Page:North Dakota Reports (vol. 48).pdf/211

 be a valid prior lien upon the premises. In July, 1917, R. C. Kittel & Co. and as individuals, were adjudicated bankrupts. There is also evidence in the record to the effect that the Alfalfa Valley Land Company and the Northern Trading Company are insolvent. R. C. Kittel was president of the First State Bank of Lucca, vice president and general manager of the Alfalfa Valley Land Company, and vice president of the Northern Trading Company. His brother, W. F. Kittel, was cashier of the defendant bank and secretary of the Northern Trading Company.

In the record there is a real estate loan record of the bank. There are 492 loans in this register aggregating $1,449,500, and covering a period between January 12, 1904, and October 20, 1914. Eight loans, aggregating $30,000, are listed, running to the defendant, as mortgagee. There appear numerous loans wherein R. C. Kittel is mortgagee, and likewise wherein the Northern Trading Company is mortgagee. There appears a loan from the Ellsburys to the Northern Trading Company in 1910, and likewise another loan from the Ellsburys to R. C. Kittel in 1912. both of which were assigned to the Farmers’ & Merchants’ Savings Bank of Minneapolis. Evidence was introduced to the effect that no commission, exchange, or consideration was ever paid into the bank on either the Ellsbury or the Alfalfa Valley Land Company loan; that receipt of the proceeds of such transactions does not appear on any of the books of the defendant bank. The testimony of the present cashier, Crick, refers to this real estate register as a record of real estate loans made for the convenience of customers. He testified that if the Ellsbury and Alfalfa Valley Land Company loans were handled by the bank they would appear and go through the records of the bank, and if there was anything received on the proceeds of them they would appear on the records of the bank, and if such proceeds were received and they did not appear the books would be out of balance, and that the books of the bank were not out of balance.

In an exhibit introduced it is shown that the assistant secretary of the land company was specifically not authorized by the by-laws to execute notes and mortgages of such company. In the mortgage from such land company to plaintiff, it appears that Mr. Patten, the assistant cashier of the defendant, took the acknowledgment of Thompson, the assistant secretary, who executed such mortgage in behalf of the incorporated land company.

Upon special questions submitted, the jury found that the defendant