Court Opinion

ID: 3524415
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:36:35.751046+00
Date Added: 2024-06-11T14:05:54.776468
License: Public Domain

The facts are well covered in the principal opinion of CLARK, J., and succinctly summarized in the concurring opinion of DOUGLAS, J. As stated therein, this action for money had and received involves about $290,000 out of a fund of $2,751,256.32, compulsorily paid into the circuit court of Cole County by 155 insurance companies in the Aetna restitution proceeding.1
This fund represented the disputed portion of the premiums collected by the companies during the pendency of prior unsuccessful litigation to review an order reducing fire insurance rates.2 Under a statute effective throughout most of this rate litigation the companies were permitted to collect the original rate pendente lite, but were required to depositthe disputed portion of premiums with the Superintendent
awaiting the result of the review. The companies ignored the statute. It is now Sec. 5985, R.S. 1939, sec. 5874, Mo. Stat. Ann., p. 4482, and is the basis of the instant action.
In the restitution proceeding aforesaid the circuit court on December 14, 1934, entered two general orders: one appointing two commissioners and custodians, Messrs. Cook and Lauf, to verify collections from the insurance companies and to deposit the money; the other appointing the respondent Trust Company (hereinafter called the bank) as depositary and prescribing the style of the bank account and the form and signatures for checks thereagainst. These orders also disclosed that the circuit court contemplated making disbursements from the fund instead of turning all of it over to the Superintendent. During the next 20 months the whole restitution fund, aforesaid, was collected and deposited in the bank. The companies made 77 separate payments on 76 different dates to the clerk of the court, who turned them over to the two custodians, and they deposited the money in the bank. Final judgment was entered December *Page 558 
7, 1935, and the companies were discharged February 18, 1936. Throughout this period also, substantial disbursements were made from the fund by court order, for monthly salaries to the custodians and their attorney and for clerk hire, auditing, office rent, refunds to insurance companies and policyholders. No complaint was made by the Superintendent about any of these so far as this record shows.
But on March 3, 1936, after the foregoing had transpired, the court entered orders allowing the two custodians a fee of $40,000 each, and their attorney $30,000, together with further monthly salaries of $500 to each. The Superintendent appealed from those orders, and in the Aetna fee case3 decided June 17, 1938, this court held the orders were void because the circuit court had exceeded its jurisdiction in making them, since the statute, Sec. [580] 5985, supra, vested the sole power ofdisbursing the fund in the Superintendent. Our mandate went down September 20, 1938. Following that, on October 17, the Superintendent made a written demand on the bank for the whole amount deposited, and a month later brought the instant suit. Thereafter this court forced the Superintendent to accept from the bank $2,360,502.11 of the fund which it then had on deposit.4 Of the remaining $391,000 (about) which had been disbursed on court orders, substantially $101,000 had been distributed to policyholders, and the appellant Superintendent's brief states he seeks no recovery for that. Thus it is that the suit now involves only $290,000. But the Superintendent also claims interest on the whole fund for so long as the bank had it.
The Superintendent's petition charges that the bank "wrongfully and without authority of law received" each of the 76 deposits, without the consent of the Superintendent, knowing: the money belonged to the policyholders; that the Superintendent was the lawful custodian thereof; and that the circuit court and the two custodians were wrongfully attempting to deposit and administer the fund, contrary to law. The legal theory of the Superintendent, and his counsel, the Attorney General's office, is that since Sec. 5985, supra, requires insurance companies in a review proceeding to deposit the disputed portion of premiums with the Superintendent, therefore the circuit court must do the same thing in a restitution proceeding brought to compel such companies to disgorge premiums which they failed to deposit with the Superintendent. It follows from this, they say, that the court orders of December 14, 1934, appointing the two custodians and the bank as depositary, and the deposit of the money therein, all were void; and that the circuit court should have turned over the money to the Superintendent in dribbles as it was received from the companies. They further assert the bank was chargeable with constructive notice of the foregoing legal propositions and is liable as a *Page 559 
trustee ex maleficio, although all the money now in dispute in this case had been paid out by the bank on court orders well before the Aetna fee case was decided.
