First Dakota National Bank was established on Dec. 7, Headquartered in Yankton, SD, it has assets in the amount of $1,,, Its customers are. First Dakota National Bank, Agricultural Loans, Banks, Financial Services, complete business, agriculture, mortgage, personal banking and investment needs. Below you will find ratings, reviews, corporate information, directions, office hours, their phone number, online banking website, and branch locations. Bank.
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|How long mobile check deposit chime||Consequently, we affirm the district court's instruction regarding "dishonest or fraudulent" acts. This court imputed to the bank the knowledge that Gibson Livestock was engaged in a fraudulent check kiting scheme and that the bank's ex-president was a major participant in the scheme. Trial transcript Tr. Paul did not act vexatiously or unreasonably in refusing coverage under the fidelity bond. Pence, F.|
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Submitted May 14, Decided July 14, Stephen M. Johnson, Yankton, S. Knudson and Thomas H. Crouch, and Paul T. Paul for losses allegedly caused by dishonest former employees of American Bank and sought recovery under two fidelity bonds issued to American Bank by St. The case went to trial and the jury found in favor of First Dakota on 12 of its 14 claims against St. The district court granted St.
Paul's posttrial motion for judgment as a matter of law on four of the 12 claims that the jury had found in favor of First Dakota. Both parties appeal. We affirm in part, reverse in part, and remand. Unbeknownst to the bank's stockholders, depositors, or bank regulators, Deam was involved in a fraudulent scheme to divert bank funds to his own personal use.
During the scheme, Deam's ownership in the holding company increased from 8. The FDIC examiners informed the board that several bank officers were engaging in self-serving conduct that weakened the bank's asset portfolio.
The examiners also cited numerous apparent violations of federal banking laws and regulations. Lillibridge immediately contacted Lawrence Piersol, an attorney hired by American Bank. After an investigation, Piersol notified St. Paul on September 10, , for a claim on this loss. Paul concedes this fact. See St. Paul's brief at On February 19, , in accordance with the terms of the fidelity bonds, St. Paul notified American Bank that the bonds' coverage would terminate on April 19, American Bank subsequently filed a revised proof of loss with St.
Paul on August 1, Trial transcript Tr. Because American Bank's liabilities were greater than its assets, First Dakota requested a substantial amount of money from the FDIC to finalize the merger. As an additional condition of the merger, First Dakota was obligated to seek reimbursement for losses allegedly caused by Deam and other American Bank officers. The purpose of this repayment schedule was to reimburse the FDIC for the money it paid to First Dakota to finalize the merger.
Paul on March 22, , and the trial commenced on May 7, First Dakota sought recovery from St. Paul for losses sustained by American Bank on 14 separate transactions. Paul on the two remaining claims, namely the Business Expense claim and the Emmick claim. The district court, however, after the verdicts, granted judgment as a matter of law to St. CIV D. Both parties appeal and raise a salmagundi of issues. Discussion A. Statute of Limitations 10 St. Paul issued two bonds to American Bank insuring against losses resulting directly from dishonest or fraudulent acts committed by an American Bank employee acting alone or in collusion with others.
In order to recover under the specific terms of the bond, the insured was required to notify St. Paul of a loss "at the earliest practicable moment not to exceed 30 days after the discovery of a loss. Paul's app. Within six months after the discovery, the insured was required to furnish St. Paul with a proof of loss. Finally, the insured was required to initiate legal proceedings, if necessary, within 24 months after discovery of a loss.
Specifically, the jury found that the insured notified St. Paul "as soon as practicable" and also that this notification was within 30 days after discovering the loss. The jury was not required by the interrogatories to specify the exact date upon which American Bank should have reasonably assumed that an insured loss had been incurred; in other words, the exact date when a loss was discovered. Paul argues that First Dakota failed to file this lawsuit within 24 months after discovering a loss and, therefore, is barred from any recovery.
Notwithstanding the fact that the jury specifically found that American Bank timely notified St. Paul "as soon as practicable" and also within 30 days after discovering an insured loss, St.
