City of Leesburg v. Ware

• Decision Date: 18 January 1934
• Citation: 153 So. 87,113 Fla. 760
• Parties: CITY OF LEESBURG v. WARE et al.
• Court: Florida Supreme Court

153 So. 87

113 Fla. 760

CITY OF LEESBURG v. WARE et al.

Florida Supreme Court, Division A.

January 18, 1934

Rehearing Denied March 1, 1934.

Suit by the City of Leesburg against G. G. Ware and others, as bond trustees of the City, and another. Decree of dismissal, and complainant appeals.

Affirmed.

ELLIS J., dissenting. Appeal from Circuit Court, Lake County; J. C. B. Koonce, judge.

COUNSEL

J. M Austin and A. S. Herlong, Jr., both of Leesburg, W. F Robinson, and Waller & Pepper, of Tallahassee, for appellant.

Gaines & Futch, of Leesburg, and Duncan, Hamlin & Duncan, of Tavares, for appellees.

OPINION

ELLIS Justice.

The city of Leesburg appealed from a decree entered by the judge of the circuit court for the Sixteenth judicial circuit dismissing the city's bill of complaint exhibited in that court against G. G. Ware, J. C. Lee, and A. L Miller, as bond trustees of the city, and against the First National Bank of that city. The decree also ordered the costs to be assessed against the city and allowed reasonable solicitors' fees to be paid out of the trust fund in the hands of the trustees.

The bill of complaint sought an accounting from the trustees of all moneys which they received and handled as bond trustees of the city, and an order declaring the sale to the trustees by G. G. Ware of certain bonds of the town of Palmetto to be null and void, and requiring the First National Bank to place to the credit of the trustees to be held in the sinking fund of the 1923 Extension Bond Improvement Fund the sum of $15,300.65 with interest from July 29, 1929, and for general relief.

The sum asked to be refunded by the bank is the amount which the bank on the above date received from the trustees in payment for the Palmetto bonds.

The grounds set forth in the bill for the relief prayed are as follows in substance succinctly stated:

The city by ordinance made provision for the appointment of certain bond trustees who were to receive from the city certain funds to be invested in approved securities as a sinking fund for the 1923 Improvement Extension bonds of Leesburg; that Ware, Lee, and Miller were the bond trustees and as such every year from June, 1924, to May, 1930, received from the city certain sums of money amounting to $3,334.34 each year; that they failed to invest the money as the ordinance required and on July 29, 1929, purchased from the First National Bank bonds of the city of Palmetto paying therefor $15,300.65; that the bonds at the time of purchase had no marketable value and were not approved securities and had not been approved by the city commission of Leesburg; that G. G. Ware, while acting as a bond trustee and secretary to the trustees, was president of the First National Bank of Leesburg, and as president of the bank and secretary to the trustees made the transaction without the knowledge or consent of his cotrustees Lee and Miller; that the transaction was effected by canceling a certificate of deposit held by the trustee and issued by the bank in the sum of $14,509.22, supplementing the difference from funds in the bank to the credit of the trustees.

The answers of the trustees and the bank contained no averments of fact of material importance different from those averred in the bill. There was a denial that the Palmetto bonds at the time of the transfer were of no marketable value and that the trustees had failed or refused to give an accounting to the proper legal authorities of the city, and averred that the purchase of the Palmetto bonds was made in good faith and at the time they were considered good securities and the bank made no profit on the transaction.

Appellants contend that the transaction was a violation of section 7472 of the Compiled General Laws 1927; that it was a violation of public policy and a fraud in law which entitles the trustees to a rescission of the purchase and an order requiring the bank to restore the money paid for the bonds; and that it was improper for the chancellor to award solicitors' fees to the trustees out of the trust funds in their hands.

The bonds when purchased were not in default, and there is no evidence that they were not at the time of the purchase of the value which the trustees paid for them, and the city ordinance does not require the municipal authorities to ratify or approve investments made by the trustees, nor does it define 'approved securities.' The evidence does not tend to show that the trustees ever failed or refused to account to the city authorities, but on the contrary their accounts were always open to inspection and were examined at the city's request by auditors for the city's information, and in two such audits the purchase of the bonds were mentioned. The suit was begun two years after the transaction and nearly that long after the maturity date of the bonds.

It appears that there was no suspicion of fraud in the transaction; that Mr. Ware acted for the trustees, if not at their express request certainly by implied permission, and in the best of good faith and in the interest of the fund, because he deemed it prudent in view of the precarious condition of the times to remove the money from the bank and invest it in municipal bonds authorized by legislative enactment to be issued.

Section 7472, Comp. Gen. Laws 1927, does not apply. The bonds purchased by the trustees were neither supplies, goods, nor materials. In the first place, it is a criminal statute and should be construed strictly. Atlantic Coast Line R. Co. v. State, 73 Fla. 609, 74 So. 595.

Nothing should be regarded as included within its meaning that is not within its letter and spirit. If there is doubt or ambiguity in its provisions leaving a doubt as to their meaning, the provisions are to be construed in favor of life and liberty. Snowden v. Brown, 60 Fla. 212, 53 So. 548; Sanford v. State, 75 Fla. 393, 78 So. 340; Texas Co. v. Amos, 77 Fla. 327, 81 So. 471.

The bond trustees were not municipal officers in the sense that they performed any governmental function. Indeed, the city had no power from the Legislature to constitute them such. The mere fact of their election by the citizens did not of itself constitute them officers of the city government. This court held, in Charlotte County v. Chadwick, 102 Fla. 163, 135 So. 502, that county bond trustees provided for by statute were not county officers, not only because they were not appointed or elected, but because they do not perform such functions as would make them officers.

The trustees in this case are just what their title implies, trustees or agents for the city charged with the trust of holding money for certain purposes and investing it to the best interests of the city within their judgment.

We perceive nothing in the transaction on the part of Mr. Ware that indicates that he had either for himself or his bank a sinister purpose in purchasing the bonds from the bank of which he was president, and nothing on the part of the other two trustees but an improvident, careless shirking of duty in intrusting business of that character to any one to perform. If what they did was within the contemplation of the law, it was scarcely worthwhile to have more than one trustee. They may be subject to censure for what they did although their motives appear to have been entirely worthy.

Whether the transaction was per se fraudulent or against public policy and void is the next question presented by the brief. The bank through its president, Ware, sold the Palmetto bonds to the trustees through its secretary, Ware, the same person. Mr. Ware acted in two capacities, as agent for the bank and as agent for the trustees of whom he was one. How could he serve the interests of both principals? If as president of the bank he had any information that led him to believe that the Palmetto bonds were precarious securities, or that owing to economic conditions and resultant reduction in the revenue collecting capacity of the town of Palmetto that would impair the market value of its bonds, or that rendered likely or even slightly probable a default in the payment of interest or principal, he was in duty bound to the city of Leesburg to avoid the purchase, at least impart the information to his cotrustees or to the city government, his employer, whether the ordinance required its approval or not. If, on the other hand, he knew the bonds to be perfectly sound securities but doubted the safety of the bank of which he was president as a safe place for keeping on deposit of the city's moneys, his obligation was equally strong to impart the information to his cotrustees and discuss the situation with his colleagues of the bank.

It is difficult for any man to serve two masters. Matthew said 'No man can serve two masters; for either he will hate the one and love the other; or else he will hold to one and despise the other.'...