Butcher v. Butler

• Decision Date: 07 December 1908
• Parties: BUTCHER et al. v. BUTLER et al.
• Court: Missouri Court of Appeals

114 S.W. 564

134 Mo. App. 61

BUTCHER et al. v. BUTLER et al.

Kansas City Court of Appeals. Missouri.

December 7, 1908.

1. BANKS AND BANKING (§ 119)—BANK AND DEPOSITOR—RELATION.

A banker is guilty of no breach of trust or impropriety in using funds coming into his custody from general depositors, his relation to them being that of debtor and creditor, and in no sense that of trustee and cestui que trust.

2. BANKS AND BANKING (§ 80)—INSOLVENCY —DISTRIBUTION OF ASSETS—GENERAL DEPOSITS.

In a distribution of the funds of an insolvent bank all general depositors should share equally.

3. BANKS AND BANKING (§ 80)—INSOLVENCY —DEPOSITS—TRUST FUNDS.

A deposit of money in a bank by one who sustains fiduciary relations to the funds, and who deposits the money for the benefit of another with the knowledge of the banker, was not entitled to any priority at the distribution of the assets on the bank's insolvency, where there was no understanding that the deposit should be treated as a special deposit.

4. BANKS AND BANKING (§ 129)—"GENERAL DEPOSIT."

A general deposit is where the bank is given custody of the money deposited with the intention expressed or implied that the bank is not required to return the identical money, but only its equivalent; the legal title to the money in such cases passing to the bank.

For other definitions, see Words and Phrases, vol. 4, pp. 3061, 3062.]

5. BANKS AND BANKING (§ 153)—"SPECIAL DEPOSIT."

A special deposit is one where the bank merely assumes charge or custody of the property without authority to use it, the depositor being entitled to receive back the identical thing deposited in which case the title remains with the depositor, and, if the subject be money, the bank has no right to mingle it with other funds [citing Words & Phrases, vol. 7, p. 6574].

6. BANKS AND BANKING (§ 154)—NATURE AND FORM.

In the absence of proof to the contrary, a deposit in a bank is presumed to be general, and it devolves upon the party claiming the contrary to show that it was received by the bank with an express or clearly implied agreement that it should be kept separate from the other funds of the bank and the identical money or property be returned to the depositor.

7. BANKS AND BANKING (§ 80)—DEPOSITS— NATURE AND FORM.

Where money was deposited in a bank to secure payment of compensation under a well drilling contract, and, while the depositor had no right to check against the deposit, there was no agreement that the money should be kept separate from the other funds of the bank, it was a general and not a special deposit, though the transaction was called a "trust fund account" on the bank's books, and hence, on the insolvency of the bank, the depositor was not entitled to a priority over general creditors.

Appeal from Circuit Court, Bates County; Chas. A. Denton, Judge.

Action by Win Butcher and another against William J. Butler, as receiver of the Bates National Bank, and others. Judgment for plaintiffs, and defendants appeal. Reversed.

John A. Eaton, E. H. McVey, and W. O. Jackson, for appellants. Thos. J. Smith and Silvers & Silvers, for respondents.

JOHNSON, J.

Action in equity to obtain a preference over the general creditors of the insolvent estate of the Bates National Bank. Plaintiff prevailed in the trial court, and the cause is here on the appeal of defendants.

June 25, 1906, L. C. Martin and plaintiff B. T. Becker of Nevada, Mo., entered into a written contract with plaintiff William Butcher of Mound City, Kan., by the terms of which Butcher was to drill a certain well for Martin and Becker near Butler, Mo. To secure the payment to Butcher of the agreed consideration for his performance of the contract, it was agreed in that instrument: "Said first party (meaning Becker) agrees to deposit one thousand dollars in the Bates National Bank at Butler, Mo., as a guarantee of its part for the use of said second party (Butcher) for such drilling, * * * payment to be made to said second party as follows: Each well to be paid for when it is completed and capped or when drilling is stopped." The contract was deposited by the parties with the cashier of the Bates National Bank on the date of its execution, and at the same time Becker deposited two checks, one for $1,000, drawn by him on a Wisconsin bank, and the other for $500, drawn on a bank in Nevada. A general account was opened by the bank with Becker in which the amounts of these checks were treated as so much money placed to the credit of the depositor. In due time the checks were collected by the bank. Afterward Becker was charged in this account with the following item: "Trust fund, June 29, $1,000.00." The cashier testified concerning this item that on discovering that Mr. Becker, if he chose, might exhaust the account by checking against it, since it was a general account, Mr. Butcher demanded that the said sum of $1,000 be placed by Becker in the bank in a way that would not subject it to the payment of his individual checks, and to this end caused Becker to write the following letter to the bank: "Butler, Mo., June 29, 1906. The Bates National Bank, Butler, Mo.—Gentlemen: You will please reserve $1,000.00 of my account until the test well I am about to have drilled in or near Butler is down 1,000 feet unless gas be found at a less depth after completion of the well, or when it will have been drilled to a depth of 1,000 feet. Mr. Win Butcher is to be paid in full his account against myself and L. C. Martin." Acting on the instructions contained in this letter, the cashier made out and handed to the bookkeeper a deposit slip as follows: "Trust fund by T. B. Becker * * * checks as follows: $1,000.00. To be paid to Butcher when he shall have put his drill down 1,000 feet. $1,000."

We quote from the testimony of the cashier relative to this account.

Direct examination: "Q. That memorandum was for the information of your bookkeeper? A. Yes, sir; or any body else that might—Q. It never was given to any body else, just kept in the...