
    In re Estate of B. F. Prunty. University State Bank, Appellee, v. C. J. Johnson et al., Appellants.
    1 INDEMNITY: Indemnity to Bank — Construction. An instrument in writing, though, addressed to the state superintendent of hanking, entered into hy the stockholders of a hank in order to avoid an impairment of the capital stock of the hank, wherein the stockholders “guarantee the said bank against loss” in a named amount on certain hills receivable, is a contract of indemnity to the hank; and the hank may maintain an action thereon, its acceptance of the instrument being presumed. (Sec. 10982, Code of 1924.)
    2 INDEMNITY: Indemnity Against Impairment of Bank Capital — Consideration. An agreement hy the stockholders of a hank with the state superintendent of hanking that the former will indemnify the hank (a third party) against loss on certain bills receivable, needs for its support no consideration moving from the hank to the in-demnitors. Sufficient consideration is found in the interest of the stockholders in preserving the hank as a going' concern and in preventing an impairment of the hank’s capital. (See Book of Anno., Vol. '1, See. 9441, Anno. 27 et seq.)
    
    3 EXECUTORS AND ADMINISTRATORS: Claims — -Premature Filing. The filing of a claim against an estate prior to the doing of some act which is necessary to fully mature the claim, i. e., a demand of payment, will not render the filing premature when such act is done prior to the hearing.
    4 BANKS AND BANKING: Indemnity Against Loss — “Charging Off” Item of Loss — Effect. The act of a bank in “charging off” on its hooks an item of loss in no manner affects the right of the bank to proceed against a party who has legally agreed to indemnify the hank against such loss.
    Headnote 1: 31 C. J. pp. 458, 469. Headnote 2: 31 O. J. p. 422. Headnote 3: 24 O. J. p. 327. Headnote 4: 31 O. J. p. 430 (Anno.)
    
      Appeal from, Polk District Court. — Joseph E. Meyer, Judge.
    March 16, 1926.
    The University State Bank filed a claim against the estate of B. F. Prunty, deceased, for $12,400, based on a contract, which will be later set out. The court directed a verdict for the claimant, and the executors appeal. —
    Affirmed.
    
      
      C. E. Hunn and H. S. Hunn, for appellants.
    
      Howe & Howe, for appellee.
   MorliNG, J.

B. F. Prunty in his lifetime was president of the claimant bank. Under date of March 17, 1922, the deceased and other officers and directors of the bank executed the following instrument:

“To Mr. W. J. Murray,

“Superintendent of Banking,

“Des Moines, Iowa.

“Dear Sir:

“For the consideration of being permitted to carry in the assets certain receivables an’d real estate referred to below and designated as doubtful by the examiners, we, the undersigned officers and directors • of the University State Bank of Des Moines, Iowa, severally guarantee the said bank against loss in an amount not to exceed one hundred dollars ($100) per share of the capital stock of said bank owned by us today and set out opposite our signatures, on the following paper, to wit:

. “H. H. Barton, farm of 655 acres, located in Kittson County, Minn.

“C. A. Housh, .120-acre farm, located near Ames, Story County, Iowa.

“Notes as follows:

“Master Truck & Tractor Company, including direct and indirect line.

“DeVeny Motor Company, including direct and indirect line.

“It is understood that the management of the bank may have eighteen (18) months in which to collect said paper and that the guarantors will take up any residue unpaid or unliquidated at that time, at the will of the superintendent of banking, in accordance with and to the extent of the above guarantee.

“It is agreed by the undersigned officers and directors of said bank that whatever loss is covered by this guarantee be borne in proportion to stock owned by them in the said University State Bank, and that this guarantee does not exceed the par value of the stock owned.

“It is also understood that the liability of.the guarantors under this guarantee in no way affects their further liability as stockholders, and that no stock will be transferred on the books of the bank without the consent of the superintendent of banking.

“Nothing in this agreement or guarantee is construed to prevent the said guarantors from being reimbursed for any losses sustained by this guarantee from future earnings or assessment on the stockholders if approved by said stockholders at a legal meeting.

“Dated this 17th day of March, 1922.

“[Signed] B. F. Prunty 124

“R. A. Crawford, 5 shares

“B. Frank Prunty, 121

“A. M. Haggard,- 80

“GL N. Sherman, 10 shares

“W. S. Hartsook, • 5 shares

“B. D. YanMeter, 16 shares.”

This instrument was given pursuant to letter from the state banking department to the claimant bank, dated March 15, 1922, reading as follows:

“I am enclosing form of guarantee very similar to that furnished by yourselves when in your office but'having several additional features that we think will clear up any misunderstandings that might grow out of the matter. We especially think that the last paragraph is one that should be inserted for the protection of you men in case you need to take care of losses thát belong possibly to all stockholders. If this is satisfactory please have it signed as individuals, inserting the number of shares of stock after each signature on the sheet. You understand that- the officers sign individually and not officially. A carbon copy of this guaranty is enclosed for your files. We have consented to this temporary disposal of the matter, considering that with this guaranty the capital stock at the present time is unimpaired. We will leave your bank in the particular charge of an examiner, who will keep in close touch with conditions, with a possibility of eliminating smaller doubtful lines in the meantime.”

