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SUPREME COURT GIVES OPINION IN BANK CASE HERE IMPORTANT DECISION MADE IN FAVOR OF RECEIVER FOR FIRST STATE BANK OF WALNUT GROVE The Supreme Court of Minnesota last week handed down a decision of the utmost importance to banks and bankers as well as to private citizens. This decision was in answer to the appeal made in the case of A J. Veigel, Commissioner of Banks as Receiver of the First State Bank of Walnut Grove as plaintiff with E. E. Converse and other defendants as appellants. The defendants in the case were bondsmen in the First State Bank of Walnut Grove for county funds on deposit there. They paid the amount of their secured obligation and later attempted to use the amount thus paid to offset their personal obligations in the closed bank. The decision handed down last week practically reverses the decision of two former and similar cases in the Supreme Court. However, it follows the decision in the United State Supreme Court. The syllabus of that opinion is; "Debtors to an insolvent bank cannot, when sued by the receiver, offset moneys paid by them after the insolvency as sureties on a bond of the bank given to secure the repayment of deposits." In the opinion the facts of the case are set forth in the two following paragraphs; "Two actions by the Commissioner of Banks, as receiver of the First State Bank of Walnut Grove, to recover from defendants on their joint and several obligations acquired by the bank before its insolvency. One of the cases, (25548), is on a written guaranty of several notes owned by the bank. They were recited by the guaranty to be of "questionable value" and are now said to be worthless. Without going into details, we assume that the obligations in question, although in terms of guaranty, may now be considered a primary liability of defendants. The other action, (25547), is on a promissory note of defendants executed and delivered to the bank in order to make good impaired assets and for no other purpose. The appeals are from orders sustaining demurrers to supplemental answers, one in each case. The only point now for consideration is whether the defendants are entitled to the equitable set-off, the right to which was asserted by the supplemental answers. "The attempted set-off is that of substantial amounts paid by several of the defendants in each case, after the insolvency, to make good their liability as sureties on a depository bond required of the banks as a condition precedent to the deposit therein of the public moneys of the County of Redwood. Other set-offs are claimed but the only one the right to which is seriously urged upon these appeals is of the moneys paid to the county under the depository bond." After citing a number of cases in point the opinion closes by saying: "It is clear that, unlike the reciprocal claims between a bank and a depositor who is also its debtor on ordinary commercial paper, there is absent from the claims now under consideration that degree of mutuality ordinarily requisite to an equitable set-off. They arise out of transaetions which are not only independent (Continued on page twelve)
