Opinion
Opinion filed May 8, 1934. Motion for rehearing overruled May 22, 1934.
1. — Guardians and Curators — Benefit Payments To — On Behalf of World War Veteran by United States Government Become Ward's Property and Does Not Remain Property of the United States Government. World War Veteran Benefits paid to the guardian of a veteran by the Government becomes the ward's property and discharges the Government's debt to the veteran.
2. — Guardians and Curators — Deposits in Bank — Pending Investment — Not Prohibited by Law. Neither Section 507 nor Section 418, R.S. Mo. 1929, prohibit the guardian or curator as trustee of the money of the ward from depositing the same as a general deposit with a bank pending its investment.
3. — Banks and Banking — Receipt of General Deposit of Ward's Money from Guardian or Curator — Not Unlawful — Hence Bank Not Trustee Ex Maleficio — Deposit Not Preferred — On Bank's Liquidation for Insolvency. Since pending investment of a ward's money in securities authorized by statute, the guardian or curator may lawfully deposit the same in a bank as a general deposit, the bank does not by receiving the deposit as such, become a trustee ex maleficio entitling the ward to preferred classification of his claim upon liquidation in insolvency proceedings of the bank by the State Finance Department.
4. — Banks and Banking — General Deposit — Special Deposit — Relation of Depositors. In a special deposit with a bank a fiduciary relation might well arise while in a general deposit made in good faith the title to the fund deposited passes, the bank becomes the owner and the relation of debtor and creditor and not of trustee and cestui que trust exists.
5. — Banks and Banking — Preferential Payment of Claims in Insolvency — Right To. Where there is no equity founded on agreement, no wrongful conversion and no relation of the debt to the assigned property, there can be no preference allowed in distribution of the bank's assets in insolvency.
Appeal from Circuit Court of St. Charles County. — Hon. Edgar B. Woolfolk, Judge.
REVERSED AND REMANDED ( with directions to deny plaintiff's claim a preference and allow the claim as a general claim only).
William Waye, Jr. for appellant.
(1) The deposit made by Emma C. Parker, as guardian and curatrix of William Wiemkin, in the Central Trust Company of St. Charles, was a general deposit. Paul v. Draper, 158 Mo. 197; Arnall v. Commercial Bank of Wellsville, 45 S.W.2d 909, l.c. 911; Wheelock v. Cantley, 50 S.W.2d 731; Butcher v. Butler, 134 Mo. App. 61. (2) Emma C. Parker, as guardian of the person and curatrix of the estate of William Wiemkin, was authorized under the laws of Missouri to collect the amount due her ward from the Federal Government and give acquittances and discharges therefor; and when said money was paid to her, the government had no further control over it. Sec. 471, R.S. of Mo., 1929. (3) The payment to the guardian and curatrix of the amounts due the ward under the World War Veteran's Act of 1924 for war risk insurance and disability compensation vested title in the ward and operated to discharge the obligation of the United States. And the deposit does not belong to the United States. Spicer v. Smith, Special Deputy Banking Com. et al., 53 Sup. Ct. Rep. 415, 244 Ky. 68, 50 S.W.2d 64; State ex rel. Robertson, Sup. of Banks v. Bank of Bristol, 55 S.W.2d 771.
Claude S. Tuttle and B.H. Dyer for respondent.
