Farmers' Trust Company v. Tootle-Lacy Natl. Bank

Citation56 S.W.2d 769
Decision Date28 January 1933
Docket NumberNo. 31478.,31478.
PartiesFARMERS' TRUST COMPANY, of Maryville, a Corporation, by S.L. CANTLEY, Commissioner of Finance of the State of Missouri, and EARL C. McKISSICK, Special Deputy Commissioner in Charge Thereof, v. THE TOOTLE-LACY NATIONAL BANK OF ST. JOSEPH, a Corporation, Appellant.
CourtUnited States State Supreme Court of Missouri

Appeal from Buchanan Circuit Court. Hon. L.A. Vories, Judge.

AFFIRMED.

Brown, Douglas & Brown for appellant.

(1) The right of off-set as an equitable defense may be asserted by the real party in interest, or upon a foundation of equitable title as well as upon legal title. 24 R.C.L. Set-off and Counterclaim 859, 860; 34 Cyc. 717-8; Nickerson v. Gilliam, 29 Mo. 456; Strong v. Gordon, 203 Mo. App. 470, 221 S.W. 770; Hall v. Wilder Mfg. Co., 316 Mo. 831, 293 S.W. 760; Fricke v. Battery and Supplies Co., 220 Mo. App. 623, 288 S.W. 1000; Rankin v. Blain County Bank, 20 Okla. 68, 93 Pac. 536. (2) An unliquidated demand not sounding in tort may be offset in equity. Strong v. Gordon, supra; Hall v. Wilder Mfg. Co., supra; Smith, Admr., v. Perry, 197 Mo. 438, 95 S.W. 337; Fricke v. Battery Co., supra. (3) By the terms of the trust instrument, the deposit in the Baker and Williams trust fund was, from and after March First, 1931, held by the trustee upon a dry trust which left no duty or interest in the trustee except to pay over. Fisher v. Fisher, 203 Mo. App. 45, 217 S.W. 845.

Shinabargar, Blagg & Livengood and Culver, Phillip & Voorhees for respondent.

(1) Reciprocal demands to be the subject-matter of set-off must exist between the same persons at the same time; that is, the claim must be due to and from the same parties. It must be such a demand as that the defendant, in his own name, or in the names of the defendants sued, without bringing in the name of a stranger to the suit, may maintain an action on it against the party, or all the parties suing. 24 R.C.L. p. 858; McPherson v. Meek, 30 Mo. 345. (2) The Trust Company was not indebted to appellant. When Pierce the trustee, deposited the funds in the Trust Company the funds ceased to be trust funds in the hands of the bank. It took the complete title to the money in its own right and it became debtor to Pierce in his official capacity. Pierce, and not the beneficiaries in the trust, became the creditor of the Trust Company. Paul v. Draper, 158 Mo. 197; State ex rel. v. Powell, 67 Mo. 398; State ex rel. v. Moore, 74 Mo. 418; Butcher v. Butler, 134 Mo. App. 61. (3) Under all the authorities Mr. Pierce could sue in his own name without joining the beneficiaries to recover the deposit. Sec. 699, R.S. 1929; Schribner v. Smith, 104 Mo. App. 542; Mosman v. Bender, 80 Mo. 584; Stillman v. Glasscock, 47 Mo. App. 557. (4) Since the trust was an active trust and none of the beneficiaries was entitled to distribution until their respective interests had been ascertained when all the lands were sold and all taxes, interest and costs of maintenances and trustee's fees had been paid, the trustee was the only person that could recover the deposit. None of the beneficiaries had that right. Morrow v. Gross, 113 Mo. App. 444; Richardson v. Frederitze, 35 Mo. 266; Gibbons v. Gentry, 20 Mo. 468; Myers v. Hale, 17 Mo. App. 204. (5) Nor had the time for distribution of the fund arrived. A debt not due is not available as a set-off. Eddington v. Cockrell, 286 S.W. 406; Hunter v. Tappmeyer, 223 S.W. 695; Kortjohn v. Nat. Bank, 63 Mo. App. 166; Iler v. Nat. Bank, 69 Mo. App. 64. And this is true in equity as well as at law. Homer v. Bank of Commerce, 140 Mo. 225; Carson Nat. Bank v. Amer. Nat. Bank, 34 S.W. (2d) 149; Reppy v. Reppy, 46 Mo. 71; Huse v. Ames, 104 Mo. 91; Spaulding v. Balken, 122 Mass. 553; Harmon v. Williams, 34 N.J. Eq. 255. (6) Even if the title to the money deposited in the Trust Company passed to the beneficiaries in the trust agreement, and the Trust Company thereby became indebted to them, the appellant could not offset the debt owing to all the beneficiaries jointly against the debt it alone owed the Trust Company, since appellant alone could not sue the Trust Company to recover the joint debt. Sec. 702, R.S. 1929; Fulkerson v. Davenport, 70 Mo. 541; Miller v. Crigler, 83 Mo. App. 395; White v. Dyer, 81 Mo. App. 643; Dewey v. Carey, 60 Mo. 224; McLaren v. Wilhelm, 50 Mo. App. 661; Henry v. Mount Pleasant Tp. Bates Co., 70 Mo. 500; Ellis v. Ry., 130 Mo. App. 221; Lemon v. Wheeler, 96 Mo. App. 651; Dillon's Admx. v. Bates, 39 Mo. 292. It is for that reason that a debt due a partnership cannot be offset against a debt due by an individual. Myers v. Cantley, 18 S.W. (2d) 112. In equity as well as law, the right of set-off is reciprocal; and only mutual claims and such as are in the same right can be set off. 34 Cyc. 724; Fulton v. Fisher, 329 Mo. 116; Matheson v. St. Louis, 156 Mo. 202.

