Smith v. Citizens Bank of Gerald

• Decision Date: 01 June 1937
• Citation: 106 S.W.2d 45,232 Mo.App. 906
• Parties: HARRY SMITH, RESPONDENT, v. CITIZENS BANK OF GERALD, APPELLANT
• Court: Missouri Court of Appeals

106 S.W.2d 45

232 Mo.App. 906

HARRY SMITH, RESPONDENT, v. CITIZENS BANK OF GERALD, APPELLANT

Court of Appeals of Missouri, St. Louis

June 1, 1937

Appeal from Circuit Court of Washington County.--Hon. E. M. Dearing Judge.

AFFIRMED IN PART AND REVERSED AND REMANDED (with directions in part).

James Booth for respondent.

The depositor had a right to set off his deposit against a debt due him by the bank though the bank was insolvent. Aab v French, 279 S.W. 435; New First National Bank v Rhodes Produce Company, 58 S.W.2d 742, 332 Mo. 163; Mitchell v. Bank of Ava, 65 S.W.2d 104, 333 Mo. 115; Forrester v. Cantley, 51 S.W.2d 550; Dalton et al v. Sturdivant Bank, 76 S.W.2d 425; 7 C. J. 652, sec. 350; 21 C. J. 72, sec. 48 (F).

Joseph T. Tate for appellant.

(1) Section 3 of C. S. H. B. No. 91, page 404 of the Session Laws of Missouri, 1933; S. B. No. 293, page 402 of the Session Laws of Missouri, 1933. (2) The defendant should be allowed to treat plaintiff the same as it treated all other depositors of the same class as plaintiff. Section 3 of C. S. H. B. No. 91, page 404 of the Session Laws of Missouri, 1933; S. B. No. 293, page 402 of the Session Laws of Missouri, 1933. (3) Section 837, R. S. Mo., 1929; Brown et al. v. Stotes City Bank et al. , 38 S.W.2d 722; Smith v. Spengler, 83 Mo. 408; Huse v. Ames, 104 Mo. 91, 15 S.W. 965; Homer v. Bank, 140 Mo. 225, 41 S.W. 790; Kortjohn v. Bank, 63 Mo. 166; Storts v. Mills, 93 Mo.App. 201. (4) To warrant a set-off at law the demands must be mutual and subsisting between the same parties, due in the same capacity or right, and there must be mutuality as to the quality of right. Sturdivant v. Stoddard County, 332 Mo. 568, 58 S.W.2d 702. (5) If defendant's demand is due and payable while plaintiff's is not, or if a statute prohibits defendant's payment of plaintiff's demand of what is tendered as an offset, the parties are not "mutually indebted." Sturdivant v. Stoddard County, 332 Mo. 568, 58 S.W.2d 702. (6) No man is entitled to the aid of a court of equity when that aid becomes necessary through his fault. B. F. Goodrich Rubber Co. v. Bennett, 281 S.W. 75. (7) Where a safe way is open to a party to protect himself from financial loss at a normal expense, and he speculates unsuccessfully on a line of action that leads to financial disaster, he canont call on a court of equity for relief. Phoenix Trust Co. et al. v. Holt et al., 312 Mo. 563, 279 S.W. 714. (8) Where the equities are equal the law will prevail. Friel et ux. v. Alewel, 298 S.W. 762, 318 Mo. 1; 281 S.W. 75. (9) He who comes into a court of equity must come with clean hands. 21 C. J., pages 180, 181, section 163; 121 Mo.App. 451. (10) Equity will not allow set-off where it would work injustice to others having equal equities. Sturdivant v. Stoddard County, 322 Mo. 568, 58 S.W.2d 702.

McCULLEN, J. Hostetter, P. J., and Becker, J., concur.

OPINION

McCULLEN, J.--

This action in equity was brought by respondent, plaintiff below, against appellant, defendant below, on a petition containing two counts. In the first count plaintiff prayed to have the court take an accounting between himself and defendant, and also prayed to have a certificate of deposit in the sum of $ 600, which had been issued by defendant to plaintiff, set-off against plaintiff's note for $ 600 due defendant. In the second count of his petition plaintiff sought to recover a money judgment against the defendant on the same certificate of deposit. The action was originally commenced in the Circuit Court of Franklin County, but on application of defendant it was taken on a change of venue to the Circuit Court of Washington County where it was tried. After hearing all the testimony offered by the parties and having taken the case under advisement, the court rendered judgment in favor of plaintiff, allowed the full amount of his certificate of deposit with interest thereon, making a total of $ 612 to be set-off against the sum of $ 661.44 found by the court to be owing by plaintiff to defendant on plaintiff's note, and ordered that defendant recover from plaintiff the net balance due and owing by plaintiff to defendant on said note in the sum og $ 49.44, and denied defendant its interest on said note from the 20th of April, 1934, up to the date of judgment, and also denied defendant a ten per cent attorney's fee provided for in said note if collected by an attorney. After an unavailing motion for a new trial, defendant brings the case to this court by appeal.

