City of Fulton v. Home Trust Co.

• Decision Date: 21 December 1934
• Citation: 78 S.W.2d 445,336 Mo. 239
• Parties: City of Fulton v. Home Trust Company, D. R. Harrison, Commissioner of Finance and W. B. Whitlow, Deputy Commissioner of Finance, in charge of the assets of the Home Trust Company of Fulton, Appellants
• Court: Missouri Supreme Court

78 S.W.2d 445

336 Mo. 239

City of Fulton v. Home Trust Company, D. R. Harrison, Commissioner of Finance and W. B. Whitlow, Deputy Commissioner of Finance, in charge of the assets of the Home Trust Company of Fulton, Appellants

Supreme Court of Missouri

December 21, 1934

Appeal from Callaway Circuit Court; Hon. North Todd Gentry Judge.

Reversed and remanded.

W B. Whitlow for appellants.

(1) The trial court erred in entering judgment against defendants and ordering this claim classified and paid as a preference claim, because Brown, the city collector, was the legal custodian of the monies collected, until such time as he was required by law to account to the proper person for such funds in his possession, and the deposit of these funds in the Home Trust Company by Brown was lawful. Secs. 6782, 6785 R. S. 1929; Compton Co. v. Farmers Trust Co., 279 S.W. 746, 220 Mo.App. 1081; Hunter's Bank of New Madrid v. City of New Madrid, 224 Mo.App. 550, 30 S.W.2d 782; Macon v. Farmers Trust Co., 21 S.W.2d 643; 7 C. J. 633. (2) Where money is placed on deposit in a bank, the title to the money passes to the bank, and the relationship of debtor and creditor is created between the bank and the depositor. In this case, the relationship between the bank and the said R. L. Brown, city collector, was that of debtor and creditor. Butcher v. Butler, 134 Mo.App. 61; Horigan Realty Co. v. First Natl. Bank, 273 S.W. 775; Ellington v. Cantley, 300 S.W. 529; Boswell Post of American Legion v. Farmers State Bank, 61 S.W.2d 761. (3) This claim could not be classified and ordered paid on the grounds that it was money held as a "trust ex maleficio" because there was nothing illegal in the city collector depositing monies in the Home Trust Company, or any other bank or trust company, as such funds were legally in his custody until directed by law to account for them. Secs. 6782, 6785, R. S. 1929; Compton Co. v. Farmers Trust Co., 279 S.W. 746, 220 Mo.App. 1081; Aurora v. Bank of Aurora, 52 S.W.2d 496; Maryville v. Farmers Trust Co., 45 S.W.2d 103; In re Bank of Mt. Moriah Loquidation, 49 S.W.2d 275.

Rubey M. Hulen, Edwin C. Orr and Clyde Boyd for respondent.

(1) The city collector was not the custodian of the funds of the city of Fulton. The city treasurer was the exclusive custodian of such funds. City of Macon v. Farmers' Trust Co., 21 S.W.2d 644; Hunter's Bank of New Madrid v. City of New Madrid, 30 S.W.2d 783. (a) The city collector was a trustee with respect to the funds. The bank obtained no better title to the funds than the collector had. Maryville v. Farmers' Trust Co., 45 S.W.2d 103. (b) Brown was a mere collector of the fees of the city and the authority given him by law did not extend to a deposit. The bank knowing the source of the deposit became a trustee as to the fees deposited. State ex rel. Gentry, Attorney-General, v. Page Bank of St. Louis, 14 S.W.2d 599; Compton Co. v. Farmers' Trust Co., 279 S.W. 749; Aurora v. Bank of Aurora, 52 S.W.2d 496. (2) Under the agreement between the city collector and the Home Trust Company, the deposit of the funds in question was a special deposit. Ellington v. Cantley, 300 S.W. 531; Compton Co. v. Farmers' Trust Co., 279 S.W. 749.

Ferguson, C. Sturgis and Hyde, CC., concur.

