Busch v. City Trust Co.

• Decision Date: 28 April 1931
• Citation: 134 So. 226,101 Fla. 392
• Parties: BUSCH v. CITY TRUST CO.
• Court: Florida Supreme Court

134 So. 226

101 Fla. 392

BUSCH v. CITY TRUST CO.

Florida Supreme Court

April 28, 1931

Commissioners' Decision.

Suit by the City Trust Company against Alice E. Roland Busch. Decree for complainant, and defendant appeals.

Affirmed. Appeal from Circuit Court, Dade County; Paul D Barns, Judge.

COUNSEL

Frederick J. Ward, of Miami, for appellant.

S. D Weissbuch and Henry L. Everett, both of Miami, for appellee.

OPINION

ANDREWS C.

This cause is here for review upon appeal taken by defendant below, appellant here, to a decree of the circuit court of Dade county, foreclosing a trust deed or mortgage on real estate by the City Trust Company, as trustee for the holders of certain first mortgage coupon bonds totaling $44,000 secured by said mortgage. It will be observed that the trust deed was first executed to Thomas F. Davenport as trustee and, as authorized by its terms, appellee was duly substituted as such trustee.

It is conceded by both parties that the main issue presented in this appeal is that:

Where a trust deed is executed and delivered to secure the payment of numerous bonds made 'payable to bearer' and there is no express provision in the trust deed specifically authorizing the trustee to foreclose the same on default in payment of any of the bonds, may the trustee, without joining the owners of the outstanding bonds, either as cocomplainants or as defendants, proceed to foreclose the mortgage in his or its own name?

The able briefs of both parties have directed attention to the recent case of Winer v. Trust Co. of Florida, 98 Fla. 726, 124 So. 35. Appellant claims that the opinion in above case may impliedly be considered as decisive of the above question in the instant case. That case appears to have turned on the fact that there was a clear provision in the trust deed that in case of default the trustee would have the right to foreclose the same in due form, as the court stated that:

'Where trust deed provided that on default trustee should have right to proceed to foreclose, and bonds contained recital that they were secured by trust deed, and that trust deed was referred to and made part of bond, so that bondholders accepting bonds took them subject to conditions of trust deed and expressly authorized trustee to foreclose on default, trustee could maintain suit to foreclose without making bondholders parties.'

In the instant case there is no provision in the trust deed expressly authorizing the trustee in terms to institute foreclosure without joining the bondholders as beneficiaries, but it is clear that a foreclosure if necessary may be had in the usual manner in the event of default as it provides that, 'in case of foreclosure for any default of the mortgagors under this instrument, a receiver may be appointed,' and that 'the trustee herein named, in acting as herein designated is acting for the mortgagors, and also for the owners, holders and purchasers of any or all bonds described herein, which said bonds the trustee is hereby fully authorized and empowered to sell without further consent from the mortgagors.' 'The trustee is hereby vested with full power and lawful authority to satisfy this mortgage of record without the signature of the cestuis que trustent and such satisfaction shall be as fully valid and binding as if made by the actual owners of the said bonds whenever full payment of all notes and obligations then due under this mortgage shall have been made to the trustee whether said bonds, or any of them, shall be then owned by the original purchasers, or by one or more transferees, or by the trustee, and whether or not all of said bonds shall then be in the possession of said trustee, and the trustee is hereby authorized to hold all funds so collected, without interest, until the bonds represented by the funds so collected shall be presented to the trustee, or until the trustee shall be otherwise satisfactorily protected in such payment.'

The 88 bonds held by many people were made payable to the trustee and his successors. It will also be observed from the master's report that he finds that the trustee, the City Trust Company, has in its possession $43,500 of the $44,000 outstanding and unpaid bonds, which are filed in evidence, and that the remaining bond of $500 is in the hands of a purchaser.

The general rule seems to be that, where a mortgage or trust deed is executed to a trustee to secure the holders of notes or bonds of certain named creditors, both the trustee and beneficiaries should be made parties to a bill to foreclose. In some states, however, it is provided by statute that the trustee of an express trust may sue without joining the beneficiaries. 3 Jones on Mortgages (8th Ed.) 1770.

In the instant case the beneficiaries are not named in the trust deed; in fact the beneficiaries are holders of bonds made payable to 'bearer' and not to named parties.

Under the provisions of section 4201, Compiled General Laws of Florida 1927 (chapter 3241, Acts of 1881) the 'trustee of an express trust (including a person with whom or in whose name contract is made for the benefit of...