Brooks v. Miami Bank & Trust Co.

• Decision Date: 24 September 1934
• Citation: 116 Fla. 589,156 So. 757
• Court: Florida Supreme Court
• Parties: BROOKS v. MIAMI BANK & TRUST CO. et al.

156 So. 757

116 Fla. 589

BROOKS v. MIAMI BANK & TRUST CO. et al.

Florida Supreme Court, Division A.

September 24, 1934

Original proceeding upon a suggestion filed by the Miami Bank & Trust Company for a writ of prohibition to be directed to the circuit court of the Eleventh judicial circuit for Dade county, Florida, and the judges thereof, and John G. Brooks in which proceeding an order to show cause was issued why a writ of prohibition should not issue. On motion to quash the order to show cause.

Motion granted, and proceeding dismissed.

See also (Fla.) 155 So. 157.

COUNSEL Redfearn & Ferrell, of Miami, for petitioner.

Stuart MacKenzie and W. F. Parker, both of Miami, for respondents.

OPINION

ELLIS Justice.

Pursuant to a suggestion filed in this court by solicitors for the Miami Bank & Trust Company for a writ of prohibition to be directed to the circuit court of the Eleventh judicial circuit for Dade County, Fla., and the judges thereof and John G. Brooks to prevent them from proceeding further in a cause which had been instituted in that court but which it is claimed had been dismissed, the cause bearing the title of John G. Brooks v. Miami Bank & Trust Company, a Banking Corporation, in its Corporate Capacity and as Trustee Biscayne Associates, Inc., a Corporation of Florida, City National Bank in Miami, a Corporation Organized under the National Banking Laws of the United States, Frank L. Herbert as Receiver of First Mortgage & Bond Company, and H. J. Spurway, as Receiver of City National Bank in Miami, an order to show cause why the writ of prohibition should not issue was made on August 1, 1934.

The relator contended by his petition that the circuit court had lost jurisdiction of the cause because on the 4th day of September, 1933, the Honorable Paul D. Barns, judge of said court, by order duly entered two days later, sustained a motion to dismiss a third amended bill of complaint which J. G. Brooks had caused to be filed in said court in that cause; the motion to dismiss having been made by the City National Bank of Miami and H. J. Spurway as receiver for that corporation.

It does not appear that the motion was expressly made in behalf of any defendants other than the City National Bank in Miami and Spurway as receiver, although there were three other defendants, named respectively the Miami Bank & Trust Company, Biscayne Associates, Inc., both Florida corporations, and Frank L. Herbert, as receiver of First Mortgage & Bond Company.

The judge's order was entitled, in the circuit court for Dade county, in chancery, 'John G. Brooks, Plaintiff, v. Miami Bank & Trust Company, et al., Defendants.' The language of the order is as follows:

'It is considered, ordered, adjudged and decreed that the motion to dismiss the third amended bill of complaint, filed by the City National Bank in Miami, a United States banking corporation, and H. J. Spurway, as Receiver of City National Bank in Miami, be and the same is hereby sustained.

'Done and ordered in Chambers, at Miami, Florida, this 4th day of September, A. D. 1933.

'Paul D. Barns, Circuit Judge.'

We construe the order as referring to the motion to dismiss as interposed by the City National Bank in Miami and its receiver, H. J. Spurway.

The City National Bank in Miami and H. J. Spurway, as its receiver, represented in the litigation one interest, that of the City National Bank in Miami.

The third amended bill of complaint was filed July 10, 1933, by leave of court first had and obtained, so the bill recites. It was filed in behalf of Brooks and all other persons similarly situated.

The third amended bill is a lengthy document, requiring, with its several exhibits, approximately eighty-two pages of typewritten matter to state the complainant's case.

An attempt will be made to express as concisely as possible the nature of complainant's cause as set out in the bill because the nature of the suit and the relation of each defendant to the cause stated in the bill may shed some light upon the order sustaining the motion to dismiss the bill and the purpose which was in the court's mind when the motion was sustained.

Brooks was the holder of fifty bonds, of $1,000 par value each, of a total issue of $250,000 issued by the First Mortgage & Bond Company on or about October 2, 1923, on which date it entered into an agreement of trust with the Miami Bank & Trust Company, one of the defendants in this case, the purpose of which agreement was to secure the payment of the bonds to be issued by First Mortgage & Bond Company.

