Cassel v. Mercantile Trust Co.
| Decision Date | 12 July 1965 |
| Docket Number | No. 1,No. 51120,51120,1 |
| Citation | 393 S.W.2d 433 |
| Parties | Dr. Melvin A. CASSEL, Successor Trustee of Trust A and Trust B under the Will of George B. Fleischman, Deceased, Appellant, v. MERCANTILE TRUST COMPANY, a Corporation, Respondent |
| Court | Missouri Supreme Court |
Lewis, Rice, Tucker, Allen & Chubb, Samuel H. Liberman, Eugene J. Gabianelli, St. Louis, for appellant.
Thompson Mitchell Douglas & Neill, William G. Guerri, W. Stanley Walch, Edwin D. Akers, Jr., St. Louis, for respondent.
HOUSER, Commissioner.
Action by Dr. Melvin A. Cassel, successor trustee under the will of George B. Fleischman, deceased, against Mercantile Trust Company, a banking corporation, to recover $108,225 allegedly permitted by Mercantile to be withdrawn from the bank account of the estate by Irl B. Rosenblum, plaintiff's predecessor in trust, and used by Rosenblum for his own personal purposes.
Mercantile filed a motion to dismiss on the ground that the action is barred by limitations [Sec. 516.120(1), V.A.M.S., or in the alternative, Sec. 516.120(4) or (5), V.A.M.S.] and that the petition fails to state a claim upon which relief can be granted.
The circuit court sustained the motion to dismiss on the theory that the action is barred by limitations [Sec. 516.120(1)], and dismissed the petition with prejudice. Plaintiff has appealed from the judgment of dismissal.
On this appeal both parties have briefed both points raised in the motion to dismiss. We pass over the point on limitations, preferring to consider first the meritorious, central question in this case: whether the petition states a claim upon which relief can be granted.
Plaintiff's first amended petition alleges these facts: George B. Fleischman died on August 21, 1950 leaving a will by which he left his estate to Irl B. Rosenblum in trust under two separate trusts, and appointed Rosenblum executor of his will. Rosenblum qualified and acted as executor and trustee until his death on September 26, 1956. On September 25, 1950 Rosenblum opened a checking account with Mississippi Valley Trust Company, in his name as executor of the estate of decedent. On April 14, 1952 (after Mississippi Valley Trust Company merged with Mercantile Trust Company) Rosenblum presented at the window of the cage of teller No. 60 the following check on a form prescribed by the bank:
St. Louis, Mo. 4/14 1952
Received in Person From My Checking Account at
Mercantile Trust Company
Saint Louis, Mo
Nine hundred .................................... Dollars $900-00/100
Not Negotiable
______________
To be used only at this bank and by
the depositor personally
Irl B. Rosenblum, Executor
Estate of George B. Fleischman, Deceased
On presentation Mercantile paid Rosenblum $900 and charged the same to the account of the estate of decedent. Then and for years previously Mercantile and its predecessor was authorized by law to act as executor of estates of deceased persons and had so acted in hundreds of estates administered in the probate courts of the City and County of St. Louis. It maintained a probate division in its trust department composed of officers and personnel cognizant of the duties and responsibilities of executors and the practices and procedures relating to the administration of estates. Mercantile had actual and constructive knowledge of the laws relating to such administration and of these practices and procedures; knew that executors had no right to use estate funds except to pay claims or administration expenses allowed and approved by the probate court or pursuant to