Landwehr v. Moberly

• Citation: 93 S.W.2d 935,338 Mo. 1106
• Decision Date: 23 April 1936
• Docket Number: 33673
• Parties: Caroline Landwehr, Executrix of the Estate of Fritz Landwehr, Appellant, v. O. H. Moberly, State Finance Commissioner In Charge of Farmers & Merchants Bank, a Delinquent Corporation
• Court: Missouri Supreme Court

93 S.W.2d 935

338 Mo. 1106

Caroline Landwehr, Executrix of the Estate of Fritz Landwehr, Appellant, v. O. H. Moberly, State Finance Commissioner In Charge of Farmers & Merchants Bank, a Delinquent Corporation

No. 33673

Supreme Court of Missouri

April 23, 1936

Appeal from Gasconade Circuit Court; Hon. R. A. Breuer Judge.

Affirmed.

B B. Baxter and Orla M. Hill for appellant.

(1) The evidence in this compels the belief that the bank's officers made a specific and unusual effort to induce plaintiff to deposit the money of her deceased husband's estate for safe keeping only as a special account for a specific purpose; that the bank agreed to take, retain and preserve the money so deposited by plaintiff and the plaintiff treated the account solely in accordance with said understanding. The bank took the same, therefore, as a trust fund and the defendant now has possession thereof. The plaintiff should have her claim of preference allowed. Wheelock v. Cantley, 50 S.W.2d 731; Marshall v Farmers & Merchants Bank, 253 S.W. 15; In re Wells-Hine Trust Co., 32 S.W.2d 1093; Greenfield v. Clarence Sav. Bank, 5 S.W.2d 708; Kline and Aitken v. Cantley, 34 S.W.2d 526; Central Coal & Coke Co. v. State Bank of Bevier, 44 S.W.2d 188; Fidelity Bank & Trust Co. v. Farmers Exchange Bank of Gallatin, 45 S.W.2d 1090; Compton v. Farmers Trust Co., 279 S.W. 746; Ellington v. Cantley, 300 S.W. 529; Mo. Mut. Assn. v. Holland Banking Co., 290 S.W. 100. (2) If the bank was insolvent or in a failing condition at the time the plaintiff deposited the money and if the officers of the bank, or any of them, had knowledge at said time of such insolvency, then a fraud has been committed upon the plaintiff and the sums of money thus deposited became a trust fund in the hands of the bank, which obtained no legal or equitable title thereto, and if said fund passed into the hands of the defendant commissioner the plaintiff is entitled to preference in the assets of the bank in the commissioner's hands. Turner v. Farmers Exchange Bank, 45 S.W.2d 1084; Ronchetto v. State Bank of Bevier, 51 S.W.2d 174; Cottondale Planting Co. v. Diehlstodt Bank, 286 S.W. 425; Craig v. Stacy, 50 S.W.2d 104; Blockshow v. French, 45 S.W.2d 916; Compton v. Farmers Trust Co., 27 S.W. 746. (3) Various definitions of insolvency have been given. One definition given by this court in a number of late cases is: A bank is insolvent when it is unable to pay its debts in the usual and ordinary course of business, or when its available assets are reduced to less than its liabilities. Graf v. Allen, 74 S.W.2d 61; Alexander v. Llewellyn, 70 S.W.2d 115; State ex rel. Arndt v. Cox, 38 S.W.2d 1079.

Joseph T. Tate and James Booth for respondent.

(1) The petition directly and expressly charged that the bank by its officers, fraudulently induced plaintiff to make the deposit in question by willful and intentional misrepresentations as to the condition of the bank. Under these circumstances plaintiff must recover, if at all, upon the charge thus made and she is not entitled to recover by showing that the bank officers were guilty of constructive fraud, that is that the deposits were received without notifying plaintiff of the insolvency of the bank (although such fraud and misrepresentations are expressly denied). Williams v. Hall, 207 Mo.App. 433; Thompson v. Street Ry. Co., 135 Mo. 217; Henry County v. Bank, 208 Mo. 209; 20 Cyc. 106. (2) If the proof does not support the charge made by plaintiff, she must fail, even though her proof might show a state of facts which, if properly pleaded, would entitle her to recover. (3) Fraud will not be presumed but must be proved, and the burden of proof rests upon him who asserts it. Gockel v. Gockel, 66 S.W.2d 867; Maupin v. Providence Life & Acc. Ins. Co., 75 S.W.2d 593. (4) The alleged statement of the bank cashier that the bank would never fail and never go into the hands of the commissioner for liquidation, was the mere expression of an opinion relating to the future, and if true, which is denied, constituted no proof of fraud. Collins v. Lindsay, 25 S.W.2d 84; Bank v. Hutton, 224 Mo. 42.

