Liquidation of Peoples Bank of Butler

• Decision Date: 02 May 1939
• Docket Number: 35877
• Citation: 127 S.W.2d 669,344 Mo. 611
• Parties: In Re Liquidation of Peoples Bank of Butler. In Re Liquidation of Walton Bank & Trust Company. In Re Liquidation of Farmers Bank of Bates County, Ed. E. Powell, Trustee, Appellant, v. O. H. Moberly, Commissioner of Finance
• Court: Missouri Supreme Court

127 S.W.2d 669

344 Mo. 611

In Re Liquidation of Peoples Bank of Butler. In Re Liquidation of Walton Bank & Trust Company. In Re Liquidation of Farmers Bank of Bates County, Ed. E. Powell, Trustee, Appellant, v. O. H. Moberly, Commissioner of Finance

No. 35877

Supreme Court of Missouri

May 2, 1939

Appeal from Bates Circuit Court; Hon. C. A. Calvird, Jr. Judge;

Affirmed.

Silvers & Silvers and D. C. Chastain for appellant.

(1) The finance commissioner acquired no better title to the funds in the bank that the bank had. Dalton v. Sturdivant Bank, 76 S.W.2d 425. (2) If title to the funds in question never lawfully vested in the bank, then it is wrong to permit the commissioner to use them to pay the bank's general debts. Harrison Twp. v. People's State Bank, 329 Mo. 968, 46 S.W.2d 165; Clearmont School Dist. v. Jackson Bank, 37 S.W.2d 1006; School Dist of Cameron v. Cameron Trust Co., 330 Mo. 1070, 51 S.W.2d 1025. (3) The bank must be legally designated as depositary and must qualify as such before it is entitled to receive deposits of the public funds. Harrison Twp. v People's State Bank, 329 Mo. 968, 46 S.W.2d 165. (a) To designate a bank as depositary, the statute must be observed. The provisions of the statute are mandatory and must be complied with in all respects. In re Cameron Trust Co., 51 S.W.2d 1026; Marion County v. First Savs. Bank, 80 S.W.2d 861. (b) The county court cannot waive or alter the statute by any action it takes. Boone County v. Cantley, 330 Mo. 911, 51 S.W. 56. (4) The court erred in holding the banks to be legal depositaries and in denying preferences, because: In selecting and designating a county depositary it is essential that the county court: (a) Divide the county funds into not less than two nor more than ten equal parts, by order of record. R. S. 1929, sec. 12184; Aurora School Dist. v. Bank of Aurora, 227 Mo.App. 339, 52 S.W.2d 484. (b) Choose a depositary for a specific term ending sixty-five days after the next biennial letting. R. S. 1929, secs. 12184, 12185, 12188. (c) Give notice that such bids will be received, i.e., the notice should follow the statute as to period for which bids will be received. R. S. 1929, sec. 12184; Harris v. Langford, 277 Mo. 527, 211 S.W. 19. (5) The court erred in holding there was a lawful designation of depositaries, because, in this case there was a failure to comply with the following requirements: (a) That bidders deposit certified checks for an adequate sum as an evidence of good faith. R. S. 1929, sec. 12185. (b) The bid must specify the period of two years for which the bidder binds himself to pay the interest offered. R. S. 1929, sec. 12185. (c) Designation of a depositary must specify its term to be until sixty-five days after the next biennial letting. R. S. 1929, sec. 12188. (d) Upon opening the bids it is the duty of the court to select the highest bidder. R. S. 1929, sec. 12186; Denny v. Jefferson County, 272 Mo. 436, 199 S.W. 250. (e) The highest bidder, thus selected, is given ten days in which to qualify; whereupon it is finally designated as depositary. R. S. 1929, secs. 12187, 12188; Aurora School Dist. v. Bank of Aurora, 227 Mo.App. 339, 52 S.W.2d 484. (6) Deposit of public funds with any bank, except upon the foregoing statutory procedure, is permitted only in case no bids are submitted. R. S. 1929, sec. 12189; Marion County v. First Savs. Bank, 80 S.W.2d 864. (7) In case of rejection of bids as too law, readvertisement must be made. R. S. 1929, sec. 12191. (8) The only provision for a clearing house among several depositaries is where no bids are submitted for some or all the money and the money is deposited by contract, under R. S. 1929, secs. 12189, 12190, 12191. (9) There is no provision for subdepositaries, known to the law. R. S. 1929, Chap. 85, Art. IX. Especially where one bank bids for all the money, offering the highest rate of interest. R. S. 1929, sec. 12186. (10) The court erred in holding the banks lawful depositaries because: (a) The county court has no power to finally designate a depositary until after bond is given by the highest bidder, selected at the opening of bids. Selection of the high bidder is under R. S. 1929, sec. 12186. (b) Final designation is made only after bond is given, under R. S. 1929, sec. 12188. (c) The bond must be given in ten days after the preliminary selection of the highest bidder. R. S. 1929, sec. 12187. (d) This is to enable the court to readvertise and make a second choice before the term and bond of the then existing depositary expires. The existing depositary's term runs for sixty-five days after the biennial letting. R. S. 1929, sec. 12188. (e) In case, for any reason no selection is made at the time fixed by the statute, provision is made for readvertisement, etc. R. S. 1929, sec. 12196. (11) A designation of a bank as depositary is of no effect and confers no right to accept deposit of the county money unless a bond such as the statute requires is given, and in proper amount. R. S. 1929, sec. 12187; Huntsville Trust Co. v. Noel, 321 Mo. 749, 12 S.W.2d 754; White v. Greenlee, 330 Mo. 135, 49 S.W.2d 134; Marion County v. First Savs. Bank, 80 S.W.2d 864. (12) The court erred in holding the bonds given by the banks were valid as to township funds and in denying preferences on this ground because: (a) Such bonds must provide for protection of township funds in term; and in this case neither one of them did so. R. S. 1929, sec. 12187. (b) A surety is bound only by the strict letter of his bond. Nofsinger v. Hartnett, 84 Mo. 555; State ex rel. So. Surety Co. v. Haid, 329 Mo. 1220, 49 S.W.2d 41; City of St. J. ex rel. Consolidated Stone Co. v. Pfeiffer S. Co., 224 Mo.App. 895, 26 S.W.2d 1018; Bauer v. Cabanne, 105 Mo. 110, 16 S.W. 521. (13) The court erred in holding the Walton Bank bond legal, though unsigned by the bank, because: A bond not signed by the principal is invalid and no bond, and this bond was not signed by the principal. Bunn v. Jetmore, 70 Mo. 228; North St. L. B. & L. Assn. v. Obert, 169 Mo. 507, 69 S.W. 1048.

