272 Mo. 436 | Mo. | 1917
This is an injunction suit brought by 450 taxpaying citizens of Jefferson County to set aside an order of its county court designating the Bank of Hillsboro as depositary of the county funds, and to enjoin the county treasurer from depositing such funds or the district or capital school funds thereof in said bank under and by virtue of such order, and to require him to withdraw all such funds as may have by him been deposited in said bank, and to restrain the county court and judges thereof from further recognizing such order, and to require the court to accept the bid of the Jefferson Trust Company, or proceed under- the statute to select some depositary of such funds.
The petition states that the county court caused due notice to be given that sealed proposals would be received by it at its May term, 1913, until noon of the first day of said term, from banking corporations, as
One of the county judges did not testify. The others were present and upon the stand and failed to testify that they knew or believed anything derogatory to the character and financial soundness of the Jefferson Trust Company. One of them testified that he came to the court, on the morning bids were received, ignorant as to who the bidders would be. He did not vote because the other judges voted for the Bank of Hillsboro. Had it been necessary he would have voted the same way.. The Presiding Judge had been a stockholder, director and vice-president of the bank when he was elected as judge for the term beginning January 1, 1911, soon after which he sold his stock and resigned as vice-president and director. One of the reasons he giave for voting for the Bank of Hillsboro was that it had always taken care of the warrants when the money was not immediately available in the funds upon which they were drawn. Mr. Williams said that the Presiding Judge (Winer) had told him that he had promised Mr. Donnell, one of the directors of the Bank of Hillsboro, before the election, to give him the money. Judge Winer denied this by saying, “If Mr. Williams says so, I might have done it.” Mr. Kidd testified that Judge Winer advised him not to take stock in the Jefferson Trust Company, saying, “It was a Republican scheme, and damned if they could fool him for a moment.” George Russel testified that in speaking of his action in awarding the funds to the Bank of Hillsboro, Winer said: “If you ever expect the.Republicans to elect you to office, you are left; they will never do it.” Other similar statements were in evidence, none of which were denied by Judge Winer. Judge Kerckhoff, the other member of the court, although a defendant, did not testify. The district and capital school funds, not at the disposition of the county
“Now this day come the parties, plaintiffs and defendants, both in person and by attorney, and submit this cause to the 'Court upon the pleadings and proof adduced, and the court being fully advised doth find that at the May term, 1913, of the county court of Jefferson County, Missouri, said county court advertised for bids, as by law provided and required, for the deposit of all the funds belonging to said county for the purpose of selecting a county depositary; that as a result of said advertisement the Bank of Hillsboro, a banking corporation, filed its bids to become the depositary, and its bid- was two per cent per annum on daily balances; that the Jefferson Trust Company, a corporation doing a general business, also bid to become the depositary for the funds of said county and its bid was three and one-quarter per cent per annum on daily balances; that no other bid or bids were made; that on the same day the bids were filed they were opened by the county court and the award was then and there let to the Bank of Hillsboro, the lowest bidder; that the Bank of Hillsboro was a solvent institution and its business methods safe and sound; that the Jefferson Trust Company was solvent, its management in the hands of reputable and responsible men, its business methods were safe and sound, and its bid to become the depositary was materially higher than the bid of its only competitor, the Bank of Hillsboro; that both the Bank of Hillsboro and the Jefferson Trust Company are conveniently located for a depositary of the county, both secured against burglary losses, both equally well equipped and equally well managed as banking institutions; that this action was brought by fifty and more reputable, responsible resident taxpaying citizens of said Jefferson County; that the action of the county court in the selection of the depositary was the result of bad faith, partiality and favoritism on the part of said county court, and against the best interest of the taxpayers of Jefferson County; that the action of said*443 court was illegal, without authority of law or warrant of facts and was fraudulent within the meaning of the law; that the contract entered into by the county court with the Bank of Hillsboro in selecting it as the depositary under the law and the facts is a fraud on the petitioners and the taxpayers of the county; wherefore, the court finds all the issues for the plaintiffs and that petitioners are entitled to the relief prayed for in their petition.
“It is, therefore, ordered and adjudged by this court that the order of the county court awarding and designating the Bank of Hillsboro as depositary be set aside and for naught held; that the county court of Jefferson County select and designate the Jefferson Trust Company of Jefferson County, Missouri, as the depositary, for the county funds, in pursuance to its bid to pay three and one-quarter per cent on daily balances on all money belonging to said county, and that it accept from the said Jefferson Trust Company and approve a good and sufficient bond in the amount required by said court for the faithful performance of its duties as depositary for said county, with the proper conditions, and that upon compliance with the judgment herein, the funds of said county be immediately paid over and deposited in the said Jefferson Trust Company as the depositary for said funds of said county. It is further ordered that the defendant, the Bank of Hillsboro, transfer said funds in it's possession to-the Treasurer of Jefferson County, or upon the order of the county court of said county.”
We think that the finding of the court as we have stated it was fully justified by the evidence. The members of the county court, both by their statements as witnesses and by their silence, demonstrated to the trial court that in the action complained of they took no cognizance of the public good, that they'neither considered nor discussed the effect of their action in connection with the public welfare, nor investigated rumors and facts which, by an afterthought, they now present in justification. On the other hand, the judges who have testified, established by their own word the solvency and suitability of the unsuccessful bidder with respect to its resources and management. The ability of its directors to respond to the stringent liability which the law imposes upon them was also well established.
