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RECEIVERS NAMED FOR TWO BANKS Bismarck, N. D., Nov. 4.-The state banking board in meeting here has appointed R. O. Bryan, now in charge of the Slope County State Bank at Amidon as its receiver, and Harrison B. French as receiver for the State Bank of Bowman. C. E. Fodness of Bismarck was appointed a deputy state examiner.
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Stockholders Demand Removal Of Receivers Appointed By Lofthus Dickinson. N. D., Dec. 5.-C. L. Merrick of Minneapolis, representing the majority of the stockholders and creditors of the Security State Bank of New England, the S'ope County State Bank at Amidon and the Farmers' State Bank at Havelock, N. D., all of which were closed during the last year, has begun action demanding the removal of receivers appointed by O. E. Lofthus, and asking that the closed institutions be placed under court supervision with new receivers appointed. Judge .Thomas H. Pugh will conduct a hearing here December 20. The Bank of North Dakota is intervening on the ground that stockholders and other creditors have no right to intervene in the matter and should abide by the decision of the state banking board. The state guaranty of fund commission, consisting a leaguers, would intervene from standpoint of protection to the depositors and creditors.
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ASKS COURT TO NAME RECEIVERS C. L. Merrick, of Minneapolis, Brings Suit in Case in Stark Co. Dickinson, N. D., Dec. 5-C. L. Merrick of Minneapolis, represent ing the majority of the stockholders and creditors of the Security State bank at New England, the Slope County State bank at Amidon and the harmers State bank at Havelock, all of which have been closed by the state banking department during the past year, this week through his at torney, Ctto Thress, brought action asking that the affairs of the banks be placed under court supervision and demanding the removal of receivers now in charge of the closed institutions and new appointees placed in their stead. A hearing in the matter will be held in the court chambers in Dickinson on December 20, before Judge Thomas H. Pugh. The Guaranty Fund Commission will be represented at the hearing by the attorney general's department. while the Bank of North Dakota will be represented by L. A. Simpson. The Bank of North Dakota as one of the minor creditors of the closed banks claims that the stockholders and other creditors have no right to intervene in the matter and should abide by the decision of the state banking board, it was said. This point the stockholder creditors question. The Guaranty Fund commission is intervening from a standpoint of protection to the depositors and creditors. This, the majority creditors claim, would be acceptable to them. They further state that all they ask is a strict business management accounting of the affairs of the bank by those in charge.
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DENY RIGHT OF COURT TO NAME BANK RECEIVER Answer of State Boards Hold That Under Law Courts Are Without Power CASE IN DICKINSON The policy of the Guaranty Fund Commission toward administration of closed banks in the state is outlined in an answer filed in the Stark cirC. L. Young, for the marck, cuit court attorney by commission. of Bisis in the name the Fund Guaranty The answer Commission, North of State Da Board and state in cases in kota Banking as intervenors the of which G. L. Merrick, of Minneapolis, asked the court to remove receivers of three banks appointed by the banking board and to appoint receivers. It is contended, Mr. Young said, that the courts have no power to interfere with the administration of insolvent the banks in under_ circumstances held that exist- the ing these cases. It is supervision is under the Guaranty Fund Commission and the State Bank ing Board. Proposal on Receivers. The proposal of the state boards for the consolidation of receiverships also is discussed in the answer. It states that the boards as constituted with changes made in the election have "determined to group insolvent banks, where a grouping thereof shall be possible and place in charge of several of such banks conveniently located a single receiver qualified by practical experience as a banker and business ability to manage the affairs of said banks in a proper and businesslike manner." It is further stated that under the proposed grouping, made public a few days ago in which the number of receivers would be reduced half or more, to group the three banks involved under one receiver. The three banks are the Security State of New England. Slope County Bank of Amidon, and Farmers State Bank of Have lock. Purpose in Future. The answer of the intervenors sets out that at the time the banks became insolvent the state examiner then in office was appointed a receiver for each and his appointment in each case was approved by the state banking board. The Guaranty Fund Com mission has levied assessments since the failures began last year and will in due course pay the depositors. The commission under the law is the principal creditor of each bank. It sets out that the change of administration has caused a change in the personnel of the guaranty fund board and banking board and that a new state examiner is in office. It declares that under the direction and supervision of the Guaranty Fund Commission and Banking Board as now constituted the affairs of the banks will be handled so as to protect all creditors and stockholders and all parties interested. The case is scheduled to be heard in Dickinson Dec. 20. The Guaranty Fund Commission will also, it is announced, ask Judge Lembke to vacate an order appointing a receiver for the Slope County bank. The commission was informed that upon representations by Leslie Simpson. as attorney for creditors, Judge Lembke did name a new receiver for this bank.
