Article Text
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.
