Security Nat. Bank Sav. & Trust Co. v. Moberly

• Citation: 101 S.W.2d 33,340 Mo. 95
• Decision Date: 14 December 1936
• Docket Number: 34,594
• Parties: Security National Bank Savings & Trust Company, a Corporation, v. O. H. Moberly, Commissioner of Finance, et al., Appellants
• Court: United States State Supreme Court of Missouri

101 S.W.2d 33

340 Mo. 95

Security National Bank Savings & Trust Company, a Corporation, v. O. H. Moberly, Commissioner of Finance, et al., Appellants

No. 34,594

Supreme Court of Missouri

December 14, 1936

Appeal from Circuit Court of City of St. Louis; Hon. O'Neill Ryan, Judge.

Reversed and remanded (with directions).

William T. Jones, Harold R. Small and William H. Biggs for appellants; Carter & Jones of counsel.

(1) In Missouri the rule is that deposits made by trustees are usually considered simply as general deposits, and if the bank fails to pay them the beneficiaries have no particular claims or rights over other creditors, but share the same as other creditors. City of Fulton v. Home Trust Co., 336 Mo. 239. (2) A deposit in its banking department by a Missouri trust company, trustee under a deed of trust, when rightfully made pursuant to deed of trust authority, creates a general, and not a special, trust deposit. (a) The deposits were deposits authorized by the deed of trust to be deposited in the banking department of the Chouteau Trust Company, and the claim for such deposits is, therefore, not entitled to preference. 5 Mitchie, Banks & Banking, p. 606, sec. 318; Wheelock v. Cantley, 227 Mo.App. 107; Paul v Draper, 158 Mo. 197; City of Fulton v. Northern Trust Co., 336 Mo. 246; Worcester Bank & Trust Co v. Nordbloom, 188 N.E. 492; McDonald v. Fulton, 125 Ohio St. 507, 182 N.E. 504; Font v. Home Bank, 152 S.C. 140, 149 S.E. 599; Fralick v. Couer d'Alene Bank & Trust Co., 210 P. 586; People v. Strauss, 281 N.Y.S. 200; Tucker v. New Hampshire Trust Co., 44 A 927; Braver Liquidation of Financial Institutions, p. 855, sec. 527; Maryland Cas. Co. v. Williams, 229 Ala. 663, 159 So. 243; Robinson v. Williams, 229 Ala. 692, 159 So. 239; Bank Commissioners v. Security Trust Co., 70 N.H. 536, 49 A. 113; Roebuck v. Natl. Surety Co., 200 N.C. 196, 156 S.E. 531; First & Citizens Natl. Bank v. Corp. Commissioner, 201 N.C. 381, 160 S.E. 360; State ex rel. Hicks v. Corp. Commissioner, 201 N.C. 819, 161 S.E. 545; In re Bank of Clinton, 205 N.C. 399, 171 S.E. 364; Ex parte Mitchie, 167 S.C. 1, 165 S.E. 359; Swan v. Childrens' Home, 67 F.2d 84; Walker v. Alden, 6 F.Supp. 262; Bassett v. City Bank, 115 Conn. 1, 160 A. 60; In re Garner Bank & Trust Co., 204 N.C. 791, 168 S.E. 813; Miller's Appeal, 218 Pa. St. 50; Vail v. Newark Sav. Institution, 32 N.J.Eq. 627; 2 Patton's Digest of Legal Opinions on Banking Law 1936, p. 1214; Madison Trust Co. v. Carnegie Trust Co., 109 N.E. 580; Cobson's Estate, 3 Pa.Super. Ct. 244; 7 C. J., Banks & Banking, p. 895, sec. 1005; Cline v. Union Trust Co., 99 Ind.App. 296, 189 N.E. 643; City of Lincoln v. Ricketts, 77 F.2d 429. (b) The deposits were not "special deposits for a special purpose" that entitled the claim for them to be allowed as preferred. The depositor had no title to the deposit after depositing them and the noteholders had no right to payment until the next matured principal note and coupon interest payment date, February 15, 1933, and the trust company, in the interim, had the right to the full use of and profit from the deposits pursuant to the terms of the deed of trust. The arrangement was, in effect, a time certificate of deposit arrangement, with payment to be made February 15, 1933, to the holders of the then matured notes and interest coupons, to the extent of deposits theretofore made. City of Fulton v. Home Trust Co., 336 Mo. 239, 69 S.W.2d 316, affirmed 78 S.W.2d 445; Paul v. Draper, 158 Mo. 197; Wheelock v. Cantley, 227 Mo.App. 102; Boswell Post, Am. Legion, v. Farmers State Bank, 61 S.W.2d 761; In re North Mo. Trust Co., 39 S.W.2d 415; Ellington v. Cantley, 300 S.W. 529; Nichols v. Bank of Syracuse, 220 Mo.App. 1019; Craig v. Bank of Granby, 210 Mo.App. 335; Butcher v. Butler, 134 Mo.App. 61; People v. Nelson, 170 N.E. 205; Buscher v. Fulton, 191 N.E. 752; Fulton v. Buscher, 191 N.E. 475; Am. Law Institute Restatement of the Law of Trusts, p. 44; 1 Morse on Banks & Banking (6 Ed.), 510; Reichert v. Am. State Savs. Bank, 249 N.W. 876; Borgess Hospital v. Union Industrial Tr. & Savs. Bank of Flint, 251 N.W. 363; Northern Security Sugar Corp. v. Thompson, 13 F.2d 829; Wentzel v. Peoples State Bank, 259 N.W. 120; Great A. & P. Tea Co. v. Citizens Natl. Bank, 2 F.Supp. 29; 21 Columbia Law Rev. 509; Greene County B. & L. Assn. v. Cantley, 62 S.W.2d 931; Mo. Utilities v. Scott, 62 S.W.2d 933; Bank of Republic v. Republic State Bank, 42 S.W.2d 27, 328 Mo. 848; Landwehr v. Moberly, 93 S.W.2d 935; Smalley v. Queen City Bank, 94 S.W.2d 954.

