Miller v. Farmers' Exchange Bank of Gallatin

• Decision Date: 08 January 1934
• Citation: 67 S.W.2d 528,228 Mo.App. 367
• Parties: HOMER MLLER, APPELLANT, v. THE FARMERS EXCHANGE BANK ET AL., RESPONDENTS
• Court: Kansas Court of Appeals

67 S.W.2d 528

228 Mo.App. 367

HOMER MLLER, APPELLANT, v. THE FARMERS EXCHANGE BANK ET AL., RESPONDENTS

Court of Appeals of Missouri, Kansas City

January 8, 1934

Appeal from Circuit Court of Daviess County.--Hon. Ira D. Beals Judge.

Reversed and remanded. (with directions).

Sam T Evans, J. Hubert Fuller, Rex H. Moore and Platt Hubbell for appellant.

Dudley & Brandom for respondents.

OPINION

TRIMBLE, J.

The Farmers Exchange Bank of Gallatin, Missouri, being insolvent, closed its doors and went into the hands of the State Banking Department on March 4, 1926, with S. L. Cantley, Commissioner of Finance, and Joseph N. Martin, Special Deputy Finance Commissioner, in charge of its affairs for liquidation.

Plaintiff, having on deposit a balance of $ 548.93 therein, in due time, filed his claim with the Deputy Commissioner for the allowance of that amount as a common claim, and same was allowed on September 25, 1926, and it was listed along with the other allowed claims, and filed in the office of the Recorder of Deeds as required by Section 5334, Revised Statutes 1929 (11 Mo. St. Ann., Sec. 5334, p. 7559).

This action was brought by plaintiff on April 2, 1932, to have his common claim declared a preference. On the day this action was instituted, the defendants filed their joint entry of appearance. On June 1, 1932, plaintiff filed a duly verified first amended petition. Thereafter, on August 19, 1932, an application for a writ of prohibition was filed in this, our appellate court (at the relation of the defendant bank, the liquidation officers in charge thereof, and other depositors and creditors of said bank, holders of claims allowed against said bank, some of them common and some preferred), to prohibit the circuit judge having jurisdiction over the matters and proceedings in connection with the liquidation of said bank, from hearing the petition of some thirty-five similar holders of common claims upon which no claims for preference had been asserted prior to March 27, 1932, to have such common claims decreed to be preferred claims. On the hearing of this application for prohibition, had on December 12, 1932, the preliminary rule was quashed and the permanent writ denied. [State ex rel. Farmers' & Merchants Bank et al. v. Beals, Judge, 55 S.W.2d 1005.]

Thereafter, on February 6, 1933, defendants filed a demurrer to plaintiff's said first amended petition in the case at bar, which demurrer the circuit court heard, and on March 10, 1933, during the February, 1933, term of said court, sustained the same upon the ground that said first amended petition "failed to state facts sufficient to constitute a cause of action." After taking the necessary and proper steps, plaintiff appealed.

As hereinabove stated, this action to have plaintiff's common claim declared a preferred one was not instituted until April 2, 1932, more than five years after its allowance by the commissioner as a common claim. Hence, one of respondents' points raised in defense of the action is that it is barred by the general five-year Statute of Limitations. [Sec. 862, R. S. 1929, 2 Mo. St. Ann., Sec. 862, p. 1143.]

The first amended petition, against which the demurrer was leveled (after alleging the incorporation and existence of the bank, its being now in the hands of the State Banking Department of which S. L. Cantley, is Commissioner, and Joseph N. Martin Special Deputy Commissioner is in charge of the liquidation thereof), set up that on March 2, 1926 (just two days before the bank ceased to function), and while it was still open and transacting business and was being held out by its officers and directors as solvent and able to meet its obligations, plaintiff made two deposits, one of $ 2278.64 and the other of $ 638.77, aggregating $ 2917.41 which, on account of payments made by the bank, left a balance of $ 548.93 on deposit at the time said bank ceased to function and went into the State Banking Department for liquidation; that the funds and resources of the bank were enhanced and increased to the extent of said balance on deposit; that at all the times of making said deposits and the maintenance of the balance of said deposit in said bank, plaintiff believed said bank was solvent and able to meet its obligations, and made said deposits and maintained said balance therein relying upon said belief;

