White v. Greenlee

• Decision Date: 08 April 1932
• Docket Number: No. 31682.,31682.
• Citation: 49 S.W.2d 132
• Parties: W.A. WHITE, County Treasurer of Pike County, Missouri, Appellant, v. C.A. GREENLEE, Deputy Commissioner of Finance of Missouri in Charge of the Liquidation of THE PIKE COUNTY BANK of Bowling Green, Missouri.
• Court: Missouri Supreme Court

49 S.W.2d 132

W.A. WHITE, County Treasurer of Pike County, Missouri, Appellant, v. C.A. GREENLEE, Deputy Commissioner of Finance of Missouri in Charge of the Liquidation of THE PIKE COUNTY BANK of Bowling Green, Missouri.

No. 31682.

Supreme Court of Missouri, Division Two.

April 8, 1932.

Appeal from Pike Circuit Court. — Hon. Edgar B. Woolfolk, Judge.

REVERSED AND REMANDED (with directions).

William F. Goodman and May & May for appellant.

(1) Appellant contends that the bank was not qualified as a statutory county depository. All county funds being required by law to be deposited in a county depository, the officers of the county charged with duties relating to the deposit of such funds for safe keeping are agents of limited powers, and as such they have no authority to deposit these public moneys with any other than a county depository; that a bank does not become a county depository merely by being designated as such in an order of the county court. It must qualify as a depository by giving the security prescribed by Sec. 12187, R.S. 1929, to-wit: (1) a personal bond with not less than five solvent sureties, real estate owners, (2) a surety or trust company, (3) bonds of the United States, or (4) bonds of the State of Missouri. It is apparent that the bank had not so qualified, and therefore the deposit of the county funds with it was unlawful, and it, in receiving such funds under color of being a county depository, wrongfully obtained possession of them. The county moneys so obtained thereupon became, in the hands of the bank, a trust fund by operation of law. These funds entered into, became commingled with, and to that extent augmented, the bank's assets as a whole. Such assets should therefore be impressed with the trust to the extent of the funds so wrongfully obtained and commingled with them, and therefore should have been allowed by the trial court as a preferred claim. Huntsville Trust Co. v. Noel, 12 S.W. (2d) 754. (2) By so much the stronger should the funds equitably be impressed with the trust because the Commissioner of Finance appropriated the securities pledged with the depository bond executed by the bank to the county, and thus by such appropriation swelled the assets in his hands above what he already had more than enough to pay appellant's claim. This seems to be a case of one "eating his pie and still having it." The statute (Sec. 5336, R.S. 1929) lodges with the circuit court the power of determining priorities including priorities of an equitable nature. State ex rel. v. Page Bank, 14 S.W. (2d) 600; Merchants Ice & Fuel Co. v. Holland Banking Co., 8 S.W. (2d) 1030. "Though money coming into hands of Commissioner of Finance when bank closed its doors was insufficient to pay amount of claim for trust fund, where he received other assets from which he realized more than sufficient to pay the claim it was entitled to preference." Johnson v. Farmers Bank, 11 S.W. (2d) 1090.

Fry & Hollingsworth and Marion S. Francis for respondent.

Where a depositary contract is entered into and recognized by both parties, and a valid bond given, even though the statutes are not strictly complied with, such contract is binding and the obligee is estopped to deny the contract; and upon the depositary becoming insolvent the obligee is not entitled to a preferred claim against its funds. Fidelity & Deposit Co. v. Cantley, Comr. of Finance, 39 S.W. (2d) 415; 18 C.J. 585, 587, 591; Henry County v. Salmon, 201 Mo. 136; State ex rel. v. McKay, 30 S.W. (2d) 90; Cole County v. Central Mo. Trust Co., 257 S.W. 774, 302 Mo. 222.

FITZSIMMONS, C.

The Circuit Court of Pike County denied to appellant, Treasurer of Pike County, the right of priority to a claim based on a deposit of county funds in the sum of $7,892.71, and the Treasurer appealed. The facts are undisputed. The special deputy commissioner in charge of the liquidation of the Pike County Bank allowed the claim of the County Treasurer in the amount stated and certified it to the circuit court for the determination of the question of priority under Section 5339, Revised Statutes 1929.

