Sparrow v. State Exchange Bank
| Decision Date | 09 November 1903 |
| Citation | 77 S.W. 168,103 Mo.App. 338 |
| Parties | JAMES D. SPARROW, Administrator, etc., Respondent, v. STATE EXCHANGE BANK et al., Appellants |
| Court | Kansas Court of Appeals |
Appeal from Macon Circuit Court.--Hon. Nat. M. Shelton, Judge.
REVERSED.
Decree reversed.
Web. M Rubey and Thomas N. Dysart for appellant.
(1) It is a well-settled principle that where a depositor in a bank is indebted to the bank by bill, note or other indebtedness the bank has the right to apply so much of the funds of the depositor as may be necessary to satisfy the same. Morse on Banks and Banking, sec. 559; Bolles on Banks and Dep., sec 403; Park Bank v. Herman Schneidermeyer, 62 Mo.App 183; Bank v. Hughes, 17 Wend. 94; Marsh v Bank, 34 Barb. 228. (2) Without notice then of the fiduciary character of the depositor the bank would have a right to apply the moneys deposited by him to the payment of any debt due the bank from the depositor. Clark v. First National Bank, 57 Mo.App. 287. (3) The word "Admr." added to Magee's name on his checks and the books of the bank is not in itself notice to any one that Magee held the funds as such administrator. Eyerman v. Bank, 13 Mo.App. 289, affirmed by 84 Mo. 408; Lindsay v. Brooks, 82 Mo.App. 301; Mayer v. Bank, 86 Mo.App. 108; Clark v. Bank, 57 Mo.App. 277; Morse on B. & B., sec. 604. (4) On the contrary, the presumption as between the parties is in favor of the personal ownership of the funds by the depositor, and if nothing else appears, the bank must be guided in all of its transactions by these presumptions. Eyerman v. Bank, 13 Mo.App. 289; Lindsay v. Brooks, 82 Mo.App. 306.
R. S. Matthews & Son and B. E. Guthrie for respondent.
(1) The agreed statement of facts show that Magee had no account in the State Exchange Bank at all when he sold the Emdee real estate and deposited the proceeds of sale thereof in the bank. His former account had been closed, and with the Emdee money, he opened a new account in the name of "Wm. J. Magee, Administrator." (2) The bank fails to show how much Magee owed the bank on the sixteenth day of May, 1902, when it appropriated the $ 152.18 that was in the bank to Magee's credit as administrator. It did not show whether Magee owed it $ 1 or $ 100,000 or whether the bank was amply secured or not on the individual indebtedness of Magee to the bank or anything about Magee's indebtedness to the bank. (3) Magee did not check the $ 152.18 to the bank, but it was in the bank in the name of "Wm. J. Magee, Administrator," when Magee became insane. The bank can not be permitted to hold this money and appropriate it to the individual indebtedness of Magee to the bank. A fraud has been committed upon the Emdee estate. No fraud was committed by Magee in putting the money in the bank in the name of "Wm. J. Magee, Administrator." He did the thing the law required him to do. (4) Magee did not check to the bank $ 152.18. If he had checked it himself to pay a private debt the moment he checked the same the fraud would have been completed by himself, and the bank would not have been responsible for the fraud, unless it in some way personally knew that Magee was committing a fraud for its benefit. Bank v. Ins. Co., 104 U.S. 54; Bank v. Gillaspy, 137 U.S. 411; Trust Co. v. Boone, 66 Am. St. Rep. 167; s. c., 102 Ga. 202; Paul v. Draper, 73 Mo.App. 566; Ihl v. Bank, 26 Mo.App. 129. (5) The bank mingled and commingled the money deposited by Wm. J. Magee collected for the Murphy heirs on its own motion, without the consent or approval of Magee, with the money in the bank belonging to the Emdee estate, and whatever loss occurred to any one, if any, but the mingling and commingling of the funds the bank is responsible therefor. (6) The bank had lost nothing by the deposit by "Magee as administrator" of money of the Emdee estate, and equity will not permit the bank to profit by the fraud perpetrated upon the Emdee estate by the bank itself in taking the money from the administrator's account. As to the general doctrine of this State in following trust funds in the hands of an insolvent. Harrison v. Smith, 83 Mo. 210; Stoller v. Coates, 88 Mo. 520; Pundmann v. Schoenich, 144 Mo. 149; Bank v. Brightwell, 148 Mo. 365; Bircher v. Walthea, 163 Mo. 461.
