Florida Bank & Trust Co. v. Yaffey

• Decision Date: 05 August 1931
• Court: Florida Supreme Court
• Parties: FLORIDA BANK & TRUST CO. v. YAFFEY et al.

136 So. 399

102 Fla. 723

FLORIDA BANK & TRUST CO. v. YAFFEY et al.

Florida Supreme Court

August 5, 1931

En Banc.

Suit by Irene Yaffey and husband against the Florida Bank & Trust Company. From a decree allowing a preferred claim against the defendant as liquidator of the First American Bank & Trust Company, defendant appeals.

Affirmed.

WHITFIELD and DAVIS, JJ., dissenting in part.

Syllabus by the Court.

SYLLABUS

A bank liquidator in this state, under the statutes providing for his appointment and controlling his duties, is a representative or agent of the comptroller and is not an officer of the court which has confirmed the fact of the bank's insolvency thereby warranting his appointment. Such liquidator is not therefore before the courts for any purpose except when brought before it in an appropriate proceeding or when he voluntarily appears therein pursuant to law.

A bank is insolvent when it is unable to meet its current obligations as they mature, though its assets may be greatly in excess of its liabilities. In this respect a bank differs from ordinary corporations, where the rule is that such corporations are not insolvent where the entire property and assets are sufficient to meet the liabilities by way of liquidation.

Where the bank is hopelessly and irretrievably insolvent to the knowledge of its officers at the time of receiving a deposit of additional funds to be handled by it in the usual course of its banking business, fraud is committed by the bank for which there is a remedy in equity, but such fraud must be proved and is not to be presumed.

Officers of an insolvent bank may be presumed to have known the real and actual condition of the bank, in the absence of a very clear and reasonable showing to the contrary.

Fraud is never presumed, and every one of the elements making up alleged fraud must be clearly proven.

Complainant purchased from First American Bank & Trust Company a New York Exchange on the National Park Bank in New York and paid cash for it; shortly thereafter the First American Bank & Trust Company closed its doors and never reopened because of having been taken in charge by comptroller. held, that the evidence was sufficient to show such fraud in accepting complainant's money while bank was insolvent to knowledge of its officers as to entitle complainant to preferred claim. Appeal from Circuit Court, Palm Beach County C. E. Chillingworth, judge.

COUNSEL

Bussey Johnston & Lilienthal, of West Palm Beach, for appellant.

Blackwell Donnell & Moore and Quincey & Rice, all of West Palm Beach, for appellees.

OPINION

DAVIS J.

This was a suit in chancery in the circuit court of Palm Beach county. The appeal is from a decree allowing a preferred claim against the Florida Bank & Trust Company, as liquidator of the First American Bank & Trust Company, an insolvent banking institution, by which decree the court directed the payment by the liquidator of the sum of $20,510 as a preferred claim out of the assets of the First American Bank & Trust Company.

The theory of the case in the court below was that the bank was insolvent at the time it accepted certain money of the complainants, and was known to be insolvent by its officers, especially its president, who was in active charge and management of the bank. The appellees, who were complainants in the court below, urged the proposition that accepting their money under such circumstances amounted to a fraud upon them, and that they were permitted to rescind, and impress a trust upon, and demand back the money which they paid over; that as long as the First American Bank & Trust Company remained open to the public and doing business there was an implied representation that such bank was solvent, as well as an implied invitation to the public to come and deal with it; that the officers and directors in permitting the bank to stay open, when it was insolvent to their knowledge, was a fraud upon the general public, and especially upon the appellees, who asserted that they had relied upon this implied representation and invitation to their injury.

The facts of the case appear to be as follows: On June 15, 1928, Irene Yaffey, one of the complainants, purchased from the First American Bank & Trust Company a New York Exchange on the National Park Bank in New York City for $13,160 and paid cash for it. Again, the next day, on Saturday, June 16, 1928, said Irene Yaffey purchased from the same bank a cashier's check for $7,350 and paid cash for it. The latter transaction was had just a few minutes before 12 o'clock noon on Saturday, June 16, 1928. The bank closed at noon on Saturday, June 16, 1928, and never reopened. On Monday following, June 18, 1928, the comptroller of the state of Florida took charge of said bank because of insolvency and the liquidation of the same began. The closing of the bank referred to appears to have been the second time that the bank had closed its doors. The first closing was about a year and a half previous to the latter. Subsequent to the first closing the comptroller had permitted the bank to reopen upon being refinanced, whereby additional capital was paid into the bank.

In deciding this case on its merits, we have purposely disregarded the very evident impropriety of the procedure which is followed in bringing this case to a hearing, and have adopted the view that the petition which was filed in a supposed cause entitled, 'In re: The Receivership of the First American Bank & Trust Company,' was in effect an independent suit in equity, and in that aspect we have dealt with it, notwithstanding the fact that the appellant has assigned error raising this specific point. We do so because the case has been decided on other points going to the sufficiency of the petition, which have been determined in favor of the appellant. A bank liquidator in this state, under the statutes providing for his appointment and controlling his duties, is a representative or agent of the comptroller and is not an officer of the court which has confirmed the fact of the bank's insolvency thereby warranting his appointment. Such liquidator is not therefore before the courts for any purpose except when brought before it in an appropriate proceeding or when he voluntarily appears therein pursuant to law.

A bank is insolvent when it is unable to meet its current obligations as they mature, though its assets may be greatly in excess of its liabilities. In this respect a bank differs from ordinary corporations, where the rule is that such corporations are not insolvent where the entire property and assets are sufficient to meet the liabilities by way of liquidation. See Griffin v. State, 142 Ga. 636, 83 S.E. 540, L. R. A. 1915C, 716, Ann. Cas. 1916C, page 85.

But in order to entitle the complainants to the award of a preference against the First American Bank & Trust Company on account of the matters hereinbefore referred to, it was necessary for them to have alleged in their petition and established by their evidence not only that the bank was insolvent, but that it was hopelessly so, to the knowledge...