Novinger Bank v. St. Louis Union Trust Co.

• Decision Date: 06 November 1916
• Docket Number: No. 12109.,12109.
• Citation: 189 S.W. 826,196 Mo. App. 335
• Parties: NOVINGER BANK v. ST. LOUIS UNION TRUST CO. et al.
• Court: Missouri Court of Appeals

189 S.W. 826

196 Mo. App. 335

NOVINGER BANK v. ST. LOUIS UNION TRUST CO. et al.

No. 12109.

Kansas City Court of Appeals. Missouri.

November 6, 1916.

Rehearing Denied November 27, 1916.

Appeal from Circuit Court, Adair County; C. D. Stewart, Judge.

Action by the Novinger Bank against the St. Louis Union Trust Company and another, in which the defendants filed an answer by way of cross-bill for interpleader. Judgment for the plaintiff on demurrer to the answer, and defendants appeal. Reversed and remanded.

Campbell & Ellison, of Kirksville, for appellants. Higbee & Mills, of Kirksville, for respondent.

TRIMBLE, J.

The Rombauer Coal Company executed a mortgage upon its coal mine and plant to the defendant the St. Louis Union Trust Company, as trustee, to secure 200 bonds of $500 each, payable to bearer, and due March 1, 1916. Upon default in the payment of any interest or of any of the principal of any of said bonds, the trustee was authorized by said mortgage to sell the mortgaged property at foreclosure sale, after notice, at the courthouse door, in the usual manner of such sales (except that the sale might be conducted by any agent appointed by the St. Louis Union Trust Company), and upon such sale, after paying the costs and expenses of executing the trust, it was the duty of said trustee to apply the proceeds of such sale equally to the payment of all the bonds then outstanding and owed by said company.

The coal company defaulted in the payment of its bonds, and on the 6th of July, 1914, the trustee in the mortgage, through its agent Orr, defendant herein, sold said property at foreclosure sale for $32,000. On the same day, and within a few hours after the sale, and before the purchase money had come into the trustee's hands, and before the distributive share of each bondholder could be ascertained, plaintiff, as the holder of 9 of said bonds, brought this suit against defendants to recover the sum of $1,440, with interest and costs, as its distributive share. It will be observed that $1,440 is the precise amount to which the holder of 9 bonds would have been entitled if the entire $32,000 was to be distributed, instead of the net amount left after deducting the trustee's commissions and the expenses of sale.

Immediately upon receipt of the purchase price of $32,000, the trustee added thereto the sum of $688 in the sinking fund in its hands (presumably created under and by the terms of the mortgage), making a total sum of $32,688, which, after deducting $500.70, expenses of sale, left $32,187.50 for distribution among the holders of the outstanding bonds.

Thereupon the trustee made a statement of its accounts, showing that the 9 bonds claimed by plaintiff were entitled to a payment of $1,451.52, which, as will be observed, is $11.52 more than the amount claimed by plaintiff in its suit as then standing. Before any distribution could be made, the other bondholders, namely, R. E. Rombauer, holder of 74 bonds of the face value of $37,000, the Goodman Manufacturing Company, holder of 30 bonds of the face value of $15,000, and the German Savings Institution, holder of 40 bonds of the face value of $20,000, notified the trustee that plaintiff was not entitled to any distributive share on $2,500 of the bonds held by it, because they were issued in violation of section 8, art. 12, of the Missouri Constitution, which provides that no corporation shall issue stock or bonds, except for money paid, labor done, or property actually received, and for no other consideration whatever, and that $1,500 more of the bonds claimed by plaintiff were held by it in violation of its agreement with the Rombauer Coal Company without color of title thereto.

Thereupon the trustee filed an answer to plaintiff's petition, setting up the foregoing facts, and stating that it had in its hands $1,451.52, or $11.52 more than plaintiff was seeking, for distribution on said 9 bonds; that it could not pay said amount to plaintiff without incurring liability to the other claimants, and asked that it be allowed to pay said sum into court and the rival claimants be required to interplead therefor.

Plaintiff demurred to this answer, and was sustained, but immediately thereafter filed an amended petition against defendants, to recover its distributive share on said 9 bonds claimed by it, alleging, however, that, in addition to the $32,000 received as the purchase price of the mortgaged property, defendants "had, and still have in their hands, the further sum of $1,000," making a total of $33,000 for distribution ratably on plaintiff's said bonds, out of which plaintiff prayed that it have and receive $1,485, together with interest and costs.

To this amended petition filed by plaintiff, the defendant St. Louis Union Trust Company filed an answer and bill of interpleader, in which it set up the same facts hereinbefore stated as being contained in its former answer. It further set up that it had exhibited its accounts as trustee to all the bondholders of the Rombauer Coal Company, who found the same to be just and true, and that bondholders to the amount of $95,500 (which was all of the bonds except $4,500, or the 9 bonds claimed by plaintiff) had settled with the defendant as trustee, leaving, however, the question as to what amount plaintiff was entitled to under its claim to the 9 bonds subject to further determination; that upon a trial of the case it would appear from the undisputed evidence that the total amount received by said defendant from all assets of the mortgagor was $32,688, and that the total net sum for distribution was $32,187.30, and that there could be no dispute as to the amount received for distribution, since its correctness was admitted by all of the bondholders, including the plaintiff; that the allegation in plaintiff's amended petition that the trustee had received $1,000 in addition to the $32,000, making a total of $33,000 for distribution, was not made in good faith, but for the sole and only purpose of making it appear that there is a dispute as to the amount of money in said defendant's hands for distribution, and only for the purpose of depriving defendant of its right to file a bill of interpleader.

The answer and bill of interpleader further alleged that, owing to the conflicting claims of the parties, as hereinbefore stated, the defendant trustee was in danger of being harassed by suits of the various rival claimants of the funds in its hands. It, therefore, prayed that it be permitted to pay said $1,451.52 into court, and the rival claimants be required to interplead therefor.

To this second answer and bill of interpleader the plaintiff demurred as before. The trial court sustained it, and the trustee stood upon its answer and bill. Thereupon the court rendered judgment for $1,581.75, being not only for the full amount claimed by the plaintiff, but also for nearly $100 interest, together with costs. The defendant trustee has appealed.

The demurrer to the answer and bill of interpleader admits all facts well pleaded therein. It is admitted, therefore, that the defendant trust company was trustee in a certain mortgage; that it was foreclosed, and the property sold for a certain sum; that in a few hours after the sale, and before any distribution could be made, plaintiff sued the trustee for a distributive share of the gross sum received for the property, without allowing any deductions for trustee's commission (fixed by statute, section 2856, R. S. Mo. 1909) or expenses of sale; that the trustee was notified by certain bondholders not to pay plaintiff on the bonds claimed by it for the reasons hereinabove stated; that said trustee has settled with the other bondholders, except as to whom should be paid the distributive share on the 9 bonds claimed by plaintiff; that for such payment it has the sum of $1,451.52, which it is desirous of paying to whomsoever is entitled thereto, but cannot do so on...