Dunscombe v. Smith

• Citation: 174 So. 38,127 Fla. 797
• Court: United States State Supreme Court of Florida
• Decision Date: 27 April 1937
• Parties: DUNSCOMBE et al. v. SMITH.

174 So. 38

127 Fla. 797

DUNSCOMBE et al. v. SMITH.

Florida Supreme Court, Division A.

April 27, 1937

Suit by Charles F. Dirr, in behalf of the depositors of the Stuart Bank & Trust Company, against M. A. Smith, as liquidator of the Stuart Bank & Trust Company, to enforce a trust, wherein John A. Dunscombe was substituted as party complainant, and wherein C. O. Gallagher intervened. From orders dismissing the bills of complaint, complainant and intervener appeal.

Reversed with directions. Appeal from Circuit Court Martin County; E. Elwyn Thomas, judge.

COUNSEL

Carroll Dunscombe, of Stuart, for appellants.

Smith &amp Kanner, of Stuart, for appellee.

OPINION

BUFORD Justice.

In 1926 Stuart Bank & Trust Company was closed by order of the comptroller and later, in October of the same year, was permitted to reopen under a freezing agreement. The terms of tat agreement were that 25 per cent. of the deposits of the bank on the date of closing would be made immediately available upon reopening; 50 per cent. was to be paid by the issuance of 5 certificates of deposit in the amount of 10 per cent. each, payable over a period of 15 months and the balance of the deposit written off as a liability of the bank. In order to satisfy the depositors the bank agreed to create a trust of certain securities then on deposit on call through the Bankers Trust Company of Atlanta, Ga. The agreement was:

'Regarding the 25% of depositors' funds held subject to collection of the 'Atlanta System' claims: As these claims are paid the proceeds will be deposited as a separate fund in the Trust Department of the Bank, to be paid over to depositors as rapidly as they are available, share and share alike. They have every reason to believe that at least a portion of these funds will be recovered and it is the hope and expectation of the officers of the Bank that in the final outcome the ultimate loss may be small.'

Under this agreement the proceeds from the securities referred to became in law a trust fund in the trust department of Stuart Bank & Trust Company. The proposition to creditors indicates that the aggregate amount of securities referred to as 'Atlanta System' paper was $300,000. It is alleged, however, that the actual amount of those securities was $296,500, and that from these securities the sum of $90,000 had been collected for the benefit of the trust.

On March 16, 1929, after the alleged collection of the sum of $90,000 of this trust fund Stuart Bank & Trust Company closed again. O. Nobles was appointed liquidator and was succeeded by M. A. Smith when the law providing for a general liquidator went in force.

On November 15, 1935, Dirr filed his bill of complaint as a class suit in behalf of all those persons who were depositors in the bank at the time of its first closing, by which suit he sought to enforce the trust. He alleged that the trust funds had been unlawfully, negligently, and fraudulently commingled with moneys of the bank, asked that an accounting be had and, if it appeared that the allegations of the bill of complaint were true, that a trust be imposed for any shortage due the trusts upon any moneys or securities in the bank to replenish the trust fund. John A. Dunscombe was substituted as a party complainant. The appellee filed his motion to dismiss. The court granted his motion with permission to amend in order to show a claim had been filed with the bank for this money within one year after appointment of the liquidator under section 6104, C.G.L. The appellant thereupon amended his bill and attached receipt for claim filed with the bank, and C. O. Gallagher intervened and filed a bill stating that she had not filed any claim, but alleged that she was entitled to participate in this fund, regardless of such failure to file claim.

Motions were made to dismiss amended bill and intervener's bill. The motions were granted.

From the orders dismissing the bills of complaint, the appeals were taken.

First, we are impressed with the fact that Stuart Bank & Trust Company was a banking institution authorized to do a trust business in this state and, therefore, the trust department of that bank could lawfully undertake to act as trustee for the depositors in receiving the moneys derived from the collections of the securities held by the Atlanta bank subject to call of Stuart Bank & Trust Company. The law involved in this case applicable to such a trust fund is stated in the opinion in the case of Campbell et al. v. Vining, as Receiver, 101 Fla. 939, 133 So. 555, where we held:

'The words, 'the State Comptroller may forthwith designate and appoint a receiver to take charge of the assets and affairs of such bank,' [Comp.Gen.Laws 1927, § 6102] imply and mean that the receiver in his representative capacity takes title to the assets and affairs of the institution and the comptroller has complete discretionary power over them, subject to the other provisions of the act, and the 'affairs' of the bank include all business interests of the bank, including trust estates of every character lawfully held by the bank for which receiver is appointed, and the receiver is charged with handling such trust matters in the same manner in which the original trustee was charged with handling such matters until such time as a substitute trustee may be duly appointed by a court of chancery having jurisdiction of the matter.

'The provision that 'such receiver shall pay all money received by him to the State Treasurer to be held as a special deposit for the use and benefit of the creditors subject to the order of the Comptroller' will not be held to apply to moneys received by the receiver as acting trustee, because this provision of the statute clearly applies to funds in which creditors of the defunct banking institutions have an interest, and such creditors can have no interest in funds accruing from trust estates held by the defunct bank in its trust capacity. It is the duty of the comptroller, through his receiver or agent, to execute the trust according to the terms under which the trust was created.

'Equity has jurisdiction in all matters relating to trust estates, and may direct the conduct of trustees in their dealings with property which is held or controlled by a trustee and adjudicate the rights between trustees and beneficiaries of the trusts.'

In the case of Glidden as Administratrix, etc., v. Gutelius et al., 96 Fla. 834, 119 So. 140, 120 So. 1, we held:

'Where trust fund was commingled with funds belonging to trust company, and commingled fund was invested in securities authorized by statute to be subject of investment of trust funds, cestui que trust was not limited to satisfaction of claim from lowest amount of cash on hand at any time after trust was created, but he could follow trust fund into securities purchased with commingled funds, and have those securities decreed to be impressed with trust, since securities augmented assets as whole.

'Where funds held by trust company are commingled with funds of trust company, and investments are made with commingled funds, which investments might lawfully be made by trust company with trust funds, presumption is that such investments...