Reynolds v. Title Guaranty Trust Co.
| Decision Date | 24 October 1916 |
| Citation | 189 S.W. 33,196 Mo.App. 21 |
| Parties | MATT G. REYNOLDS, RECEIVER, Respondent, v. TITLE GUARANTY TRUST COMPANY, Appellant |
| Court | Missouri Court of Appeals |
Appeal from St. Louis City Circuit Court.--Hon. Rhodes E. Cave Judge.
REVERSED.
Judgment reversed.
Wilfley McIntyre & Nardin and Harry W. Allen for appellant.
(1) The action for money had and received is equitable in character is governed by principles of equity, and lies where one person has received money belonging to another which in justice and good conscience he should not be permitted to retain. Third National Bank v. St. Charles Sav. Bank, 244 Mo. 581; Reynolds v. Gerdelman, 185 Mo.App. 183. (2) A promoter is not an agent of the corporation to be formed, and the corporation is not liable for contracts entered into by promoters. Joy v. Manion, 28 Mo.App. 60; Davis & Rankin v. Creamery Association, 63 Mo.App. 480. (3) The promoters or incorporators of an insurance company, even after the certificate of incorporation is issued, have no power to enter into any contract except that of a stock subscription and have no power to ratify or adopt any contract for the expenditure of any proceeds of the sale of stock, or pay any expense incurred by a promoter in organizing the company. Taylor v. St. Louis National Life Insurance Company, 266 Mo. 283. (4) The promoter of a corporation is in a fiduciary relation to the corporation, in that he may not dispose of property to the corporation at a secret profit to himself; is a trustee, prior to the completion of the company, for the subscribers of money received from them on stock subscriptions, but is not a general trustee for the proposed corporation. South Joplin Land Co. v. Case, 104 Mo. 572; Miller v. Denman (Wash.), 95 P. 67, 16 L. R. A. (N. S.) 348; Brooker v. Trust Company, 254 Mo. 155. (5) Gardner not being the agent for the Assurance Company at the time the loan was made by Caneer, even though a trustee for the Assurance Company, could not bind the company to repay the loan, though it was made in the name of the company, for a trustee making a loan in the name of the trust estate binds only himself. Koken Iron Works v. Kinealy, 86 Mo.App. 203; Taylor v. Davis, 110 U.S. 335. (6) An implied trust arising out of circumstances from which an intention to hold money or property for the benefit of another is presumed, is a resulting trust. Perry on Trusts (5 Ed.), sec. 127. (7) A resulting trust must arise from circumstances existing at the time the person sought to be charged as trustee took the property sought to be impressed with the trust, and cannot be established by subsequent acts or circumstances. Richardson v. Champion, 143 Mo. 544; Stevenson v. Haynes, 220 Mo. 206; Barrett v. Foote, 187 S.W. 67; Krauth v. Thiele, 45 N. J. Equity 409; Whitley v. Ogle, 47 N. J. Equity 69; Barnard v. Jewett, 97 Mass. 87; Dick v. Dick, 172 Ill. 578; DeRoboam v. Schmidtlin, 50 Ore. 388; Herlihy v. Coney, 99 Me. 469; Parker v. Coop, 60 Tex. 118; Arnold, Receiver, v. Ellis, 20 Tex. Civ. App. 262; Hadley v. Stewart, 62 Ia. 267. (8) The contract of Gardner to borrow money from Caneer for the Assurance Company could not be ratified by the company after it was organized, thus relating back to the date of the loan and making the proceeds the property of the company when the loan was made, for there can be ratification only where the person ratifying was in existence at the time the contract was made. 31 Cyc. 1246; McArthur v. Times Printing Co., 48 Minn. 319. (9) If the Assurance Company adopted the contract between Gardner and Caneer, it made it its contract at the time of its adoption, subject to all the burdens and conditions attached to it. Watson v. Bigelow, 47 Mo. 413; Shinn v. Mule Co. , 109 Mo.App. 557; Porter v. Wood, 138 Mo. 539; State ex rel. v. Harrington, 100 Mo. 170; Nichols v. Kern, 32 Mo.App. 1. (10) When the receiver brought suit against Gardner to recover from him the money paid to the Title Guaranty Trust Company, he elected to treat Gardner as a debtor and chose a course inconsistent with the present action. Oliver v. Piatt, 15 U.S. 485; Stoller v. Coates, 88 Mo. 514; Barker v. Barker, 14 Wis. 131; Carter v. Gibson, 61 Neb. 207; Libby v. Frost, 98 Me. 288; Murray & Winter v. Ballou & Hunt, 1 Johnson's Chancery 565; Murray v. Tilburn, 2 Johnson's Ch. 441. (11) There was no evidence to support the finding of the trial court that defendant had notice that the money it received belonged to the Continental Assurance Company. Coleman v. Stocke, 159 Mo.App. 43.
