Gary v. Kissimmee River Cattle Co.

• Decision Date: 02 March 1923
• Citation: 85 Fla. 268,95 So. 657
• Parties: GARY et al. v. KISSIMMEE RIVER CATTLE Co. et al.
• Court: Florida Supreme Court

95 So. 657

85 Fla. 268

GARY et al. v. KISSIMMEE RIVER CATTLE Co. et al.

Florida Supreme Court

March 2, 1923

Error to Circuit Court, Okeechobee County; E. C. Davis, Judge.

Petition by the Kissimmee River Cattle Company and others against W R. Gary and Alex Sloan. From a judgment for plaintiffs defendants bring error.

Reversed.

Syllabus by the Court

SYLLABUS

Default of county bond trustees preventing conservation and enhancement of fund may be cause for removal within proper exercise of removing power. While the prime duty of county bond trustees having a fund in their custody is to secure its safety by exercising all due care and diligence in executing authority conferred, yet it is their duty to augment as well as to conserve the fund when augmentation is contemplated by the trust; and any act or default on the part of the trustees that prevents a due conservation and enhancement of the fund may be cause for removal within a proper exercise of the removing power.

County bond trustees not permitted directly or indirectly to pecuniary profit by use of trust funds or to divert or misdirect use. Trustees should not be permitted to directly or indirectly gain pecuniary profit by the use of trust funds or by diverting or misdirecting the use or custody of trust funds.

Mismanagement of funds by county bond trustees may be grounds for removal. If because of carelessness or inefficiency or design resulting in the misuse or abuse or nonuse or depreciation in or loss of profits in the use of trust funds the fund is not enhanced or augmented or conserved as it reasonably should be under the authority conferred upon the trustees, such delict inefficiency, or design in mismanaging the funds may be cause for removal of the trustees in order that the fund may be conserved, enhanced, and administered as it was intended to be executed.

County bond trustees have discretion in conservation of fund. In performing their trust functions, the county bond trustees have a discretion within limits that may be stated in the terms of the trust or implied by law from the nature of the trust and the circumstances of its execution; the conservation of the fund to serve the beneficiaries being the prime consideration.

Exercise of discretion by county bond trustees in conservation of fund not disturbed unless abuse shown. The courts will not in general interfere with the exercise by the county bond trustees of the discretion accorded to them by the nature of the trust, where no unlawful act or excess or abuse of discretion or misconduct or negligence is shown that results or probably will result in loss or detriment to the fund or its beneficiaries.

Removal of county bond trustees should be predicated upon clear showing of delict in effectuating a trust. The law contemplates that trustees shall perform their trust functions with absolute fidelity and with efficiency and promptness, and, in reviewing their conduct as such trustees the courts should require the contemplation of the law to be effectuated; but the removal of trustees should be predicated upon a clear showing of delict or abuse or wrongdoing in executing the trust.

Impropriety of officer of bank in which trust fund deposited becoming or continuing county bond trustee manifest. While the cashier or other officer of a bank may not be disqualified to serve as a county bond trustee, the duties of such a trustee may seriously conflict with the duties and interests of the bank official; and, when under competition or other circumstances money of the trust is to be deposited in the bank of which a trustee is an officer, the impropriety of the cashier or other officer of the bank becoming or continuing as a trustee is manifest.

County bond trustees responsible for negligence in not conserving or disbursing trust bond funds. The essential duties of the county bond trustees are to receive, conserve, and disburse the trust funds on proper warrants duly drawn by the board of county commissioners, the county commissioners being responsible for their own official acts, and the bond trustees being liable for their own wrongful acts or negligence in not conserving and in disbursing funds committed to them.

Evidence held insufficient to warrant removal of county bond trustees for mismanagement of funds; 'cause.' While the course of conduct of the county bond trustees in this case in managing the funds, making reports, etc., is in some respects not entitled to judicial approval, and does not measure up to the requisite standards of fiduciary duty, yet, in view of the heretofore undetermined state of the law by which they should be governed, it does not clearly appear that there has been such an intentional or negligent mismanagement of the funds by the respondent trustees as to afford, within the purview of the statute, a sufficient 'cause' for their removal.

