Conley v. Johnson

• Decision Date: 01 February 1936
• Docket Number: No. 7451.,7451.
• Parties: CONLEY et al. v. JOHNSON, as Superin tendent of Banks, et al.
• Court: Montana Supreme Court

101 Mont. 376

CONLEY et al.
v.
JOHNSON, as Superin tendent of Banks, et al.

No. 7451.

Supreme Court of Montana.

Feb. 1, 1936.

Appeal from District Court, Powell County, Third District; R. E. McHugh, Judge.

Action by Frank Conley and C. E. Larabie, as trustees, against Frank H. Johnson, as Superintendent of Banks of the State of Montana, and another. From the judgment, the defendants appeal.

Remanded with direction.

SANDS, C. J., dissenting.

John G. Brown and William A. Brown, both of Helena, for appellants.

John T. Andrew and W. H. Maloney, both of Butte, for respondents.

PER CURIAM.

This is an appeal from a judgment of the district court of Powell county. Larabie Brothers Bankers, Inc., was a banking institution and did business at Deer Lodge for a considerable number of years previous to March 22, 1933. On the last-named date the bank was closed and taken over by the Superintendent of Banks of the State of Montana for liquidation in conformity with the Banking Code of Montana. Chapter 89, Laws 1927. At some time prior to July, 1928, W. A. Clark, Jr., then a resident of Butte, Montana, delivered to the bank the sum of $25,000. At that time an agreement was entered into between Clark and the bank, and Don Larabie and Frank Conley. Later Don Larabie died, and on July 1, 1928, a new agreement, presumably a copy of the first one, was entered into between the parties. It is this new agreement that constitutes the basis for controversy in the present action. It reads as follows:

“This memorandum witnesseth: That W. A. Clark, Jr., of Butte, Montana, has given in trust to the Corporation, Larabie Brothers, a banking institution of Deer Lodge, Montana, the sum of $25,000 to the end that such corporation shall pay semi-annual interest on said sum at the rate of 4% per annum, and shall pay said semi-annual innterest January 1 and July 1 to Frank Conley and C. E. Larabie, of Deer Lodge, Montana, jointly also in trust, to the end that said Conley and said Larabie may apply such interest moneys as the same may be paid to the repairing of or the replenishing of or to the supplying of musical instruments to the band of the state prison at Deer Lodge, Montana, as the said trustees Conley and Larabie may be advised, so long as said prison shall have and maintain a band therein and thereat. The interest-bearing period of the aforesaid sum of $25,000 shall begin July 1, 1928.

Upon the death or resignation of said Conley or said Larabie the said W. A. Clark reserves the right to nominate any successor or successors to the trust.

In the event such State Prison shall dispense with its band for any reason, then in that event the corpus of the trust and any interest accrued thereon shall instantly revert to the said W. A. Clark, Jr., or to his heirs.

In acknowledgment of the receipt of the trust fund of $25,000 and in acknowledgment of the trust itself, Larabie Brothers has hereunto set its hand and seal (in duplicate) at Deer Lodge, Montana, on this first day of July, A. D. 1928. ***

We the undersigned, Frank Conley and C. E. Larabie, both of Deer Lodge, Montana,do hereby declare that we will act as trustees to effectuate the trust expressed in the above and foregoing memorandum, will so act without any compensation for our services to be rendered in such behalf.

Witness our hand in duplicate at Deer Lodge, Montana, this 1st day of July, A. D. 1928.

Frank Conley.

C. E. Larabie.”

The money was never drawn out of the bank, and Conley and Larabie continued to draw the agreed income or interest thereon. On November 29, 1933, after the bank had closed, and during the time for the presentation of claims, Clark presented a claim to the superintendent of banks in the following form:

“W. A. Clark, Jr., being first duly sworn, deposes and says that Larabie Brothers Bankers, Inc., is justly indebted in the sum of twenty-five thousand dollars ($25,000.00), besides interest, upon the following claim, to-wit:

Deposit by the affiant on or about July 1, 1928, made in trust under written declaration (a copy of which is hereto annexed) for the benefit of the prison band at the state prison at Deer Lodge, Montana. Liability No. 891, $25,000.00.

