Amos v. Trust Co. of Florida

• Decision Date: 16 December 1931
• Docket Number: No. 6450.,6450.
• Citation: 54 F.2d 286
• Parties: AMOS, Comptroller of State of Florida, v. TRUST CO. OF FLORIDA et al. ILLICK et al. v. SAME. TRUST CO. OF FLORIDA et al. v. ILLICK et al.
• Court: U.S. Court of Appeals — Fifth Circuit

54 F.2d 286 (1931)

AMOS, Comptroller of State of Florida, v. TRUST CO. OF FLORIDA et al.

ILLICK et al. v. SAME.

TRUST CO. OF FLORIDA et al. v. ILLICK et al.

No. 6450.

Circuit Court of Appeals, Fifth Circuit.

December 16, 1931.

Cary D. Landis, Atty. Gen. of Florida, Henry P. Adair and John M. McNatt, both of Jacksonville, Fla., and Carl T. Hoffman, of Miami, Fla., for Ernest Amos.

Mitchell D. Price, of Miami, Fla., for Trust Company of Florida and others.

Henry K. Gibson, of Miami, Fla., for Joseph E. Illick and others.

Before BRYAN, SIBLEY, and WALKER, Circuit Judges.

SIBLEY, Circuit Judge.

These are appeals under 28 USCA § 227, from an interlocutory judgment granting an injunction and a receivership for seventeen separate properties in the Southern District of Florida. The pleadings and evidence are complicated, but the facts which we esteem important at present are not in doubt, and may be summarized thus: Just prior to 1926 numerous hotels and office buildings had been erected by the sale of a bond issue on each in which either Marion Mortgage Company, a Florida business corporation, or the Trust Company of Florida, a trust company organized under the laws of that state, both controlled by G. L. Miller, was trustee for bondholders with the usual powers of such a trustee. After 1926, foreclosures became necessary in nearly every case. No one would buy, and the several properties were bought in for the bondholders by one of these corporations. The bondholders failing and refusing to put up funds to pay taxes, insurance, expenses of foreclosure, repairs, and the like, and the income being insufficient therefor, a small mortgage was executed on each property to raise the money thought necessary for it, and was sold on the market; or, where that could not be done, the Trust Company of Florida took the mortgage and made advances against it. Subject to the small mortgage, the title when not already in the Trust Company of Florida was then conveyed to it, and that company issued a certificate of ownership to each former bondholder in proportion to his interest. In this way the Trust Company of Florida came to hold title by conveyance under the above foreclosure arrangements to nearly two hundred pieces of property, but in trust for certificate holders who had accepted certificates, and for such bondholders as had not accepted them but had not been otherwise settled with, in addition to being trustee in some unforeclosed mortgages. The Trust Company of Florida and Marion Mortgage Company and some lesser corporations also controlled by G. L. Miller received money as trustee's fees, expenses in connection with the foreclosures, insurance premiums, and otherwise. The propriety of these, and the amount of the advances made by Trust Company of Florida and the disposition of proceeds of sale of the several small mortgages, together with rents and other things, are brought into question by the bill, and an account is sought as to each trust. Fraud and unfaithfulness are charged, and a removal of the Florida Trust Company as trustee is prayed. This should result in as many bills as there are separate trusts, but a nexus of unity is claimed, in that the funds of one trust are alleged to have been used for the benefit of other trusts, that proceeds of sale and incomes have been commingled, and that a tracing of the funds and a cross-accounting is necessary because of insolvency of the trustee, in which all the trusts should be represented. On the other hand, the defendants claim that all transactions have been honest and proper and in the interest of the bondholders, and that correct account has been kept of each separate trust without confusion or necessity for court accounting. Insolvency is denied. The bill prayed for a general receivership for each of the corporations involved, and that the receiver be substituted as trustee in the unforeclosed mortgages, and for the usual injunctions.

Pending the hearing on November 26, 1931, Ernest Amos, as comptroller of the state of Florida, acting under section 6108, Comp. Gen. Laws Fla. 1927, as amended by Acts 1929 (Ex. Sess.) c. 14487, took possession of the affairs and assets of the Trust Company of Florida, and on December 2d by leave of the court intervened in the cause, he asserting his exclusive right under the Florida statute to the possession of the property and business of the Trust Company, that he would forthwith appoint a liquidator, and that, if there previously had been any occasion for a receiver in equity, it no longer existed. Overruling these contentions, the court appointed common receivers for the seventeen trusts mentioned in the bill, directing the receivers to exercise the powers of trustee as to each, and other powers of management and control especially conferred; required the surrender to them of the property, money, and accounts relating to each trust, and enjoined the comptroller and others from interfering. On December 4th, at the instance of other persons interested in other trusts, twenty-five additional trusts were brought within the receivership. On December 8th the comptroller set up that a liquidator had been appointed and confirmed, and moved to dissolve the injunction and receivership so far as they...