Hayden v. First Community State Bank of Savannah, KCD

• Decision Date: 27 December 1978
• Docket Number: No. KCD,KCD
• Citation: 575 S.W.2d 880
• Parties: James L. HAYDEN, Appellant, v. FIRST COMMUNITY STATE BANK OF SAVANNAH, Missouri, a corporation, Respondent. 29693.
• Court: Missouri Court of Appeals

Page 880

575 S.W.2d 880

James L. HAYDEN, Appellant, v. FIRST COMMUNITY STATE BANK OF SAVANNAH, Missouri, a corporation, Respondent.

No. KCD 29693.

Missouri Court of Appeals, Kansas City District.

Dec. 27, 1978.

P. Wayne Kuhlman, Liberty, for appellant.

Richard A. Heider and Christi M. Insco, St. Joseph, Morton, Reed & Counts, St. Joseph, for respondent.

PRITCHARD, Judge.

Appellant, a former president of respondent, sought judgments upon his four count petition, the first three counts being dismissed for failure to state a cause of action, and the fourth count being dismissed upon appellant's acknowledgment that the statute of limitations had run upon it. The inquiry is therefore whether Counts I, II and III of the petition state a claim for relief upon which appellant may proceed with his proof.

The litigation upon which Count I is based, and upon which appellant alleges he is entitled to reimbursement for attorney's fees and expenses paid by him and incurred on behalf of respondent, was in the case of First Community State Bank v. Pemberton, 493 S.W.2d 692 (Mo.App.1973). There the issue was whether the present appellant, Hayden, as president of respondent bank, had inherent authority to institute proceedings to enjoin the Commissioner of Finance, who had taken possession of the bank, from continuing in possession of the bank's business and property, notwithstanding that Hayden's action had not been authorized by the bank's board of directors. This court noted, page 694(1), the apparent unanimity among the courts, that a bank's president does have the inherent right to control the bank's litigation, absent some contrary provision by statute or bylaw or contrary action by the board of directors, there being no prohibitions of those kinds in that case. A writ of prohibition, against the Commissioner ordering him to refrain from liquidation until circuit court hearing, and a writ of mandamus, ordering the circuit court to hold a hearing as to the propriety of the bank seizure, were ordered made permanent upon the ground that the filing of the proceedings was authorized under Hayden's exercise of inherent powers as president, particularly in view of the peculiar (emergency) circumstances of the case.

Count I alleged, as here paraphrased: At all times mentioned appellant was president of respondent. Beginning on December 29, 1971, he found it necessary to employ counsel for the purposes of litigation regarding the closing of the bank by the Commissioner of Finance. He incurred attorney fees and expenses and did pursue and file litigation successfully on behalf of respondent. Respondent's stockholders, at a regular meeting on January 31, 1972, unanimously adopted a resolution authorizing appellant to employ legal counsel and take the necessary legal action that he deemed proper under the facts and circumstances; and the board of directors thereafter, on July 13, 1972, formally approved and allowed and ordered paid to counsel $18,514.66, which had been incurred in the bank litigation, but payment was not made; that respondent has failed and refused to pay the attorneys employed by appellant on behalf of respondent, causing him to be required to pay the same, which he has done, in the total sum of $18,514.66. Appellant incurred a further fee for legal services on behalf of respondent to attorney McIlroy, Sr., of Bowling Green, Missouri, in the amount of $250.00. Demand was made on May 13, 1974, for payment of said expenses, but respondent refused and still refuses to make payment.

In resisting appellant's claim to reimbursement of his paid attorney fees, and those incurred by him, respondent relies upon the fact that the Commissioner of Finance had taken possession of its business and property under § 361.300, et seq., RSMo 1969, first arguing that the posting of the notice of the Commissioner of Finance acts as a bar to any proceedings against the bank under § 361.300(3). That section provides: "The posting of * * * a notice by the commissioner that he has taken possession of any such corporation shall be sufficient to place all its assets and property, of whatever nature, in the possession of the commissioner, and shall operate as a bar to any proceedings whatever whether in law or in equity, against any incorporated bank or trust company, or its assets, and if any such action is begun, then all such proceedings shall be summarily dismissed and for naught held, upon the certificate of the commissioner being filed in such cause, showing that he has taken possession of the assets of such bank or trust company, * * *." Taken in connection with this statutory provision is § 361.430 2., "No corporation, association or individual having notice or knowledge that the commissioner has taken possession of such corporation, shall have a lien or charge against any of the assets of such corporation for any payment, advance or clearance thereafter made, or liability thereafter incurred." These statutes clearly have to do only with transactions with a banking or trust company organization in its usual course of business after the commissioner has taken charge claimants must thereafter deal with the commissioner in his official status, and if not so dealt, then any action shall be subject to summary dismissal, and there shall be no lien, charge or liability against the assets of the corporation, unless established by proceedings against the commissioner, and not against the corporation alone. These statutory provisions cannot have application to proceedings to test the legality of the taking of possession by the commissioner of the corporation, which proceedings by way of an injunction suit is specifically authorized by § 361.360. And, as noted, appellant, as president of the bank, was held to have the inherent power to institute such proceedings in the Pemberton case, supra. It could not be incumbent upon the commissioner only that he have the sole authority to employ counsel to prosecute an injunction suit under § 361.360 such a requirement would thwart that relief against an improper taking of possession of the bank. Appellant thus was not required to seek approval of the commissioner or the circuit court to employ counsel to prosecute the claim.

Inasmuch as it has been held that appellant, as president of respondent, possessed the inherent power to institute the underlying litigation on respondent's behalf, it can only follow that he had a concomitant power to employ counsel therefor. That...