First Natl. Bank v. West End Bank.

• Decision Date: 14 June 1939
• Docket Number: No. 35565.,No. 35554.,35554.,35565.
• Citation: 129 S.W.2d 879
• Parties: FIRST NATIONAL BANK IN ST. LOUIS, a Corporation, and UNIVERSITY CITY v. WEST END BANK OF UNIVERSITY CITY, a Corporation, O.H. MOBERLY, Commissioner of Finance of the State, in Charge of the WEST END BANK OF UNIVERSITY CITY, Appellants. W.S. STEELE, Collector, and DAVID L. MILLAR, Mayor, v. WEST END BANK OF UNIVERSITY CITY, in Liquidation, Appellant.
• Court: Missouri Supreme Court

129 S.W.2d 879

FIRST NATIONAL BANK IN ST. LOUIS, a Corporation, and UNIVERSITY CITY v. WEST END BANK OF UNIVERSITY CITY, a Corporation, O.H. MOBERLY, Commissioner of Finance of the State, in Charge of the WEST END BANK OF UNIVERSITY CITY, Appellants. W.S. STEELE, Collector, and DAVID L. MILLAR, Mayor, v. WEST END BANK OF UNIVERSITY CITY, in Liquidation, Appellant.

No. 35554.

No. 35565.

Supreme Court of Missouri.

Division One, June 14, 1939.

Appeal from Circuit Court of St. Louis County. — Hon. Robert W. McElhinney, Judge.

REVERSED AND REMANDED (with directions).

Williams, Nelson & English and R.F. O'Bryen, for appellants.

(1) The presumption is that the deposit is general and the burden of proving otherwise is upon person claiming priority and if there is not strict compliance with the things necessary to establish their priority, they are not entitled to a preference. Landwehr v. Moberly, 93 S.W. (2d) 935, 338 Mo. 1106; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W. (2d) 33, 340, Mo. 95; Oliver v. Commissioner, Bank of Wellsville, 48 S.W. (2d) 99; Boswell Post of the American Legion v. Farmers' State Bank of Mt. Vernon, 61 S.W. (2d) 761; In re Citizens Bank of Senath, 102 S.W. (2d) 830. (2) Construction of contract, if at all ambiguous, depends upon the interpretation of the parties. McQuerry v. Bank of El Dorado Springs, 96 S.W. (2d) 515, 230 Mo. App. 1215; Thomas v. Utilities Building Corp., 74 S.W. (2d) 578, 335 Mo. 900; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W. (2d) 33, 340 Mo. 95. (3) A city depository is selected as designated by the ordinances and statutes and is a depository only for the treasurer of the city and not for the city collector. R.S. 1929, secs. 6960, 7010, 7015, 7042; State ex rel. v. Wilson, 132 S.W. 620, 151 Mo. App. 723; In re Home Trust Co. of Fulton, 69 S.W. (2d) 312; In re Citizens Bank of Senath, 102 S.W. (2d) 830; City of Macon v. Farmers Trust Co., 21 S.W. (2d) 643; In re Hunter's Bank of New Madrid, 30 S.W. (2d) 782, 224 Mo. App. 550. (4) The collector of a city of the fourth class is an elective officer and by statute and ordinance has a right to deposit funds collected for taxes under his own name and to deposit same, make reimbursements, and generally control the fund until he pays same over to the city treasury and said funds are not under the control of the city, but under his control until they are paid over to the city. R.S. 1929, secs. 6951, 6970, 6997, 7000; In re Home Trust Co. of Fulton, 69 S.W. (2d) 312; City of Fulton v. Home Trust Co., 78 S.W. (2d) 445, 336 Mo. 239; In re Citizens Bank of Senath, 102 S.W. (2d) 830; Security Natl. Bank Savings & Trust Co. v. Moberly, 101 S.W. (2d) 33, 340 Mo. 95. (5) Public funds deposited in a bank by an official charged with their custody stands upon no higher ground as to preference than the funds of a private individual. City of Aurora v. Bank of Aurora, 52 S.W. (2d) 496, 227 Mo. App. 343; Special Road District No. 4 v. Cantley, 8 S.W. (2d) 944, 223 Mo. App. 89; In re Holt County Bank of Mound City, 88 S.W. (2d) 207, 229 Mo. App. 1175; City of Fulton v. Home Trust Co., 78 S.W. (2d) 445, 336 Mo. 239; In re Citizens Bank of Senath, 102 S.W. (2d) 830; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W. (2d) 33, 340 Mo. 95. The fact that the bank knew it was city money makes no difference. City of Fulton v. Home Trust Co., 78 S.W. (2d) 445, 336 Mo. 239; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W. (2d) 33, 340 Mo. 95.

Marvin E. Boisseau for respondents.