Paul contends that on either January 17, , or on March 3, , American Bank discovered facts sufficient as a matter of law to conclude that an insured loss had occurred. Because the discovery of a covered loss allegedly occurred more than 24 months before First Dakota actually filed its complaint on March 22, , St. Paul contends that First Dakota's lawsuit is entirely barred by the bond's two-year statute of limitations provision.
In the state report, the board learned that American Bank had paid more than the net book value of the identifiable assets and liabilities of three leasing companies and a security title company when the Bank acquired them. All of the businesses had been part of Deam's holdings. Also, the board learned then that the state examiners "criticized" this transaction principally because American Bank had included the purchased business's goodwill as an asset on its financial sheets.
Paul claims that these facts were sufficient to cause a reasonable person to assume that a covered loss had been incurred. Under St. Paul's argument, therefore, First Dakota had until January 17, , which is 24 months after American Bank allegedly should have discovered the loss, to bring its lawsuit.
On that date and based on the state report, American Bank did not become aware of facts sufficient to cause a reasonable person to assume that a loss covered by the fidelity bonds had been incurred. Paul contends that the state's criticism of American Bank's inclusion of goodwill as an asset and of the more than net book value price premium paid for the leasing companies was sufficient for American Bank to have assumed that a loss covered under the bond had been incurred; in other words, that American Bank had discovered a loss.
The evidence does not support this contention. Russell Andrews, the South Dakota state examiner, when asked on cross-examination regarding the premium paid by American Bank, stated that these leasing companies could have a fair market value in excess of their net book value. Regarding the inclusion of goodwill as an asset, Andrews stated that the state simply wanted American Bank to change how it reflected the bank's assets. Although American Bank could still reflect those assets on its financial statements, the state wanted to know how much of the goodwill asset was considered to be an intangible asset.
Andrews also stated that there was no proof of dishonesty by American Bank officials at that time. In our judgment, the facts known by American Bank on January 17, , were not sufficient as a matter of law to cause a reasonable person to assume an insured loss had been incurred so as to trigger the bond's two-year statute of limitations provision.
Paul next argues that knowledge held by key employees and officers and obtained in the course of their employment can be imputed to the American Bank board of directors. See First Nat'l Bank of Sikeston v. Transamerica Ins. In effect, St. Paul argues that Deam and Langley's knowledge of their own fraudulent conduct should be imputed to the board. Under this theory, St. Paul argues that the American Bank board should be held to have discovered a loss by January 17, We disagree.
Bank officers knew that the president was part owner of Gibson Livestock and that he authorized an immediate line of credit to Gibson Livestock on checks deposited but not yet collected.
The bank had previously been advised by the Comptroller of the Currency that this credit extension constituted a blatant conflict of interest, that this practice should be immediately discontinued, and that its president should resign. The president, however, refused to resign, and the bank did not fire him.
Also, after the president eventually resigned several months later, the bank knew that a bank employee was telling the now ex-president on a daily basis the amount of money necessary to cover Gibson Livestock checks received that day. It was apparent that Gibson Livestock was issuing checks which exceeded its closing balance on the date of issue by a substantial amount of money. This court imputed to the bank the knowledge that Gibson Livestock was engaged in a fraudulent check kiting scheme and that the bank's ex-president was a major participant in the scheme.
We concluded that this knowledge was sufficient to trigger the termination clause concerning the fidelity bond. The key difference is the lack of knowledge held by the American Bank board of directors about the true nature of Deam's fraudulent activities. Additionally, knowledge of key officers cannot be imputed to a board of directors when the officers' interests are adverse to the bank's interests.
In this case, Deam's interests were adverse to those of American Bank. In summary, we conclude that Deam and Langley's knowledge of their own fraudulent conduct cannot be imputed to the American Bank board of directors. In addition to the board members, the following persons also attended this meeting: 1 David Knudson, an attorney hired by American Bank; 2 David L. The examiners informed the board of the bank's weakened financial condition and of the transactions that resulted in numerous apparent violations of federal banking laws and regulations.
See First Dakota's app. See First Sec. Kansas Bankers Sur. Clinton State Bank, F. Mere suspicion of loss by the insured is not sufficient to trigger the notice requirement. In other words, the bank must have actually discovered the loss. Perkins, F. Cable, F. Neither negligence nor any failure to discover what by due diligence might have been discovered will bar an insured from recovering the loss.