Florida Nat. Bank of Jacksonville v. Jefferson Standard Life Ins. Co.

• Decision Date: 30 March 1936
• Citation: 167 So. 378,123 Fla. 525
• Court: Florida Supreme Court
• Parties: FLORIDA NAT. BANK OF JACKSONVILLE et al. v. Jefferson Standard Life Ins. Co.

167 So. 378

123 Fla. 525

FLORIDA NAT. BANK OF JACKSONVILLE et al. v. Jefferson Standard Life Ins. Co.

Florida Supreme Court

March 30, 1936

Rehearing Denied April 28, 1936.

Bill by the Jefferson Standard Life Insurance Company against the Florida National Bank of Jacksonville as trustee, and others. From an interlocutory order denying defendants' motion to dismiss the bill, defendants appeal.

Reversed. Appeal from Circuit Court, Duval County; Miles W. Lewis, judge.

COUNSEL

J. W Harrell and W. P. Dineen, both of Jacksonville, for appellants.

Rogers Hazard & Thames, of Jacksonville, for appellee.

OPINION

DAVIS Justice.

From an interlocutory order denying appellants' motion to dismiss a bill of complaint filed by a corporate mortgage bond coupon holder to foreclose the mortgage for the payment of certain of the mortgage bond coupons that had been assigned to it the movants (defendants below) have appealed to this court for reversal.

The bill of complaint filed August 7, 1934, shows the following: That on November 1, 1919, the Florida Fair & Exposition Association, Inc., a corporation, executed and delivered to the American Trust Company, as trustee, its mortgage and deed of trust encumbering its real estate at Jacksonville, Fla., to secure payment of a corporate mortgage bond issue aggregating $150,000, all to become due January 1, 1935, drawing interest at the rate of 7 per cent. per annum, evidenced by coupon notes attached to the mortgage bonds, which coupons are, by the terms of the instruments involved, negotiable by delivery; that the complainant below, Jefferson Standard Life Insurance Company, a corporation, is the bona fide owner and holder of $2,408 of said coupons that passed into the hands of complainant's assignor, for a valuable consideration, prior to maturity of the bonds to which they had been annexed; that the Florida National Bank of Jacksonville, a corporation, has been and is a substituted trustee under the mortgage, for the American Trust Company; that said substituted trustee has failed and refused to execute the trust devolving upon it as such substituted trustee, and on the contrary has acquiesced in allowing other claimants against the mortgagor to reduce their claims to judgment against said Florida Fair & Exposition Association and has allowed said mortgagor, Florida Fair & Exposition Association, Inc., to wrongfully and illegally misapply and divert from the payment of interest in default on the mortgage bonds, several thousand dollars out of the income of the defendant, since March, 1928; that the action of the said substituted trustee in acquiescing in, or permitting, the defaults complained of, and in failing to take possession of and protect the mortgaged property as authorized by the mortgage trust deed, has necessitated the complainant to file a bill for foreclosure of the mortgage for the collection of its interest coupons, to secure which the mortgage in terms creates a lien; and that the court should allow complainant as a coupon holder to maintain said foreclosure and have other appropriate relief incident thereto, such as a receiver, accounting, costs, attorney's fees, and a sale of the mortgaged property to satisfy the complainant's demands.

The question raised by the motion of defendants below to dismiss the bill is whether or not the facts alleged in the bill of complaint make out a case entitling the mortgage bond coupon holder to foreclose the mortgage and trust deed for collection of its coupons when taken in conjunction with the provisions of the trust deed that specifically deny the right of any bond or coupon holder, secured thereby, to institute foreclosure proceedings without first giving notice in writing to the trustee, of the mortgagor's default, and unless the holders of 25 per cent. in amount of the bonds have first notified and requested in writing the trustee to foreclose the mortgage within a reasonable time after such notice, and without offering to indemnify the trustee against costs and liabilities to be incurred, as provided in the mortgage to be done to entitle a bond or coupon holder to thus sue.