OPINION

Collet, J.

On August 15, 1932, the Board of Directors of the Farmers & Merchants Bank of Owensville decided to close that bank and notified the Commissioner of Finance to that effect. That officer took charge of the bank on the following day. At the time the bank closed Carolyn Landwehr, executrix of the estate of her deceased husband, had $ 18,039.68 belonging to the estate on deposit in her representative capacity. This sum represented a number of deposits dating from November 9, 1931, until August 12, 1932, less certain withdrawals within that period. She claims a preference for the entire amount of the deposit. The petition bases this claim upon two grounds, (1) that the deposits as made were special deposits and, (2) that at the time the deposits were received the bank was known by its officers to be in a failing condition thereby making the receipt of the deposits fraudulent and creating a trust in favor of plaintiff. The defendant is the Commissioner of Finance who is in charge of the assets of the bank for the purpose of liquidation. It is conceded that sufficient assets exist for the payment of the claim. The facts germane to each of the above questions follow.

The only evidence offered by the plaintiff in support of her claim that the deposits were special consisted of the testimony of her son Julius C. Landwehr, who was with her at the time of the making of the first deposit on November 9, 1931. On this point he said:

"I recall going with my mother to the Farmers' and Merchants' Bank about November 9, 1931. At the bank we saw Mr. E. W. Steinbeck, cashier of the bank. A conversation transpired with Mr. Steinbeck. My mother got a check for $ 600 from Mr. W. J. Diestelkamp of Hinkle, Missouri and Mr. Steinbeck says: 'How would you have this?' I says: 'We were caught over at the Owensville Bank with some of the funds the other day and we wouldn't like to be caught again.' I says: 'Is there any chance to place this money here to be safely kept for us?' He says: 'Yes, sir, it will be absolutely safe, ready any time you want it. As far as this bank being forced into liquidation, it is absolutely out of the question. It can't be done. If the depositors want their money, they can get it. In that condition this bank is.' And upon that statement the deposit was made."

He further stated that at the time of the above conversation there was discussion relative to the estate of his father and it was made clear that the deposit then made and such deposits as might be made belonged to the estate and were being deposited for safe keeping until distribution was to be made. In that connection the court made the following inquiry:

"Q. The conversation you had with Mr. Steinbeck about depositing this money; was he to keep this money and turn it over to you in kind, or was he to pay you out of the assets of the bank when the time came? A. There was nothing said particularly about it, but it was understood it was to be kept for safe keeping.

"Q. And not put in the assets of the bank at all? A. That part particularly wasn't mentioned, the assets.

"Q. But it was your understanding he was to keep the money there and when she came and called for the money he was to turn it over to her? A. Yes, sir.

"Q. And it was not to be paid out of the assets of the bank? A. Yes, sir, that is right."

On cross-examination the witness identified several of the checks representing the withdrawals above referred to and further stated:

"If there had been more debts out against the estate or any more taxes to pay, I expect it would have been handled in the same way. It was my understanding that the bank was to honor these checks when presented against this account, that is the understanding I had with the bank. If they were properly drawn and signed by her they were to pay them, regardless of who they went to, out of her account. That is the understanding I had with the bank."

The plaintiff had an individual account at the bank upon which she wrote checks. That account was in no manner mingled with the affairs of the estate.

Mr. Steinbeck, the cashier, testifying for the defendant stated that he did not recall the conversation related by the witness Julius Landwehr, but he was sure that he did not agree with Landwehr and his mother that the deposits would be taken as a special deposit; that the deposits constituted a checking account, received in the customary manner. He said that he might have informed Landwehr that the bank was meeting all claims as he made that statement to numerous people and hence probably made it on this occasion. It appears from the record that another bank in Owensville had failed shortly before the first deposit was made November 9, 1931.

Upon the question of the alleged fraud in accepting the deposits at a time when the bank was in an insolvent condition plaintiff called as a witness Mr. Aufderheide, president of the bank during the period involved. He stated that during the year and a half or two years before the bank closed the board of directors of the bank kept in touch with the Commissioner of Finance regarding the bank's affairs and that several conferences, the number of which were not given, were had with the Commissioner of Finance during that period of time concerning the condition of the bank. Apparently Aufderheide, Steinbeck, the cashier, and Berger, the assistant cashier, represented the bank at the conferences with the commissioner. Aufderheide stated that in the latter part of 1931 slightly excessive withdrawals commenced; that the excessive withdrawals gradually became heavier until on August 12, 1932, he, in company with other...