Two main questions are presented in the case: (1) are the foregoing contentions of the Superintendent correct, and is he right in saying the money was wrongfully received by the bank; (2) conceding the bank's reception and disbursement of the money were illegal because the circuit court's orders therefor were void, was the bank nevertheless legally protected in honoring the checks against the fund because it was a judicial depositary acting under court orders; or is the bank personally liable for the court's jurisdictional error in making those orders? This concurring opinion deals principally with the second issue.
[8] But before proceeding to that, a word on the first issue. In my view the principal opinion of CLARK, J., clearly demonstrates the money was not wrongfully received by the bank. It was paid into court by the companies in the course of the restitution proceeding, which was exactly what the Superintendentprayed in his motion in that case. The Aetna fee case expressly conceded the circuit court had jurisdiction of the subject matter and the parties in the restitution
proceeding,5 as had been ruled twice before.6 That fact is not disputed by anybody now. It also held by necessary effect that the circuit court had jurisdiction of the restitution fund, itself. In five different places the opinion declared the fund was in the registry of the court, or that the court had jurisdiction to order the money paid into court (342 Mo. l.c. 808, 813, 814, 819, 118 S.W.2d l.c. 5, 9, 12.) And is it not obvious that in any restitution case the court not only has a right to receive and retain, but ordinarily must retain, control of the fund until final accounting and judgment, and sometimes even afterward.
With 155 insurance companies involved in the restitution case below; with the money coming in in numerous irregular payments large and small, and with the accounts changing, or likely to change, what else could it do? The final judgment of December 7, 1934, shows that one insurance [581] company had been sued in a separate suit; that two companies had failed and become insolvent; that the accountings made by two companies had included those due from five others; and that one company was entitled to a refund of $2990.70. As it was, the court exacted $200,000 to cover "errors and omissions." Undoubtedly it had the right to settle accounts before surrendering the money — especially since no one was asking for the latter. And this is true regardless of the fact that the court collaterally had in active contemplation *Page 560 
conduct violative of the statute — the attempted distribution of the fund, as subsequently held void in the Aetna fee case. It was the act of the court in excess of its jurisdiction that was wrong, in ordering the fee payments to the two custodians and their attorney; and not any lack of jurisdiction over the subject matter, the parties or the fund. It had the right to deposit the money in a bank while it was exercising its jurisdiction. If that was all that had been done this case would never have been heard of.
[9] Turning now to the other and broader issue: whether the bank is personally liable for the money paid out, and for thetrial court's jurisdictional errors in ordering its disbursement; or whether the contrary is true, that the bank was legally protected in honoring the checks because it was a judicial depositary acting only under the court's orders, notwithstanding those orders were void. In this connection it should be stated: there was no proof or contention below of actual fraud, collusion or conspiracy on the part of the bank; and no contention or proof of unjust enrichment, in the sense that the bank illegally profited from the transactions. Also, as already stated, the trial court had jurisdiction of the subject matter, the parties and the fund in the restitution proceeding, its acts in ordering the disbursement of the money involving merely an excess of jurisdiction.
On this issue the principal opinion quotes 18 C.J., sec. 50, p. 778, which says: "The order of the court, although directing payment of the fund to a person not entitled thereto, is an absolute protection to the custodian, and this is true, even in case the order was fraudulently procured, if the custodian had nothing to do with its procurement." The dissenting opinion of HAYS, J., ignores that point. The Superintendent's brief argues the rule applies only to voidable orders and not to those which are void for lack of jurisdiction. It is his theory that a void court order is an absolute nullity for any purpose; and that the appellant bank was presumed to know the law. And so, he says, since this court in the Aetna fee case held the circuit court had no jurisdiction to order the bank to pay out the money, therefore the bank is personally liable although that decision was not rendered until long after the money had been disbursed.
As to the effect of void judgments the Superintendent's brief cites United Cemeteries Co. v. Strother, 342 Mo. 1155,119 S.W.2d 762, and other like decisions. That case is a very good example. It had been before the court en banc once previously, United Cemeteries Co. v. Strother, 332 Mo. 971, 61 S.W.2d 907, 90 A.L.R. 438. There, a man sought to foreclose a deed of trust on burial grounds and was enjoined. This court en banc unanimously held he could not do it; but that he could be given a preference and paid out of the general assets of the Cemetery Co., which was in receivership. On the second appeal the court en banc changed its view, holding the appointment of the receiver was void. Now suppose in the meantime the receiver *Page 561 
had paid money on the mortgage debt or receivership expenses under court orders in accordance with our first opinion. Would it be said the receiver was presumed to know our first opinion was wrong; and would he be held personally liable for what he had paid out, or would the parties who got the money be looked to for restitution? We do not say even they would always be liable. But if the receiver was liable, why shouldn't the same be true of the judges who prompted his action?