FRANK, P.J.

On April 7, 1930, the Farmers' Trust Company, a banking institution of Maryville, Missouri, closed its doors and was placed in charge of the Commissioner of Finance. At that time it had on deposit in The Tootle-Lacy National Bank of St. Joseph, Missouri, subject to check, the sum of $19,444.91. Thereafter the Commissioner of Finance in charge of the Farmers' Trust Company withdrew from said deposit the sum of $8,201.47, thereby leaving on deposit to the credit of said trust company a balance of $11,243.44. On June 4, 1930, the Commissioner of Finance demanded payment of said balance which was refused, and this suit was brought to recover the amount of such balance with interest from June 4, 1930. The Tootle-Lacy National Bank, defendant below, admitted the facts above stated, but contended that the Farmers' Trust Company was indebted to it in the sum of $11,250, for which amount it was entitled to a set-off. A jury was waived and the cause was tried to the court on an agreed statement of facts. The trial resulted in a denial of defendant's rights to a set-off, and judgment was rendered in favor of plaintiff for $11,837.40 with six per cent interest from date of judgment. Defendant has appealed.

Appellant bases its alleged right to a set-off on the following facts:

On November 15, 1926, George B. Baker and Edward E. Williams were the owners of 280 acres of land in Missouri, subject to encumbrance, 180 acres in Illinois subject to a lease expiring March 1, 1930, and 320 acres in Colorado. It appears from the agreed statement of facts that Baker and Williams were liable to appellant as makers on certain notes and as endorsers on other notes aggregating $30,000. It further appears from the agreed statement that they were liable as sureties on bonds to the treasurer of Nodaway County, Missouri, in the sum of $19,805.84, to the treasurer of the city of Maryville, in the sum of $11,500, to the treasurer of School District No. 97 of Nodaway County, in the sum of $7,344.35, and to B.M. Rowley, trustee, in the sum of $5,862.81. A trust agreement was entered into between appellant, Baker and Williams, and one W.C. Pierce as trustee. Pursuant to the terms of the trust instrument the land above described belonging to Baker and Williams was conveyed to W.C. Pierce as trustee, who was authorized to take possession of, look after, care for, rent and dispose of said lands in the manner provided in said trust instrument, and when said lands were sold the trustee was directed to pay out of the net proceeds of the sale (1) the expenses incurred in discharging the trust, including expense of sale, (2) a reasonable compensation to the trustee for his services, and (3) the remainder pro rata on the debts of Baker and Williams above mentioned.

Immediately after the execution of said trust instrument, W.C. Pierce accepted the trust created thereby, took possession of the land, collected the income therefrom, and on April 3, 1929, sold the land located in the State of Illinois for $24,000 and deposited said sum together with the income he had received from the lands, in the Farmers' Trust Company under the name of "Baker and Williams Trust Fund," subject to the control and check of said Pierce as trustee. Thereafter the trustee withdrew the sum of $6,387.90 with which he paid taxes, interest on mortgages and other expenses of the trust. At the time the trust company closed its doors and passed into the hands of the Commissioner of Finance, there was on deposit in said trust company in the "Baker and Williams Trust Fund" a balance of $21,588.72. The Tootle-Lacy National Bank contends that as this trust fund was created for the purpose of paying debts due the creditors of Baker and Williams, of which it was one, it therefore had an interest in such trust fund, which said interest it was entitled to set-off against the debt which it admittedly owed the trust company.

[1] By the terms of the trust instrument and the agreed statement of facts, the net balance of the trust fund after paying the expenses of executing the trust, including reasonable compensation to the trustee, was to be paid pro rata to the Tootle-Lacy National Bank and four other creditors of Baker and Williams. Conceding that a court of equity, in a proper case, would be authorized to apportion a debt which the plaintiff owed defendant and others jointly, and set-off defendant's portion of such debt against the debt which the plaintiff claimed against the defendant, there are two reasons why such a procedure cannot be followed in this case. In the first place, four of the creditors of Baker and Williams, who by the terms of the trust agreement are entitled to participate in the distribution of the trust fund on the termination of the trust are not parties to this suit. It would be necessary to apportion this trust fund in order to determine what amount of such fund Tootle-Lacy National Bank would be entitled to set-off against the debt it owes the trust company. Such an apportionment could not be made in the absence of the four creditors who have an interest in the trust fund. Th...

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2 cases
  • Farmers' Trust Co. of Maryville, by Cantley v. Tootle-Lacy Nat. Bank of St. Joseph
    • United States
    • United States State Supreme Court of Missouri
    • January 28, 1933
    ...56 S.W.2d 769 332 Mo. 82 Farmers' Trust Company, of Maryville, a Corporation, by S. L. Cantley, Commissioner of Finance of the State of Missouri, and Earl C. McKissick, Special Deputy Commissioner ......
  • United States Fidelity & Guar. Co. v. Mississippi V. T. Co., 25755.
    • United States
    • Court of Appeal of Missouri (US)
    • July 8, 1941
    ...prevails generally. 3 R.C.L. § 149 p. 521. And it has been repeatedly held by our courts, as in the case of Farmers' Trust Co. v. Tootle-Lacy Nat. Bank, 332 Mo. 82, 56 S.W.2d 769, that the deposit of trust funds creates only the relation of debtor and creditor between the bank and the And w......

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