United States Fidelity & Guaranty Co. v. State
| Decision Date | 22 May 1939 |
| Docket Number | 33721 |
| Parties | UNITED STATES FIDELITY & GUARANTY Co. et al. v. STATE, FOR USE OF MERCHANTS BANK & TRUST CO |
| Court | Mississippi Supreme Court |
Suggestion Of Error Overruled July 7, 1939.
APPEAL from the chancery court of Sunflower county HON. J. L WILLIAMS, Chancellor.
Suit by the State, for the Use of the Merchants Bank & Trust Company in liquidation, against the United States Fidelity & Guaranty Company and J. S. Love for the recovery of funds paid by the Merchants Bank & Trust Company, in liquidation, to the Okolona Banking Company, which was in liquidation under the direction of J. S. Love, Superintendent of Banks. The cause was transferred from the chancery court of Hinds county to the chancery court of Sunflower county. The suit was consolidated with a suit styled "In the Matter of the Liquidation of the Merchants Bank & Trust Company, Indianola Mississippi." From the judgment, the respondents appeal. Reversed and remanded.
Reversed and remanded.
Robert Burns, Jr., F. W. Bradshaw, and Flowers, Brown & Hester, all of Jackson, for appellants.
The entire record before the court shows that Love was not heard and was given no opportunity to be heard before the decree of May 20, 1937, was rendered. The hearing was had 2 1/2, years after the expiration of his term of office. No process was served on the exceptions and no notice was given of their filing. Love was not represented at the hearing, and his motion to set aside the decree of May 20, 1937, should have been sustained and opportunity given him to urge his defenses. There was no provision under the Banking Law, chapter 85 of the 1930 Code, requiring the Superintendent of Banks, or liquidating agent, to file a final account. Section 86 of the chapter 146 of the Laws of 1934 required an accounting to the receiver appointed to succeed him. And by section 100 of the 1934 Law, the same account was required to a liquidating corporation but if the receiver or liquidating corporation desired to except to any item of the accounting, he or it would have to do so by suit, after proper process, and the suit should be filed against the liquidating agent, or against both the liquidating agent and superintendent of banks in a proper case.
Indianola Liquidating Corp. v. Moore, 177 Miss. 572, 171 So. 693.
The first sentence of section 2914 is to the following effect: "All money deposited in a bank, or with any depository, by or for a tax collector, or other officer having the custody of public funds, state, county, municipal, levee board, road districts, drainage districts or school districts, whether the same be deposited in the name of the officer, as an individual or as an officer, or in the name of any other person, is prima facie public money and a trust fund, and is not liable to be taken by the general creditors of the officer or by the creditors of the depository." It is our position that Love, as Superintendent of Banks, was a state officer and that the funds in his hands as such were public funds of the state, and that they were a trust fund and given priority under this statute. The Superintendent of Banks was a state officer under the statutes creating the office.
Moore v. Bank of Indianola Liquidating Corp., 177 Miss. 572.
The prior right of the state as to funds of State Banking Department has always been recognized.
Perkins v. State, 130. Miss. 512, 94 So. 460; Bank of Commerce v. Clark, 114 Miss. 850, 75 So. 595; Commercial Bank v. Harding, 87 Miss. 75, 53 So. 395; Section 3817, Code of 1930.
The funds in question, being public funds of state, were protected by the statute because the proof shows that the bank at Indianola, in which deposited, was not a state depository.
10 Zollman, Banks and Banking, sec. 6603, page 26; Therrell v. Comr. of Internal Revenue, 88 F.2d 871.
Snider v. Fulton, 184 N.E. 839, 44 Ohio App. 238, is authority for the proposition that if the transaction between the Superintendent and the Bank of Indianola was unlawful that a trust was created giving rise to a preference in his favor for the benefit of Okolona Banking Company, in liquidation, and its depositors.
Bliss, Receiver v. Mason, 121 Neb. 484, 237 N.W. 581, 65 A.L.R. 1413.
It is rather unusual that the lower court should have held in the decree of May 20, 1937, that the $ 5000 of Okolona Banking Company was a deposit, while in the opinion rendered on the final hearing the court refers to these funds as having been loaned by appellant Love to Merchants Bank and Trust Company. The fund was a deposit evidenced by the certificate of deposit of the bank. Appellant Love required security for the deposit in the form of the note of the directors, but regardless of whether the court considers the transaction as one involving the deposit of funds in the bank at Indianola or the lending of funds to the bank at Indianola, the funds, nevertheless, belong to the Okolona Banking Company, in Liquidation, and they were in the hands and under the charge of J. S. Love, as Superintendent of Banks, in his official capacity, and the funds were preferred in The Merchants Bank and Trust Company, Indianola, Mississippi, under the authority which we have cited, regardless of whether the court considers that the money was deposited in the Bank at Indianola or loaned to the Bank at Indianola by Superintendent Love.