(1) The depository agreement extended to and included funds deposited by the city collector. (a) The city had power to contract to secure all its funds. R.S. 1929, sec. 7010; In re Citizens' Bank of Senath, 102 S.W. (2d) 831. (b) Funds in custody of the collector are city funds. In re Home Trust Co. of Fulton, 69 S.W. (2d) 312; City of Fulton v. Home Trust Co., 78 S.W. (2d) 445; Security Natl. Bank v. Moberly, 101 S.W. (2d) 33. (c) The parties so construed the contract. (2) Appellant is estopped from asserting that the depository agreement did not include deposits made by the collector, or that such deposits are not entitled to a preference. (a) An estoppel arises when one is misled to his hurt by the conduct of another. 10 R.C.L., p. 697; State ex rel. v. Hamilton, 303 Mo. 302, 260 S.W. 466; Losee v. Crawford, 5 S.W. (2d) 105. (b) If estoppel is not asserted against appellant, then the collector will suffer injury, i.e., he will be personally liable. City of Fayette v. Silvey, 290 S.W. 1019; University City v. Schall, 205 S.W. 631; Bragg City Road District v. Johnson, 20 S.W. (2d) 22. (3) Respondents are entitled to a preference in any event. (a) This must be determined from the circumstances of each case. 7 C.J., p. 360; McQuerry v. Bank of El Dorado Springs, 96 S.W. (2d) 515; City of Portageville v. Harrison, 63 S.W. (2d) 410. (b) Either the depository agreement includes the accounts in question or the bank became a trustee ex maleficio. City of Doniphan v. Cantley, 52 S.W. (2d) 417; City of Mason v. Farmers Trust Co., 21 S.W. (2d) 643; City of Portageville v. Harrison, 63 S.W. (2d) 410.

HYDE, C.

This is a proceeding to determine the rights of the parties in a certain fund placed in the custody of the court, in an interpleader action. This fund is claimed by both the City of University City and the State Commissioner of Finance in charge of the liquidation of the West End Bank of University City. The total amount of this fund, which the trial court awarded to the City and its collector was $16,727.04. The Finance Commissioner, on behalf of the Bank, has appealed.

By stipulation of the parties the two above entitled cases were consolidated in the trial court and likewise the appeals therein have been consolidated here. The first cause originated as an interpleader suit filed in the Circuit Court of St. Louis County, by the First National Bank in St. Louis. The bill of interpleader alleged, that the First National Bank had in its possession the sum of $35,330.60 arising from the sale of United States Government bonds placed in escrow with it by the West End Bank of University City for the purpose of securing deposits made by the City of University City in the West End Bank as the City depository; that the West End Bank had been closed and was being liquidated by the Commissioner of Finance; that the City claimed the fund because the West End Bank had failed to pay to it money which had been deposited by the City Collector, and that the Commissioner of Finance took the position that the contract under which the bonds were placed in escrow with it did not cover moneys deposited with the West End Bank by the City Collector. Pursuant to a stipulation of the parties an order was entered sustaining the bill of interpleader, directing the First National Bank to pay the $35,330.60 to the clerk of the court (which was done and it was thereupon discharged) and ordering the defendants, City of University City and the West End Bank in charge of the Finance Commissioner for liquidation, to interplead and set up their respective claims to the fund, which was done. The issues arising upon defendants' interpleas constitute the first case. The second case arose upon a petition filed, in the same court, by the City, the Mayor and City Collector, "for and on behalf of said City," for "priority" of the claim made by the City against the West End Bank, in liquidation, for money deposited by the City Collector to his account with the bank, being the same deposits referred to in the interpleader suit; the petitioners asserting the claim should be allowed as a preferred claim and the Commissioner of Finance contending it is a general claim only. The trial court found for the City in both cases.

The City of University City, hereinafter referred to as the City, is a city of the fourth class. The West End Bank, a banking corporation organized under the laws of this State will be referred to as the Bank. The facts herein stated were developed largely by the evidence adduced on the part of the City. Pursuant to Section 7010, Revised Statutes 1929, the board of aldermen of the City adopted ordinances providing for the selection, annually, of a depository for the funds of the City for the term of one year corresponding with its fiscal year. Prior to 1917, it was required that the depository give a surety company bond but in that year this requirement was changed to permit a bond by individual sureties. After 1930, the requirement was made that the depository secure the City deposits by an escrow arrangement similar to the one involved herein. The present controversy arises out of the depository contract for the fiscal year 1932-1933. Annually since 1915, the West End Bank had been selected and designated as the City depository. By ordinance No. 2071, adopted July 13, 1932, the Bank's "bid ... as depository for all the funds" of the City was accepted and it was selected as such depository "during the period from July 13, 1932, to the first regular meeting of the board of aldermen ... following the first day of July, 1933, and until a successor shall be selected." The ordinance next directed the "City Treasurer to transfer all of the funds of said City to said bank ... provided said bank shall have entered into" an escrow agreement with the City in conformity with the terms therein set out, and which are incorporated in the agreement herein involved. The ordinance then referred to this contract, executed on same date as the ordinance, and approved same and provided that: "The City Treasurer shall deposit all funds of said City with the West End Bank pursuant to the contract."

(Italics ours.) It will be noted here that the ordinance refers only to the deposit of funds in the custody of the City Treasurer.

The 1932-33 escrow agreement, dated July 13, 1932, entered into between the City and the Bank, approved by the foregoing ordinance, is the basis...