Dunham v. Hinton

• Decision Date: 16 March 1933
• Docket Number: 30481
• Parties: C. C. Dunham and Bedo Dyer, Appellants, v. William Hinton, Henley Stacey, G. L. Hall, S. L. Miller, J. W. Shoemaker, J. E. Douglass, W. F. Reynolds and J. O. Reynolds
• Court: Missouri Supreme Court

58 S.W.2d 439

332 Mo. 517

C. C. Dunham and Bedo Dyer, Appellants, v. William Hinton, Henley Stacey, G. L. Hall, S. L. Miller, J. W. Shoemaker, J. E. Douglass, W. F. Reynolds and J. O. Reynolds

No. 30481

Supreme Court of Missouri

March 16, 1933

Appeal from Henry Circuit Court; Hon. W. L. P. Burney Judge.

Affirmed.

T C. Owen and M. D. Aber for appellants.

(1) The contract sued upon was not and is not in contravention of public policy. State ex rel. v. Turner, 17 S.W.2d 986; State ex rel. v. Peoples U.S. Bank, 197 Mo 597; Ward v. Hartley, 178 Mo. 142; Hatch v. Hanson, 46 Mo.App. 334; Kusnetzky v. Ins. Co., 313 Mo. 143, 45 A. L. R. 189; Sickles v. Herold, 11 Misc. 583, 32 N.Y.S. 1083, cited in foot-note to 13 C. J. 428; Murray v. White, 42 Mont. 423, Ann. Cas. 1912A, 1301. (2) It is against the policy of the law that the property of another should be taken into the custody of the law except in case of extreme necessity. Much more should this be the case with property charged with a public interest, as a bank. Alderson on Receivers, sec. 487; Blades v. Billings, 154 Mo.App. 350; Cantwell v. Lead Co., 199 Mo. 1. (3) Even if the contract had been in contravention of public policy it does not lie within the power of defendants after having received the benefits of the contract now to question its binding force as against them. Kusnutzky v. Ins. Co., 313 Mo. 157; Union, etc., Bank v. Lyons, 220 Mo. 538; Ward v. Hartley, 178 Mo. 143.

C. C. Dickinson, W. E. Owen & Son, W. E. Suddath, Nick M. Bradley and Jas. A. Parks for respondents.

Legislative determination of public policy. Public policy of the State is to be found in its statutes, and when they have not directly spoken, then in the decisions of the courts. But when the Legislature speaks upon a subject on which it has a constitutional right to legislate, public policy is what the statutes enact. 9 Cyc. 422; State ex rel. v. Haid, 30 S.W.2d 105; State ex rel. v. Surety Co., 30 S.W.2d 105; Ins. Co. v. Railroad Co., 70 F. 201; Moorshead v. Ry. Co., 203 Mo. 165. Contracts affecting official action. Agreement to procure appointment of administrator amounts to trafficking in an important trust, and such agreement is void as against public policy. Porter v. Jones, 52 Mo. 403; Schibi v. Miller, 268 S.W. 434. Bonds indemnifying an officer against loss for failure to execute process are void as against public policy. Harrington's Admr. v. Crawford, 136 Mo. 467; Johnson v. Ragsdale, 73 Mo.App. 594; Good v. Sleeth, 176 Mo.App. 634; Holcomb v. Summit, 15 S.W.2d 362. Any contract that places individual interest of public officer in conflict with his duty to the public is illegal. In determining validity of the contract, its actual effect on the officer is immaterial, and therefore the fact that the contract did not have any corrupting effect on officer is immaterial. Ward v. Hartley, 178 Mo. 142; Carey v. Gossom, 204 Mo.App. 695; 13 C. J. 443. Here Commissioner of Finance and Bank Examiner Bushnell were both liable to suits on their bonds for failure to close the bank at Leeton after determining it to be insolvent. R. S. 1929, secs. 5292, 5316; State v. Turner, 42 S.W.2d 598.

Gantt, J. All concur, except Hays, J., not voting, because not a member of the court when cause was submitted.

OPINION

GANTT

Action on a contract of guaranty. The demurrer to the petition was sustained. Plaintiffs refused to plead further and judgment was entered for defendants. The amount involved fixed appellate jurisdiction in this court. In substance the petition alleged facts as follows:

On July 18, 1922, the Commissioner of Finance doubted the value of certain assets of a bank and believed it to be insolvent. Defendants owned stock in and were directors of the bank. Furthermore, they had on deposit in the bank large sums of money. In this situation and to prevent a liquidation of the bank, defendants executed and delivered to the Commissioner a contract of guaranty. On the execution and delivery of the contract the Commissioner returned to the bank all of its books, papers and evidences of debt and permitted it to continue business. It so continued until October 6, 1925. On that day the Commissioner took possession of the bank as an insolvent institution. In due course he proceeded to liquidate same. In doing so he duly and legally sold at public sale certain notes payable to and owned by the bank. Plaintiffs purchased the notes. They were unable to collect from the makers. Thereupon they instituted this suit against defendants on the contract of guaranty.

The contract was under consideration in Craig v. Stacy, 330 Mo. 569, 50 S.W.2d 104. And a similar contract was considered in Love v. Dampeer (Miss.), 132 So. 439 73 A. L. R. 1376. In part the contract under consideration follows:

"This agreement made and entered into this 18th day of July, 1922 by and between: Guilford Morris, W. F. Reynolds, J. W. Shoemaker, S. L. Miller, G. L. Hall, Henley Stacey, J. E. Douglass, W. T. Baker, J. O. Reynolds, and William Hinton, parties of the first part, and J. G. Hughes, Commissioner of Finance of the State of Missouri, party of the second part. WINESSETH THAT.

"Whereas, the said second party has, by his examiner, Collins E. Bushnell, made an examination of the Farmers Bank of Leeton, Mo., and whereas the said second party believes as a result of said examination that the above named bank has certain assets of slow, uncertain and doubtful value which will result in a substantial loss to said bank; therefore, the capital stock of said bank is believed to be impaired and the bank is in an insolvent condition.

"Now therefore, in consideration of said second party agreeing not to take over the affairs of the above named bank and...