Special Road Dist. No. 4 et al. v. Cantley

• Citation: 8 S.W.2d 944
• Decision Date: 20 July 1928
• Docket Number: No. 4484.,4484.
• Court: Missouri Court of Appeals
• Parties: SPECIAL ROAD DISTRICT NO. 4 ET AL., DALLAS COUNTY, RESPONDENT, v. S.L. CANTLEY, COMMISSIONER OF FINANCE, APPELLANT.<SMALL><SUP>*</SUP></SMALL>

8 S.W.2d 944

SPECIAL ROAD DISTRICT NO. 4 ET AL., DALLAS COUNTY, RESPONDENT, v. S.L. CANTLEY, COMMISSIONER OF FINANCE, APPELLANT.^*

No. 4484.

Springfield Court of Appeals. Missouri.

July 20, 1928.

Appeal from the Circuit Court of Dallas County. — Hon. C.H. Skinker, Judge.

AFFIRMED.

Page & Barrett for appellant.

O.H. Scott and Levi Engle for respondent.

BAILEY, J.

This is a suit to have a certain bank deposit declared a trust fund in the hands of the Bank of Louisburg, and in control of the state commissioner of finance and that the same be paid in full as a preferred claim. Judgment was for plaintiffs and defendant has appealed.

At the trial it was stipulated and agreed that the facts set forth in the petition are true except in the particulars hereinafter mentioned. The material allegations of the petition are as follows:

"Special road district of Dallas county, Missouri, petitioner states that it is legally organized under the laws of the State of Missouri, and that C.E. Mahaffey, O.F. Caldwell and Frank Erhman are the duly elected and acting commissioners of said district.

"That the defendant bank was on the 19th day of February, 1927, and for a long time prior thereto, a legally organized corporation engaged in the business of banking at the town of Louisburg, Dallas county, Missouri. That said bank became insolvent, and on the 9th day of March, 1927, its affairs were placed in custody of the commissioner of finance of the State of Missouri, for liquidation, who still has the custody and control of the affairs of said bank.

"Petitioner states that on the 19th day of February, 1927, the commissioners of the plaintiff road district illegally and wrongfully drew a warrant or order on the treasurer of Dallas county, Missouri, and ex-officio treasurer of said road district, for the sum of two thousand dollars, payable to the said Bank of Louisburg, which said amount of two thousand dollars was paid by the said county treasurer as treasurer of said road district, upon presentation of said warrant or order, to the said Bank of Louisburg, and the same was deposited in the said bank by the officers and agents of said bank, to the credit of the special road district No. 4, plaintiff herein.

"Petitioner states that the officers and agents of said bank at the time that they received the said two thousand dollars and placed the same on deposit in the said bank to the credit of said road district well knew that the money thus received and deposited, was the money and property of said road district; and the cashier, officers and agents of said bank well knew at the time that they received the said sum of money from the county treasurer and deposited the same in said bank, that they had no legal right or authority to accept the same and that said deposit was received and made in violation of law.

"Petitioner states that the said two thousand dollars remained on deposit in said bank until said bank was closed and its affairs placed in custody and control of the commissioner of finance for liquidation. That the petitioner duly filed its claim with the deputy commissioner of finance in charge of said bank, and the same was allowed in the amount of two thousand dollars, and duly certified as an `allowed claim' by the deputy commissioner.

"Petitioner states that at the date of the closing of said bank and at the present time the said bank has sufficient funds out of which to pay said claim in full.

"WHEREFORE, etc."

It is not admitted that the commissioners had no legal right or authority to withdraw funds from the county treasurer and that the cashier and officers of the bank knew at the time they received said money that they had no legal right or authority to accept same nor that said deposits were received and made in violation of law. These were conclusions of law pleaded in plaintiff's petition and denied by defendant. There was no testimony taken.

It is urged the court erred in holding that the claim of the petitioner was preferred and that the act of the commissioner of the road district in depositing the money in defendant bank and the act of the bank in receiving the deposit, were mala fides.

It stands conceded that the money deposited in the Bank of Louisburg, for which preference is sought, was public money. The general rule is that where public funds are deposited in a bank by an official charged with their custody, such deposit, in the absence of statute, stands upon the same plane as other general deposits and a claim therefore is not entitled to preference. [3 R.C.L. 555; McNulta v. West Chicago Park, 99 Fed. 900; Board of Education v. Union Trust Co., 136 Mich. 454, 99 N.W. 373.]

It is equally well settled that where public funds are wrongfully or illegally deposited in a bank having knowledge of the public character of the funds, they are impressed with a trust and entitled to a preference, provided the fund can be traced or the assets of the bank have thereby been increased. [Page County v. Rose et al., 130 Ia. 296, 8 Ann. Cas. 114; Spokane County v. Clark, 61 Fed. 538; Beard v. Independent Dist., 60 U.S. App. 372; Crawford County v. Strawn, 157 Fed. 49, 15 L.R.A. (N.S.) 1100; Allen v. United States, 285 Fed. 678; State v. Bank of Commerce, 54 Neb. 725, 75 N.W. 28.]

At common law the State was entitled to priority of payment out of the assets of an insolvent debtor. This proposition has been recognized in this State but preference denied on the theory of waiver. [In re Holland Banking Company, 281 S.W. 702.]

...