B. F. Prunty continued as president of the bank until the date of his death, March 12, 1923. B. Frank Prunty, his son and one of the executors and one of the signers of the agreement, was cashier, and continued to be such for some months after his father’s death. The signers of the agreement were the owners of shares in the bank to the number set opposite their signatures. Some of the signers have paid, as provided by the contract. Some have not. This claim was filed September 8, 1923. On December 20, 1923, the banking department wrote to the then cashier of the claimant bank, as follows:

“The department holds a guaranty signed by the directors of your bank, dated March 17, 1922, covering certain doubtful receivables, said guaranty being proportionate to the shares held by each director. It was the understanding had, that the bank Avould have eighteen months in which to collect the paper so guaranteed. The time having now elapsed it is the request of this department that you proceed to collect under the guaranty. You will kindly advise this office that you will comply with this request!”

[Signed]

“P. S. I believe you have a copy of the guaranty. If not, advise us, and we will furnish same.”

The claimant’s cashier, on December 28, 1923, replied, acknowledging receipt of the letter, and stating that the guarantors had on that date been notified to pay within 30 days the full amount of their liability under the guaranty. On the same date, a letter was sent by the cashier to the executors, stating:

“Pursuant to instructions from the state banking department under date of December 20th, 1923, you are hereby required within thirty days from date hereof to pay in to the University State Bank the full amount guaranteed by said deceased under date of March 17th, 1922, to cover certain doubtful receivables held among the assets of the University State Bank which have not been collected within the time specified in said guaranty. The amount due from you as said executors on account thereof is $12,400. A claim for this amount was filed against you in the probate court of this district under date of September 8th, 1923.”

The item referred to in the agreement as the Barton farm represented originally -an $8,000 note given by Barton, to which were added advancements for taxes and accumulated interest, bringing the amount up to $14,700. This was secured by a mortgage upon the land in Minnesotai to which reference is made in the agreement. The prior incumbrance was such that the security was worthless. The C. A. Housh item refers to a piece of land in Story County that had been acquired by the bank on a trade. It was subject to prior incumbrances to the amount of the value of the land or more. The bank was threatened with a claim for personal judgment .for deficiency, and after decedent’s death, relinquished to the prior mortgagee all its claim to the land. This farm was carried on the books- of the bank as an asset to the amount of $16,650, which represents the value of automobiles traded by the bank for the land. The other two items mentioned in the agreement represented personal obligations, one of them amounting to $43,000 and the other to $4,300. There has been some charging off in reference to these last two items, the particulars of which are not shown. The testimony as to the amounts of the items, as given by the bank examiner and by the new president and new cashier of the bank, and as to just how. and where they were carried, is not altogether clear or without variances. A published statement by the bank, made shortly before the trial, shows undivided profits amounting to $34,844.08. One of the witnesses thought that this included $10,600 collected from other signers on the guaranty. There is no evidence as to what became of decedent’s stock, other than that the executors have disposed of it. No bad faith on the part of the bank or its management or of the banking department is claimed. The bank is still in operation,

I. Appellants objected to some of the testimony when offered to show that the amounts were a total loss, and that the bank had been diligent since decedent’s death in the effort to make collection!" Much of the testimony on these subjects was not’ objected to at the time it was offered. The witnesses were cross-examined elaborately, and the details, so far as known by the witnesses, brought out on cross-examination; and the witnesses also produced on cross-examination a number of original documents on account of the absence of which defendants were complaining. At tbe close of plaintiff’s evidence, tbe defendants made a general motion to strike out all of plaintiff’s testimony, as well as to direct a verdict. To treat in detail tbe record relating to tbis point would unwarrantably protract tbe opinion. We find sufficient evidence in tbe record, competent or not objected to at tbe time it was offered, and elaborated on cross-examination, and uncontradicted, to require a finding that tbé bank bas sustained a loss on tbe items named in tbe agreement to an amount much in excess of tbe entire amount agreed to be contributed. Tbe court below was not in error in finding this fact established. Tbe rulings on evidence were not erroneous, and were without prejudice.'

II. The appellants elaborately argue tbe construction and effect of tbe contract. We confine ourselves to appellants’ principal contentions.

It is strenuously urged that tbe contract is one of guaranty; that it is with the superintendent of banking, and not with tbe bank; that tbe superintendent of banking, as a party to the contract, represents tbe depositors, and not tbe bank.