The instant restitution proceeding was in equity. The Aetnafee case concedes that.7 In such a proceeding (and doubtless in others) a court register or depositary is not atrustee because he is not a free agent but an agent of the court and subject to the direction of the court. Shelley v. Thomas, 232 Ala. 227, 230-1, 167 So. 316, 318-9. In that case a court register had invested registry funds in corporate stock by court order, whereas the Alabama [582] constitution forbid trustees to invest trust funds in that class of securities. After the holding just stated, the decision said:
"While the register is liable for all moneys coming into his hands, yet he is a mere agent of the court, and as such agent he holds the money for the court, and is answerable for any loss of the money by his wrongful acts, but, being an agent of the court, he must disburse the money as the court, his master, directs, and in doing so assumes no personal liability. [21 Corpus Juris, sec. 751, p. 603; People v. Randall, 73 N.Y. 416; Johnson v. Fleming,116 Ky. 680, 50 S.W. 855.] In fact, if he should refuse to comply with the orders of the court in making distribution of the fund, he could be held for contempt, and punished accordingly. [11 Corpus Juris, sec. 64, p. 884.] This being true, it would be an absurdity to hold him personally liable for complying with the orders of the court, however improvident the orders under which he acted may have been."
In New York City there is a statutory or charter depositary called a Chamberlain. Courts may order impounded funds into his stewardship: (1) either to be retained on deposit; (2) or to be invested wholly or partly, in his discretion; (3) or to be invested in a specified way. It has been said that if and insofar as such Court orders give the Chamberlain a discretion, or if he disregards them, or is negligent in executing them, his duties may be regarded as "similar" or "analogous" to those of a trustee.8 But the many cases from that state dealing with the personal liability of the Chamberlain base it on disobedience or negligent execution of court orders. They conceded by implication that compliance with the orders in good faith is a complete defense. I say all these cases so hold — there is one exception, Youngs *Page 562 
v. Herbert, discussed in the second succeeding paragraph. A distinction is drawn between a trustee and a mere court depositary in a recent Illinois case, Chicago Title  Trust Co. v. Rogers Park Apts. Bldg. Corp., 375 Ill. 599, 607,32 N.E.2d 137, 140-1.
The text of 18 Corpus Juris, sec. 50, p. 778, supra, quoted in the principal opinion, cites People v. Randall, 73 N.Y. 416, as does the Alabama case just reviewed. It is true there was no jurisdictional question in the Randall case. But another case is cited where there was such a question. [In Re McNulty, 123 N.Y.S. 1070
.] There, an imposter, posing as C.J., by a forged petition had procured a court order on the court depositary for the payment to her of funds belonging to the true C.J. In other words, the true distributee had not been brought into court, and the court had not acquired jurisdiction over her person for the purposes of the order. Thereafter, the latter made application for the same money. The court held the former court order in favor of the imposter "would seem to be a sufficient protection to him (the depositary) at the time when he acted upon it. It is not claimed that he had anything to do with its procurement, or that he was in any way responsible for the manner in which it was procured, and therefore, upon obeying such order, he was relieved from all further responsibility."
In the interesting series of Youngs cases9 from New York, one of which is mentioned in the second preceding paragraph, a husband procured an ex parte court order on the depositary for the payment to him of his deceased wife's share as inchoate doweress in certain partition proceeds. The money was paid to him. It was his view that under the law he had succeeded to his deceased wife's share. Her administrator had not been made a party to the proceeding, and later moved to set the order aside on the ground that the money went to the wife's estate. The court so ruled and entered final judgment ordering the depositary to pay the money again to the administrator. Its reasoning was that the former order in favor of the husband on its face showed it was not "duly made," as required by a provision of the New York City Charter, because it disclosed the wife was deceased and in that event under the general law the money would go to her estate, not to her husband. The depositary was denied an appeal. He refused to pay the money a second time and was adjudged guilty of contempt.