That at the time of making said deposits, defendant bank was hopelessly and irretrievably insolvent, well known to be so by its officers, directors and employees, but the plaintiff had no knowledge or notice of such insolvency, and the acts of said bank, acting through its officers, in so receiving said deposits when the bank was insolvent, "were acts of fraud on this plaintiff whereby the defendant bank became a trustee ex maleficio of the money of the plaintiff so deposited; and the title to said money did not pass to the defendant bank, but the ownership thereof remained and still remains in the plaintiff;"

That on March 4, 1926, the defendant bank ceased to function as a bank, and passed into the hands of the State Banking Department for liquidation, and at said time the defendant bank had cash in its vaults and in its physical possession largely in excess of the amount of plaintiff's deposit balance of $ 548.93; and at that time said balance had not been withdrawn but was in the possession of said bank;

The said first amended petition further set up that--

"The defendant bank has been in the process of liquidation continuously since March 4, A. D. 1926. The deposits so made by the plaintiff as aforesaid, have not been withdrawn or paid to the plaintiff either before or since March 4, 1926 and are still in the hands of the defendant bank and the liquidating agents thereof as a trust fund due the plaintiff;

"That by reason of the defendant bank being hopelessly and irretrievably insolvent as aforesaid at the time said deposits were made, it became and was the duty of the defendant bank and of the officers, directors, servants and employees in charge of the operation thereof, to advise the plaintiff of the fact that the defendant bank was at the time so insolvent and unable to meet its obligations, and, to have refused for that reason to accept and receive the deposits made by the plaintiff as aforesaid.

"By the making of said deposits in the circumstances aforesaid, the relation of debtor and creditor was not created and did not exist, but, a relation of trust and confidence was created and did exist, and said deposits became a trust fund only and the plaintiff is entitled, by reason of said facts, to have said sum of said deposits declared to be a trust fund and impressed on all the property of the defendant bank and to have the preferential payment thereof over general creditors.

"Within the time provided by law, the plaintiff duly filed with the said Commissioner of Finance and the said Special Deputy Commissioner of Finance in charge of the defendant bank, a claim for the amount of said deposits, as a general or common claim, which amount of said deposits was duly allowed by said Special Deputy Commissioner of Finance, on the--day of September, A. D. 1926, duly approved by the court, duly listed and filed with other claims in the office of the Recorder of Deeds.

"No dividend has ever been declared out of the assets and property of the defendant bank, and no payment of any dividend has ever been ordered by any court out of said assets and property, and no distribution of any fund or assets of the defendant bank has ever been made or ordered by any court.

"No payment of any dividend and no distribution of any of the property of the defendant bank has been made by any of said officers.

"All of the assets, property and funds of the defendant bank are intact and are in possession of the co-defendants of the defendant bank, being the previously named officers.

"S. L. Cantley, Commissioner of Finance, and Joseph N. Martin, Special Deputy Commissioner of Finance in charge, have sufficient funds on hand to pay the claim of the plaintiff in full, and have in their hands about one hundred thirty thousand dollars ($ 130,000) in cash in lawful money of the United States, or the equivalent thereof, as and for the assets and property of the defendant bank in liquidation. When the defendant bank passed into the hands of the Banking Department of the State of Missouri on March 4, A. D. 1926, it had assets and property of the reasonable value of one hundred thirty thousand ($ 130,000).

"Other creditors will suffer no disadvantage that they would not have suffered had the plaintiff asserted his right to priority when he first filed his claim for said deposits as a general or common claim.

"Information of facts tending to show, That the officers, directors and agents of the defendant Farmers Exchange Bank had received the deposits involved in this suit with knowledge of said insolvency of said bank, first came to the plaintiff in the summer of A. D. 1928, as a result of certain hearings and taking of testimony in the Daviess Circuit Court, and until the summer of 1928, after the completion of said hearings and testimony, the plaintiff did not have knowledge that said deposits had been received by said officers, directors and agents of said bank with knowledge of said insolvency.

"Wherefore the plaintiff prays the court that the defendant Farmers Exchange Bank be declared, adjudged and decreed to hold the amount of the plaintiff's said deposits to the amount of five hundred forty-eight dollars and ninety-three cents ($ 548.93), as a trustee ex maleficio; and that said amount of five hundred forty-eight dollars and ninety-three cents ($ 548.93) be declared to be a trust fund in the hands of the Commissioner and Special...