Fidelity Nat. Bank & Trust Co. v. Farmers' Exch. Bank

• Decision Date: 02 February 1932
• Docket Number: No. 16603.,16603.
• Court: Missouri Court of Appeals
• Parties: FIDELITY NAT. BANK & TRUST CO. v. FARMERS' EXCHANGE BANK OF GALLATIN et al.

45 S.W.2d 1090

FIDELITY NAT. BANK & TRUST CO. v. FARMERS' EXCHANGE BANK OF GALLATIN et al.

No. 16603.

Kansas City Court of Appeals. Missouri.

February 2, 1932.

Appeal from Circuit Court, Daviess County; Ira D. Beals, Judge.

"Not to be officially published."

Action by the Fidelity National Bank & Trust Company against the Farmers' Exchange Bank of Gallatin and others. Judgment in favor of the defendants, and the plaintiff appeals.

Reversed and cause remanded with directions.

Bowersock, Fizzell & Rhodes, of Kansas City, for appellant.

Ed C. Hyde and Earle W. Frost, both of Kansas City, and J. W. Alexander and L. B. Gillihan, both of Gallatin, for respondents.

BOYER, C.

This is an action against defendant bank, the commissioner of finance, and his special deputy in charge of the affairs of said bank for liquidation, for the purpose of establishing a priority claim in the sum of $300. The claim was denied; plaintiff duly appealed and contends that upon the facts and the law the judgment was erroneous and that the claim is preferential in character and should be so allowed. Respondents contend to the contrary, and the reasons assigned by both parties will be referred to in the opinion.

The facts: The record before us discloses by admissions and proof that defendant bank by voluntary action closed its doors and passed into the hands of the bank commissioner, now the commissioner of finance, for liquidation according to law March 4, 1926. Prior thereto plaintiff bank was the duly selected and approved depository and correspondent of defendant bank, and on occasions defendant borrowed large sums of money from the plaintiff. Prior to January 25, 1926, plaintiff had rediscounted a large number of notes tendered by defendant, among which was the note of one N. A. Baker for the sum of $300, which is the basis of the claim in this case. On the date last named the total indebtedness of defendant bank to plaintiff bank was approximately $140,000 on bills payable of defendant. At that time it was agreed that defendant should then execute its note to the plaintiff for the total indebtedness, and thereafter plaintiff was to hold bills receivable of defendant as collateral security for said indebtedness. This agreement was carried out and the Baker note was after said date held as collateral with numerous other notes to secure the debt of defendant. It was to mature by its terms February 11, 1926, and on January 26, 1926, plaintiff sent the note to defendant "for collection and returns in Kansas City exchange." The note was paid by the maker to defendant February 13, 1926, in the total sum of $330. This money was retained by defendant and never remitted to the plaintiff. There is no correspondence or communication shown in the record between the parties from the time the note was transmitted for collection until the bank closed, although witness for plaintiff who was in charge of the discount department stated there may have been such communication, but the records had not been searched to ascertain the fact.

After January 25, 1926, defendant obtained additional money from the plaintiff, and on the date defendant bank closed its total indebtedness to plaintiff was in round figures $154,000, to secure which plaintiff held as collateral bills payable of the defendant amounting in round figures to about $219,000. After the bank failed, some of the notes thus held as collateral by the plaintiff matured and were renewed by the makers dealing directly with the plaintiff, and upon such renewals the amounts would be credited upon the indebtedness of defendant. Some of said notes so held were paid and the amounts collected were likewise credited. Finally, the plaintiff sold all of the remaining collateral which had not been renewed or collected at public auction, according to the pledge agreement, and purchased same for the sum of $10,000 and credited that amount upon the debt of defendant. The amount of deposit in plaintiff bank to the credit of defendant bank was also applied as a credit on the debt. After all of such credits had been so made, there remained due plaintiff $14,460.10, according to its estimate, for which sum plaintiff filed a claim with the commissioner for allowance as a common claim. Plaintiff also filed with the commissioner a formal claim and demand for preferential allowance in the sum of $300, based upon the facts heretofore recited in reference to the collection by defendant of the Baker note. Plaintiff also presented to the commissioner other preferential demands, but all of them were included in the amount of the common claim for $14,460.10. By statements of counsel and witnesses, it is apparent that it was understood and agreed by all parties and the court that, if any of the preferential claims asserted were allowed either as common or priority demands, the deficiency claim was to be reduced by an equivalent amount. The priority claims thus presented to the commissioner were rejected by him and the deficiency claim was allowed "conditionally." Thereafter plaintiff in due course and manner instituted this action, and on July 11, 1928, all claims for preference and otherwise, represented by claims filed or by suits pending, were heard, considered, and determined, and were allowed, denied, or allowed conditionally, all as set forth in one decree. In reference to the item in suit, the decree recites that the claim of plaintiff for the sum of $300 was rejected by the commissioner and his action in so doing was approved, and after hearing the evidence upon the suit of plaintiff the court found the issues against it and adjudged that the claim be denied and rejected and that plaintiff take nothing. The judgment upon plaintiff's deficiency demand was that it be allowed as a common claim conditionally; that is, it was allowed subject to an accounting on all of the collateral held and collected by plaintiff and to be reduced in amount by the sum of all such collections upon said final accounting, and the balance, if any, to be allowed as a common claim only, all of which was to be done before any dividend should be paid on said claim. The judgment upon plaintiff's common claim is mentioned because respondent contends that the effect of the filing and presentation of said claim precludes the recovery sought by plaintiff on the claim which is the basis of the action in the case at bar. The evidence shows, and it is conceded, that defendant received the money paid on the note, did not remit,...