Beach v. Williamson

• Citation: 78 Fla. 611,83 So. 860
• Parties: BEACH v. WILLIAMSON.
• Decision Date: 17 December 1919
• Court: United States State Supreme Court of Florida

83 So. 860

78 Fla. 611

BEACH v. WILLIAMSON.

Florida Supreme Court

December 17, 1919

On Petition for Rehearing, Jan. 26, 1920.

Appeal from Circuit Court, Lake County; W. S. Bullock, Judge.

Bill by E. P. Williamson against J. W. Beach and others. From an order appointing a receiver, the named defendant appeals. Affirmed.

Syllabus by the Court

SYLLABUS

The directors of an insolvent corporation occupy toward the creditors of the corporation a fiduciary relation, in that the properties of the corporation constitute a fund for the payment of the corporation's debts, which fund the directors are charged with managing to the best interest of the creditors.

The directors of an insolvent corporation, who obtain a conveyance to themselves of all the properties of the corporation upon a promise to pay the debts of the corporation, by secreting information concerning their opinion as to the value of the properties, that they may gain profit for themselves, and in pursuance of this design urge upon the other stockholders and creditors their agreement to the transfer of the properties, will be deemed to have committed a fraud upon the creditors of the corporation entitling them to a cancellation of the deeds conveying the properties and to the declaration of a lien thereon for the payment of their debts.

COUNSEL Blount & Blount & Carter, of Pensacola, for appellant.

Hocker & Martin, of Ocala, for appellee.

OPINION

ELLIS J.

In November, 1917, E. P. Williamson exhibited his bill in the circuit court for Lake county against Groveland Realty Company, the Florida Development Corporation, both Florida corporations, Henry L. Bressler, as administrator of the estate of George N. Bressler, deceased, M. A. Bressler, A. M Bressler, Neva Mae O'Neill and her husband, M. C. O'Neill, H. L. Bressler, J. W. Beach, Geo T. Cann, as trustee for creditors of F. D. Tinsley and D. B Hull.

The allegations of the bill, in substance, were that in 1913 the complainant and George N. Bressler and J. W. Beach and others were stockholders of the Florida Development Corporation, which was organized for the purpose of dealing in lands, and which held a large acreage of lands in Lake county; that the corporation was without funds to pay the proper demands upon it or to properly conduct its business, and owed large sums of money, about $38,256, which, according to Exhibit E, attached to the bill, it owed to about 40 persons, the complainant holding $24,667.47 of the debt; that the stockholders unanimously agreed that the Florida Development Corporation should convey all its property, real and personal, to George N. Bressler, who agreed to assume and pay all of the debts and obligations of the corporation; that pursuant to that agreement a written contract was entered into between the corporation and George N. Bressler on the 1st day of May, 1913, whereby the corporation agreed to convey to George N. Bressler all its property, real and personal, and Bressler agreed to release all his claims and obligations against the corporation and to assume and pay all the liabilities outstanding against it. A clause in the agreement provided that it was mutually understood and agreed between the parties that the consideration for the conveyance to Bressler of all the corporation's property was the payment to Bressler of $1, the release of his claims against the corporation, and that he would assume and pay all its liabilities, and that he would carry out and fulfill all the 'selling contracts' made by it. Bressler's claim amounted to $5,575; Williamson's claim amounted to $24,000 and $667.47.

The bill alleges that pursuant to the agreement a list of the liabilities and contracts of the corporation was delivered to Bressler; deeds were executed and delivered to him, conveying all the property of the corporation. Copies of these deeds were attached to the bill and made parts of it as Exhibits B, C, and D; that complainant was the president of the corporation at that time, but that he did not reside in Florida; that Bressler and J. W. Beach were directors of the corporation and the active men in charge of its business.

It is alleged that complainant is not informed whether Bressler had paid any of the other debts of the corporation, and that the bill was filed in behalf of complainant and all other creditors whose claims Bressler had assumed and agreed to pay.