No issue is presented in this court as to the sufficiency of the pleadings and there is no dispute as to the material facts in the case.

In its answer the defendant admitted the execution and existence of the note and of the certificate of deposit referred to in plaintiff's petition, and then specifically alleged that on or about March 11, 1933, under Acts of the Legislature of Missouri, Laws of Missouri, 1933, page 402, and Laws of Missouri, 1933, page 404, the State Finance Commissioner of Missouri took charge of defendant bank and thereafter made a careful audit and inventory of the assets and liabilities of the bank to determine if it should be permitted to continue in business; that thereafter said State Finance Commissioner approved a contract and plan whereby the bank was permitted to reorganize and to receive deposits, pay checks and continue to do a banking business, which said contract and plan had, prior to said approval, been entered into between said bank and its depositors owning or controlling eighty-five per cent or more of the deposits therein which were not preferred claims, special deposits or deposits secured by bonds or collateral, and that by virtue of said contract and plan plaintiff and all other like creditors and depositors became bound by such contract and plan to the same extent and with the same effect as if they had joined in the execution thereof, and that plaintiff's claim must be treated in all respects as if he had joined in the execution of said contract and plan; that under the terms and conditions of said contract and plan defendant could pay only sixty-five per cent of plaintiff's deposit to him and issue a participating certificate for the remaining thirty-five per cent of plaintiff's deposit, and that ever since March 19, 1934, the date that defendant bank was permitted by the State Finance Commissioner to reopen and continue business, it had been able, ready and willing to comply with said contract and plan and offered to pay plaintiff sixty-five per cent of his deposit in said bank, amounting to $ 390, and deliver to him a participating certificate for the remaining thirty-five per cent of his deposit. Defendant further alleged that prior to the date of the closing of said bank and its reorganization, defendant had requested plaintiff to offset his deposit against said note but that plaintiff had refused to do so and demanded a renewal of his certificate of deposit in defendant bank. Defendant concluded its answer by praying judgment against plaintiff for the sum of $ 736.91 less $ 390 credit due plaintiff.

In his reply to defendant's answer, plaintiff denied each and every allegation contained therein and for further reply alleged that at the time of the commencement of this action defendant was unable and is still unable to pay its debts and demands against it in the ordinary course of business.

It appears from the evidence that sometime prior to March, 1930, plaintiff, along with his father and brother, borrowed $ 600 from the defendant bank and gave the bank their demand note for the same. In March, 1930, plaintiff deposited in the bank $ 600, for which he received a certificate of deposit for that sum payable six months thereafter. The note was renewed a number of times thereafter as was also the certificate of deposit. The last renewal of the note was made on September 17, 1932. The note was signed by plaintiff and his father and brother and provided for interest from date at the rate of six per cent per annum and eight per cent per annum after maturity until paid, with interest payable annually, defaulting interest to bear the same rate of interest as principal. It also provided that the makers, sureties, endorsers and guarantors thereon waived demand, presentment for payment, notice of nonpayment, protest, notice of protest, that time of payment may be extended without notice, and that in case payment should not be made at maturity and the note should be placed in the hands of an attorney for collection, the makers should pay the cost of collecting, including an attorney's fee of ten per cent of the principal and interest remaining unpaid, and waived all exemptions and homestead laws.

About October 13, 1932, plaintiff went to the bank where he presented the certificate of deposit for $ 600 to Mr. T. H. Vossbrink, cashier of the bank, and requested him to pay plaintiff the money thereon. The bank was then open and doing business in the usual manner. The cashier told plaintiff that he could get his money on the certificate of deposit but that he would have to use it to pay off his note which the bank then held against him and which was due. Plaintiff refused to take the money on the certificate of deposit and pay off his note therewith and told the cashier "that he did not want to do that because he wanted his father and brother to pay the note." He demanded that the bank renew his certificate of deposit, whereupon a new certificate of deposit, dated as of October 3, 1932, was issued to him by the bank. The certificate was payable to the order of plaintiff six months after date with interest at the rate of four per cent per annum, no interest after maturity.

On cross-examination plaintiff testified that the cashier told him that if he got his...