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RECEIVERSHIP PLAN UPHELD BY ATTORNEY Fund Commission and Banking Board Control Insolvent Banks, Says Counsel, Bismarck. N. D., Dec. 10.-The policy of the Guaranty Fund Commission toward administration of closed banks in the state is outlined in an answer filed in the Stark circuit court by C.L. Young. of Bismarck. attorney for the commission. The answer is in the name of the Guaranty Fund Commission. State Banking Board and State of North Dakota as intervencrs in the case in which C. L. Merrick of Minneapolis, asked the court to remove receivers of three banks appointed by the banking board and to appoint receivers. It is contended. Mr. Young said, that the courts have no power to in terfere with the administration of insolvent banks under the circumstances existing in these cases. It is held that the supervision is under the Guaranty Fund Commission and the State Banking Board. The proposal of the state boards for the consolidation of receiverships also is d'scussed in the answer. It states that the boards as constituted with changes made in the election have 'determined to group insolvent banks, where a grouping thereof shall be possible and place in charge of séveral of such banks conveniently 10. cated a single receiver qualified by practical experience as a banker and business ability to manage the affa rs of said banks in a proper and business-like manner.' It is further stated that under the proposed grouping. made public a few days ago in which the number of receivers would be reduced half or more, to group the three banks in volved under one receiver. The three banks are the Security State of New England. Slope County Bank oi Ami don and Farmers State Bank of Have. lock. The answer of the intervenors sets out that at the time the banks became inslovent the state examiner then in office appointed a receiver for each and his appointment in each case was approved by the state bank. ing board. The Guaranty Fund Com. mission has levied assessments since the failures began last year and will in due course pay the depositors. The commission under the law is the principal creditor of cach bank. It sets out that the change of administra tion has caused a change in the per. sonnel of the guaranty fund board and banking board and that a new state examiner is in office. It declares that under the direction and supervision of the Guaranty Fund Commission and Banking Board as now constituted the affairs of the all creditors and stockholders and all parties interested. The case is scheduled to be heard in Dickinson December 20. The Guaranty Fund Commission will also is announced. ask Judge Lembke to vacate an order appointing a receiver for the Slope county banks. The commisson was informed that upon representations by Leslie Simpson, as attorney for creditors, Judge Lembke did name a new receiver for this bank.
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HEARING BANK CASE Important Question Expected In Trial at Dickenson, N. D. Dickenson, N. D., December 21.Powers of the guaranty fund commission, state banking board and courts as regards insolvent banks are expected to be clearly defined as the result of a case here today before Judge Lembke in Start county circuit court C.-L. Merrick of Minneapolis asked the court to remove receivers appointed by the Guaranty fund commission for the Security State Bank of New England, Slope county Bank of Amidon, and farmers State Bank of Havelock and appoint other receivers. The state, the banking board and guaranty fund commission hold through their attorney, C. L. Young, of Bismarck, that this is not within the power of the court and that the board and commission have complete control of insolvent banks. The commission will also ask Judge Lembke to remove a receiver which he appointed on request of attorney for creditors for Slope County bank. The answer filed by the commission whose personnel was changed through the recall election, reveals the intention of the commission to group several of the closed banks under one receiver thus reducing by about one half number of receivers in state banks in North Dakota.
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# SATE BONDING # FUND LIABLE # FOR BIG SUM Judge Pugh Holds They Shall Reimburse Slope County The state bonding fund is liable to Slope county for $24,576.51 of the funds of the county deposited by J. S. Douglas, county treasurer in the First State Bank and the Slope county State Bank of Amidon according to an opinion in the action brought by the county against the bonding fund commission received here today from District Judge Thomas H. Pugh. The amount asked by the county was about $97,000 this being the total balance of the county in the two banks at the time they closed and which could therefore not be turned over by Douglas to his successor in office. Judge Pugh held however that these banks had been designated as county depositories by the board of county commissioners in January 1919. Although this action of the board was suspended when deposit of county funds in the Bank of North Dakota was made compulsory it automaitacca- made compulsory it automaticaly compulsory deposit feature of the Bank of North Dakota law went into force. The only part of the loss therefore for which Douglas or his bondsmen are liable is that resulting from deposits made subsequent to March 15, 1921 when the depositary law passed by and the 1921 legislative session went into effect. As Douglas failed to secure the bonds from the banks provided for under this law he and his bondsman the state bonding fund commission are liable for sums deposited subsequent to that time These amount to $24,576.51.