OPINION

FERGUSON

On December 29, 1931, the Home Trust Company of Fulton ceased to do business and its "affairs and assets" were placed under the control of the State Commissioner of Finance for liquidation. [Sec. 5316, R. S. 1929.] At the time the city collector of the city of Fulton had the sum of $ 5,511.08 on deposit in said trust company to his credit as city collector. Said sum was the aggregate of city funds collected by him and deposited, from time to time, with the trust company, to his credit as city collector, during the month of December. The city of Fulton seeks to have its claim for said sum of $ 5,511.08 granted preference. Upon a hearing in the Circuit Court of Callaway County the claim was classified, and ordered paid, as a preferred claim. The appeal from the judgment of the circuit court went to the Kansas City Court of Appeals. That court held that the city was not entitled to a preference and reversed the judgment and remanded the cause with directions to the trial court to allow the city's claim as a common claim only. [In re Home Trust Company of Fulton (City of Fulton v. Harrison, Commissioner of Finance) (Mo. App.), 69 S.W.2d 312.] However, one of the judges of the Court of Appeals deeming the decision of that court to be contrary to a previous decision of this court the cause was certified and transferred here. We must therefore determine "the cause or proceeding as in case of jurisdiction obtained by ordinary appellate process." [Section 6, Amendment 1884, Article 6, Constitution of Missouri.]

Fulton is a city of the third class. On April 1, 1930, R. L. Brown was elected city collector of said city for a term of two years and thereupon duly qualified by executing and filing a bond for $ 20,000, as required by ordinance, with the American Surety Company of New York as surety thereon, which bond was accepted and approved by the city council. The bond, in conformity with the ordinance, was conditioned that the said "R. L. Brown shall faithfully and punctually collect and pay over all city revenue, and faithfully do and perform the acts and duties required of him by virtue of said office" of city collector, etc. Brown was thus the duly elected and qualified city collector throughout the year 1931. During the same period T. H. Van Sant was city treasurer and the Callaway Bank the legally designated and acting city depository. It was admitted; "that at the time of the closing of the Home Trust Company there was on deposit in said trust company the sum of $ 5511.08 to the credit of R. L. Brown, city collector; that no part of said sum has been paid; that, at the time of closing, said trust company had sufficient assets on hand out of which the claim could be paid and that said assets are in the custody of the Special Deputy Commissioner of Finance; and that claim" therefor "was filed in due time." The fund in controversy, $ 5,511.08, is the aggregate of twenty-two daily deposits, in various amounts, made by Brown, from and including December 2, to and including December 28, 1931, to his credit as city collector in the Home Trust Company of Fulton. The trust company closed and placed its "affairs and assets" under the control of the State Commissioner of Finance, for liquidation, on the morning of December 29, 1931. These funds, so deposited, represented city taxes and other city revenues which Brown, in his capacity as city collector, had collected during the month of December. He did not, at any time, deposit any personal or private funds in this account but only funds of the city.

Sections 6782 and 6785, of Article 4, Chapter 38, Revised Statutes 1929, relating to cities of the third class, declare the duties of city collector in reference to paying into the city treasury all city revenues collected or received by him from all sources. Said sections read; Section 6782: "The city collector shall report to the city council, at the regular meetings in each month, all taxes collected on the real and personal delinquent lists; and he shall pay the same to the city treasurer, and receive credit therefor." Section 6785: "It shall be the duty of the city collector to pay into the treasury, monthly, all moneys received by him from all sources, which may be levied by law or ordinance; also, all licenses of every description authorized by law to be collected, and all moneys belonging to the city which may come into his hands. He shall give such bond and perform such duties as may be required of him by ordinance." In this connection we quote the following excerpts from the ordinance of the city of Fulton relating to the duties and requirements of the city collector: "It shall be the duty of the collector, at the close of business on the last week day of each month to make with the city clerk a full and complete settlement of the revenue collected by him, from all sources whatever, during the preceding month. In such settlement the collector shall show from what source each amount of revenue is received and has been collected," etc. "Immediately after each monthly settlement, as aforesaid, the collector shall pay into the city treasury the amount found due on such settlement, he shall take two receipts from the treasurer for the amount so paid in, one of which he shall file with the city clerk, who shall charge the treasurer with the amount such payment and credit the collector with the same." The ordinance further requires, that "within fifteen days after his election and before entering upon the discharge of the duties of his office, the collector shall execute to the city of Fulton a bond in the sum of twenty thousand dollars . . . conditioned that he will faithfully and punctually collect and pay over all city revenue for the two years next ensuing his election, and during his term of office, at the time and in the manner provided by the laws and ordinances governing the city of Fulton," etc.

Brown made daily deposits in the bank, to his credit as city collector, of the city revenues collected or received by him as city collector. Pursuant to the provisions of the ordinance, at the end of each month, or between the first and third of the following month, he regularly delivered, to the city treasurer, his check drawn upon the bank of deposit in the full or aggregate amount to his credit, took the duplicate receipts therefor from the city treasurer and then filed his monthly report or settlement with the city clerk for presentation to the city council, accompanied by the treasurer's receipt. He regularly...