This is a suit in equity which was brought against the defendant, State Exchange Bank, the object and purpose of which was to secure an accounting between it--the bank--and the estate of John Emdee, the plaintiff's intestate, and to recover one hundred and fifty-two dollars, etc. The cause was submitted to the court on an agreed statement of facts which was as follows:
1. "That Wm. J. Magee, defendant, was on the thirtieth day of April, 1902, the lawful administrator of the estate of John Emdee, deceased; and also curator of the Murphy heirs, whose present curator, the successor of said Magee, has been made a party defendant, and permitted to file her claim to the funds in controversy in this suit.
2. "That said Magee has since the 16th day of May, 1902, been adjudged of unsound mind and the defendant John W. Gross appointed his curator. And by reason of Magee's insanity the plaintiff herein, James D. Sparrow, had been appointed and is now lawfully acting as administrator de bonis non with will annexed of the estate of said John Emdee, and that Lena Murphy, a party defendant in this case, has been appointed and is now lawfully acting curator of the aforesaid Murphy heirs.
3. "That said Magee as administrator of the estate of John Emdee, prior to April 30, 1902, sold some real estate belonging to said estate and on the thirtieth day of April, 1902, deposited $ 1,350 of the proceeds in the State Exchange Bank of Macon, one of the defendants in this suit, in the name of Wm. J. Magee, administrator.
4. "That on the tenth day of May, 1902, said Magee as curator of the said Murphy heirs collected $ 489 belonging to said heirs, and deposited same in said bank in the name of 'W. J. Magee,' but which sum was by the bank credited on its books to the account of 'W. J. Magee, Admr.,' there being no account in said bank in name of 'W. J. Magee.'
5. "That said Magee on the first day of May, 1902, commenced drawing upon said account of 'W. J. Magee, Admr.' signing the checks 'W. J. Magee, Admr.' and by May 14, 1902, had drawn all of said account but $ 152.18.
6. "That on the sixteenth day of May, 1902, the defendant, the State Exchange Bank of Macon, drew from said account said balance of $ 152.18 and gave credit therefor upon an overdue note held by said bank against W. J. Magee.
7. "That said Magee has done business in said bank from 1894 to 1902 but had but one account and that was kept in the name of 'W. J. Magee, Administrator.' That to the credit of that account he deposited all money, checks or drafts which he did from time to time deposit, no matter from what source received; and against said account he drew money for any and all purposes, including his private and personal debts, always signing checks, 'W. J. Magee, Admr.'
8. "That the defendant, the State Exchange Bank of Macon, had no actual notice, knowledge or information, either at the time of the aforesaid sums of $ 1,350 and $ 489 were deposited, nor at the time it drew and used the $ 152.18 that the same was other than the funds of W. J. Magee.
9. "It is further admitted that Magee is indebted to the estate of John Emdee in the sum of $ 1,699.40 as shown by final settlement made in the probate court of Macon county, Missouri, by John W. Gross, curator of Magee for the Emdee estate, and amount due is unpaid.
10. "It is admitted that the estate of Wm. J. Magee is insolvent.
11.
The finding and decree was for plaintiff and defendant appealed.
It is a well-settled principle that where a depositor in a bank is indebted to the bank by bill, note or other indebtedness, the bank has the right to apply so much of the funds of the depositor to the payment of his matured indebtedness as may be necessary to discharge the same. Morse on Banking, sec. 559; Bolles on Banking and Dep., sec. 403. And so it has been expressly decided by the appellate courts of this State that where a discount has been made by a bank and the note has matured so as to create an indebtedness from the depositor to the bank, all funds of the depositor which the bank has at the date of the maturity of the discounted note, or afterwards acquires in the course of business with him, may be applied to the discharge of his indebtedness. Park Bank v. Schneidermeyer, 62 Mo.App. 179; Muench v. Bank, 11 Mo.App. 144; Ehlermann v. Bank, 14 Mo.App. 591; Bank v. Carson, 32 Mo. 191.
Applying to the conceded facts as set forth in the 6th paragraph of said statement of facts agreed the rule first adverted to and it is clear that the bank was authorized to apply any money belonging to Magee on deposit with it to the discharge of his overdue note to it. But it is contended that Magee had no funds on deposit with it and that the fund applied by it was that of Emdee's estate, or else that of the Murphys'. The vital question in the case is whether the deposit of the $ 1,350 belonging to Emdee's estate to the credit of "W. J. Magee, Admr." was notice to the bank that the fund was held by him in a fiduciary capacity. It is conceded that the defendant bank had no actual notice or knowledge at the time of the deposit or at the time of the application of the $ 152 of the fund then on deposit to the discharge of its overdue note, that such funds belonged...
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