In re Wellston Trust Co.

• Decision Date: 28 June 1939
• Docket Number: No. 24828.,24828.
• Citation: In re Wellston Trust Co., 130 S.W.2d 232 (Mo. App. 1939)
• Parties: In re WELLSTON TRUST CO. URY et al. v. HOLT, Commissioner of Finance, et al.
• Court: Missouri Court of Appeals

130 S.W.2d 232

In re WELLSTON TRUST CO URY et al. v. HOLT, Commissioner of Finance, et al.

No. 24828.

St. Louis Court of Appeals. Missouri.

June 28, 1939.

Appeal from Circuit Court, St. Louis County; Peter T. Barrett, Judge.

"Not to be reported in State Reports."

Proceeding in the matter of the Wellston Trust Company in liquidation by John C. Ury, Leo B. Painter, Elmer C. Smith, and Walter J. Newman, trustees of Wellston Lodge No. 613, Ancient Free and Accepted Masons, against R. W. Holt, Commissioner of Finance of the State of Missouri, and Ralph D. Griffin, Special Deputy Commissioner of the State of Missouri in charge of the liquidation of the Wellston Trust Company, to establish a preferred claim. From a judgment for plaintiff the defendants appeal.

Affirmed.

J. Marvin Krause, of St. Louis, for appellants.

Harry Richards and Barak T. Mattingly, both of St. Louis, for respondents.

BENNICK, Commissioner.

This is an appeal by the officials in charge of the liquidation of the Wellston Trust Company from the judgment and decision of the Circuit Court of St. Louis County awarding a preference to the claim of the trustees of Wellston Lodge No. 613, Ancient Free and Accepted Masons.

It appears that prior to 1927 the lodge had incurred a very substantial indebtedness secured by what is referred to in the record as a first real estate mortgage deed of trust.

Confronted with the demand for a reduction in such indebtedness, and having insufficient funds available for that purpose, the lodge conceived the idea of borrowing the sum of $10,000 from its own members through the medium of the sale to them of 400 bonds, each in the sum of $25, made payable to bearer on March 1, 1942, and bearing interest from March 1, 1927, the date of issuance, at the rate of 5% per annum, payable annually. Installments of interest accruing until maturity were evidenced by interest coupons attached to each of the bonds, with provision made that interest should be paid on presentation and surrender of the coupons as they respectively matured.

The bonds were secured by a second real estate mortgage deed of trust upon the temple and grounds of the lodge, in which instrument the bank was named as trustee, being so appointed for the purpose, among others, of holding title to the property pending the discharge of the obligations assumed by the lodge in connection with the issuance and sale of the bonds.

Anticipating the fact that it would be extremely inconvenient to all parties concerned for an officer of the lodge to attempt the task of redeeming all interest coupons as they matured, the lodge, at the time of the issuance of the bonds and the execution of the deed of trust securing them, entered into an agreement with the bank whereby the latter undertook to attend to the matter of the redemption of the coupons with funds supplied it by the lodge for that purpose.

Pursuant to this agreement, the bank entered upon its ledger what it denominated "Wellston Lodge No. 613, Coupon Account", and each year thereafter, prior to the due date of the particular annual interest payment, the lodge would deposit with the bank, out of the treasury of the lodge, the exact sum of $500 necessary to meet the interest payment coming due. The bondholders would then, at their convenience, present their coupons at the bank as they had been instructed to do, and after payments had been made upon any number of coupons thus presented, appropriate entries would be made in the bank's ledger showing the balance remaining due in the account.

The lodge, incidentally, had no other account with the bank; and the undisputed evidence was that after a particular deposit had been made, the lodge had no further control over the money so deposited except to demand that it be paid out for the special and specific purpose for which it had been turned over to the bank under the agreement entered into between the latter and the lodge.

The undertaking thus begun in 1927 was carried through for six years until March 3, 1933, when the bank closed its doors and passed into the hands of the State Department of Finance for liquidation. At that time there was in the fund a balance of...