Evans v. People's Bank of Meadville

• Decision Date: 21 May 1928
• Citation: 6 S.W.2d 655,222 Mo.App. 990
• Parties: NANCY A. EVANS, APPELLANT, v. C. E. FRENCH, STATE FINANCE COMMISSIONER, ETC., RESPONDENT. [*]
• Court: Kansas Court of Appeals

6 S.W.2d 655

222 Mo.App. 990

NANCY A. EVANS, APPELLANT, v. C. E. FRENCH, STATE FINANCE COMMISSIONER, ETC., RESPONDENT. ^[*]

Court of Appeals of Missouri, Kansas City

May 21, 1928

Appeal from the Circuit Court of Linn County.--Hon. J. E Montgomery, Judge.

REVERSED AND REMANDED.

Judgment reversed and remanded.

Rober S. Miller and Scott J. Miller for appellant.

Davis & Ashby for respondent.

FRANK C. Williams, C., concurs. Trimble, P. J., absent.

OPINION

FRANK, C.

Action by plaintiff asking that a preferred claim in the sum of $ 4000 be allowed in her favor and against the Peoples Bank of Meadville, now in the hands of the commissioner of finance of the State. The trial court denied a preference but allowed the claim in the sum of $ 4000 as a common or general claim, and plaintiff appealed.

The record shows that this bank was a corporation doing a general banking business in Meadville, Missouri, prior to September 15, 1925. Plaintiff had been a customer of this bank for a number of years, carrying a checking account therein. On account of her advanced age and infirmities, the cashier of said bank and her two sons transacted her banking business for her.

There is no dispute as to the facts giving rise to plaintiff's claim. Both parties concede that at various times before the closing of said bank, plaintiff, by means of checks drawn on her checking account in said bank, delivered to the cashier of said bank various sums of money aggregating $ 8000 and directed him to invest said money in government bonds for her; that said cashier did purchase registered bonds for her with the first $ 4000 she gave him, but with the remaining $ 4000, he, without her knowledge or consent purchased time certificates of deposit in said bank instead of investing the money in bonds as he had been directed to do.

The bank ceased to function as a bank on September 15, 1925, and on this date its affairs and business were placed in charge of the commissioner of finance of the State, and since said time has been in process of liquidation. After the bank closed bonds to the amount of $ 4000, which had been purchased with plaintiff's money, were delivered to her, and this suit was brought to establish a preferred claim against the assets of the bank in the hands of the commissioner of finance for the remaining $ 4000 of plaintiff's money which the cashier invested in time certificates of deposit, without her knowledge or consent, and against her directions.

Other necessary facts will be stated in connection with the points discussed.

Appellant contends that as the bank, through its cashier, received the $ 4000 for the specific purpose of investing it in government bonds, it was impressed with a trust in favor of plaintiff, while respondent contends that when the money was invested in certificates of deposit in said bank, the title to the money passed to the bank, and the relation of debtor and creditor arose between plaintiff and the bank.

Where money is placed on general deposit in a bank, either on check account or on time deposit, the title to the money passes to the bank and the relation of debtor and creditor is created between the bank and the depositor. [Butcher v. Butler, 134 Mo.App. 61, 91, 114 S.W. 564; Horigan Realty Co. v. First National Bank, 273 S.W. 772, 775; Ellington et al. v. Cantley et al., 300 S.W. 529, 530.] This rule, however, does not apply in this case because plaintiff did not deposit the $ 4000 in question in this bank, or authorize any one to do so for her. Plaintiff had a checking account in the bank. She delivered to the cashier two checks on this account for $ 2000 each, payable to bonds, and directed him to invest the proceeds of said checks in government bonds for her. The cashier charged these two checks to her account, thus withdrawing $ 4000 from said account. While it is true that the $ 4000 may not have actually passed into the physical possession of the cashier, yet the legal effect of charging these checks against plaintiff's account, under the circumstances here shown, was to place $ 4000 of plaintiff's money in the hands of the cashier with specific instructions from plaintiff to invest it in government bonds for her. The cashier violated his instructions by investing the money in time certificates of deposit in said bank, instead of investing it in government bonds as he was directed to do. The voluntary, wrongful and unauthorized act of the cashier in placing this money on time deposit and issuing certificates of deposit therefor, without the knowledge or consent of plaintiff, could not have the effect of forcing her to accept a relation with said bank that she never intended to create, or change the relation that was actually created at the time plaintiff delivered the checks to the cashier and directed him to invest their proceeds in government bonds. Relationships are created by the conduct or agreement of both parties and not by the voluntary act of one party without the knowledge or consent of the other. [Ellington et al. v. Cantley et al., supra; William R. Compton Co. et al. v. Farmers' Trust Co. of Grant City et al., 279 S.W. 746, 749.] We, therefore, hold that the unauthorized act of the cashier in investing plaintiff's money in time certificates of deposit did not create the relation of debtor and creditor between plaintiff and the bank.

A trust has been defined to be "a holding of property, subject to a duty of employing it or applying its proceeds according to directions given by the person from whom it was derived." [39 Cyc. 17.] The Supreme Court of this State in Corby v. Corby, 85 Mo.--defines a trust as follows, "A trust is a relation between two persons, by virtue of which one of them (the trustee) holds property for the benefit of the other (the cestui que trust)." The transactions had between plaintiff and the bank created a relation of trust and not of debtor and creditor. When the bank accepted the money from plaintiff with specific directions to invest it in government bonds, the title thereto did not pass, but the bank thereafter held the money in trust for plaintiff, subject to the duty of investing it in government bonds as directed by plaintiff.

Defendant contends that plaintiff did not bring suit to establish her claim within six months after the date of the rejection of the claim by the commissioner of finance in charge of the bank and for that reason plaintiff's claim is barred by limitations.

Section 11720, Revised Statutes 1919, provides that when the time within which the commissioner is required to approve or reject claims has expired, and at any time within six months thereafter, a claimant whose claim has been duly filed and has not been approved by the commissioner, may institute and maintain an action thereon against such corporation or banker.

The St. Louis Court of Appeals in Boserwick Mills & Power Co. v. Citizens' Trust Co. of Gorin, 298 S.W. 1049, construed this statute to be one of limitation and held that where a claim against an insolvent bank has been rejected by the commissioner in charge of the bank, and no suit is brought on such rejected claim within the time specified in said statute, it is barred by limitation. We agree with this holding. It remains, therefore, for us to determine from the record whether or not the case at bar was brought within the time specified in said section.

Section 11716, Revised Statutes 1919, requires the commissioner of finance, after he takes charge of an insolvent bank and determines to liquidate its affairs to notify all persons who may have claims against such bank to present the same to him and make proof thereof within four months from the date of said notice. Section 11718, provides that any interested party may object to the allowance of any claim by filing verified written objections with the commissioner within thirty days after the last date fixed in the notice to creditors to present and make proof of their claims. Section 11719, provides that the commissioner shall, not later than thirty days after the time has expired to file objections to claims duly presented, approve or reject every duly filed claim except claims as to which objections are still pending and undetermined by the court or judge.

The record in this case shows that the commissioner of finance took charge of the bank in question and determined to liquidate its affairs on September 15, 1925. On September 24 1925 the commissioner notified all persons having claims against said bank to present same for allowance or rejection within four months thereafter. Plaintiff filed her claim with the commissioner on January 22, 1926. The commissioner rejected her claim on March 5, 1926 and notified plaintiff of such rejection on March...