Wheelock v. Cantley

• Decision Date: 07 June 1932
• Citation: 50 S.W.2d 731,227 Mo.App. 102
• Parties: WILLIAM W. WHEELOCK AND WILLIAM G. BIERD, RECEIVERS OF THE CHICAGO & ALTON RAILROAD COMPANY (CLAIMANTS), APPELLANTS, v. S. L. CANTLEY, COMMISSIONER OF FINANCE OF THE STATE OF MISSOURI, IN CHARGE OF THE NORTH MISSOURI TRUST COMPANY, RESPONDENT
• Court: Missouri Court of Appeals

50 S.W.2d 731

227 Mo.App. 102

WILLIAM W. WHEELOCK AND WILLIAM G. BIERD, RECEIVERS OF THE CHICAGO & ALTON RAILROAD COMPANY (CLAIMANTS), APPELLANTS, v. S. L. CANTLEY, COMMISSIONER OF FINANCE OF THE STATE OF MISSOURI, IN CHARGE OF THE NORTH MISSOURI TRUST COMPANY, RESPONDENT

Court of Appeals of Missouri, St. Louis

June 7, 1932

Appeal from the Circuit Court of Audrain County.--Hon. William C Hughes, Judge.

AFFIRMED.

Judgment affirmed.

A. C Whitson and Charles M. Miller for appellants.

(1) The trial court erred in denying appellants, Receivers, a preferred claim because the character of the funds left with the North Missouri Trust Company, being funds of the Receivers, established a trust relation between the Trust Company and the Receivers, entitling the Receivers to a preferred claim. Stone v. St. Louis Union Trust Co., 166 S.W. 1091, 183 Mo.App. 261; Farmers Bank of Bowling Green v. Cantley, 16 S.W.2d 642; Johnson v. Farmers Bank, 11 S.W.2d 1090; Nichols v. Bank of Syracuse, 278 S.W. 794. (2) If the character of the funds did not establish a trust relation between the Receivers and the Trust Company, then the trial court erred in not holding that the transaction between the Trust Company and the Receivers constituted at least a "special deposit" entitling the Receivers to a preferred claim because the transaction at least established a "special deposit." Re North Missouri Trust Co., 39 S.W.2d 412 414; Smith et al. v. Fuller et al. (Supreme Court of Ohio), 86 Ohio State 57, 99 N.E. 214. (3) The trial court erred in not holding that the Trust Company was insolvent or in failing circumstances when it received the Receivers' funds, thus entitling the Receivers to a preferred claim on this account, because we believe the evidence discloses that the Trust Company was insolvent or in failing circumstances and its officers knew or had reasonable cause to know it. State v. Cox (Mo. Sup.), 38 S.W.2d 1079; Carson City Bank v. American Nat. Bank, 34 S.W.2d 143.

Fry, Hollingsworth & Francis for respondent.

(1) (a) The certificates of deposit agreed upon and thereafter used by the parties hereto, although differing in legal effect from the usual commercial deposits in that they were not subject to being checked against, nevertheless created a debtor and creditor relationship between the bank and appellants. Farmers & Traders Bank v. Harrison, 12 S.W.2d 755, 757; Cantley v. Little River Drainage Dist., 2 S.W.2d 607, 611; 3 R. C. L., secs. 198, 202, pages 570, 573. See also: Ellington v. Cantley, 300 S.W. 530, and cases cited; In re North Missouri Trust Co., 39 S.W.2d 412, 414. (b) No evidence is admissible to vary the terms of the certificates of deposit here in question. Trust Co. v. Limpp, 288 S.W. 957, 958, and cases cited; Machine Co. v. Matthews, 174 S.W. 198; Bank v. Henry, 202 S.W. 281. (2) Even though the certificates of deposit here in question should be considered as drafts or cashier's checks, yet they are not entitled to allowance as a preferred claim. Bank of Republic v. Republic State Bank, 42 S.W.2d 27; In re Wells-Hine Trust Co., 32 S.W.2d 1093. (3) The evidence in this case fell far short of showing the Bank's insolvency at the time the certificates in question were issued. State v. Hill, 44 S.W.2d 103; State ex rel. Arndt v. Cox, 38 S.W.2d 1079; State v. Long, 44 S.W.2d 67.

HAID, P. J. Becker and Nipper, JJ., concur.

OPINION

HAID, P. J.--

This is an appeal from a judgment allowing a claim as a general one but denying it a preference.

