494 S.W.2d 408 | Mo. Ct. App. | 1973
Appellant sought from the Commissioner of Finance and by declaratory judgment
The main thrust of St. Louis Union’s appeal is that Sec. 362.105 is not applicable to it because it is a “pure” non-banking trust company (its Point II).
The facts are stipulated or come from answers to interrogatories. St. Louis Union was originally incorporated as a trust company in 1889, having as it principal place of business a building located at 510 Locust Street in St. Louis, Missouri. It is the largest trust company in this state, having assets in excess of 28 million dollars, and holding fiduciary assets in excess of 1 billion dollars. St. Louis Union originally exercised banking powers, as authorized by its charter (which charter provisions still exist), and through interim mergers and formation of new holding company entities, its present status came into being: The holding company, First Union, Incorporated, which was incorporated in 1968, thereafter acquired more than 97% of the outstanding shares of First National Bank in St. Louis, and more than 98% of the outstanding shares of St. Louis Union, the acquisition being accounted for “as pooling of interests.” Later purchases increased First Union’s holdings. Although St. Louis Union does not presently exercise any “banking” powers, it is located in the same building with First National (a separate corporate entity which has no trust department) with common entrance-ways for public use, and the officers and employees of both use the same dining rooms, cafeterias and elevators. The same janitorial and maintenance services are provided both corporations. St. Louis Union borrows money for its own account and its fiduciary accounts from First National through which it also buys municipal and U. S. Government securities for itself and fiduciary accounts. The two corporations jointly advertise their services.
St. Louis Union’s proposed office is 9 miles from its downtown location, and is at 222 South Meramec Avenue, in Clayton, Missouri, which is in St. Louis County. This proposed facility location is about 206 feet west of Intervenor Clayton Bank and about 642 feet south of Intervenor St. Louis County National Bank.
In pursuing its contention that it is not within the prohibition of “branching” within Sec. 362.105, St. Louis Union asserts (as a stipulated fact) that it is “engaged in ‘trust and investment service exclusively.’ ” “Its activities are limited to those necessary and incidental to the business of being a fiduciary, and it is not in any sense of the word a ‘bank’.” The gist of the argument is that the reference to “trust companies” in Sec. 362.105 can only be reasonably interpreted to apply to trust companies which are engaged in the banking business and not to companies exercising trust powers exclusively, such as St. Louis Union. It relies on Sec. 362.010(3) which is: “ ‘Bank’ means any corporation soliciting, receiving or accepting money, or its equivalent, on deposit as a business, whether the deposit is made subject to check, or is evidenced by a certificate of deposit, a pass book, a note, a receipt, or other writing; * * As stipulated, St. Louis Union is one of only two financial institu
It seems to be the historical argument that because of early banking difficulties and bank failures in the late 1800’s branch banking was prohibited in the initial Act in 1899. In 1877 statutory regulation of banks of deposit and discount originated; but in 1885 incorporation of trust companies was permitted, but they were denied rights which were reserved to banks such as receiving money on general deposit, discounting and negotiating promissory notes, drafts or bills of exchange, and the buying and selling of coin or bullion. Trust companies “increasingly assumed the posture and performed the function of banks” and were in 1910 even defined as “ ‘a bank which has power to act in the capacity of trustee, administrator, guardian or executor’ ” [citing Barnett, State Banks and Trust Companies Since the Passage of the National Bank Act, Senate Doc. No. 659, Vol. 2, 1911]. The history is then traced as to the demise of the “pure” trust company, that is, the trust business became that of an adjunct of and a privilege of commercial banks. St. Louis Union concludes that by 1905 trust companies in Missouri were considered simply as banks with certain additional powers. At this point, in seeking to demonstrate that “pure” trust organizations are differentiated from banks (doing also a trust business), St. Louis Union cites State v. Reid, 125 Mo. 43, 28 S.W. 172 (1894). There the state sought to prosecute an officer
The increase of statutory supervision and regulation of trust companies, because of their similarities to the business of banking, is referred to by St. Louis Union as reason for excluding it from the operation of Sec. 362.105. The anti-branching legislation originally applied only to banks, and it was not until 1915 that trust companies were specifically mentioned in the statute granting expanded powers to those corporations: “Corporations may be created under this article for any one or more of the following purposes : 1. To receive money in trust and to accumulate the same, at such rate of interest as may be obtained or agreed upon, or to allow such interest thereon as may be prescribed or agreed, and to receive money on deposit, with or without allowing interest thereon, not exceeding in any case the legal rate: Provided, however, that no trust company shall maintain in this state a branch trust company or pay checks except in its own banking house. (There follows thirteen subdivisions of specific powers granted.)” [Italics added.] In none of the historical facts leading up to the foregoing prohibition against trust company branching can any rational basis be found for a legislative intent that it was aimed at banking, as distinguished from non-banking, trust companies. On the contrary, the legislative intent to prohibit trust company branching may be gathered from other statutes related to and culminating in