Salkey & Jones and Fred A. Eppenberger for respondent.

(1) In determining whether a deposit is a "special deposit," the purpose of the deposit and the mutual intention at the time of deposit will control. In re North Mo. Trust Co., 39 S.W.2d 413; Ozark Fruit Growers' Assn. v. Bank of Aurora, 52 S.W.2d 430; Spicer v. Round Prairie Bank of Fillmore, 71 S.W.2d 121. (2) Missouri courts uniformly hold that where, as in this case, a deposit is made in a bank for a distinct or special purpose, the deposit is a special deposit and becomes impressed with a trust. In re Sturdivant Bank, 89 S.W.2d 89; Fidelity Bank & Trust Co. v. Ely-Walker D. G. Co., 77 S.W.2d 480; Central Coal & Coke Co. v. State Bank of Bevier, 226 Mo.App. 594, 44 S.W.2d 188; Vandivort v. Sturdivant Bank, 77 S.W.2d 484; In re Farmers' Exchange Bank of Gallatin, 37 S.W.2d 936; Ozark Fruit Growers' Assn. v. Bank of Aurora, 52 S.W.2d 430; In re Central Trust Co. of St. Charles, 68 S.W.2d 919; Spicer v. Round Prairie Bank of Fillmore, 71 S.W.2d 121; Schulz v. Bank of Harrisonville, 246 S.W. 614; Greenfield v. Clarence Savs. Bank, 5 S.W.2d 708; Nichols v. Bank of Syracuse, 278 S.W. 793; Thomson v. Bank of Syracuse, 278 S.W. 810; Arnall v. Commercial Bank of Wellsville, 45 S.W.2d 909; Andrews v. Farmers' Tr. Co., 21 S.W.2d 641; Kent v. Bolckow State Bank, 70 S.W.2d 129; Methodist Benevolent Assn. v. Bank of Sweet Springs, 54 S.W.2d 474; In re Home Trust Co. of Fulton, 69 S.W.2d 312, approved in 336 Mo. 239, 78 S.W.2d 445. (3) Cases from other jurisdictions under facts identical with those of the case at bar uniformly hold that a special deposit has been created and a preferred claim should be allowed. Newsom v. Acacia Mut. Life Assn., 136 So. 389; Northwest Lbr. Co. v. Scandinavian-Am. Bank of Seattle, 130 Wash. 33, 225 P. 825, 39 A. L. R. 922; In re State Bank of Portland, 110 Ore. 61, 222 P. 740; State v. Banking Corp. of Montana, 251 P. 151; Gormley v. Board of Commissioners of Roads, 173 S.E. 667; Borough of Deal v. Asbury Park & Ocean Grove Bank, 178 A. 790; Pacific B. & L. Assn. v. Central Bank & Trust Co., 127 Wash. 524, 221 P. 313; Blumer v. Scandinavian-American State Bank, 169 Minn. 89, 210 N.W. 865; Guidise v. Island Refining Corp., 291 F. 922. (4) The Missouri rule is that the claimant of a trust fund need not trace the identical res sought to be impressed with the trust. In re Farmers' Exchange Bank of Gallatin, 37 S.W.2d 936; Commerce Trust Co. v. Farmers' Exchange Bank of Gallatin, 61 S.W.2d 928; Nichols v. Bank of Syracuse, 278 S.W. 793.

OPINION

Hays, J.

This is a suit in equity to establish certain claims against the assets of the Chouteau Trust Company, in liquidation, as preferred claims against its assets. The amended petition is in two counts, the first count involving the sum of $ 26,665.40, and the second count the sum of $ 1134.60. There was a decree in favor of plaintiff on the first count and against the plaintiff in the second count. All the defendants appealed from the judgment and decree rendered on the first count.

The facts alleged in the first count are these: One Bartin conveyed to the Chouteau Trust Company, as trustee, a corporation authorized to do both a trust and a banking business, the Winston-Churchill apartment house property situate in the city of St. Louis to secure the payment of notes aggregating $ 500,000, upon which he was to make certain monthy deposits with the trustee on principal and interest. Upon the making of such deposits the grantor was relieved of any further liability concerning them. On January 14, 1933, said trust company was placed in the hands of defendant State Commissioner of Finance for the purpose of liquidation. Then on deposit in said trust company was the sum of $ 26,665.40, representing an accumulation of the aforesaid monthly deposits and being held by the trust company for the principal and interest due on certain of said notes, and augmenting the assets of said trust company in the hands of the commissioner by that amount. "Said trust deposits were made . . . for the sole and exclusive purpose of paying the principal and interest as hereinabove set out and were received by said Chouteau Trust Company as trustee and placed in a special trust account for the sole and exclusive purpose but were wrongfully commingled with the general funds of said trust company, contrary to the provisions of said deed of trust." Plaintiff Security National Bank Savings & Trust Company, a corporation, is the duly appointed substitute trustee in said deed of trust, and sues on behalf of the note holders. The claim was duly filed with the commissioner for said sum who rejected same in its entirety, as a common or preferred claim, and this suit to establish said claim as a preferred claim was duly brought.

As this appeal is only from the judgment as to the first count, the allegations contained in the second count may be disregarded.

The joint answer of the defendants in legal effect, and so far as need be noted, contained a specific denial of the Chouteau Trust Company's alleged wrongful commingling of said funds with the general funds of said institution, also contained admissions of the other constitutive facts alleged in plaintiff's...