Trenton Trust Co. v. Western Sur. Co.
| Decision Date | 13 May 1980 |
| Docket Number | No. 61717,61717 |
| Citation | 599 S.W.2d 481 |
| Parties | 29 UCC Rep.Serv. 921 TRENTON TRUST COMPANY, Appellant, v. WESTERN SURETY COMPANY, Nancy Hook and Kenneth R. Lewis, Guardian of the Estates of Norman C. Bruner, Jr., and Karen L. Bruner, Minors, Respondents. |
| Court | Missouri Supreme Court |
Louis F. Cottey, Thomas R. Oswald, Kirksville, for appellant.
Erwin L. Milne, Trenton, for respondents.
Appellant Trenton Trust Company seeks a declaratory judgment that security agreements and collateral pledge agreements made with respondent Nancy Hook are valid and entitle appellant to retain two certificates of deposit pledged by respondent Hook as collateral for a loan to her and her husband. The trial court found that when appellant accepted the certificates of deposit as security for loans to respondent Hook and her husband, it acted with knowledge that the certificates of deposit were purchased with fiduciary funds and that in accepting the certificates as collateral for a loan to respondent Hook in her personal capacity, appellant acted with knowledge that the transaction involved a misappropriation of fiduciary funds. The court also found that appellant acted with knowledge of such facts that its participation in the transaction constituted bad faith. The trial court held that the collateral pledge agreements were invalid, and ordered the appellant to deliver the certificates of deposit to the successor guardian of the estates of Norman C. Bruner, Jr., and Karen L. Bruner. We agree with the findings and conclusions of the trial court, and affirm its judgment.
There is conflicting evidence in the record concerning crucial questions of fact. Under Rule 73.01.3(a) and (b), our review in this court-tried case is "upon both the law and the evidence as in suits of an equitable nature," giving "(d)ue regard . . . to the opportunity of the trial court to have judged the credibility of witnesses." The judgment of the trial court should be affirmed "unless there is no substantial evidence to support it or it is against the weight of the evidence or it erroneously declares or applies the law." McGee v. St. Francois County Savings and Loan Association, 559 S.W.2d 184, 186 (Mo. banc 1977); Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). "Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is 'against the weight of the evidence' with caution and with a firm belief that the decree or judgment is wrong." Murphy, 536 S.W.2d at 32. Conflicts in the evidence were for the trial court to resolve, and the facts must be taken in accordance with the result reached by the trial court. Bollinger v. Sigman, 586 S.W.2d 773, 775 (Mo.App.1979); B & B Equipment Co. v. Bowen, 581 S.W.2d 80, 85 (Mo.App.1979). The trial court, when sitting as the trier of fact, may believe all, part or none of the testimony of any witness. Cockrum v. Cockrum, 550 S.W.2d 202, 205 (Mo.App.1977); Long v. Lincoln, 528 S.W.2d 512, 513 (Mo.App.1975). Accordingly, the statement of facts which follows treats the evidence in a light most favorable to the judgment of the trial court, and defers to the judgment of the trial court on matters in which the evidence is in conflict.
Respondent Nancy Hook was married to Donald Hook and was the mother of minor children by a previous marriage, Karen L. and Norman C. Bruner, Jr. In June of 1974, Norman C. Bruner, Sr., ex-husband of respondent Hook and the father of the children, was killed in an automobile accident in Illinois. Respondent Hook learned that her children would receive, from Equitable Life Assurance Society of the United States (hereinafter, "Equitable"), proceeds from a group insurance policy on her ex-husband's life. Respondent Hook's attorney, Max Humphreys, advised her that the probate court would have to set up a guardianship for the minor children before the insurance company would issue checks in settlement of the claim for life insurance proceeds. Bond was approved in the amount of $12,000 for the estates of each of the minor children and respondent Western Surety Company issued its guardianship bond in the principal amount of $12,000 in both estates on November 4, 1974. On November 7, 1974, the Probate Court of Grundy County issued letters of guardianship, naming Nancy Hook as guardian of the person and estate of each of the two children. Phyllis Robinson and Michael Flieg were appointed to appraise the minors' estates. Ms. Robinson was at that time an Assistant Trust Officer of appellant Trenton Trust Company, but her appraisal of the minors' estates was done as an individual. She was neither directed to perform the appraising service nor paid for the service by appellant Trenton Trust Company.