distribution, or otherwise by court approval; that an executor is required to file periodic settlements and attach receipts and vouchers evidencing disbursements; that payments of claims, expenses, distributions, etc. are not normally, customarily or usually made in cash but by check. It was alleged that the withdrawal in cash by an executor of the substantial sum of $900 was in and of itself such an abnormal and unusual practice as to arouse in the mind of Mercantile a suspicion that the funds so withdrawn were not to be used for the benefit of the estate but by Rosenblum for his own personal purposes. On April 18, 1952 Rosenblum in the same fashion withdrew $600, which was charged to the account of the decedent's estate. On April 22, 1952 $900 was in similar manner withdrawn and charged. These monies were not used by Rosenblum for the use and benefit of decedent's estate but for Rosenblum's own personal purposes 'in violation and breach of trust of the duties imposed upon him.' It was alleged that these withdrawals, more than 18 months after Rosenblum's appointment as executor, a fact then known to Mercantile, operated to charge Mercantile with notice that Rosenblum was withdrawing and using funds of decedent's estate for his own personal use in breach of trust (Paragraph 16). Notwithstanding said notice of said breaches of trust Mercantile continued to pay cash to Rosenblum on checks drawn by him in this same manner and to charge same to decedent's account, all the checks having been presented to and paid out by the bank's teller No. 60, as follows:
Date Amount Date Amount
------- -------- -------- ----------
5/9/52 $ 900.00 12/10/52 2,000.00
5/12/52 900.00 12/12/52 2,000.00
5/16/52 900.00 12/17/52 2,000.00
5/20/52 900.00 12/19/52 2,100.00
5/27/52 1,400.00 12/23/52 2,000.00
6/4/52 1,200.00 12/24/52 2,000.00
6/11/52 1,600.00 2/24/53 1,000.00
6/16/52 1,200.00 3/5/53 2,100.00
6/17/52 1,200.00 3/6/53 2,100.00
6/23/52 1,500.00 3/26/53 500.00
6/26/52 800.00 4/1/53 300.00
7/2/52 800.00 4/2/53 2,400.00
7/18/52 900.00 4/3/53 2,000.00
7/23/52 1,900.00 4/8/53 300.00
7/25/52 1,800.00 4/9/53 2,400.00
7/31/52 1,100.00 4/10/53 2,400.00
----------
9/2/52 900.00 TOTAL... $47,500.00
Commencing on April 11, 1953 Rosenblum presented checks drawn on Mercantile, signed by him as executor of decedent's estate, payable to himself, to Mutual Bank & Trust Company in St. Louis, as follows:
Date Amount Date Amount
-------- --------- ---------- ----------
4/11/53 $2,000.00 11/18/53 1,500.00
4/14/53 2,000.00 11/19/53 2,000.00
4/16/53 2,000.00 12/14/53 2,000.00
4/17/53 2,000.00 12/18/53 2,000.00
4/20/53 2,000.00 2/17/54 700.00
5/1/53 2,000.00 6/16/54 1,900.00
5/8/53 1,400.00 7/27/54 650.00
5/12/53 1,400.00 8/10/54 700.00
5/27/53 2,000.00 9/7/54 700.00
5/29/53 2,000.00 10/20/54 500.00
6/2/53 1,600.00 11/17/54 2,000.00
6/23/53 400.00 11/19/54 2,000.00
7/16/53 500.00 12/6/54 2,000.00
7/23/53 200.00 12/7/54 2,400.00
10/6/53 400.00 12/9/54 2,400.00
10/22/53 350.00 12/10/54 2,400.00
11/3/53 2,000.00 12/11/54 2,000.00
11/12/53 2,000.00 10/14/55 90.00
11/17/53 2,000.00 4/6/56 4,535.00
----------
TOTAL ..... $60,725.00
Upon presentation of each of these checks bearing Rosenblum's endorsement as payee Mutual paid the amounts of said checks and transmitted them to Mercantile, which paid over and credited to Mutual's account the amounts of the checks, and charged them to the account of the estate of decedent.
The proceeds of the checks totaling $47,500 and of the checks totaling $60,725 were not used by Rosenblum for estate purposes but for his own personal purposes in violation and breach of trust of the duties imposed upon him.