the enactment of Chapter 362, RSMo 1969. Sec. 362.115 sets forth the procedure that a qualifying bank may add to its business the fiduciary powers granted to trust companies. Upon its application, the finance commissioner shall, in addition to other criteria, determine “The needs of the community for fiduciary services and the probable volume of such fiduciary business available to the bank; * * *.” This section shows a legislative intent to control the proliferation of new trust departments of banks, which can be done only if there exists a need therefor in a context of whether existing fiduciary services, if any, are adequately providing such services. Although Sec. 362.105 does not expressly distinguish between a trust company doing banking business and one not doing banking business, Sec. 362.900 (in the chapter of which repealed all of Chapter 363 which related to trust companies) provides that Chapter
If the plain wording of Sec. 362.105 were disregarded, and the construction given it for which St. Louis Union contends, the results could be these: Any bank now exercising also trust powers could separately incorporate its trust department and establish as many branches therefrom as “pure” trust business as it chose. St. Louis Union itself, after establishing its proffered branch, could start exercising its chartered banking powers, thus placing itself in the same position as those bank-trust organizations to which it contends Sec. 362.105 applies only, thus being able to do what the latter could not do. Each and every contention and argument under St. Louis Union’s Point II are without merit, and the point is overruled.
By its Point I, St. Louis Union claims that its enumerated and proposed activities at the Clayton facility are not illegal because none of them would constitute the maintenance of a “branch trust company.” It says that the statute prohibits only a branch trust company, and not merely a second office. It derives the contention from the claim that none of the true fiduciary activities or decisions will occur in Clayton, but will be done solely at the downtown office.
What St. Louis Union requested of the Commissioner of Finance was approval of its sublease of office premises at 222 South Meramec Avenue, Clayton, Missouri, for its intended use for these seven activities: (1) To interview and consult with prospective customers, their lawyers and representatives; (2) To consult with current customers, their attorneys and representatives, and to enable customers to deliver papers, documents and property in connection with trusts, estates and accounts being administered or to be administered; (3) To conduct, carry on and perform bookkeeping, record keeping, and auditing work and other functions of a similar nature incidental to the administration of estates and trusts; (4) To conduct and carry on and perform all operations in connection with acting as stock transfer agent and registrar for corporations and other business organizations and associations; (5) To conduct and carry on and perform all operations in connection with acting as paying agent or dividend disbursing agent for corporations, business organizations and associations; (6) To conduct and carry on a general real estate business, acting as agent for buyers and sellers and owners of real estate in the management, purchase and sale of proper
These facts are stipulated: St. Louis Union maintains a Probate Department, concerned almost exclusively with the administration of estates in which it is named as executor or administrator, and has a Probate Officer who takes possession of the estate, the personal property of which is kept in its vault. An inventory is prepared, tax estimates are made, and a determination is made as to sale of securities upon suggestion of St. Louis Union’s Investment Department. The estate tax section of the Tax Department prepares estate and inheritance tax returns “in conjunction with the attorney for the estate,” and also personal income tax returns are filed for the decedent’s year of death, and fiduciary returns are filed thereafter for the estate. Semi-annual, annual and final settlements are prepared, and distribution is made. The employees of the Probate Department located in Clayton will be available to interview and consult with prospective customers and current customers, their lawyers and representatives. Papers, documents and property in connection with estate administration can be delivered by customers and potential customers at Clayton, but no estate assets or property will there be retained, but will be promptly transmitted to St. Louis Union’s downtown location. The inventory, tax returns, settlements and distribution schedules will be drawn downtown, but these documents might be delivered to the Clayton customer.
St. Louis Union’s Personal Trust Department, wherein inter vivos or testamentary trusts in which it is named as a trustee are administered upon assignment to a trust officer, performs these functions: Physical possession of all trust assets are taken and distributions are made as required by the governing instrument. The Investment Department maintains a list of securities held, and makes recommendations concerning disposition or exchange of certain assets. Statements are given to co-trustees and beneficiaries by the Accounting Department each six months. The Income Tax Department files fiduciary returns, and the Estate and Gift Tax Department files gift tax returns if necessary. Again, at Clayton, employees of the Personal Trust Department will there be available to interview and consult with current and prospective customers, their lawyers and representatives, who will be able to deliver, receive and sign papers, documents and property in connection with trust, agency and other accounts being administered or to be administered. No trust assets or property will be retained in Clayton, and St. Louis Union will not execute any trust instruments at the Clayton location, and settlements, decisions, tax returns and distribution schedules will be maintained downtown.