This liability is for funds held by said bank in trust, and is a preferred claim, entitled under the decisions of the Montana Supreme Court and under section 134 of chapter 89, Montana Session Laws of 1927, to be paid next after expenses of liquidation, in the second order of priority as defined in said section 134, and before liabilities mentioned in said section 134 as of lower orders of priority-and demand is now made for allowance in full as such preferred claim with such priority.

All of which is due and payable to such trustee as may be lawfully appointed in place of said Larabie Brothers Bankers, and affiant makes this claim because he is the declarant of the trust set forth in said Declaration, is the person entitled to reversion thereunder, and has a beneficial interest in the due execution of said trust; affiant further says that neither he nor anyone else, to his knowledge, has given any endorsement or assignment of the same or any part thereof, and that he knows of no set-off or equitable defense to said claim or any part thereof, and that the facts set forth in said claim are each and all thereof true.

[Signed] W. A. Clark, Jr.,

Residence, Butte, Montana.”

The claim was duly verified and acknowledged, and to it was attached a copy of the trust memorandum.

It will be observed that the claim contained a demand that the amount thereof be allowed as a preferred claim, on the theory that the money was delivered to the bank in trust. The superintendent of banks denied the preference right, but allowed the claim as a general one. Thereafter Conley and Larabie instituted this action against Johnson, as superintendent of banks, and against the liquidating agent acting under him.

No question of parties was raised in the lower court or in this court, except the following statement contained in defendants' brief: “It will be noted that although Clark made the deposit, was the creator of the trust as to the interest on the deposit, and made the claim to the superintendent of banks, this action is brought by and in the name of Frank Conley and C. E. Larabie, as trustees.” Reference to the language of the claim discloses the fact that Clark did not present the claim strictly in his own behalf. The claim recites that “Larabie Brothers is justly indebted in the sum of $25,000 besides interest,” but instead of saying that the bank was indebted to Clark, it in effect recites that the indebtedness is due under the terms of the memorandum agreement which was attached to the claim. This memorandum speaks for itself as to who is entitled to the money and to whom the debt would be due when allowed. Significant, also, is the language of the claim which says: “All of which is due and payable to such trustee as may be lawfully appointed in place of said Larabie Brothers Bankers.” It is obvious that the claim therefore was not presented by Clark in his own behalf alone, but was presented in behalf of all parties interested under the memorandum agreement. Conley and Larabie, as trustees of the income or interest, were claimants. They, as trustees, were interested in the perpetuation of the fund that it might provide revenue for their trust. The law under which the suit was instituted, section 132 of chapter 89, Laws of 1927, provides that the action of the superintendent of banks when taken upon a claim shall be final unless an action be brought by the claimant against the bank, etc. This section also provides that an appeal from the superintendent's allowance, either as to priority or amount, may also be taken to the district court of the proper county by any party in interest. Conley and Larabie, as trustees, were certainly parties in interest. The record does not disclose that there was ever any question raised and argued either in the district court or in this court on appeal relative to the right of Conley and Larabie to maintain the action except the quoted suggestion from appellants' brief. In any event it is plain that the only controversy involved here may be completely determined without the presence of other parties. The district court had only the question of the legal status of the $25,000 before it, and that is all we have here. That question may be properly and fully settled in the action as presented. See State ex rel. Valley Center Drain District v. Board of County Commissioners (Mont.) 51 P.(2d) 635, and authorities cited.

The cause came to trial before the court without a jury. Thereafter the court made and entered findings of fact and conclusions of law. The findings of fact were to the effect that Larabie Brothers Bankers, Inc., was a bank doing a general banking business at Deer Lodge prior to March 22, 1933; that on the last-named date it was taken over by the state superintendent of banks, and at the time of the trial was in his charge and in process of liquidation; that on or about July 1, 1928, W. A. Clark, Jr., delivered to the bank the sum of $25,000 under and subject to the provisions of the written memorandum; that the same became and was a trust fund by the terms of the contract, and that Frank Conley and C. E. Larabie became trustees thereof; that at all times after the delivery to the bank it retained its character as a trust fund, and was such at the time of the closing of the bank, and was a proper subject of a preferred claim against the assets of the bank; that a claim was filed in due form setting forth the nature of the trust and asking that it be allowed as a preference claim; that the superintendent of banks in his official capacity did on the 30th day of June, 1934, reject the claim as a preference claim, but allowed it as a general claim, and issued a certificate of such allowance; and, finally, that the claim so filed was entitled to be allowed as a preference claim.

From the findings of...