He was allowed an appeal from the contempt judgment, and the New York Court [583] of Appeals ruled the contempt order must stand because the depositary had had his day in court on the merits *Page 563 
of the second distribution order, and could not disobey it. But it further held the Appellate Division had erred in holding the wife's share went to her estate instead of her husband, and suggested the case be reopened below for argument on the merits. That was done, the Appellate Division reversed itself and reinstated the order in favor of the husband. But the depositary, though thus vindicated on the merits, was not purged of thecontempt for refusal to obey the erroneous order in favor of the administrator. By way of history, the Houston case, last in the series, says the erroneous ruling was based on the Charter expression "duly made;" and that after the decision of the above cases the Charter was amended to protect the depositary from liability for payments made by him "in good faith in accordance with the order of the court."
In Succession of Hart, 127 La. 833, 54 So. 46, a court depositary sought to challenge a court order on jurisdictional grounds. The syllabus of the opinion, written by the court, is as follows (italics and parenthesis ours): "A judicial depositary, holding property subject to the order of the court, has nostanding to contest the validity of an order for the delivery of the deposit to a trust company appointed tutor ad bona (guardian), on the ground that the court has no jurisdiction to make such appointment."
Looking to the rule applicable to judges of general jurisdiction, it is said they are civilly liable if they act judicially wholly outside their jurisdiction. Some cases declare they are protected when they have jurisdiction alone of the subject matter; others, only when they have jurisdiction both of the subject matter and the person. If they have both and merely exceed their jurisdiction in the particular case (which is the situation here) they are not liable. And this immunity exists even when they are called upon to decide the question of their own jurisdiction, and decide wrongly.10 In a case of the latter character, Grove v. Van Duyn, 44 N.J. Law, 654, 659, 42 Am. Rep. 649, the New Jersey Court of Errors and Appeals said:
"The doctrine that an officer having general powers of judicature, must, at his peril, pass upon the question, which is often one difficult of solution, whether the facts before him place the given case under his cognizance, is as unreasonable as it is impolitic. Such a regulation would be applicable alike to all courts and to all judicial officers acting under a general authority, and it would thus involve in its liabilities all tribunals except those of last resort. It would also subject tosuit persons participating in the execution of orders andjudgments rendered in the absence of a real ground ofjurisdiction."
This excerpt (and more) is quoted in Broom v. Douglass,175 Ala. 268, 276-7, 57 So. 860, 863, 44 L.R.A. (N.S.) 164, 174. The necessary *Page 564 
implication of the sentence italicised is that if the judge is not liable, the officers of the court who execute his orders also are immune. In Rush v. Buckley, 100 Me. 322, 327, 61 A. 774, 776-7, 70 L.R.A. 464, 465, 4 Ann. Cas. 318, 320, the Supreme Judicial Court of Maine thus declared the rule applicable to such officers:
"For reasons founded on public policy, and in order to secure a prompt and effective service of legal process, the law protects its officers in the performance of their duties, if there is no defect or want of jurisdiction apparent on the face of the writ or warrant under which they act. The officer is not bound to look beyond his warrant. He is not to exercise his judgment touchingthe validity of the process in point of law; but if it is in due form, and is issued by a court or magistrate apparently having jurisdiction of the case or subject matter, he is to obey its commands. In such case, he may justify under it, although in fact it may have been issued without authority, and therefore be wholly void." [On a somewhat analogous proposition see State ex rel. Barrett v. Bridges (Mo. App.), 206 S.W. 598, 599(3).]
This Rush case further says the limit of the rule is where the process is void on its face, or where the court or magistrate issuing the process has no general jurisdiction over the subject matter. It has been followed many times in various jurisdictions. Some decisions hold the rule also is inapplicable where there is a plain absence of jurisdiction over the person. Others state a converse general rule that an officer disobeys court orders at his peril unless the lack of initial jurisdiction is obvious and[584] patent. [Passemore Williamson's Case, 26 Pa. 6, 21, 67 Am. Dec. 374; Ex parte Wimberly, 57 Mass. 435, 437.] As has been several times pointed out, the circuit court's basic jurisdiction in the restitution proceeding here was complete. It lacked only jurisdiction to do the particular act of disbursing the fund, because of Sec. 5985, supra.
