In re Walton Bk. & Tr. Co. v. Am. Herf. Cat. Bdrs.
| Decision Date | 19 June 1939 |
| Docket Number | No. 19248.,19248. |
| Citation | 129 S.W.2d 1090 |
| Court | Missouri Court of Appeals |
| Parties | IN RE LIQUIDATION OF WALTON BANK & TRUST COMPANY, RESPONDENT, v. AMERICAN HEREFORD CATTLE BREEDERS, APPELLANT. |
Appeal from Circuit Court of Bates County. — Hon. Charles A. Calvird, Judge.
REVERSED AND REMANDED (with directions).
Charles P. Woodbury, Paul S. Kelly and Johnson, Garnett & Quinn for appellant.
(1) The relationship between appellant and the bank, created by the employment of the bank to collect and remit the proceeds of appellant's various real estate loans, was that of principal and agent, and not that of debtor and creditor. Insurance Co. v. Kimble, 66 Mo. App. 370; Thomson v. Bank of Syracuse, 220 Mo. App. 805, 278 S.W. 810; Noll v. Harrison County Bank, 222 Mo. App. 923, 11 S.W. (2d) 73; Federal Reserve Bank v. Millspaugh, 314 Mo. 1, 282 S.W. 706; Schulz v. Bank of Harrisonville (Mo. App.), 246 S.W. 614. (2) The fact that the bank carried in its mortgage department a ledger account, in appellant's name, of the collections made, did not result in the creation of a depositor-banker relationship between appellant and the bank. The account in question was a mere bookkeeping arrangement giving appellant no right to check against it as a deposit and creating no right in the bank to treat the funds as its own. Central Coal & Coke Co. v. State Bank of Bevier, 226 Mo. 594, 44 S.W. (2d) 188; Deal v. Bank of Smithville (Mo. App.), 52 S.W. (2d) 201; Noll v. Harrison County Bank, supra; Central Trust Co. v. St. Charles (Mo. App.), 68 S.W. (2d) 919; In re Liquidation of Fidelity Bank & Trust Co. (Mo. App.), 77 S.W. (2d) 480. (3) The trial court erred in refusing to prefer appellant's claim over the claims of common creditors because the funds collected by the bank are trust funds, title to which never passed to the bank. The funds having passed into the hands of the commissioner of finance and having augmented the assets in his hands, constitute trust funds which appellant is entitled to recover in full.
H.E. Sheppard for respondent.
Permitting the proceeds of the collections to be retained by the bank and remitted at intervals, accompanied by a statement of the account, created the relation of debtor and creditor between the appellant and the bank and the appellant is not entitled to a preference. Particularly is this true when the manner and course of dealing had been followed over a period of years with the appellant's knowledge and consent. Green County Building & Loan Assn. v. Cantley, 62 S.W. (2d) 931; Missouri Utilities Co. v. Bank, 62 S.W. (2d) 933; In re Citizens Bank of Senath, 96 S.W. (2d) 526; Metropolitan Life Insurance Co. v. Lamb, 185 S.E. 197; McCormick Harvesting Machine Co. v. Bank, 87 N.W. 974.
American Hereford Cattle Breeders Association, whom we will call petitioner, sought a preferred claim against the assets of Walton Bank & Trust Company, a defunct banking corporation, whom we will call respondent. The circuit court allowed petitioner a common claim and denied it a preference. From the order denying the preference, petitioner has appealed.
The case is here on an agreed statement of facts and the sole question presented is whether or not the claim should have been allowed as a preference.
Respondent is the successor of the Missouri State Bank and of the Walton Trust Company, which institutions were merged on May 6, 1931. It operated under restrictions from March 15, 1933, until it suspended business May 9, 1934. It engaged in the general banking business and also carried on the business of the Walton Trust Company, to which it succeeded, such business consisting, in part, of making loans on real estate and of selling said loans to investors. Petitioner had been an investor of the Walton Trust Company and after the merger it continued such relationship with respondent. Respondent sold mortgage loans and as a part of the consideration for the purchase price thereof it collected the interest and principal of said loans for investors, making no charge therefor, and it looked after leasing and collecting rentals on foreclosed lands owned by investors, charging a fee for such services. Petitioner carried no checking account with respondent, but two accounts to its credit were carried for years in the mortgage department with the knowledge, but not with the specific consent, of petitioner.
The first such account resulted from collections of interest and principal of loans and from collections of income from property serviced by respondent for petitioner, less the amounts paid out by respondent, from time to time, for taxes, insurance, abstract fees, and other expenses of a like nature. The ledger sheet of respondent, covering this account, is included in the record before us, and covers a period of time beginning July 7, 1931, and ending March 15, 1933, and shows collection and credit of sixty-two items, ranging in amounts of from $2.20 up to the sum of $1500. The balance on hand July 7, 1931, was $1879. Collections accumulated therein until, on September 30, 1931, the balance was $2911.54, which was remitted in full to petitioner. The account began to accumulate again on October 6, 1931, and ran until July 3, 1932, when the balance then on hand was remitted in full. It again began accumulating on July 11, 1932, and continued until August 23, 1932, when the entire balance was remitted. On August 25, 1932, it began accumulating and ran until February 3, 1933, when the entire balance was remitted. The balance which accumulated after the last mentioned date, and which was on hand from and after February 25, 1933, less an item paid out March 15, 1933, was the sum of $1931.25.
Respondent also carried, in its mortgage department, another account for petitioner, which is referred to by the parties as the oil royalties account. Petitioner was the owner of a note and mortgage on certain Oklahoma lands, purchased from Walton Trust Company, which mortgage note became delinquent as to interest in 1927. In April, 1930, respondent collected some oil royalties on this land and in June, 1930, petitioner advanced the sum of $1416.68, which, together with oil royalties previously collected, was used by respondent to pay the accumulated back taxes on the land. Thereafter respondent continued to collect royalties and, in July, 1930, it wrote petitioner that it had collected $57.60 in royalties "now held in trust fund to be applied as part reimburement to you for advancement of taxes". Such royalties continued to accumulate in this fund, by monthly collections, until March, 1933. During this period respondent paid out of said collections two items, one for insurance and one for oil tax, and, on March 15, 1933, there was a net balance in this account, due petitioner, in the amount of $925.75.
The items mentioned in the last two preceding paragraphs total the sum of $2856.98, and were carried in the mortgage department of respondent. The record does not disclose that these funds were deposited by respondent to the credit of petitioner, in the sense generally recognized, but merely that an account of receipts and disbursements was kept in the mortgage department of respondent. The record discloses that petitioner never at any time drew on either account, or checked on same, or that it had the right or power so to do. All withdrawals from these accounts were by remittance from respondent to petitioner on account of these accounts were made by respondent.
It is petitioner's contention that the agreed statement of facts discloses that the original relationship existing between the parties is one of principal and agent, growing out of the acts of the agent in looking after its principal's business, in the matter of collecting interest, rents, royalties, etc., and in paying taxes, insurance, abstract fees etc.; that the relationship did not begin by the deposit of any funds, but by reason of petitioner entrusting respondent with collections growing out of investments purchased from it; that, since the original relationship was that of principal and agent, all funds collected by respondent were thereafter held in trust for petitioner until remitted; and that this relationship could not be changed by the acts of respondent alone in failing to remit promptly upon collection, but that it required the positive consent of petitioner in agreeing or consenting to any claimed changed relationship.
Respondent...
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