The Pension Trust Department of St. Louis Union will have employees at Clayton available to consult with customers and potential customers. So also with employees from its corporate, real estate, investment and law departments.
In its argument, St. Louis Union urges that “a branch bank or trust company must be a separate viable entity” to run afoul of branching restrictions. It first cites Dean et al. v. Eastern Shore Trust Co., 159 Md,
The doing of “trust business” is not solely confined to the administration of the assets of a trust or even the probate of an estate. It must of necessity include contact with existing and prospective customers, which the stipulation recites that St. Louis Union will do from all its major departments in Clayton, albeit that some of such departments do not perform strictly fiduciary functions. It is the getting of business that St. Louis Union contemplates. To do that it must hold itself out to prospective testators and settlors in Clayton that it can perform fiduciary functions. As pointed out by St. Louis County National Bank, St. Louis Union has' in the past extensively advertised for such business, “The great thrust of all these [advertising] materials is essentially advice about the need for intelligent estate planning and the importance of having the advice and counsel of an experienced fiduciary, such as Appellant.” Once the advertising becomes effective to induce .a customer to appear at the Clayton facility, undoubtedly the initial negotiations for the formation of a trust or the contents of a will (with or without a trust provision) include the ascertaining of the intention of the settlor or the testator in order to draft the instrument. Restatement, Trusts, 2nd, Sec. 4; 90 C.J.S. Trusts § 247, p. 225 et seq. The manifestation of the intention of the set-tlor or testator, at the time of the creation of the trust, is the beginning point. It is for this purpose that St. Louis Union, through its representatives, should and certainly must be present in Clayton if it is to get the business of administering the trust or probate of the will. This is the critical stage of the matter of fiduciary undertaking — “the evaluation, discussion and preparation of the estate plan before the document is written. This pre-document period may require several conferences with the testator, settlor beneficiaries, lawyer, trust officers and other representatives of the corporate trustee.” (St. Louis County National Bank brief.) While it is true, in some instances, that a trust instrument must be signed by a corporate trustee— which St. Louis Union says it will do only at its downtown St. Louis offices, yet many things undoubtedly would be done (with St. Louis Union’s representatives) by a settlor or testator at the proposed Clayton facility: besides conferences, the execution of the trust by settlor or testator, and its delivery to St. Louis Union. These prior acts cannot be separated from St. Louis Union’s entire fiduciary business, and it is factitious for it to claim that maintaining a constant business contact office at Clayton and the activities to be carried on therein (with definite contact with the public) are “only of the most tan
Kerens v. St. Louis Union Trust Company, 283 Mo. 601, 223 S.W. 645 (banc, 1920) is no help to St. Louis Union. It had no issue as to what constitutes the doing of trust business. American Guaranty & Trust Company v. Green, 282 A.2d 16 (Del.Super.1971), held only that the company which acted as a registrar and transfer agent for corporations had not been actively engaged in trust business since its incorporation in 1914, the certificate for which at that time authorized it to transact a general trust company business. The court ruled that American was entitled to a certificate to begin the transaction of business as a trust company under a statute defining its classification as being a corporation with trust powers actively engaged in non-trust business prior to 1933. The case had no issue as to the branching of a trust company. Hudson-Harlem Valley Title & Mortgage Co. v. White, 263 App.Div. 167, 33 N.Y.S.2d 592 (1942), held merely that under New York’s Banking Act prohibiting banks and trust companies from transacting their usual business from other than principal offices, appellant could not carry on its banking and trust business outside the City of New York, yet there was no inhibition against doing its title business (under the supervision of the Superintendent of Insurance) outside the city. Leuthold v. Camp, 273 F.Supp. 695 (D.C.Mont.1967) held only that there was no prohibition against the maintenance of offices by banks wherever they chose so long as no banking business was conducted in them. Here the nature of St. Louis Union’s proposed non-separable trust business at the Clayton office falls within the plain prohibition of Sec. 362.105, supra, and neither the Commissioner nor the trial court erred in denying approval of the proposed lease in Clayton for the purposes planned by St. Louis Union.
The judgment is affirmed.
All concur.