COUNSEL

E. J. L'Engle and P. L. Gaskins, both of Jacksonville, and F. L. Hemmings and Parker & Thomas, both of Ft. Pierce, for plaintiffs in error.

Blackwell, Donnell & McCracken, of West Palm Beach, and R. E. Hamrick, of Okeechobee, for defendants in error.

OPINION

WHITFIELD J.

A petition was filed in the circuit court by taxpayers against two of the bond trustees of Okeechobee county, the other trustee being one of the petitioners, in which it is in effect alleged:

That $300,000 of 6 per cent. bonds were issued by Okeechobee county for the purpose of constructing paved macadamized, and other hard-surfaced highways in said county; that the respondents and one other were appointed trustees of said bonds; that on or about July 7, 1919, the bonds were sold, and that 'there was turned over to the said bond trustees the money realized from said sale in the amount of $309,510 and accrued interest in the sum of $1,149.90, and it became the duty of said bond trustees to faithfully discharge the trust confided in them and to pay over and duly account for all sums of money placed in their hands by virtue of such trust, and among the duties imposed on said trustees by virtue of the trust confided in them are and were at that time, and at all times have been, to distribute the money realized from the sale of said bonds for the purposes for which the bonds were sold, and for no other purposes, and to keep the money in a safe depository, and to collect for the deposit of said money the highest rate of interest commensurate to sound business practice, and in all ways to serve the best interests of the taxpayers in said county; that less than 2 per cent. interest per annum has been realized and collected on said money, if the whole time for which it has been kept be considered, and at no time has more than 3 per cent. interest per annum been collected, whereas the said money could have been placed and kept in banks thoroughly solvent, responsible, and able to pay the same at a rate of interest of 4 per cent. per annum, and since the 1st day of January, A. D. 1921, there has been a bank in Okeechobee county solvent, responsible, and able to pay the said money, willing to keep said money and pay therefor 4 per cent. interest per annum, and by so placing the same at such interest the said money realized from the sale of said bonds would have earned for the use and credit of said county large sums of money in excess of the amount actually earned under the management and control of the said trustees; that the said W. R. Gary and Alex Sloan have, without consulting the other member of the bond trustees, allowed the funds realized from the said sale of said bonds to be expended for illegal and unlawful purposes; that large sums of money have been expended on roads not designated in or allowable under the resolution calling for the election for the issuance of said bonds, and large sums of money have been expended upon roads upon which it is unlawful to spend the said funds, and other large sums of money have been expended for matters entirely foreign to roadwork or road construction for which said bonds were issued; that, the said trustees wholly disregarding their duty in the premises and unmindful of the interest of the taxpayers of said county, and evincing a motive of selfishness and working in the interest of individuals and corporations, the said trustees did not invest any portion of the said sums of money so collected from the said tax collector in the bonds aforesaid, nor did they invest any portion of said sums of money in bonds of the United States, the state, a county, or a municipality bearing interest, nor did they deposit the said sum in the savings department of any national bank or state bank of the state of Florida, or any savings bank organized and existing under the laws of the state of Florida at a prevailing rate of interest, but, on the contrary, held all of the said sums in the Bank of Okeechobee and received therefor no interest at all, or a much smaller rate than the prevailing rate; that the said Alex Sloan has since his incumbency in the office of trustee as aforesaid connived with the said W. R. Gary in all of the illegal acts above set out in this petition, and has refused at all times to act with the chairman of said board in performing the duties required of the said bond trustees by law, and by such conniving with the said W. R. Gary and working against the will of the said chairman and against the interest of the taxpayers and contrary to the law, the said Alex Sloan and W. R. Gary are unfit and incompetent to be trustees; that the said W. R. Gary is cashier of the Bank of Okeechobee, located in the city of Okeechobee, Fla., and he has at all times used his influence and power to keep the funds realized from the sale of said bonds deposited in his bank to the detriment of the taxpayers and to the...