William R. Compton Co. v. Farmers' Trust Co.
| Decision Date | 07 December 1925 |
| Docket Number | No. 15447.,15447. |
| Citation | 279 S.W. 746 |
| Parties | WILLIAM R. COMPTON CO. v. FARMERS' TRUST CO. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, Worth County; John M. Dawson, Judge.
Action by the William R. Compton Company and another against the Farmers' Trust Company of Grant City and another. Judgment for defendants, and plaintiffs appeal. Affirmed.
Ed Kelso, of Grant City, for appellants.
Du Bois & Miller, of Grant City, for respondents.
This is an action by plaintiffs to have allowed as a preferred claim certain funds deposited in defendant bank, the Farmers' Trust Company of Grant City, Mo. The cause was tried to the court upon an agreed statement of facts, the substance of which is as follows:
The Worth county drainage district No 1, a quasi public corporation, issued bonds in the sum of $132,000, which were sold to plaintiff, the William R. Compton Company. In August, 1923, said drainage district levied a tax against the lands of said district to pay five of said bonds of $1,000 each and also the interest thereon in the sum of $1,630, due May 1, 1924. The said tax was regularly collected by the collector of revenue of Worth county, and on the 1st day of March, 1924, was delivered to W. C. Okey, the treasurer of the drainage district, and the sum of $6,630 was deposited in the Farmers' Trust Company of Grant City, Mo., in the name and to the credit of W. C. Okey, treasurer. When so deposited, it was accepted by the defendant trust company with the knowledge and understanding that the funds were the property of said drainage district and were to be used for the sole and only purpose of discharging the indebtedness of said district in the sum of $5,000 bonds and interest in the sum of $1,630; and with the understanding and knowledge that said trust company received said deposit and held the same for the benefit of said drainage district, with which to meet its said obligations. The said deposit was so entered upon the books of said trust company in the name of W. C. Okey, treasurer, and so remained until debited by the issuing of a cashier's check against the same by the trust company.
It was agreed that said Worth county drainage district No. 1 was, and is, a public corporation under the laws of the state of Missouri, and that said funds belonging to said district were at all times public funds, and so known to defendant trust company and so received and held by it. It was further agreed: That W. O. Okey was the duly elected and acting treasurer of said district and, as such, had the right to receive said funds from the collector of revenue on March 1, 1924. That in January, 1924, the board of supervisors of said drainage district, at a regular session thereof, made an order directing the treasurer to deposit the funds received by him as, aforesaid, as follows: $2,000 thereof, in the Citizens' Bank of Grant City, Mo.; $2,000 in the People's State Bank of Grant City, Mo., and the remainder of $2,630 in the Farmers' Trust Company. That by reason of said order, $4,000 of the funds were illegally deposited in the Farmers' Trust Company, without authority and against the orders of said board of supervisors, and that said facts were known to said Farmers' Trust Company and its authorized agents. It is further agreed that on April 28, 1924, the said treasurer of said drainage district drew a check, in his official capacity, against the funds of the district in said trust company, in the sum of $6,630, and for which the trust company, without the knowledge or consent of the drainage district, issued to William R. Compton Company its cashier's check in said amount, in payment of the bonds and interest above mentioned; and said cashier's check was forwarded by the treasurer' of said district to the William R. Compton Company. On April 29, 1924, the said trust company, by order of its directors, closed its doors, and the said cashier's check was never paid. On the day the defendant trust company closed its doors, its affairs were placed in the hands of A. R. Todd, special deputy commissioner of the Finance Department of the State of Missouri, who is made a party defendant herein. Plaintiff contends that $4,000 of the funds of the drainage district were illegally deposited in the defendant trust company, with the knowledge and consent of the officers of said trust company. This charge is based upon the fact, shown by the agreed statement of facts, that the board of directors of the drainage district had instructed their treasurer to deposit only' $2,630 of the funds with the trust company, and $2,000 in each of the two other banks; that this order was known to defendant trust company, and therefore that the said sum of $4,000 was illegally received by said defendant.
It is urged that the entire deposit of $6,630 was placed with the trust company for a certain definite and specific purpose and time, to wit, to pay certain bonds and interest which matured May 1, 1924, and for no other purpose; that knowing and understanding all of the above, the trust company received and accepted said deposit and held the same for the sole purpose of discharging said obligations; that these facts impressed the entire fund so deposited and received with the character of a trust, and that plaintiffs are entitled to have their claim for the entire deposit declared to have a preference.
On the other hand, defendants claim there is nothing in the agreed statement of facts showing any money on hand at the time of the failure of the trust company upon which a trust can be impressed; that neither is there any showing as to how many other claims may be presented against the defunct trust company, exhausting any possible funds on hands, if any; that under these conditions no fund can be impressed with a trust and no claim can be declared preferred unless it be shown that an amount in cash equal to the claim sought to be declared preferred remained continuously in the hands of the trust company until its suspension and then passed into the hands of the commissioner of finance. It is argued by defendant that, however the funds may have been deposited, no trust was created; that W. C. Okey, the treasurer, rightfully obtained therefor a cashier's check which he accepted and forwarded in payment of the indebtedness of the district; that whatever relation may have existed up to the time of obtaining the cashier's check, it then became only that of debtor and creditor. In other words, plaintiffs contend, and defendant denies, that a trust was created, under the facts-presented by the agreed statement.
"A trust is an obligation imposed either expressly or by implication of law whereby the obligor is bound to deal with property over which he has control for the benefit of certain persons of whom he may himself be one, and any one of whom may enforce the obligation." 3 Bouvier's Law Diet. 3328, quoting W. G. Hart, 15 L. Q. R. 294.
"Technically, an obligation arising out of a confidence reposed in a person, to whom the...
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