In re West of St. Louis Trust Co. v. Brokaw

• Citation: 102 S.W.2d 792
• Decision Date: 02 March 1937
• Docket Number: No. 23761.,23761.
• Parties: IN THE MATTER OF WEST OF ST. LOUIS TRUST COMPANY OF ST. LOUIS, MISSOURI, IN LIQUIDATION, RESPONDENT, v. FRANK BROKAW, TRUSTEE FOR SCOTT BROKAW, A MINOR, APPELLANT.
• Court: Court of Appeal of Missouri (US)

102 S.W.2d 792

IN THE MATTER OF WEST OF ST. LOUIS TRUST COMPANY OF ST. LOUIS, MISSOURI, IN LIQUIDATION, RESPONDENT, v. FRANK BROKAW, TRUSTEE FOR SCOTT BROKAW, A MINOR, APPELLANT.

No. 23761.

St. Louis Court of Appeals. Missouri.

Opinion filed March 2, 1937.

Appellant motion for rehearing overruled March 26, 1937.

Appeal from the Circuit Court of City of St. Louis. — Hon. Harry A. Hamilton, Judge.

AFFIRMED.

Robert J. Keefe and Paul G. Ochterbeck for respondent.

Igoe, Carroll, Higgs & Keefe of counsel.

(1) The fact that the deposit by the appellant was of funds which he held in trust for some one else, whether a minor or an adult, constitutes no ground for preferring his claim over those of general creditors. Paul v. Draper, 158 Mo. 197, 59 S.W. 77, l.c. 78; Parker v. Central Trust Company, 71 S.W. (2d) 106, l.c. 108 (and cases cited). (2) The order of the circuit court directing the deposit of these funds in the bank was not void or in excess of the jurisdiction of that court. (a) Circuit courts have jurisdiction over next friends appointed by them and, also, over funds recovered by next friends for the use of minors. Constitution of Missouri, Art. VI, sec. 22; R.S. Mo. 1929, sections 708-715; Aley v. Mo. Pac. Ry. Co., 211 Mo. 460, 111 S.W. 102, l.c. 107. (b) The requirements of the Guardianship Act are not applicable to funds held by next friends, R.S. Mo. 1929, section 418. (c) The statutes governing next friends do not require that the funds of a minor be invested in any particular manner. R.S. Mo. 1929, sections 708-715. (3) Even if the appellant had been subject to the guardianship statutes his deposit of these funds would not have been in violation of such statutes. For while guardians and curators may "invest" funds, only as permitted by section 418. Revised Statutes of Missouri, 1929. Porterfield v. Farmers Exchange Bank, 37 S.W. (2d) 936; Hart v. Kirksville Savings Bank, 82 S.W. (2d) 612; Round Prairie Bank v. Downey, 64 S.W. (2d) 701. There is no proscription against a guardian depositing funds in a bank, unless the deposit is a "time deposit" or in some similar form such as make it a loan, in effect. Parker v. Central Trust Company (Mo. App.), 71 S.W. (2d) 106. (4) The bank had the right to rely upon the order of the circuit court, a court of general jurisdiction. Such an order, even if it were erroneous, would be binding upon the parties and would estop them from denying the legality of the status which was invited in reliance thereupon. B. Roth Tool Company v. Champ Spring Co. (Mo. App.), 146 Mo. App. 1, 123 S.W. 513, l.c. 520-521; Brown v. Curtiss, 155 Mo. App. 376, 137 S.W. 24, l.c. 26, Pt. 3. (5) Appellant can neither assert invalidity of the circuit court's order directing the deposit of these funds nor deny that he had lawful authority to make the deposit as a trustee for the minor. He is precluded from both of those contentions by the claim itself, which is directly contrary thereto. The claim fills the office of a petition. It constitutes the basis, and the only basis, of whatever right he has. No theory of recovery may be maintained which does not consist with it. Gary v. Averill, 321 Mo. 840, 12 S.W. (2d) 747, l.c. 750, Pt. 8, and cases cited. (6) Even if the appellant's claim to preference were well based from the standpoint of the essentials hereinabove dealt with, it would fail because of a further fatal defect. There was no evidence either tracing the deposited fund into the assets which came into the hands of the liquidator and there identifying it, or demonstrating that the assets which came into the liquidator's hands were swelled by reason of the deposit in question. Such a showing is indispensable to the allowance of a preference in any case. Porterfield v. Farmers Exchange Bank, 37 S.W. (2d) 936, l.c. 942, Pt. 6.

Henry J. Mueller and Edward Hupert for appellant.