The deed contained a form of the bonds to be issued, the form of coupons and trustee's certificate to be attached to the bonds secured by the deed, called a 'Collateral Deed of Trust.' The mortgage company agreed that for the purpose of securing the payment of the bonds issued under the terms of the deed it would deposit with and assign to the trustee from time to time real estate mortgages or deeds of trust which were to be held by the trustee for the equal and proportionate benefit and security of all the bonds issued.

The instrument contained many pertinent covenants on the part of the mortgage company to perform. The value of the collateral security so deposited was by the terms of the instrument always to be maintained to an amount equal to the amount of the principal of the outstanding bonds issued and remaining unpaid. In the event of default in the payment of the bonds or in the observance by the mortgagor of any of the covenants on its part to be performed, the trustee, after a certain period of time had elapsed, could declare the entire indebtedness to be due and payable.

The trustee accepted the trust and provision was made for its compensation. Provision was made for resignation by the trustee and the appointment of another trustee with the approval of the circuit judge for Dade county. Other appropriate provisions were made in the instrument for the protection and security of the bondholders which it is unnecessary to mention.

The bill alleges that the principal of the bonds became due in January, 1931; that principal and interest are due upon them and unpaid and no interest had been paid since July, 1928.

The bill contains a list of mortgages for different amounts, aggregating approximately $127,000 in face value which the First Mortgage & Bond Company deposited with the Miami Bank & Trust Company as trustee under the terms of the agreement prior to the issuing of the bonds.

It is alleged that the City National Bank & Trust Company of Miami, which was organized in May, 1926, entered into negotiations to take over the business of Miami Bank & Trust Company; that under the terms of an agreement entered into between the two corporations the City National Bank & Trust Company took over the entire properties and business of the Miami Bank & Trust Company and assumed all its 'existing liabilities and obligations shown by the books and records' of that company, and under that agreement the new corporation assumed the management and control of the aforementioned trust; that the City National Bank in Miami became the successor of the City National Bank & Trust Company which surrendered to its successor supervision and control of its business including its trust department; that the City National Bank & Trust Company on June 19, 1926, assumed control of the trust and became subject to all its terms and conditions; that on the 16th of June, 1926, the Miami Bank & Trust Company wrongfully surrendered possession of all the mortgages which it had received under the trust agreement, and described in the bill, to the Century Trust Company of Baltimore, Md., and the assignment of them was recorded in Dade county.

It is alleged on information and belief that such mortgages were sold to the Maryland Company for the sum of $139,700, and on June 16, 1926, the trustee had possession of neither the mortgages nor the money received for them, which fact was known to the City National Bank & Trust Company, but on that date the Miami Bank & Trust Company accepted from the First Mortgage & Bond Company in substitution for the mortgages, which had been deposited under the agreement and which were transferred to the Maryland Company, one mortgage from Miami Land & Development Company to Tatum Brothers Real Estate & Development Company dated June, 1923, payable June, 1933, to secure the payment of an indebtedness amounting to $330,000 evidenced by five notes. It is alleged that in that transaction the Miami Bank & Trust Company breached its trust agreement. It is alleged that subsequently to the agreement of June 19, 1926, under which the City National Bank & Trust Company acquired the assets of the Miami Bank & Trust Company and assumed the trust business of that company, it accepted other mortgages from the First Mortgage & Bond Company which are set forth in the bill; that the trust agreement was again breached in that transaction in the particulars set forth in the bill. Allegations of fraud are made as to that transaction; the sufficiency of them it is not necessary here to determine.

The bill also alleges a series of transactions in which the City National Bank in Miami, Biscayne Associates, Inc., Miami Bank & Trust Company, Tatum, and others participated, resulting in the sale of the securities held for the payment of the bonds at a sacrifice, bonds of the First Mortgage & Bond Company purchased at a low price for the benefit of the corporations upon whom devolved the administration of the trust, and retention by the purchasers of a portion of the purchase price at which the mortgage properties were sold was never paid over. Those transactions also resulted in the transfer of the deposit of United States bonds with ...