Lyman J. Bishop and H. E. Sheppard for respondent.

(1) A bond given as a county depositary covers deposits of township funds causing the deposit of such public funds to create a debtor-creditor relation for which no preference can properly be allowed. Secs. 12184, 12198, R. S. 1929; Ralls County v. Commr. of Finance, 334 Mo. 167, 66 S.W.2d 115; Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56. (2) A rigid compliance with all the minutiae of the statute is not indispensable to the validity of a depositary bond. Immaterial variances from statutory form will not render it invalid. Henry County v. Salmon, 201 Mo 136, 100 S.W. 20; Wright County v. Farmers & Merchants Bank, 30 S.W.2d 32; Town of Canton v. Bank of Lewis County, 338 Mo. 817, 92 S.W.2d 595; Boone County v. Cantley, 330 Mo. 911, 51 S.W.2d 56. (3) The provisions of the statute, Section 12187, Revised Statutes 1929, pertaining to township funds deposited in a county depositary, should be read into the bond as its terms and conditions. Wright County v. Farmers & Merchant's Bank, 30 S.W.2d 32; Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99; Fogarty v. Davis, 305 Mo. 288, 264 S.W. 879; Henry County v. Salmon, 201 Mo. 136, 100 S.W. 20; State ex rel. Courtney v. Callaway, 208 Mo.App. 447, 237 S.W. 173. (4) The failure of the Walton Bank & Trust Company to sign the depositary bond until some time after the bond was delivered to the county did not invalidate the bond as a depositary bond -- the bond would be good and the sureties liable though the bank had not signed. White v. Greenlee, 337 Mo. 514, 85 S.W.2d 112; Farmers & Traders Bank v. Harrison, 321 Mo. 815, 12 S.W.2d 755; Clark County Savings Bank v. Farmers Trust Co., 24 S.W.2d 1065. (3) Depositary bond is valid and enforceable though not filed in time provided by statute. Mitchell v. Bank of Ava, 333 Mo. 960, 65 S.W.2d 99. (6) Preference, based on collusion, was properly denied. (a) Evidence of collusion was inadmissible as a collateral attack on the record of the county court designating depositaries and approving depositary bonds. The record of the county court, acting in a judicial capacity, was not subject to collateral attack. Art. IX, Chap. 85, R. S. 1929; Hartzfeld v. Taylor, 207 Mo. 236, 105 S.W. 599; Naeglin v. Edwards, 228 S.W. 764; Bingham v. Kollman, 256 Mo. 573, 165 S.W. 1097; State ex rel. G. M. A. C. v. Brown, 330 Mo. 220, 48 S.W.2d 857; State v. Fulton, 152 Mo.App. 345, 135 S.W. 95; State ex rel. Wirt v. Cass County Court, 137 Mo.App. 698, 119 S.W. 1010; McDonald v. McDaniel, 242 Mo. 172, 145 S.W. 452. The orders of the county court designating depositaries and approving depositary bonds were judicial acts. 34 C. J., p. 1179, sec. 3; Biddeford v. Yates, 72 A. 335, 15 Ann. Cas. 1091; Secs. 12186, 12187, R. S. 1929; Regan v. Iron County Court, 226 Mo. 79, 125 S.W. 1140; State ex rel. Doniphan Bank v. Harris, 176 S.W. 9; Barrett v. Stoddard County, 246 Mo. 501, 152 S.W. 43; State ex rel. Johnson v. Sevier, 339 Mo. 483, 98 S.W.2d 677; State ex rel. Heller v. Thornhill, 174 Mo.App. 469, 160 S.W. 558; State ex rel. Randolph County v. Evans, 240 Mo. 95, 145 S.W. 40; State ex rel. Johnson v. M. & M. Bank, 279 Mo. 228, 213 S.W. 815; Denny v. Jefferson County, 272 Mo. 436, 199 S.W. 250. Appellant was a stranger to the record whose rights accrued after the rendition of the orders and may not attack the orders for fraud in the procurement -- if considered as a party to the record still may not make such attack. 34 C. J., p. 526, sec. 832; Abington v. Townsend, 271 Mo. 602, 197 S.W. 253; State ex rel. Courtney v. Callaway, 208 Mo.App. 447, 237 S.W. 173; State ex rel. Van Hafften v. Ellison, 285 Mo. 301, 226 S.W. 559; McIntyre v. St. L.-S. F. Ry. Co., 286 Mo. 234, 227 S.W. 1047, ...