(1) A curatrix of the estate of an insane ward has no authority to loan her ward's money to a bank. Sec. 507, R.S. of Mo., 1929; Sec. 418, R.S. of Mo., 1929; In re Farmer's Exchange Bank of Gallatin, 37 S.W.2d 936. (2) The relationship of debtor and creditor, or banker and creditor, is a contractual relation, and can be entered into only by persons who have the capacity to make such a contract. 3 R.C.L. 556, sec. 183; City of Doniphan v. Cantley, 52 S.W.2d 417; In re Cameron Trust Co., 51 S.W.2d 1025. (3) Where an agent depositing money in bank does so against his authority, the bank, knowing at the time that the agent has no authority to make the deposit, obtains no title to the money so deposited, but holds it as trustee for the owner. Andrews v. Farmers Trust Co., 21 S.W.2d 641; City of Macon v. Farmers Trust Co., 21 S.W.2d 643; City of Doniphan v. Cantley, 52 S.W.2d 417; Everton Special Road District v. Bank of Everton, 55 S.W.2d 335. (4) One who knowingly takes title to property which is subject to trust, himself becomes a trustee, ex maleficio, of that property. Elliott v. Machine Co., 236 Mo. 546, l.c. 561-3; Case v. Goodman, 250 Mo. 112; Price v. Morrison, 291 Mo. 249, l.c. 265-6; Wm. R. Compton Co. v. Farmers Trust Co., 220 Mo. App. 1081, 279 S.W. 746; Harrison Tp., Vernon County v. Peoples State Bank, 46 S.W.2d 165. (5) A bank receiving a deposit of money from one who, having custody thereof, yet has no authority to make such deposit, the bank having knowledge at the time that such depositor cannot lawfully make the deposit, takes only the title of a trustee to such deposit, and must account therefor, to the real owner. Harrison Tp., Vernon County v. Peoples State Bank, 46 S.W.2d 165; In re Farmers Exchange Bank of Gallatin, 37 S.W.2d 936; State ex rel. Gentry v. Page Bank of St. Louis County, 14 S.W.2d 597; Clearmont School District v. Jackson Bank of Clearmont, 37 S.W.2d 1006; Special Road District v. Cantley, 8 S.W.2d 944; Consolidated School District v. Bank, 21 S.W.2d 781; In re Cameron Trust Co., 51 S.W.2d 1025; City of Aurora v. Bank of Aurora, 52 S.W.2d 496; Consolidated School District No. 5 v. Parma Bank, 52 S.W.2d 425; White v. Greenlee, 49 S.W.2d 132; Everton Special Road Dist. v. Bank of Everton, 55 S.W.2d 336.
Emma C. Parker, guardian of the person and curatrix of the estate of William F. Wiemken, a person of unsound mind, had on deposit with the Central Trust Company of St. Charles, Missouri, certain moneys, as curatrix, on January 5, 1931, on which day the said bank closed its doors and was taken over by the Commissioner of Finance of the State of Missouri for liquidation. She had her claim in the sum of $734.34 allowed and classified as a preferred claim in the Circuit Court of St. Charles County, Missouri. The Commissioner of Finance in due course appeals.
It is apparent from the record before us that the learned trial judge below allowed the claim of the curatrix as a preferred claim in the belief and upon the theory that the claim was entitled to preference because the fund which went to make up the balance of the deposit on hand at the time the bank was taken over by the Commissioner of Finance was made up of moneys received as compensation for her ward as a disabled war veteran from the veteran's bureau, and that such moneys as the curatrix had received and placed on deposit remained the money of the United States until it actually reached her ward. Here on appeal, however, respondent completely abandons that theory of her case, as she must in fact, in light of the ruling of the Supreme Court of the United States in Spicer v. Smith, etc., 53 U.S. Sup. Ct. Rep. 415, wherein it is specifically held that payments under the World War Veteran's Act to a guardian, vests title in the ward and operates to discharge the obligation of the United States in respect to such installments, and that when such payments are deposited by a guardian or curatrix the deposit does not belong to the United States, and, therefore, as indebtedness to it is essential to priority in a claim against an insolvent bank, the guardian's claim for a deposit in an insolvent bank cannot be held to be entitled to priority or be allowed as a preferred claim. See also Duzan v. Cantley, etc. (Mo. App.), 55 S.W.2d 711, in which case a certificate of time deposit issued to a beneficiary of a war risk policy for funds derived therefrom are held not entitled to preferred standing upon the insolvency of the bank.