Mercantile's predecessor was named as substitute trustee and executor in the event of Rosenblum's death, a fact known to Mercantile prior to the time the foregoing withdrawals were permitted. In paragraph 23 it was alleged that Mercantile 'had notice' of Rosenblum's breaches of trust 'not later than' April 22, 1952. It was further alleged that Mercantile thereafter was obligated to refuse to pay the checks presented to it at its bank and the checks presented to and cashed by Mutual, and that by paying said checks after notice Mercantile 'participated in the said breaches of trust and became liable for the amounts which Rosenblum appropriated to his own use in violation and breach of trust.'
On October 13, 1956 plaintiff Cassel was appointed administrator d. b. n. with the will annexed. He qualified and acted as such until finally discharged by order of the probate court. On May 9, 1957 he was appointed successor trustee by court order and has acted as such since that date.
In Lucas v. Central Missouri Trust Co., 350 Mo. 593, 166 S.W.2d 1053, this Court stated three ways in which a bank may incur liability and be compelled to make good deposits that have been misappropriated by a fiduciary: (1) by a violation on its part of the contract, express or implied, between it and the owner of the fund; (2) by appropriating the fund, either with or without the fiduciary's consent, to the payment of the latter's debt to the bank; and (3) by assisting the fiduciary to accomplish the misappropriation, the bank having knowledge, actual or constructive, that the fraud is being or is about to be perpetrated by the fiduciary. And see 5A Michie, Banks and Banking Sec. 57 a, e. The reason for the bank's liability under (3) is that the bank 'knowingly makes itself a party to a fraud, and must make good the loss that results from the appropriation.' 166 S.W.2d, l.c. 1058; 10 Am.Jur.2d Banks Secs. 521, et seq. On this appeal we are concerned only with (3), there being no contention that Mercantile violated its contract or appropriated the fund.
In order to state a claim for relief under (3...
To continue reading
Request your trial
-
Trenton Trust Co. v. Western Sur. Co.
... ... v. West Allis State Bank, 70 Wis.2d 1041, 236 N.W.2d 266, 270 (1975). Both Southern Agency, 452 S.W.2d at 103, and Cassel v. Mercantile Trust Co., 393 S.W.2d 433, 438 (Mo.1965) suggest that if the banks had "benefited from the proceeds" of the fiduciary's ... ...
-
In re Broadview Lumber Co., Inc.
... ... Thomas J. O'NEAL, Trustee, Plaintiff, ... SOUTHWEST MISSOURI BANK OF CARTHAGE, and Mercantile Bank of Joplin, and Richard Mansfield and Jenny Mansfield, Defendants ... Bankruptcy No ... 7 168 BR 952 The note was secured by 679 shares of stock in Broadview 8 and by a Deed of Trust on a residence located at 1505 Grand Avenue, Carthage, Missouri (the "Grand Avenue House"). In ... Trenton Trust, 599 S.W.2d at 489 n. 2. See also, Cassel v. Mercantile Trust Co., 393 S.W.2d 433, 438 (Mo.1965); Brede Decorating, Inc. v. Jefferson Bank ... ...
-
Leyba v. Whitley
... ... In particular, if a lawyer represents a trustee, when, if ever, does the beneficiary of the trust have a cause of action against the lawyer? In the specific circumstances of this case we hold ... 2 to check written to fiduciary with no indication on check of payee's fiduciary capacity); Cassel v. Mercantile Trust Co., 393 S.W.2d 433, 440-41 (Mo.1965) (same). Leyba does not challenge the ... ...
-
Stillings v. Citizens Bank of Ava, 12208
... ... Waller, supra; Welch v. North Hills Bank, supra; Keokuk Savings Bank & Trust Company v. Desvaux, 259 Iowa 387, 143 N.W.2d 296 (1966); Annot., Bank-Liability-Joint Deposit, 62 ... When the defendant paid the $4000.00 to J. B., it breached the contract of deposit, Cassel v. Mercantile Trust Company, 393 S.W.2d 433 (Mo.1965); State ex rel. Paden v. Carrel, 597 S.W.2d ... ...