The mortgage deed sued upon, which is attached to and made a part of the bill of complaint, contained the following provisions that are pertinent to a determination of the present controversy with respect to the question of law just propounded:

'Twelfth--Until the occurrence of one of the acts of default specified in this indenture The Company, its successors and assigns, shall be suffered and permitted to retain actual possession of all the premises and properties hereby mortgaged and to manage, operate and use the same and every part thereof, with the rights and franchise appertaining thereto, and to collect, receive, take, use and enjoy the tolls, earnings, incomes, rents, issues and profits thereof. * * *

'If default be made by said Company in the payment of any of the interest on any of the said bonds according to the tenor and effect thereof on the presentation of the said coupons respectively, or if said Company shall fail faithfully to observe any obligation or perform any covenant required of it by these presents and such default shall continue for the space of sixty (60) days after demand in writing, then in the discretion of The American Trust Company, Trustee, it shall be lawful for said The American Trust Company, Trustee, and upon request in writing of the holders of not less than twenty-five per cent. (25%) of the bonds hereby secured then outstanding, it shall be the duty of The American Trust Company, Trustee, to declare the whole of the principal of said bonds then outstanding together with all accrued and unpaid interest thereon, at once due and payable and thereupon the principal of the said bonds then outstanding, together with all accrued and unpaid interest thereon, shall at once become due and payable.

'Thirteenth--In case of Sixty (60) days default being made as aforesaid, and not being waived, as hereinafter provided, or in case of default in the payment of the principal of any of said bonds at maturity, the Trustee hereunder shall be entitled to immediate possession of all of said property as for condition broken, and to receive and collect the rents, issues and profits thereof, and if the party of the first part, its successors and assigns, shall thereafter remain in possession of said property, it or they shall be deemed, and shall be tenant at will of the Trustee, and shall at once surrender and yield up such possession on demand to it and the said The American Trust Company, Trustee, may thereupon enter and take possession and collect the rents, issues and profits of said property and apply the same less a reasonable compensation to the said Trustee for its said services to be reserved therefrom, towards the repairing of said property, and the payment of insurance and taxes and assessments thereon, and other expenses of this trust, and expenses of the management of said property, if any, and to the payment of interest and principal of said bonds and upon the failure or refusal to surrender and yield up such possession, said The American Trust Company, Trustee, may at its option, obtain such possession forcibly or otherwise with or without process of law.

'Fourteenth--in case of sixty days default being made, as aforesaid, and not waived as hereinafter provided, or in case of default in the payment of the principal of any of said bonds at maturity, the said The American Trust Company, Trustee may, and upon request in writing of the holder of not less than twenty-five (25%) per cent. of the bonds hereby secured then outstanding, it shall file a bill in any court having jurisdiction thereof, against the party of first part, its successors or assigns, and all other proper parties, to secure the specific performance of the covenants and agreements of this instrument or to obtain a decree for the sale and conveyance of the whole or any part of the said premises and property, for the purposes herein specified, or said The American Trust Company, Trustee, may institute and carry out any other proceedings authorized by law for the foreclosure of this deed, or the sale of the said property, or the enforcement of said debt, or for any other appropriate legal or equitable relief and out of the proceeds of any foreclosure sale or other proceedings may pay the costs of such suit, all costs of advertising, sale and conveyance, including a reasonable sum for Attorney's fees, solicitors fees and Trustee's fees hereunder and in the enforcement thereof and also all advances and liabilities made or incurred under the provisions of this Trust Deed, including advances for abstracts of title or for continuations thereof, and all other expenses and charges of this trust, including all moneys advanced for insurance, taxes of other liens or assessments, with interest thereon at the highest rate allowed by the law and shall then pay the principal of the bonds then outstanding and unpaid whether due and payable by the terms thereof or under any other provision of this Trust Deed and the interest thereon up to the time of such payment, rendering the overplus, if any, upon the said party of the first part, its successors or assigns, upon reasonable request; and it shall not be obligatory upon the purchaser or purchasers at any sale under the provisions of this trust deed to see to the application of the purchase money. In case of the filing of any bill of foreclosure this trust deed the complainant shall immediately and without notice be entitled to the appointment of a receiver or receivers of the mortgaged property and of the rents, issues and profits thereof, with the usual powers of receivers in such cases and said receiver

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