dakota Supreme Court
DecidedMarch 14, 1933
DocketFile Nos. 7361, 7409.
StatusPublished

This text of 247 N.W. 379 (Northwestern Trust Co. v. Smith) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northwestern Trust Co. v. Smith, 247 N.W. 379, 61 S.D. 179, 1933 S.D. LEXIS 16 (S.D. 1933).

Opinions

WARREN, J.

This is. -an appeal by the Northwestern Trust Company (substituted for C. H. Dillon), as administrator of the Bartlett Tripp estate, to recover the proceeds of two warrants issued by the defendant school district.

The facts of the case are substantially as follows: The plaintiff was the owner of two warrants of the -Colome independent school district. About the 1st of September, 1925, plaintiff forwarded the warrants to the Bi-Metallic Bank of Colome, S. D1., with instructions to collect the said warrants and remit the amount due the plaintiff, which was the sum of $4,347.64. The president of the Bi-Metallic Bank presented the warrants to the treasurer of the school district, and received from the treasurer his two checks upon the Tripp County State Bank, a -banking corporation also doing business in the city of Colome, S. D., the Bi-Metallic Bank indorsing and surrendering the two warrants therefor. On the same day, September 29, 1925, the Bi-Metallic Bank mailed to the plaintiff its cashier’s check in the sum of $4,347.64 as a remittance for the collection of said warrants, but the cashier’s check was not paid on account of the suspension of the Bi-Metallic Bank on October 2, 1925.

On the same day that the checks from the treasurer of the defendant school district were received by the Bi-Metallic Bank, they, along with other items, were cleared between the two banks in Colome, S. D., in the usual course of banking done by these two banks. The transaction was made in the usual method of clearance between banks in which the banks exchange the items that each had on the other, and the difference is paid in cash to *181 make the balance. In this particular clearing transaction were the two checks 'from1 the treasurer of the defendant school district drawn on the defendant Tripp County State Bank which the BiMetallic Bank presented for payment. Among the items presented by the Tripp County State Bank against the Bi-Metallic Bank was a check for $2,304.18 drawn by the treasurer of the defendant school district on the Bi-Metallic Bank against moneys which that bank had in its hands as matters of collection on tuition warrants. The Bi-Metallic Bank was not the depositary of the school district’s funds; the Tripp County State Bank having been designated as such. The balance in the clearing transaction was $866.96, for which the Tripp County State Bank, being the debtor, gave a draft on its correspondent, which was later, the same day, returned and paid; in cash.

At the close of the day on October 1, 1925, the last day the Bi-Metallic Bank was open for business, it had on hand in actual cash the sum of $1,047.39. The trial court in its findngs of fact found that on September 29, 1925, the defendant Bi-Metallic Bank of Colome, S. ¡D., was insolvent, and had been insolvent for some time prior thereto, although it had conducted its business and was not suspended until October 1, 1925. There is also evidence in the record that the cashier of the Tripp County State Bank had; been called into conference and had been told of the financial condition of the Bi-Metallic Bank by its president, and that there was a possibility of the latter bank closing its doors, unless financial assistance was received in the very near future. At the time of the procuring of the checks from the treasurer of the defendant school district, the cashier of the Tripp County State Bank advised Knecht, the president of the Bi-Metallic Bank, that he should take the drafts of the Tripp County State Bank and; not to remit through the Bi-Metallic Bank because of its condition.

Plaintiffi has brought his action, naming as defendants the superintendent of banks, the Bi-Metallic Bank, the Colome Independent School District, its treasurer individually, the Tripp County State Bank, and its board of trustees; the latter bank having- been subsequently taken over by the banking department of the state of South Dakota.

The matter came on for trial before the judge of the circuit court;-a jury having been waived by stipulations of .the parties. *182 After hearing the evidence, the court made and filed its findings of fact, substantially as set forth above, and conclusions of law, which conclusions are as follows:

"I. That on September 29th, 1925, said Bi-Metallic Bank became indebted to C. H. Dillon as the predecessor in interest of the plaintiff in the sum of $4,347.64 'by reason of having collected the said warrants of the said Dillon. That said bank has paid thereon the sum of $866.96 and $243.64 as set forth in the Findings of Fact; that the plaintiff is entitled: to recover as a preferred claim against the assets of said bank the further sum of $180.43, which represents the difference between the actual cash on hand in the bank at the> time it closed on October 2nd, 1925, which was $1,047.39, and the amount paid plaintiff as a preferred claim, which was ¡$866'.g6. That the remainder of said indebtedness, after allowing credit for the foregoing should be paid from the assets of said bank pro rata with the claims of other common creditors of said bank.

“II. That the Tripp County State Bank failed to pay to the Bi-Metallic Bank on September 29th, 1925, a portion of the amount of the checks which the Treasurer of the defendant school district had given in payment of the Dillon warrants, to-wit: the sum of $2,304.18 thereof. That the Bi-Metallic Bank had not the right or authority to accept from the Tripp County State Bank on September 29th, 1925, the check for $2,304.18 which the Treasurer of the defendant school district had given on the former bank, and of this the said Tripp County State Bank was bound to take notice, and accordingly the latter bank did not pay said checks given in settlement of the Dillon warrants to the extent of $2,304.18. That the plaintiff is entitled to recover said sum' of $2,304.18 from the Tripp County State Bank, to be paid by the trustees of said: bank pro rata with other creditors. That said Tripp County State Bank shall be subrogated to the rights of the plaintiff against the BiMetallic Bank so far as the former shall pay to the plaintiff its liability to the plaintiff as set forth above, such subrogation to be without prejudice to the right of the plaintiff to recover against the said Bi-Metallic Bank.

“III. That there is no liability to the plaintiff on the part of the defendant Colome Independent School District No. 24 on account of the transactions set forth in the foregoing Findings; that the'said defendant paid in full for the said Dillon warrants.

*183 “IV. That the plaintiff should recover costs from the BiMetallic Bank and the Tripp County State Bank, and from their respective successors in interest; and defendant Colonie Independent School District No. 24 should recover its costs from the plaintiff.”

The trial court by its judgment allowed full recovery against the Bi-Metallic Bank, allowed a partial recovery to the extent of $2,304.18 against the Tripp County State Bank, and denied plaintiff any recovery against the defendant school district. The plaintiff has appealed from that part of the judgment which allowed only a partial recovery against the Tripp 'County State Bank, and which denied any recovery from the defendant school district.

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Bluebook (online)
247 N.W. 379, 61 S.D. 179, 1933 S.D. LEXIS 16, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northwestern-trust-co-v-smith-sd-1933.