John S. Leahy and Chase Morsey for respondent.
(1) The Title Guaranty Trust Company, having accepted a check of the Continental Assurance Company of America in payment of a private debt of Harry B. Gardner, the officer drawing the check, took the money with knowledge of the fact that it was not Harry B. Gardner's and in this action for money had and received must account for its proceeds. St. Louis Charcoal Co. v. Lewis, 154 Mo.App. 548; Coleman v. Stocke, 159 Mo.App. 43; Rochester v. Pavior, 164 N.Y. 281; Bank v. Edwards, 243 Mo. 569; Bank v. Orthwein, 160 Mo.App. 369. (2) One who has notice sufficient to put him upon inquiry is bound by every fact which an inquiry would have disclosed. Lakeman v. Trust Co., 147 Mo.App. 48; Barrett v. Davis, 104 Mo. 549; Rupe v. Alkire, 77 Mo. 641. (3) While the Continental Assurance Company of American may not, strictly speaking, have been liable on the contract by which the money was borrowed from the Citizens' Bank of Senath, Missouri, still it was liable under the broad equitable principles of an action for money had and received. Third National Bk. v. St. Charles Savings Bk., 244 Mo. 554. (4) At the time of the transaction in question, the Continental Assurance Company of America was in process of formation. The initial steps, such as signing the articles of association and publication of the declaration of intention to form the corporation, had been taken and all persons dealing with the company were bound to take notice of these facts. Ellerby v. Bank, 109 Mo. 445. (5) Where a statute requires a number of steps to be taken before the company is entitled to a certificate of incorporation and further requires the public to be notified of these steps, as in the case at bar, the taking of the final step and the securing of the certificate of incorporation relates back to the time of the taking of the first step and all the rights, duties and liabilities of the corporation are determined as of the date of the first step whenever it is necessary to prevent a failure of justice. Knapp v. Alexander, 237 U.S. 162; Peyton v. Desmond, 129 F. 1; U. S. v. Anderson, 194 U.S. 394. (6) By the doctrine of relation is meant that principle by which an act done at one time is considered by a fiction of law to have been done at some antecedent period. It is usually applied where several proceedings are essential to complete a particular transaction, such as a conveyance or deed. The last proceeding which consummates the conveyance is held for certain purposes to take effect by relation as of the date the first proceeding was had. Gibson v. Chouteau, 13 Wall. 92; Knapp v. Alexander, 237 U.S. 162; Peyton v. Desmond, 129 F. 1; U. S. v. Anderson, 194 U.S. 394. (7) To obtain the certificate of incorporation it was necessary to pay the fees of the Secretary of State and the fees for publishing the declaration of intention. Someone was bound to pay these fees. Mr. Gardner and his associates primarily--the corporation ultimately. For all business transacted for the benefit of the corporators during these preliminary steps the corporators were liable as partners. The money was borrowed in the name of the company to cover the initial expenses of incorporation. Mr. Gardner misappropriated $ 5445.18 of the amount borrowed, and if the company had never received its certificate of incorporation the corporators--the partnership--could have recovered the money from the Trust Company in an action for money had and received. The company, however, having received its certificate of incorporation and having repaid the loan, now has the same right to maintain the action as the corporators--the partnership. (8) By instituting a suit against Gardner to recover the amount of money unlawfully withdrawn by him from the Third National Bank, the Receiver made no election of remedies because all of his remedies in this case are consistent. Steinbach v. Murphy, 143 Mo.App. 530; National Bank v. City Bank, 103 U.S. 668; Sweet v. Bank, 69 Kan. 741; State v. Home Ins. Co., 58 Neb. 524; Freeman v. Bailey, 50 S.C. 241; Squire v. Ordemann, 194 N.Y. 394; Citizens' Bank v. Rucker, 138 Cal. 606. (9) The doctrine of resulting trust has no application to the facts in the case at bar. The Receiver is not trying to impress a trust upon the real estate. He is seeking to recover from the Trust Company on the theory of money had and received, or, in other words, on the theory of a constructive trust. The difference between resulting and constructive trusts is marked and well defined. 39 Cyc., page 26 et seq.
This is an action prosecuted by the receiver of the Continental Assurance Company of America as for money had and received. The first count of the petition is predicated upon the theory that the defendant is liable for the return of the proceeds of a check for the sum of $ 5445.18, executed in the name of the Continental Assurance Company of America, and which is said to have been received by the defendant Trust Company in payment of a private debt of one Harry B. Gardner, a promoter of the Assurance Company. The second count of the petition is predicated upon a like theory, involving the proceeds of a check for $ 250....
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