(1) The probate court has sole jurisdiction over the conservation of a minor's property where said property comes to the minor from a source other than its parents. Constitution of Missouri, Art. VI, sec. 34; Sec. 2542, R.S. Mo. 1919, now sec. 2046, R.S. Mo. 1929; Sec. 371, R.S. Mo. 1919, now sec. 375, R.S. Mo. 1929; Sec. 414, R.S. Mo. 1919, now sec. 418, R.S. Mo. 1929; State ex rel. v. Staed, 143 Mo. 248, 45 S.W. 50; Spillane v. Railway, 111 Mo. 555, 20 S.W. 293. (2) The circuit court has no jurisdiction over a minor's property and is without authority to control the property of a minor resulting from a judgment for personal injuries. Constitution of Mo., Art. VI, sec. 34; Scott v. Royston, 123 S.W. 454, 223 Mo. 568; Brewer v. Cary, 148 Mo. App. 193, 127 S.W. 685; Groves v. Aegerter, 42 S.W. (2d) 974. (3) The bank, a Missouri corporation, and its successors is bound to know the laws of this State. Round Prairie Bank of Fillmore v. Downey, 64 S.W. (2d) 701, l.c. 704; In re Cameron Trust, 51 S.W. (2d) 1025, 330 Mo. 1070; Hart v. Kirksville Savings Bank, 82 S.W. (2d) 612. (4) Acceptance of funds of a minor in violation of section 414, Revised Statutes of Missouri, 1919 (now section 418, Revised Statutes of Missouri, 1929) creates a trust ex maleficio. Porterfield v. Farmers' Exchange Bank of Gallatin, 37 S.W. (2d) 936; Hart v. Kirksville Savings Bank, 82 S.W. (2d) 612; Round Prairie Bank of Fillmore v. Downey, 64 S.W. (2d) 701. (5) Where the relation of trustee and cestui exists between the bank and a creditor the claim must be treated as preferred. Round Prairie Bank of Fillmore v. Downey, 64 S.W. (2d) 701; McPheeters v. Scott City Bank, 63 S.W. (2d) 456; Also cases cited under Points III and IV above.

BENNICK, C.

This appeal, which comes to the writer on reassignment, is from the judgment of the Circuit Court of the City of St. Louis denying a preferred status to a claim filed by Frank Brokaw as trustee for Scott Brokaw, a minor, in connection with the liquidation of the West St. Louis Trust Company.

The facts of the case are simple and undisputed.

On April 22, 1924, Scott Brokaw, a minor, by Frank Brokaw, his next friend, recovered a judgment in the Circuit Court of the City of St. Louis against the National Bottling Company for the sum of $2,000. As a part of its judgment the court included a specific order and direction regarding the disposition to be made of the proceeds of the judgment, which order and direction was as follows:

"It is further ordered by the court that the sheriff pay said amount to next friend without bond, and that said next friend deposit said amount in the West St. Louis Trust Company in the name of plaintiff, to draw at least three per cent interest, and that said amount be held in said bank until the minor plaintiff reaches his majority or until the further order of the court.

"It is further ordered by the court that on receipt of letter from trust company showing the deposit of said sum, this judgment to be satisfied."

On June 18, 1924, acting in accordance with the order of the court, the next friend deposited said sum of $2,000 in the West St. Louis Trust Company in the name of "Frank Brokaw Tr. for Scott Brokaw," and the bank for its part accepted the deposit in accordance with the court's order, reciting upon the face of its records that "Mr. Brokaw must have an order from the court before any withdrawals will be allowed."

Thereafter certain withdrawals were made from time to time, and semi-annual interest payments were regularly credited to it, until at the time of the closing of the bank in January, 1933, there was on deposit to the credit of the account the sum of $2,060.90, for which timely claim was made.

The claim was of course allowed by the commissioner of finance as a common claim, and then, in accordance with statutory requirements, certified by him to the circuit court for determination of the question of its priority. The judgment of the court was adverse to the claimant as we have already pointed out, and his appeal to this court has followed in the usual course.

The claimant's position is, in short, that in view of section 375, Revised Statutes of Missouri, 1929 [Mo. St. Ann., sec. 375, p. 241], which gives the probate court jurisdiction over the matter of the management, control, and security of an estate derived by a minor child otherwise than from its parents acting as guardian and curator, the circuit court was wholly without jurisdiction to undertake to control the disposition to be made of the proceeds of the judgment rendered by it in favor of the minor plaintiff; that the deposit of the fund in the bank, though concededly made in strict accordance with the order of the circuit court, was nevertheless wrongful and unlawful in that the deposit or investment of the fund was not made in compliance with the requirements of section 418, Revised Statutes of Missouri, 1929 [Mo. St. Ann., sec. 418, p. 264], which specifically provides how the money of a minor may be loaned out by the minor's guardian or curator, subject to the supervision of the probate court; and that the act of the bank in accepting the deposit in question, knowing that the provisions of section 418 were not being complied with, constituted it a trustee ex maleficio so as to require that the claim made for the amount of the deposit be accorded a preferred status upon the liquidation of the bank.

This, incidentally, is the identical theory upon which the parties joined issue in the lower court, and it is to such theory that we shall limit our consideration of the case in this court, disregarding all further suggestions which come for the first time on the appeal, regardless of how meritorious they might perhaps have been if appropriately raised and presented in the course of the proceedings short of the appeal.

So we are faced at the outset of the case with the question of whether the circuit court had the jurisdiction it assumed to exercise of directing and controlling the disposition to be made of the proceeds of the judgment in the hands of the next friend until such time as the...