In 1907 the Legislature had the whole subject of banking before it and treated it in a single act repealing-the following articles of Chapter 12, Revised Statutes 1899, and enacting new articles in lieu thereof: Article VIII, entitled “Banks of Deposit and Discount;” Article XII, ,entitled, “Trust Companies,” and Article XIII, entitled, “Savings and Safe Deposit Institutions,” together with all acts amendatory thereof, and enacting three new articles, with the- same titles, covering the same matter, in lieu thereof, and amending Article XX, entitled “State Banking Department.” [Laws 1907, p. 124.] -These articles were evidently intended to cover- everything connected with the banking business of the State subject to State jurisdiction and control, and are substantially continued in the Revised Statutes of. 1909. This law gave the State Banking Department charge of the execution of the laws relating to banks, private banks and bankers, trust companies and savings and safe deposit companies, and the banking business in the State. In the provisions relating to each of these institutions their powers are entwined in a manner that indicates clearly the common ground covered by all. It was made the duty of the examiner (R. S. 1909, sec. 1080) “to visit and examine every bank, private banker and trust company receiving deposits, except national banks, and every savings and safe-deposit company.” It was also provided that “for the purposes of this section each such institution and private banker are hereby denominated banks.” Thus the popular habit, of designating the places in which these institutions received deposits as “banks” received legislative endorsement. In the article concerning banks of deposit and discount, banks
While banks of deposit and discount were empowered to receive money on deposit and to allow interest thereon, the trust companies were empowered to receive money in trust and to allow such interest thereon as may be agreed. These two propositions were before this court in State ex inf. v. Lincoln Trust Company, 144 Mo. 562, in which it was held that while the power quoted gave to the bank of deposit and discount the right to charge interest or not on its deposits the trust company could only receive deposits upon which it should
Their powers cover practically the whole field of legitimate banking, with the exception of receiving money on deposit without the payment of interest. They are sufficient to render innocuous the statement that the Jefferson Trust Company was doing a general banking business. It raises no inference that it was exceeding its charter powers. Nor do we think that the evidence is sufficient to prove that at the time of the letting in question or afterward the company was engaged in handling deposits without the payment of interest. A general order was made by its board of directors on December 19, 1911, fixing the rate of interest on
Of the loans complained of the most important is a loan of $8,000 made to one Pounds, to pay for a farm purchased by him from Doctor Denny, the president of the company. The amount was advanced upon a note of Pounds to Denny, secured by deed of trust upon the land, and indorsed by Denny to.the bank. The transaction Avas approved by the directors. . The safety of the loan' does not seem to be questioned, but its legality is attacked on the ground that it was excessive, and incidentally a question is made as to whether it was a loan to Denny or Pounds, or a purchase of the note with its security. If it was made to Denny, it would seem to come within the following provision of Section 1131, Revised Statutes 1909, to which it has been carried intact from the Act óf 1907; “No director or officer of a trust company in this State receiving deposits shall be permitted to borrow any of the money of the trust company in which he is a director or officer in excess of ten per centum of the paid-up capital and surplus without the consent of a majority of the directors of the trust company, Other than the borrower, first having been obtained in a regular meeting of the board, said consent' to be made a matter of record before the loan is made.” Although the only consent proven is a general one, it does not seem to be questioned in the briefs of counsel that it was given in time and manner prescribed by the statute, and we will therefore presume that it was. This provision seems unlimited in its scope, and to permit the loan of the entire
Another class of transactions complained of consists of certain notes to the secretary, Mr. Dietrich, and by him transferred by indorsement without recourse to the Trust Company. This transaction seems also to be covered by the same provision of Section 1124, which we have already quoted.
In this connection one of the appellants’ witnesses, Mr. Nichols, vice-president of the American Trust Company of St. Louis, testified that the method employed by his company and the other trust companies of St. Louis and elsewhere in handling loans is that the borrower executes the note to himself and thereupon indorses it and hands it to the cashier who gives him the money.- While this testimony is not applicable or competent in this case, it was placed before the trial court and before us without objection, -and we refer to it to show that it has not been overlooked.
We have no doubt that the transactions of the Jefferson Trust Company to which we have referred come directly within the power to buy all kinds of negotiable paper. They appear to have been sanctioned by the Banking Department of the State, and do not appear from the testimony to have been improvident or to have resulted in loss. Nor do they appear to have been considered by the county court in making the award in question.
The purpose indicated in this act is plain, and well expressed in the simple provision of Section 3805 that “it shall be the duty of the county court . . .to. publicly open said bids, and cause each bid to be entered upon the records of the court, and to select as the depositaries of the county funds, district school funds and capital funds, not otherwise invested according to law, the banking corporations, associations or individual bankers whose bids respectively made for one or more of said parts of said funds shall in the aggregate constitute the largest offer for the payment of interest per annum for said funds. Provided, that the court shall have the right to reject any and all bids.” It goes without saying that the purpose of this law is to obtain for the public the largest available income from its funds. Their safety in the hands of the depositary is required to be safeguarded by ample security in addition to the responsibility of the bank, and it cannot be possible that the Legislature intended to revoke its simple and peremptory command, and by this proviso to substitute a power in the county court to do whatever it might desire to do. The meaning of the proviso is plain. It means that whenever, in order to obtain the highest rate of interest reasonably available, it becomes necessary, in the judgment of the county court, to reject any and all bids on the whole or any part of the funds, it may do so. Its
The cause is remanded to the circuit court for Jefferson County for final disposition in accordance with this judgment.
The foregoing opinion of Brown, 0., is adopted as the opinion .of the court.