Polk County v. Farmers' State Bank of Bolivar
| Decision Date | 07 May 1935 |
| Citation | 82 S.W.2d 577,336 Mo. 1129 |
| Parties | Polk County and Edgar Redhair, Treasurer, v. Farmers' State Bank of Bolivar, in Liquidation, and S. L. Cantley, Commissioner of Finance, in Charge of Said Bank |
| Court | Missouri Supreme Court |
Appeal from Polk Circuit Court; Hon. C. H. Skinker, Judge.
Reversed and remanded (with directions).
T. H Douglas for appellants.
(1) Under the evidence in this case there is no showing that the Commissioner of Finance as liquidating officer of the Farmers' State Bank of Bolivar had in his possession, or ever had in his possession, sufficient funds, or any funds with which to pay any preferred claims. In the absence of such showing by the plaintiffs they wholly failed to make a case entitling them to a preference and the trial court erred in allowing a preference for any amount. "Absent showing there is money on insolvency of bank against which trust ex maleficio could be impressed, no preference can be granted." Compton Co. v. Trust Co., 279 S.W 749, 220 Mo.App. 1081; Special Road Dist. No. 4 v. Cantley, 8 S.W.2d 944, 223 Mo.App. 89; State v. Farmers' Exchange Bank of Gallatin, 56 S.W.2d 130; Householder v. Cantley, 27 S.W.2d 1034. (2) The county courts in Missouri are courts of record and can only speak through their records. The trial court erred in permitting Edgar Redhair, county treasurer, and Judge Pickering, presiding judge of the county court, to testify to oral statements made by members of the court, as to what was said and done. The record of the county court was the best evidence, and if there was no written record of the court then there was nothing admissible. The court permitted both of these witnesses to repeatedly testify to oral statements made by members of the county court, and to testify as to things the court ordered done without any court records to substantiate the same, over the objection and exception of the defendant. This was very prejudicial to the defendants. All orders of the county courts not entered of record are extra-judicial and void. Riley v. Pettis County, 96 Mo. 318; Maupin v. Franklin County, 67 Mo. 329; Reppy v. Jefferson County, 47 Mo. 66; Dennison v. St. Louis County, 33 Mo. 168; Medlin v. Platte County, 8 Mo. 235. The relationship of debtor and creditor having once arisen it would continue to exist, until some fact or facts should arise to change such relationship. In this case no further or other facts were developed to make such a change. The testimony of all the witnesses failed to show that Devin, managing officer of the Farmers' State Bank of Bolivar, had any knowledge of the depletion of the deposit in Citizens' State Bank of Fair Play. Even if he had had such knowledge in this case it would have made no difference, because the Fair Play Bank had never qualified as a statutory depositary, and the deposit of county money therein was unlawful and illegal. Ralls County v. Commissioner of Finance, 66 S.W.2d 118.
Farrington & Curtis and Herman Pufahl for respondent.
It is a principle supported by numerous authorities that the unauthorized or unlawful deposit of public funds in a bank which subsequently becomes insolvent creates a trust relationship of such funds between the bank and the community to which they belong. 22 R. C. L. 228; 18 C. J., sec. 60, p. 588; Compton Co. v. Farmers' Trust Co., 279 S.W. 746, 220 Mo.App. 1081; Special Road Dist. v. Cantley, 8 S.W.2d 944; Huntsville Trust Co. v. Noel, 12 S.W.2d 754; State ex rel. Gentry v. Page Bank, 14 S.W.2d 599; City of Macon v. Farmers' Trust Co., 21 S.W.2d 643; Consolidated School Dist. v. Citizens' Savs. Bank, 21 S.W.2d 788; Wisconsin v. Pederson, 135 Wis. 31, 114 N.W. 828; Wisconsin v. U. S. F. & G. Co., 210 Wis. 178, 246 N.W. 434; Platte County v. Mason, 38 Wyo. 1, 264 P. 93; Jarvis v. Hammons, 32 Ariz. 444, 259 P. 886; Renville Co. v. Gray, 61 Minn. 242, 63 N.W. 635; Goodhue Co. v. Noser, 171 Minn. 8, 212 N.W. 948, 237 F. 314; Scotts Bluff Co. v. First Natl. Bank, 115 Neb. 273, 212 N.W. 617; Gregg v. Hinkle, 29 N. M. 576, 224 P. 1025, 13 F. 40; United States F. & G. Co. v. Kansas, 81 Kan. 660, 106 P. 1040, 26 L. R. A. (N. S.) 865; Seay v. Bank of Rome, 66 Ga. 609; Leach v. Farmers' Savs. Bank, 204 Iowa 1083, 216 N.W. 748, 65 A. L. R. 679; Yellowstone County v. First Trust & Savs. Bank, 46 Mont. 439, 128 P. 596; National Surety Co. v. Apache Co., 22 F. 356; United States F. & G. Co. v. Naylor, 237 F. 314.
Westhues, C. Cooley and Bohling, CC., concur.
This is a proceeding to establish a claim in the sum of $ 38,796.24 as preferred, against the assets of the defunct Farmers' State Bank of Bolivar, which assets were in the hands of the State Finance Department for the purpose of liquidation. The trial court ordered a preference in the sum of $ 13,000, and the balance of the sum as a common claim. From this judgment an appeal was taken by appellants defendants below.
The defendant bank closed its doors on May 4, 1931. On May 6, 1929, it was designated, by the County Court of Polk County, as a depositary for one-half of the county funds. The other half was awarded to the Farmers' Bank of Fair Play. The defendant bank filed a bond in the penal sum of $ 100,000. It was conceded at the trial that the defendant bank was legally designated as a depositary for one-half of the county funds. The evidence disclosed that soon after the depositaries were designated, the county treasurer kept a much larger sum on deposit in the defendant bank than in the bank of Fair Play. In other words, the money was not divided equally between the two depositaries. This, we learn from the evidence, was largely due to the fact that the officers of the defendant bank persuaded the county authorities to keep a larger deposit with their bank because they needed the money in the banking business, that is, the bank was hard pressed for cash. This practice was followed until the day the defendant bank closed its doors. Respondents' additional abstract of the record discloses the average monthly balance that was kept on deposit in the two banks during the entire period. For the year 1931, it shows the following:
It will be noticed that February was the only month the bank of Fair Play had on deposit a sum equal to the sum on deposit in the defendant bank. In January, 1931, the county court instructed the treasurer not to keep over $ 40,000 on deposit in the defendant bank.
The theory upon which the trial court allowed a part of the claim as preferred, can be best ascertained by quoting a part of the court's judgment, which reads as follows:
While the county treasurer, Mr. Redhair, was on the witness stand he was questioned by the court as follows:
The evidence disclosed that the county authorities refrained from checking against the fund in the defendant bank at the instance and request of the bank officials. The officers informed the county court and treasurer that if the county drew checks against this fund the bank would have to close.
The deposit in the defendant bank did not at any time exceed the amount authorized by the bond. The relation of debtor and creditor was, therefore, created between the defendant bank and the county. The amount on...
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