City of Macon v. Farmers' Trust Co.

• Decision Date: 11 November 1929
• Docket Number: No. 16674.,16674.
• Citation: 21 S.W.2d 643
• Parties: CITY OF MACON v. FARMERS' TRUST CO. et al.
• Court: Missouri Court of Appeals

21 S.W.2d 643

CITY OF MACON v. FARMERS' TRUST CO. et al.

No. 16674.

Kansas City Court of Appeals. Missouri.

November 11, 1929.

Appeal from Circuit Court, Macon County; Vernon L. Drain, Judge.

"Not to be officially published."

Action by City of Macon against the Farmers' Trust Company and others. Judgment for defendants, and plaintiff appeals. Reversed and remanded.

John N. Franklin and Chas. W. Shelton, both of Macon, for appellant.

Waldo Edwards and C. G. Buster, both of Macon, for respondents.

BLAND, J.

This is a proceeding seeking to have an unlawful deposit of plaintiff's money made by its City Clerk in the bank of the defendant, Farmers' Trust Company, impressed with a trust and allowed as a preferred claim against the assets of the Trust Company which is now in process of liquidation. The court refused to allow the claim as a preferred one and plaintiff has appealed.

The facts show that the Trust Company closed its doors and was taken over by the Commissioner of Finance on August 10th, 1927; that at that time there was on deposit with the Trust Company money belonging to the City in the sum of $549.36, which money was carried on the books of the Trust Company as follows: "City emergency fund, W. A. Tibbs, City Clerk." This money came into possession of the Trust Company under the following circumstances:

On November 14th, 1923, upon motion made and duly carried, the council of the plaintiff city established a fund known as "a petty cash fund" for the purpose of paying "emergency bills," such fund "to be kept and paid out at the discretion of the City Clerk." Subsequently upon orders of the City Council the Clerk deposited various sums in the Trust Company and as before stated a balance in the sum of $549.36 was in the account at the time the Trust Company closed.

The City did not select a depository for its funds as it was authorized under sections 8280 and 8284, Rev. St. 1919, but the City Treasurer had selected depositories other than the Trust Company for the funds in his hands belonging to the City. The money deposited by the Clerk in the Trust Company was obtained from the funds belonging to the City in the hands of the City Treasurer by warrants signed by the Mayor and attested by the City Clerk. These warrants were delivered by the latter to the Trust Company which presented them to a depository of the City Treasurer and they were paid to the Trust Company by such depository out of the funds of the City.

The City Treasurer followed a practice of not at any time writing checks on his bank account as Treasurer, but the warrants drawn on the funds of the City were cashed by the Treasurer's depositories and charged by them to the funds on which they were drawn.

It is claimed by the plaintiff that the taking of the money from the Treasury of the City in this manner was unlawful and that it was likewise unlawful for the City Clerk to have possession of and to deposit in the Trust Company the funds of the City, the custody of which it is claimed the law places exclusively in the hands of the Treasurer; that the Trust Company must be considered as having knowledge of the law and therefore it became a trustee ex maleficio for the City and that the City is entitled to a preference.

Respondents admit that "the right to a preference depends upon the question of whether or not the deposit (by the City Clerk in the Trust Company) was authorized." It is admitted that if the deposit was authorized there can be no preference given the City. This requires an examination of the Statutes in relation to cities of the third class, in which class the City of Macon falls. Section 8634, Rev. St. 1919, provides that the Treasurer "shall receive all moneys payable into the treasury [of the city] * * * and disburse the same on warrants drawn by order of the board of trustees." Section 8284, Rev. St. 1919, makes the Treasurer responsible for the funds of the City at any time when, for any reason, there shall be no city depository. Sections 8213 and 8285 provide that warrants shall be signed by the Mayor and...