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BONDING FUND LOSES CLAIM TO PREFERENCE Cannot Participate Ahead of Others in Assets of Closed Slope County Banks RULINGBYJUDGECOOLEY Regarded as Important, as Matter May Arise in Some Other Instances The State Bonding Fund is held not to be a preferred creditor in the assets of the Slope County State and First State Banks of Amidon, in receiver's hands, by Judge C. M. Cooley of district court, in sustaining the demurrer of L. R. Baird, general receiver, through his attorneys, Zuger and Tillotson, to the two actions begun by S. A. Olsness, Commissioner of Insurance, for the State Bonding Fund. The ruling is regarded as important by Mr. Baird, because there may be other cases in the state in which the same principle is involved. The bonding fund must take its place the same as other creditors of closed banks. The case was an aftermath of the judgment of $50,000 and costs obtain ed by Slope county against the State Bonding Fund because of the loss of over $90,000 of deposits in the two Amidon banks because, it was alleged by the bonding fund, the treasurer of the county had deposited money in the banks without demanding proper bonds. The bonding fund, seeking to recover from the banks, sought to be made a preferred creditor and have a trust fund declared in its favor against all the assets of the two banks. The demurrer set up numerous grounds, the one on which Judge Cooley based his decision being the contention that the bond of the bonding department was a general bond of the treasurer and the bonding fund therefore is not entitled to be preferred as a creditor although it had paid its liability because the treasurer had not complied in full, still owing the county over $40,000. Until the full debt of the county is paid, it was contended, the bonding fund is not entitled to subrogation. The case decided that the bonding fund cannot be made a preferred creditor while banks are still indebted to a county or other public corporation.
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Slope County Bank Case Is Up On Appeal Appeal has been taken to the supreme court in the case in which the State Bonding Fund seeks to have itself declared a preferred creditor in the defunct First State and Slope County Banks of Amidon, to recover $56,954.51, the amount recovered from the bonding fund by Slope county because of public deposits lost in the bank failures. The case, which is against L. R. Baird, receiver, and J. S. Douglas, county treasurer at the time the money was deposited and lost, is brought by S. A. Olsness, as Commissioner of Insurance. He asks that the money which had been deposited be declared a trust fund, that the assets of the bank be impressed with trust for the amount, and that the bonding fund have preference in its claim upon all of the assets of the banks, and he paid before the claims of the creditors of the banks are allowed.
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BONDING FUND NOT ENTITLED TO BANK CASH Does Not Precede Slope County in Participation, Court Rules The State Bonding Fund is not entitled to priority over depositors in participating in the assets of the closed Slope County State Bank of Amidon nor is the claim of Slope county to participate in any dividends the closed bank may pay foreclosed by the fact that the bonding had had paid a loss incurred the county, the supreme court held, in affirming the decision of Judge Charles M. Cooley of district court, in the case of the state bonding fund against L. R. Baird, as receiver of the bank. The state bonding fund had paid a judgment of $56,954.51 to Slope county because the court held that J. S. Douglas, former county treasurer, had illegally deposited $90,000 in two Amidon banks, both of which closed. The bonding fund contended
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of Insurance of the State of North Dakota, acting for and in behalf of the State Bonding Fund of the State of North Dakota, Plaintiff and Appellant. vs. L. R. Baird, as Receiver of the Slope County State Bank of Amidon, North Dakota, and J. S. Douglas, Defendants and Respondents. 1. Where a principal debtor is in default and a surety who is bound for a portion of the principal obligation discharges the debt to the extent of his liability, paying less than the amount for which the principal is indebted, the surety is not subrogated to the rights of the creditor against third parties to the extent that it may seek reimbursement from such source in competition with the partially satisfied creditor. 2. Section 10 of Chapter 158 of the Laws of 1919, which provides that the State Bonding Fund shall be subrogated to the right of the judgment creditor upon paying the judgment rendered against it or the principal on account of the default of the principal, does not amount to a contract giving to the Bonding Fund a right of subrogation in competition with the creditor where the creditor's claim is only partially satisfied. 3. Where a claim to pro tanto subrogation is based on contract, the contract right must be clear and certain before subrogation will be permitted thereunder to the detriment . of the obligee or creditor. (Syllabus by the Court) Appeal from the District Court of Burleigh County, Hon. Chas. M. Cooley, Judge. AFFIRMED: Opinion of the Court by Birdzell, J. Charles L. Crum, Esq., Bismarck, Attorney for Appellant. Messrs. Zuger & Tillotson, Bismarek, Attorneys for Respondent L. R. Baird.