The record discloses that the Commissioner of Finance took charge of the North Missouri Trust Company on the morning of June 4, 1930; on June 25, 1930, the Commissioner gave written notice to all persons having claims against the Trust Company, to present the same to him and make proper proof thereof on or before October 27, 1930; that claimants on September 23, 1930, filed with the Commissioner their application for a preferred claim and due proof having been made to the Commission the latter approved the application and claim and presented the same to the circuit court for determination as to priority of payment as required by section 5336, Revised Statutes of Missouri, 1929; that on November 22, 1930, the application and claim was heard and on March 12, 1931, the court entered its judgment denying preference or priority of payment to the claim but allowed it as a general claim. The claim of the receivers set out that they were appointed as such September 1, 1922, and set out four certificates of deposit issued by the Trust Company dated, respectively, May 31st, two dated June 2nd, and June 3, 1930, and aggravating the sum of $ 3765.55. Prior to September 1, 1929, the local agent of the receivers transmitted the funds of the receivers obtained from those having business with the railroad at Mexico, Missouri, by taking the cash and checks obtained from patrons of the railroad at Mexico to the Trust Company and obtaining a cashier's check or draft for the same which would, on the same day, be transmitted to the receivers at Chicago. On September 1, 1929, the Mexico Clearing House Association, composed of the banks of Mexico, agreed that they would make a charge, effective September 1st, on all drafts and cashier's checks, of ten cents per one hundred dollars or fraction thereof, and five cents for each additional one hundred dollars or fraction thereof. The agent of the receivers at Mexico advised the treasurer of the receivers at Chicago of this agreement and ruling of the Clearing House Association, whereupon the treasurer of the receivers instructed the agent to collect the checks and ship out the currency by train to the receivers at Chicago. Mr. Pollock, the then president of the Trust Company, on September 4, 1929, wrote to the treasurer of the receivers concerning the matter and asking "if a plan could not be worked out by which he would deposit his daily collections and you give us sufficient time to make collections on the different items and keep a balance in proportion to the business handled and then you could check against the funds without any charge being made" and expressed the belief that "this would be a much more satisfactory arrangement than shipping out the currency." On September 9, 1929, the treasurer of the receivers at Chicago wrote the president of the Trust Company acknowledging receipt of the latter's letter of September 4th, in which, among other things, he says, "I wish to state that it is impossible for us to open a standing deposit as suggested in your letter. As a matter of fact, for the past several years out agent has been receiving from your bank, so I understand, cashiers checks for his local items in cash, and as these cashiers checks are forwarded to Chicago for deposit, it practically constitutes a three or four day float before your bank is called upon to meet the same, thereby in a way giving you a standing deposit of over a thousand dollars a day from the Alton Company. Another reason why I cannot open this account, is on account of the properties of this company being in the hands of receivers, and it is necessary for us to obtain court orders of approval of banks before placing the funds under the custody of the court therein."

On September 24, 1929, the president of the Trust Company wrote to the treasurer of the railroad, "I am enclosing you herewith sample slip, which shows how the Mexico Savings Bank handles the Wabash business and while this practically answers every purpose of the cashier's check or draft either it will keep us from breaking our rule in regard to issuing cashier's check or draft either, without charging and if this form meets with your approval you can return it to us and we will have some printed and handle the business that way."

On September 26th, the treasurer of the railroad wrote the president of the Trust Company, acknowledging receipt of the latter's letter of September 24th, and stated, "I am perfectly agreeable to the adoption of this system, but have modified the certificates of deposit, as you will note from the attached slip, by eliminating the necessity of placing the agent's name thereon, so that the same can become available at our banking depositary here by placing thereon our own endorsing stamp now maintained with our Chicago bank for that purpose. I understand that the Burlington Railroad, with which I am cooperating, expects to make a similar suggestion to you. As this modification does not materially change the certificate so far as your bank is concerned, I hope that the same will meet with your approval, and that you can place the same in effect just as soon as the slips are printed up. I am, therefore, writing our agent today, authorizing him to cooperate with you on this subject." On October 1, 1929, the president of the Trust Company wrote to the treasurer of the Alton, acknowledging receipt of the letter of the latter dated September 26th, and stating, "We have fixed up the copy for the certificate in line with your suggestions and as soon as we receive same from the printer we will deliver them to your agent here and start using them." The certificate agreed upon and thereafter used was in the following form:

North Missouri Trust Company

Mexico, Missouri.

Mexico, Missouri, 1930

C. & A. R. R. CO.--Receivers--has deposited in this bank, . . . . Dollars ___ payable to its order, upon presentation and surrender of this certificate properly endorsed.

North Missouri Trust Company

Mexico, Missouri.

. . . . Teller

The four deposits made for which the claim is prosecuted were, respectively, May 31, 1930, for $ 50; June 2, 1930, for $ 3373.61; June 2, 1930, for $ 207.23; June 3 1930, for $ 134.71. At the time these deposits were made the agent of the receivers would...