It is inaccurate to speak of tbe contract as one of guaranty. It is one of indemnity, and it is to indemnify tbe bank against loss on tbe stipulated items. 28 Corpus Juris 892; 31 Corpus Juris 419. The language of the contract itself, Avlaile it is addressed to tbe superintendent of banking, is plainly one of indemnification of tbe bank from loss. It must be held to have been accepted by tbe bank. Appellants’ effort to reframe tbe instrument so as to make it read, “We, tbe undersigned, officers and directors of tbe University State Bank of Des Moines, severally guarantee to Mr. W. J. Murray, Superintendent of Banking, Des Moines, Iowa, tbe said bank against loss,’’ etc., is a perversion of its language and meaning. Tbe superintendent of banking or tbe state bad no personal interest in the transaction. Tbe rights of depositors were most effectually conserved by maintaining tbe solvency and prosperity of tbe corporation. Tbe interests of tbe decedent and tbe depositors in tbis regard were identical. Tbe value of the assets of tbe bank as a going institution, and tbe security of tbe depositors, their ability to obtain ■ payment of checks in tbe regular course of business, rather than to finally draw out tbe deposit in tbe form of tbe dividends of a receivership, were of vital importance to them, as well as to stockholders. On well settled principles, tbe promise was made for tbe benefit of tbe bank, and (it being otherwise unobjectionable) tbe bank may recover thereon. Marble Sav. Bank v. Mesarvey, 101 Iowa 285; Chicago, R. I. & P. B. Co. v. City of Ottumwa, 112 Iowa 300; Gould v. Gunn, 161 Iowa 155. If this were not true, still by express statute tbe bank is authorized to recover. Code of 1924, Section 10982; Grennell v. Cass County, 193 Iowa 697, 704.

It'is urged in support of this contention that no consideration moved from tbe bank to Prunty. In tbe first place, this was not necessary (cases above cited); and in tbe second place, the signers of tbe agreement were interested in beeping the bank open and making good tbe impairment of its capital. This was a sufficient consideration for their obligation, and inured to their benefit. Interstate Tr. & Banking Co. v. Irwin, 138 La. 325 (70 So. 313). Tbe instrument is not one (except consequentially) to indemnify tbe depositors against loss. It is to indemnify tbe bank. Tbe signers were interested in tbe bank and in its recuperation. Money paid on tbe obligation would become tbe property of tbe bank, whether they intended to make a donation or that tbe other stockholders should share in the benefit thereof or not; and necessarily the property in tbe obligation and tbe right to enforce its performance were in tbe bank. Wright v. Gurley, 133 La. 745 (63 So. 310); Interstate Tr. & Banking Co. v. Irwin, 138 La. 325 (70 So. 313). Tbe signers were conducting a quasi public institution, under tbe supervision of tbe state banking department. Undoubtedly they published tbe required statements while they were in control, as their successors did after them. Those statements and their permission to continue in tbe operation of tbe bank and to receive money on deposit, as authorized by tbe state, were founded, in part at least, upon this agreement; and tbe indemnitors will not be permitted to deny its efficacy. Kennedy v. Young, 136 La. 674 (67 So. 547); Pauly v. O’Brien, 69 Fed. 460.

III. It is urged that tbe claim was prematurely filed; that tbe superintendent of banking did not require payment; and that no demand for payment was made. The law limits the time for filinS claimS against ai1 estate> and claims must to be recoverable, be filed within the prescribed time, regardless of their maturity. A claim not filed within six months is postponed in payment to claims filed within that time. Claimant was only performing its duty and asserting its rights in filing the claim so as to get the advantage of position. The superintendent of banking did, after the expiration of the 18 months, require the bank to proceed with the collection. Demand for payment was made. It is immaterial that the demand to proceed and the demand for payment were made after the claim was filed.

It is urged that the executors, on making payment, would be entitled to immediately sue the bank to recover the amount paid, together with expenses of their defense. The contract does not so read. They may be reimbursed from “some future earnings or assessment of the stockholders if approved by said stockholders at a legal meeting.” It is not shown that future earnings have been made, or that the stockholders have approved reimbursement. The money, when paid in, as has been noted, will belong to the bank.

It is objected that the guaranty in terms of two farms is meaningless. The indemnity agreed upon is against loss upon stated items. The items appear on the records of the bank, and the meaning of the instrument in respect to them cannot be doubted.

It is said that there can be no recovery for what has been charged off. The charging off is most persuasive evidence of the existence of a loss, and the loss is not less from the fact that ü is so shown by tbe books-

We should, perhaps, add that the foregoing discussion is not to be construed as an intimation of opinion upon the rights of the representatives of the estate, as between them and the other contributors or stockholders, nor as foreclosing any right to contribution or reimbursement on proper proceedings between necessary parties. We are not to be understood as expressing any opinion upon those questions, nor upon the effect thereon of future developments from the operations of the bank.

The judgment is — Affirmed.

De Graee, C. J., and EvaNS and Albert, JJ., concur. •  