The paragraph quoted earlier from 18 C.J., sec. 50, p. 778, as to the non-liability of court depositaries, is revised in 26 C.J.S., sec. 9d 1, p. 971. It admits of exceptions where the court order is void on its face, "or with the custodian's knowledge." On the first exception it cites one of the Youngs cases from New York, which we have already reviewed. On the second, Tabor Realty Co. v. Nelson, 49 S.D. 275, 207 N.W. 97, is cited. That decision is as much out of line with the weight of authority as were the Youngs cases, where the New York Charter provision upon which they were based was later amended to cure the injustice worked by their interpretation of it. But even so, the Tabor case did not fasten liability on a court depositary because he was presumed to know the law. It was a case where a clerk paid out money in the registry of his court to a litigant on court order, knowing and without informing the court that there was another *Page 565 
claimant to the fund who had not been served with process, and over whom the court consequently had not acquired jurisdiction.
There is good reason for saying the rule should be stricter against a clerk or sheriff attempting to interpret and follow thegeneral law in the issuance and service of process, than against an officer who has no independent existence apart from the court, such as a depositary, and whose duty to follow the particular orders of the court is practically absolute. A judicial depositary is often called the hand of the court. Can the hand be guilty if the head is not? If a depositary still hasthe money, or is proven fraudulent, negligent or usurpatory, he can be made to pay. But to base his liability on constructiveknowledge of the law; to require him to be wiser than the court he serves; and to make him the censor of that court's orders — such a doctrine is obviously and viciously unsound, would throw all courts into confusion, and expose their officers to intolerable peril. Nothing could be further from those equitable principles which are followed in an action for money had and received. Leedy, Tipton, Clark and Douglas, JJ., concur.
1 Aetna Ins. Co. v. Hyde, 327 Mo. 115, 34 S.W.2d 85; State ex rel. Abeille Ins. Co. v. Sevier, 335 Mo. 269,73 S.W.2d 361.
2 Aetna Ins. Co. v. Hyde, 315 Mo. 113, 285 S.W. 65.
3 Aetna Ins. Co. v. O'Malley, 342 Mo. 800, 814(5),118 S.W.2d 3, 9(8).
4 State ex rel. Robertson v. Sevier, 345 Mo. 274,132 S.W.2d 961.
5 Aetna Ins. Co. v. O'Malley, 342 Mo. l.c. 814(5), 118 S.W. 2d, l.c. 9(8).
6 In the Aetna restitution case, supra, 327 Mo. 115,34 S.W.2d 85, and the Abeille case, supra, 335 Mo. 269,73 S.W.2d 361, the latter opinion having been written by the late Judge William F. Frank who also wrote the Aetna fee case.
7 Aetna Ins. Co. v. O'Malley, 342 Mo. l.c. 816(7), 118 S.W.2d l.c. 10(12). See also: State ex inf. McKittrick v. American Colony Ins. Co., 336 Mo. 406, 424(3), 80 S.W.2d 876, 882(4).
8 Mills v. Bluestein, 275 N.Y. 317, 322, 323,9 N.E.2d 944, 946.
9 Youngs v. Goodman, 199 A.D. 281, 192 N.Y.S. 3; Youngs v. Herbert, 202 A.D. 690, 195 N.Y.S. 476, 478; Youngs v. Goodman, 213 A.D. 866, 209 N.Y.S. 942; Youngs v. Goodman,240 N.Y. 470, 148 N.E. 639; Youngs v. Goodman, 214 A.D. 497,212 N.Y.S. 407, 409; Youngs v. Goodman, 242 N.Y. 575,152 N.E. 433; In re Houston's Estate, 145 Misc. 417, 261 N.Y.S. 317, 319.
10 2 Cooley on Torts (4 Ed.), sec. 315, p. 446; 30 Am. Jur., sec. 45, p. 758, sec. 47, p. 760, sec. 48, p. 761; 33 C.J., sec. 115, p. 982-3, sec. 116, p. 984; Stone v. Graves, 8 Mo. 148, 40 Am. Dec. 131.