Mabry v. Waller

• Decision Date: 08 March 1937
• Docket Number: 32527
• Citation: 178 Miss. 183,172 So. 870
• Court: Mississippi Supreme Court
• Parties: MABRY et al. v. WALLER

172 So. 870

178 Miss. 183

MABRY et al. v. WALLER

No. 32527

Supreme Court of Mississippi

March 8, 1937

Division A

1. BANKS AND BANKING.

Deposit is presumed general unless expressly made special and specific.

2. BANKS AND BANKING.

Where directors of bank executed their personal note in favor of depositor for amount of deposit and received from cashier a time certificate without any special notation to indicate a special deposit, and books of bank and minutes of board of directors showed no action by bank tending to establish a trust or special deposit, no trust fund or special deposit was established in favor of directors, so as to entitle them to preference on insolvency of bank.

HON. N R. SLEDGE, Chancellor.

APPEAL from chancery court of Calhoun county HON. N. R. SLEDGE Chancellor.

Suit by Mrs. C. S. Waller, guardian, against C. G. Mabry and others as directors of the Bank of Derma, wherein the defendants filed a cross-bill against the liquidating corporation which had taken over the affairs of the Bank of Derma. From a decree against the directors in favor of the plaintiff and dismissing the cross-bill, the defendants appeal. Affirmed.

Affirmed.

Rush H. Knox and Creekmore, Creekmore & Capers, all of Jackson, and E. C. Sharp, of Booneville, for appellants.

The deposit was a special deposit and became a trust fund for the payment of the note in question. Our contention in this case is that the deposit that was made to the credit of G. C. and S. Mabry was made for a special deposit and a trust was created between the parties. That the bank never got title to the deposit and the relationship of debtor and creditor never arose between the bank and the Mabry brothers. It seems that the proof on this is not disputed. The witnesses testified fully about the transaction and no one contradicted their statements. The cashier of the bank, who was not a director, testified that he understood the matter and that the deposit was for the sole and only purpose of paying Mrs. Waller's note. That such instructions were given him by the Board of Directors.

Where a deposit was special, was made for a special purpose, or, was in any way segregated, so that title did not pass to the bank, it must of course be repaid in preference to general creditors.

7 C. J., sections 544, 548; Sawyers v. Conners, 114 Miss. 363, 74 So. 131; 6 C. J., page 632.

A special deposit exists when money or property is given to a bank for some specific or particular purpose, as a note for collection, money to pay a particular note, or property for some specific purpose.

2 Michie on Banks and Banking, page 1291; Carlson v. Kies, 75 Wash. 171, 47 L. R. A. (N. S.) 317; Armour Packing Co. v. First National Bank, 69 Miss. 700; Whitcomb v. Carpenter, 111 N.W. 825, 10 L. R. A. (N. S.) 928; 3 Michie on Banks and Banking, page 257, sec. 185, 186.

In the case of Andrew v. Security Savings Bank of Perry, 203 Iowa 546, 213 N.W. 245, the court held that where a fund is held in trust by the bank for a specific designated purpose the bank does not take title.

Home Trust Co. Case, 69 S.W.2d 312; Love v. Wilson, 172 Miss. 546, 159 So. 97; Love v. Dampeer, 159 Miss. 430, 132 So. 439, 73 A. L. R. 1376.

The books of the bank, which were introduced in evidence, show from the date of the transaction to the closing of the bank, the bank had cash and sight exchange on hand more than sufficient to discharge this trust. And the proof conclusively shows that Mrs. Waller had presented herself at the bank to withdraw her funds to the amount of the note, and would have done so but for the giving of the note in question. And had this sum been withdrawn the assets of the bank would have been reduced to that extent and the assets coming into the hands of the superintendent of banks, as liquidating agent, and the liquidating corporation, as his successors, would have been decreased in that amount. That by the action of the signers of this note the assets coming into the possession of the liquidating corporation were increased to the extent of the amount of the certificate of deposit. Therefore, the depositors will sustain no loss by applying the amount of the certificate of deposit to the payment of the note in question. They will receive as much, and possibly more, than they would have received had these funds been withdrawn at the time Mrs. Waller presented herself at the bank for that purpose.