It is alleged that this arrangement above recited was urged upon the complainant and the other stockholders by Bressler and Beach, who represented that it was for the best interests of all parties, and upon such representations complainant assented to the agreement. It is alleged that prior to the consummation of this arrangement Bressler and Beach privately entered into a contract dated the same day, May 1, 1913, of which, however, the complainant was ignorant, in which it was recited that Bressler had acquired certain lands in Lake county from Tinsley and Hull; H. S. Budd and R. F. E. Cooke; E. E. Edge and T. E. O'Keefe, and all the lands of the Florida Development Corporation and all its assets, negotiable instruments, and personal property, and by which it was agreed that Bressler should receive 'net to him in cash, less all expenses, commissions, office force and necessary incidental expenses pertaining to the sale of said land contracts, real and personal property acquired, same not to include the liability of the Florida Development Corporation assumed by George N. Bressler, in the sum of thirty-three thousand two hundred seven and 81/100 ($33,207.81) from the date of this agreement the sum of one hundred thousand dollars ($100,000.00) from the sale of the lands held by him, by contracts, deed or otherwise, acquired from the Florida Development Corporation, Tinsley & Hull, Budd & Cooke and E. E. Edge as aforesaid, he will pay unto the said party of the second part [Beach] 25 per cent. of the gross receipts received thereafter as aforesaid from the sale of said land at retail, less all expenses, commissions, office force and necessary incidental expenses pertaining to the sale of said land, same not to include the liability of the Florida Development Corporation assumed by George N. Bressler, in the sum of thirty-three thousand two hundred seven and 81/100 (33,207.81) dollars.'

Another clause of this agreement provides that Bressler was in no event to be liable to Beach for any part of the '25 per cent. hereinbefore referred to until' Bressler had first received his one hundred thousand dollars 'as aforesaid from the sale of said lands.' After which Beach 'shall be entitled to twenty-five per cent. of all property, both personal and real, acquired as herein set forth after reasonable time expires from date.' It was also agreed that if Tinsley & Hull, Budd & Cooke, or T. E O'Keefe, should foreclose any of their mortgages on any of the lands, and such lands should be lost to the parties on account of such foreclosure, then Bressler's $100,000, to be received by him before Beach should come into his interest, should be reduced by $5 per acre for all lands so lost to the parties by foreclosure. Provision was also made in the contract for any loss that Bressler might sustain on account of the contracts made by the Florida Development Corporation which he had assumed, affecting lands conveyed by the corporation, the title to which might fail. It was provided that if Bressler should sell his interests in the property before he received the $100,000 he should pay to Beach the sum of $3,000 as full payment for all his interest or claim under the contract. Beach agreed to use his influence and good will in the sale and colonization of the lands, and was to receive a commission on all sales effected by him. The bill alleges that at the time this contract was made Beach was the manager and secretary of the Florida Development Corporation; that Beach at the time of filing the bill was suing for large amounts under the contract made with Bressler involving the property conveyed by the corporation to the latter, and such claims were adverse to the interests of the corporation's creditors mentioned in the list which was delivered to Bressler. It is asserted: That under these circumstances Beach's claims are subordinate to those of the complainant and other creditors of the corporation, because he had full knowledge and information of all the circumstances under which the corporation's properties were conveyed to Bressler, and himself urged the arrangement upon them. That after May 1, 1913, the corporation ceased to transact any business, and Bressler took charge of all the 'assets, lands and property formerly belonging to it and got all the benefit contemplated or agreed to under said arrangement.' That he has never paid the consideration for which the deeds were executed. That the corporation has practically gone out of business, having divested itself by said arrangement of all its assets, and that what is left of its property in the hands of Bressler or held by his estate or heirs, he having died intestate, constitutes a trust fund for the payment of the corporation's creditors. That M. A. Bressler, H. L. Bressler, A. M. Bressler, and Neva Mae Bressler are his heirs at law. Henry L. Bressler is administrator of George N. Bressler's estate. That the Groveland Realty Company is a Florida corporation organized by the heirs at law of George N. Bressler for the purpose of taking over his estate, including the property obtained from the Florida Development Corporation, and that all the above-mentioned parties had full knowledge of all the matters and circumstances alleged in the bill. That when Bressler acquired the property of the Florida Development Corporation he executed and delivered to the complainant...