Mr. Humphreys sent the letters of guardianship to Equitable, and on January 7, 1975, Equitable sent to respondent Hook two checks, each in the amount of $12,228.82. Each of the checks was made payable to respondent Hook as guardian of the estate of one of the two minor children. Mrs. Hook received the checks on Saturday, January 11, 1975, and on the following Monday, January 13, 1975, she took them to her attorney's office for instructions.
Mr. Humphreys gave respondent Hook copies of the letters of guardianship, and instructed her to take the letters and the two checks to the bank, and to invest the funds in guardianship accounts. Because Mr. Humphreys knew Mrs. Hook planned to invest the funds in appellant Trenton Trust Company, he instructed her to speak to George Constant, a Vice President and Trust Officer of appellant. Mr. Humphreys instructed respondent Hook to place the bulk of the money in long term certificates, and to place approximately a thousand dollars from each of the checks in savings accounts so that funds would be readily available to pay expenses of administration.
Respondent Hook went to Trenton Trust Company on January 13, 1975, and asked to speak with Mr. Constant. Finding that Mr. Constant was not at the bank, Mrs. Hook instead conducted the transaction with Charles Patterson, then Assistant Secretary (now a Vice President) of Trenton Trust Company. Patterson worked as a loan officer for appellant and was engaged primarily in making commercial and personal installment loans.
Respondent Hook and her second husband had a speaking acquaintance with Charles Patterson dating back several years. Mrs. Hook and Mr. Patterson were on a first-name basis. Throughout their testimony in the transcript, Mrs. Hook referred to Mr. Patterson as "Chuck," and Mr. Patterson referred to Mrs. Hook as "Nancy." The Hooks had procured several loans from appellant through Mr. Patterson, most of the loans between three hundred and five hundred dollars, and at least one vehicle loan of $3,000 to $5,000. Patterson did not at any time ask the Hooks for a financial statement nor did he require them to fill out a regular bank application for loans. Patterson testified that he had no in-depth knowledge of the Hooks' financial condition, other than his knowledge that "(t)hey had paid good on all the loans I'd made them."
Respondent Hook testified that she had talked to Patterson about her kids several times before January of 1975. Sometime in the late fall of 1974, while respondent Hook was conducting unrelated business at Trenton Trust Company, she told Patterson that the children would be receiving some life insurance proceeds soon that would need to be invested. In pre-trial depositions, she testified that she told Patterson that she was going to be appointed guardian of the kids by the court, and that the children would be receiving life insurance proceeds. She testified at trial that she told Patterson that she would have to go to court and that "there would have to be a guardianship set up before the money would come."
When Hook brought the life insurance checks to Patterson on January 13, 1975 she did not state in so many words that she had been appointed guardian of the children, and she did not produce the copies of her letters of guardianship that Mr. Humphreys had given her. Patterson testified that Hook did not tell him that the money was for the benefit of her children. Respondent Hook testified that when she presented the insurance checks to Patterson on January 13, 1975, she told him that the money was for her children and that the checks represented insurance proceeds. Mrs. Hook testified that she specifically remembered mentioning her children to Patterson on January 13, 1975, because one of the reasons she chose to invest the insurance proceeds in certificates of deposit instead of in government bonds was that the certificates of deposit could be renewed relatively easily so that their dates of maturity could be made to coincide with the different dates that the two children would reach majority and become eligible to receive their money. Mrs. Hook concluded from the statements Patterson made on January 13, 1975, that he was aware that the funds invested in the certificates of deposit belonged to her minor children.
Patterson and Hook determined that $11,000 from each of the two checks would be placed in 48 month certificates of deposit and the $1,228.82 balance from each check would be placed in savings accounts. The certificates of deposit yielded annual interest of 7%, compounded quarterly. Patterson instructed Mrs. Hook to endorse both checks exactly as they were made payable. Check no. 713 was payable to "Nancy Hook as Guardian of the estate of Norman C. Bruner, Jr., a minor," and check no. 714 was payable to "Nancy Hook as Guardian of the estate of Karen L. Bruner, a minor." Mrs. Hook endorsed both checks under Patterson's supervision, exactly as they were made payable. Patterson then examined the front and back of each check to ascertain that the endorsement on the back of each check matched the payee's name as it was displayed on the front of...
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