The respondent here on appeal seeks to support the allowance of her claim as a preferred one upon the theory that since Section 507, Revised Statutes of Missouri, 1929, Mo. Stat. Ann., sec. 507, p. 304, provides that guardians and curators of insane persons shall be authorized and required to loan money belonging to the estate of such insane person in the manner and under like circumstances as other guardians and curators are now required by law who loan money of their wards, therefore, since Section 418, Revised Statutes of Missouri, 1929, Mo. Stat. Ann., sec. 418, p. 264, provides that "curators shall . . . loan the money of their wards at the highest legal rate of interest that can be obtained, on prime real estate security, or invest it in bonds of the United States, or of the State of Missouri, or of the Federal Farm Loan Bank, excepting where the estate is less than three hundred dollars, in which case good personal security may be taken, and shall account for all such interest received which shall be charged in their annual settlement; . . . and if it appear that such money is loaned out, then he shall state the name of the person to whom loaned . . . and if such money had not been loaned out the guardian or curator shall state such fact and the reasons, which report shall be sworn to, and shall . . . state that such guardian or curator has been unable to make loan after diligent effort to do so, . . ." prohibited the curatrix, as trustee of the money of her ward, from depositing said money with the bank so as to create the relation of debtor and creditor with the trust company, and that the trust company, having knowledge of all of the facts, took the money on deposit from the curatrix only as a trustee ex maleficio or a constructive trustee, and; therefore, became accountable for the moneys on deposit as a trustee and not as a mere debtor, and, therefore, the claim of the curatrix was properly allowed as a preferred claim. To this we cannot accede.
It is true Section 418 of our statutes provides that the curatrix shall invest the property of the ward in certain specified securities, yet said section does not mandatorily direct what the curatrix shall do with the funds of the ward during such period of time as the curatrix may be endeavoring to secure an investment therefor of the kind and character designated by said statute; nor does it mandatorily prohibit the curatrix, during such period of time or until statutory investment shall have been found, from depositing the funds of the ward in a bank or trust company. This is the more apparent in that the section specifically provides what shall be the duty of the curatrix "if such money has not been loaned out," by requiring the curatrix to state such fact and "give his reasons therefor in his annual report, and shall state that such guardian or curator has been unable to make loan after diligent effort to do so."
Nor are the cases cited by respondent in support of her position, such as In re Cameron Trust Co. (Mo.), 51 S.W.2d 1025, in point, for they deal with school district funds which had been placed on deposit in a bank which had not been selected as a depository of school funds as required by Section 9362, Revised Statutes of Missouri, 1929, Mo. Stat. Ann., sec. 9362, p. 7211, for said section is mandatory, and, absent a compliance by the school board with such statute, the bank receiving funds is properly held to be a trustee ex maleficio entitling the school district to preference on the bank's insolvency.
In the case of Paul v. Draper, 158 Mo. 197, 59 S.W. 77, our Supreme Court had before it the question whether plaintiff, as guardian and curator, as against other creditors of an insolvent bank, was entitled to have his claim, as such trustee, for the balance of his deposit preferred over the claims of other creditors of the bank in the distribution of its assets by the assignee. It was held therein that "the fact that the deposit was of a trust fund, and known to the bank to be such, would not of itself make the bank a trustee of the funds for the benefit of the cestui que trust. In order to have that effect there must have been something in the circumstance of the deposit to constitute it a special, as contradistinguished from a general deposit, into which two classes all deposits of commercial banks may be divided. If the deposit belonged to the former class the fiduciary relation might well arise; if to the latter, in the absence of mala fides, it could not do so, for by a general deposit in good faith the title to the fund deposited passed. The bank became the owner thereof; the relation of debtor and creditor, and not that of trustee and cestui que trust was created." The Supreme Court ruled that there was nothing in the evidence in that case tending to prove that the deposit was a special deposit in any sense and held the deposit to have been a general deposit, "whereby no misappropriation was intended or accomplished, the owner of this fund became a creditor of the bank and stands upon precisely the same footing as the other general depositors in the bank, who are creditors thereof, and is entitled to no preference over them. . . . The mingling of that fund by the bank with its other assets after it had been deposited as stated, was no wrongful conversion thereof, but simply a mingling of its own funds, and there is no ground upon which to impress a trust in favor of the plaintiff's claim upon the assets assigned in order to give him a preference over the claims of other creditors. In other words, there is no equity founded on agreement, no wrongful conversion, and no relation of the debt to the assigned property to entitle the plaintiff to preferential payment." The case of Paul v. Draper, supra, has been cited repeatedly, the more recent cases being Duzan v. Cantley, etc., supra; Boswell Post of Amer. Legion v. Farmers' State Bank (Mo. App.), 61 S.W.2d 761.
It follows that the circuit court erred in entering a judgment granting the curatrix a preferred claim. Accordingly the judgment is reversed and the cause remanded with directions to deny plaintiff's claim a preference and allow the claim as a general claim only. It is so ordered. McCullen, J., concurs; Hostetter, P.J., not sitting.