Trustmark Nati'l Bank v. Roxco Ltd.
| Docket Number: | 2009-CA-00559-SCT Linked Case(s): 2009-CA-00559-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 12-08-2011 Opinion Author: King, J. Holding: On Direct Appeal: Reversed and Rendered. On Cross-Appeal: Dismissed. |
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| Additional Case Information: |
Topic: Contract - Conversion - Release of funds - Section 31-5-15 - Safekeeping accounts Judge(s) Concurring: Waller, C.J., Carlson and Dickinson, P.JJ., Randolph, Lamar, Kitchens and Chandler, JJ. Non Participating Judge(s): Pierce, J. Procedural History: Jury Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 02-02-2009 Appealed from: Hinds County Circuit Court Judge: Tomie Green Disposition: A jury found in favor of Roxco and awarded $3,720,000 in damages. Case Number: 251-02-481CIV |
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| Note: | Appellant/Cross-Appellee Trustmark National Bank's Motion to Dismiss Cross-Appeal is dismissed as moot. | |
| Party Name: | Attorney Name: | |||
| Appellant: | Trustmark National Bank d/b/a Credit Card Center |
CHRISTOPHER A. SHAPLEY
WILLIAM ‘TREY’ JONES, III |
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| Appellee: | Roxco Ltd. | JAMES A. BOBO PRECIOUS TYRONE MARTIN, SR. |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Conversion - Release of funds - Section 31-5-15 - Safekeeping accounts |
| Summary of the Facts: | Roxco, Ltd., was hired as the general contractor for several public-construction projects for the State of Mississippi, including four building projects at the University of Mississippi, Jackson State University, and Alcorn State University. State law requires that three percent of the cost of construction be retained to ensure completion. However, section 31-5-15 allows the contractor to access that retainage by depositing with the State other acceptable security. Pursuant to section 31-5-15, in order to access the retainage on its state-construction projects, Roxco substituted securities valued at $1,055,000. These securities were deposited in a safekeeping account at Trustmark National Bank. Upon being notified of Roxco’s default, the State instructed Trustmark to transfer the funds from the treasury bills into the state treasury account. By letter, Roxco directed Trustmark not to transfer the funds from the treasury bills to the State’s account. Notwithstanding Roxco’s letter, Trustmark deposited the funds into the State’s account. Roxco filed suit against Trustmark for breach of contract and conversion. A jury found in favor of Roxco and awarded $3,720,000 in damages. Trustmark appeals. |
| Summary of Opinion Analysis: | The first issue is whether section 31-5-15 permitted Trustmark to release the funds within the safekeeping account to the State. If section 31-5-15 permitted the release of funds to the State, Trustmark cannot be held liable for breach of contract or conversion. Roxco argued, and the trial court agreed, that section 31-5-15 did not apply to the contract between Trustmark and Roxco. Roxco argued that the requirements of the statute were not met for the State to take control of the securities. Roxco argued that no securities were deposited with the State Treasurer and that Roxco did not default on the construction projects. In order to effectuate section 31-5-15, the State Treasurer does maintain some securities in his vault. However, the majority of these securities are maintained by commercial-banking institutions, with whom the State has entered into service contracts to provide safekeeping accounts. The safekeeping accounts allow the banks to hold securities on behalf of the State. A contractor may then select a bank, authorized to hold securities on behalf of the State, in which to open a safekeeping account. Roxco’s former Chief Financial Officer, who signed the safekeeping-account agreement, testified that, while acting in his authorized capacity for Roxco, he pledged the funds in the safekeeping account to the State under section 31-5-15. He further testified that it was his understanding that, once the funds were pledged, Roxco forfeited the right to have the funds back without the State’s permission. The language of section 31-5-15 is clear and unambiguous. In order to obtain a release of the retainage, the statute requires a contractor to deposit funds with the State Treasurer, or to deposit a certificate of deposit issued by a commercial bank provided that the certificate is negotiable or accompanied by a power of attorney executed by the owner of the certificate in favor of the Treasurer of the State. In this case, the deposit requirements of section 31-5-15 were met. It is true that the treasury bills were not physically delivered to the state treasurer himself. However, under the State’s agreement with Trustmark to serve as a safekeeper of securities, Trustmark became the agent of the State. Under general principles of agency law, delivery to the agent is delivery to the principle. The formal pledging of the treasury bills to the State of Mississippi was effective as delivery and compliance with section 31-5-15. Having obtained effective delivery of the securities, upon default, the State of Mississippi was authorized to receive those funds substituted for the retainage. Once Roxco pledged and effectively delivered those funds to the State, it lost control of them and could take no action to control them without the permission of the State. Accordingly, the trial judge improperly denied Trustmark's motions for a directed verdict and judgment notwithstanding the verdict. |
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