It was proved by the records that the county court received ten proposals of banks on May 6, 1929, in accordance with an order of April 8, 1929, dividing the county funds for depository purposes into ten parts of $15,000 each, and under a published notice. Among those proposing to act as a depository of county funds was the Pike County Bank, of Bowling Green, Missouri, which tendered a bid for one part of the funds. The court, by its order of May 6, 1929, selected the ten proposing banking corporations including the Pike County Bank "as depositories of the funds of Pike County, Missouri, on condition that each file its bond, as required by law, for the portion of said funds to be received by it under its bid, as hereinabove set forth, within ten days from this date." On the next day, May 7, 1929, the county court, by order of record, examined the bonds submitted to it by the ten banking corporations including the Pike County Bank, previously "selected as depositories as required by law." It found the bonds in due form and sufficient in amount and security. It accordingly approved the bonds and ordered them filed, and it designated each of the corporations, among them the Pike County Bank as a depository of the funds of Pike County, Missouri, from the 6th day of May, 1929, until the 6th day of May, 1931. The record discloses that the security given by the Pike County Bank, and approved and filed was a surety company bond for $10,000 and $8,000 in bonds "as security for county funds deposited in excess of $8,000."

The records of the county court show that, on May 22, 1930, a little over a year after the Pike County Bank had been designated a depository of county funds for a period of two years, the bank by one of its officers offered to the county court in lieu of the surety bond and the other bond originally given as security "a contract in the nature of a depository bond secured by collateral of par value of $22,000 which is by the court examined and approved." The order of the county court of May 22, 1930, then concludes: "And it is ordered, that the said bond be filed and that the bonds heretofore given by said Pike County Bank as such depository be surrendered to said bank, and sureties thereon are hereby discharged." The instrument, termed in the record a contract and bearing the caption "Depository Bond" is as follows:

"DEPOSITORY BOND.

"Whereas, the Pike County Bank of Bowling Green, Pike County, Missouri, has been selected as a depository of county funds by the County Court of Pike County, Missouri, for a period to terminate on the 6th day of May, 1931, and for a period to terminate sixty-five days after the May, 1931, Term of said county court, and

"Whereas, said bank qualified as such depository by giving a corporate surety bond for $10,000, and in addition thereto by the designation of certain bonds to secure any sums deposited with it as such depository in excess of $10,000, and

"Whereas, the corporate surety bond of said bank as such depository has expired, and it now desires to secure the entire deposits of county funds, deposited with it as such depository, by designation and setting apart of approved bonds.

"Now, therefore, the Pike County Bank aforesaid, to secure the funds of Pike County, Missouri, deposited with it as such county depository and to secure the faithful performance of all its duties and obligations as such depository, and the payment upon presentation of all checks drawn upon it as such depository, by the proper officers of Pike County, whenever any funds shall be in said depository sufficient for such payment, and the payment of all interest promptly, and the faithful keeping and accounting for all funds of the county deposited with it, according to law, agrees and does hereby set apart approved bonds and agrees to designate such bonds so set apart on its records, the right being reserved to change such bonds from time to time, subject, however, to the approval of the County Court of Pike County, Missouri.

"And at this time the aforesaid Pike County Bank designates and sets apart the following securities under the terms hereof:

"$8,000. Kansas Hotel Co., 1st 6% bonds, due 1932, Nos. 568 to 575 Inc.

"$4,000. United Railways of St. Louis, 1st General Mort. 4%, due July 1st, 1934. Nos. 3571-3419-4915 and 4916-Coupon.

"$6,000. Federal Public Service Corporation, 1st lien bond 6%, due 1947. Nos. 7556 and 7561 inclusive.

"$4,000. Mississippi County, Arkansas, drainage bonds, District No. 17, 5%, due 1936, Nos. 1110-1111-1112-1113.

"In testimony whereof, etc... . ."

The instrument was dated May 22, 1930, and was signed and sealed in the name of the Bank by its President. It also was certified by the county clerk as having been approved May 22, 1930, and ordered filed by the county court. It was recorded the same day in the Recorder's office.

Subsequent to the execution of the new bond, on May 22, 1930, and prior to the closing of the bank, the county treasurer made deposits in the bank at various times. These total subsequent deposits amounted to $2,472.62. The balance of the deposit account of the county treasurer in the Pike County Bank after the execution of the depository contract varied. On June 1, 1930, it was $14,327.08. The bank balance was reduced gradually and was $7,892.71 on November 22, 1930, the day that the bank closed its doors. A comparison of the total amount of deposits made after the new contract had been given and of the balances shows that a substantial sum was in the county treasurer's account when the original security was withdrawn and the sureties discharged, and that a large part of this substantial sum over and above the later deposits was in...