It is shown by paragraphs 2, 3, and 4 of the amended and supplemental answer of appellants that appellee ratified the payments made to Okolona Banking Company, in Liquidation, and thus released appellants thereasto.
The settlement made between The Merchants Bank and Trust Company Liquidating Corporation and the Receiver of Okolona Banking Company was authorized by the Board of Directors of the Liquidating Corporation, after full knowledge that $ 2, 153.33 had already been paid to the Receiver of the Okolona Banking Company, on the theory that the $ 5000 deposit was a preferred claim.
It is clear that there was an accord and satisfaction of the entire matter as a result of the settlement between appellee and the receiver at Okolona.
Clayton v. Clark, 21 So. 565; Greener & Sons v. Cain & Sons, 101 So. 859; May Bros. v. Duggett, 124 So. 476; Phillips v. Ins. Co., 125 So. 705; R. R. Co. v. Sideboard, 133 So. 669; Casper v. Y. & M. V. R. R., 35 So. 162; Ins. Co. v. Perrin, 183 So. 917; Sec. 95, chapter 146, Laws of 1934; Fair Co. v. Warrell, 112 So. 24.
It is shown by paragraph 5 of the supplemental answer that appellee, because of its manner of handling the matter in controversy, prejudiced the rights of appellant Love and estopped itself to assert this claim against appellants.
The liquidation of Okolona Banking was being conducted by Love, as Superintendent, prior to passage of chapter 146 of the Laws of 1934. Then Foote was appointed receiver. He was the successor liquidator to Love. He took up where Love left off and continued to liquidate Okolona Banking Company. Love treated the deposit at Indianola as preferred. Foote maintained this position. Appellee was advised of this and also treated the deposit as entitled to preferential consideration because he, with Cox, paid $ 250 in settlement of balance owing after 50% had already been paid on the deposit. Allen, liquidator, testified that only 5% dividend was paid to general depositors. The deposit at Indianola was secured by $ 5000 note of A. C. Cox, et al. This note was probated against estate of A. C. Cox, deceased. This estate was solvent and the claim had not been disallowed by the court. As a result of the settlement by Cox and Allen, attorneys, directors and liquidator of appellee, the note was surrendered to Cox, the names of the signers were deleted, the probated claim was dismissed and the value of the security of the note entirely destroyed. The Cox estate has been wound up. Love was not consulted. It was not intended that he would be proceeded against. He cannot be placed in status quo ante. If the payments to Okolona Banking Company were improper, they cannot be recovered because it has been released. It is difficult for us to conceive of a case involving a more complete estoppel.
10 R. C. L., 703-704, sec. 30; Izard v. Mikell, 163 So. 498; Staton v. Bryant, 55 Miss. 261.
Equity binds appellee to its election. It ratified, accepted and approved what Love had done. On the strength of this it secured a settlement of disputed matter from the receiver at Okolona. And by virtue of the settlement by appellee and Cox it obtained the security for the deposit and destroyed it. It would be a fraud on the rights of Love to permit appellee to recover under the facts of this case. Our court is in line with the general holding that a party cannot take inconsistent positions.
R. R. Co. v. Wade, 139 So. 403, 162 Miss. 699; Clark v. Dorsett, 128 So. 79; Kelson v. Robinson, 172 Miss. 828, 161 So. 135; Thompson v. Gore, 178 So. 81; Skinner v. Mahoney, 140 Miss. 625, 106 So. 211; Carter v. Jennings, 134 Miss. 263, 98 So. 687; Taylor v. Ross, 129 Miss. 536, 92 So. 637.
Love did not profit from the transaction. He was not acting for himself or in his individual capacity, but officially. And if he should be liable to appellee, because of exceeding his authority in making payments to Okolona Banking Company, the law must require that he be dealt with fairly and equitably. If he is to stand full responsibility for the transaction, appellee must be in position to put him in status quo ante when payment is made. It would not be right, it is not just, to permit appellee to deal with the matter as it saw fit, by making settlement and surrendering security, all without Love's knowledge, and then hold him personally responsible.
First Natl. Bank of Missoula v. Holding, 4 P.2d 709.
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