The case of Morton v. Farmers Bank, 24 A. L. R. 1107, 189 N.W. 232, held that where a person makes a deposit in a bank for the specific purpose of meeting certain checks to be thereafter issued, the bank, on accepting the deposit, becomes bound by the conditions imposed and if the money so deposited is misapplied it can be recovered as a trust deposit. The annotation to this case lays down the general rule that money thus deposited for the purpose of meeting certain checks, must be applied to that purpose.

Sawyers v. Conner, 1918 L. R. A. 61; Bryan v. Coconut Grove Bank & Trust Co., 132 So. 481; Myers v. Federal Reserve Bank of Atlanta, 134 So. 600.

It appears from a careful examination of the Mississippi authorities that the cases most nearly in point are Sawyers v. Conner, 114 Miss. 363, and Miss. Central Railroad Co. v. Conner, 114 Miss. 631.

Stone & Stone, of Coffeeville, for appellee.

We say that the repeated statement in the claim against the liquidating corporation that the money was received as a trust fund and was the subject of a secret trust and one in favor of the directors of the bank, all constitute separately and jointly a medley of legal impossibilities. We did not take up much time in our oral argument in discussing this because it seems to us elementary law and absolutely a fundamental proposition that no set of trustees or directors can establish any such trust as this in order to save themselves; we need not go further than section 3795.

The whole spirit of our banking law was in line with all the decisions in the country that the directors or trustees of any institution can never make the institution a buffer against the effect of private business ventures of said trustees or directors.

Love v. Wilson, 160 So. 565, 172 Miss. 546; Dampeer case, 159 Miss. 430, 132 So. 439, 73 A. L. R. 1376.

Counsel submitted several authorities and I have one word for the ones outside of Mississippi and that is when we have a matter decided in Mississippi, and thoroughly decided, an unequivocal adjudication of the same inside of our state, I refuse to be invited on an excursion into foreign states to see what they may have thought about this proposition. The only case even winking at anything favorable to the signers of the note, even on a casual glance, is the case of Sawyers v. Conner, 114 Miss. 363, 75 So. 131, L. R. A. 1918A, 61, Ann. Cas. 1918B, 388, and the supposed application of that case to the case at bar would be apparent only to the casual glance, but on full examination it would show what was said by Judge Anderson in the case of Love v. Little, 167 Miss. 105, 148 So. 646, and that is: "In the Sawyers case the depositor refused to permit the proceeds of a cheek to be deposited either to her checking account or her savings account, but informed the cashier of the bank that the deposit was for the purpose of paying a contractor for building a house; whereupon, the cashier gave her a special receipt bearing the words S. P. Dept. The court held that the deposit was charged with a trust in favor of the contractor and that the bank did not get title to the proceeds of the deposit."

This little paragraph occurs on page 110 of 167 Miss. in the case of Love v. Little, and shows very plainly that far from being in line with the case at bar which is a purported secret trust, that in the Sawyers v. Conner case there was a special receipt bearing the words"S. P. Dept.", which were interpreted in the opinion as meaning Special Deposit. This case takes itself out of the class into which properly falls the case at bar, and is so plainly shown to do so by the paragraph just quoted, and the decision in Love v. Little shows very plainly i he line of demarcation between a general and a special deposit.

A deposit is presumed to be general unless expressly made special or specific. Where the bank had a right to mingle the funds deposited with its general assets, it is a general deposit and not a special one. A special deposit does not enter into the general funds of the bank "and form a part of its disposable capital;" it is kept separate and is to be specifically returned. This is true, even though the money deposited may be trust funds put with the bank on condition that it would pay a certain sum to the cestui during life, in the absence of evidence to show that it was the bank's duty by express agreement or clearly implied to keep the funds and their investment separate.

1 Morse on Banks & Banking (6 Ed.), sections 186 and 205; Love v. Little, 167 Miss. 105.

The only other case that we desire to mention is Mississippi Central Railroad Co. v. Conner, 114 Miss. 63, 75 So. 57, and it is directly in line with the latest decision above quoted from which latter is the more recent decision, and still we can not fail to call attention to the case which so thoroughly excludes the theory on which the case at bar was filed.

The distinctive feature, the sine qua non of a special deposit, is that the identical money deposited is to be kept apart from the general funds of the bank to be returned to the depositor or paid to some other person designated when the money is deposited.

Sawyers v. Conner, 114 Miss. 363, 75 So. 131; Love v. Little, 167 Miss. 105, 148 So. 656.

We repeat that the case of Miss. Central Railroad Co. v. Conner stands without the slightest...