Reimer v. Smith

• Decision Date: 13 June 1932
• Citation: 142 So. 603,105 Fla. 671
• Court: Florida Supreme Court
• Parties: REIMER v. SMITH et al.

142 So. 603

105 Fla. 671

REIMER v. SMITH et al.

Florida Supreme Court, Division A.

June 13, 1932

Suit by E. A. Reimer, in his own right and as administrator of the estate of Clara A. Reimer, deceased, against Carl W. Smith as trustee, and others. From an order sustaining a demurrer to the bill, the complainant appeals.

Order affirmed. Appeal from Circuit Court, Dade County; Paul D. Barns, Judge.

COUNSEL

Hudson & Cason, of Miami, for appellant.

Hubbard & Hubbard and Loftin, Stokes & Calkins, all of Miami, for appellees.

OPINION

ELLIS J.

Clara A. Reimer died during the month of December, 1930. She was before and at the time of her death, a resident of Miami Fla. She was, in July, 1930, the owner in fee simple of certain lands lying in Dade county, Fla. She was the owner also of a certain mortgage upon which was due about $9,000.

On the 16th and 21st days of July, 1930, she conveyed and transferred the property, lands, and mortgage, to R. H. S.W. Holding Company, a Florida corporation, in consideration for which all the capital stock of the corporation was issued to four persons as follows: Ninety-seven shares to Mrs. Clara A Reimer, and one share each to Carl W. Smith, Arthur Kerker, and Albert D. Hubbard. On the 30th day of October, 1930, Mrs. Reimer, by a written instrument under seal, transferred the ninety-seven shares of stock in the corporation held by her to 'Carl W. Smith, Trustee,' to be held by him for the benefit of Mrs. Reimer during her lifetime, and upon her death for the benefit of certain other named beneficiaries in certain proportions.

The deed required that the trustee and the executor or administrator or the successors in office of the trustee should hold the shares of stock 'upon trust, full power of ownership therein and the attendant privileges in that regard such as voting of same,' etc. The trustee was required to 'receive all dividends from time to time paid upon the said shares and so soon after the receipt of any dividend as may be convenient shall divide such dividend amongst all of the beneficiaries hereinafter, named in the propertion and/or proportions as is hereinafter set forth.'

Mrs. Reimer, under the terms of the trust, was to receive all the dividends, earnings, or income from the shares during her lifetime. Upon her death the other named beneficiaries, their 'heirs and assigns,' should receive the income from such shares in the proportions named in the deed. The trustee was given power to name his successor by deed or will and to require such bond as he should deem proper.

It was provided that, if any beneficiary sought to cancel or to modify the terms of the trust by legal proceedings or otherwise then, such beneficiary should be eliminated from the terms of the trust, and his or her share should be distributed pro rata among the remaining beneficiaries.

On the 21st of March, 1931, E. A. Reimer, brother to Mrs. Clara Reimer and administrator of her estate, but not named as one of the beneficiaries in the deed of transfer by which Mrs. Reimer's stock was assigned to Carl W. Smith as trustee, exhibited his amended bill of complaint in the circuit court of the Eleventh circuit for Dade county against Smith as trustee and all the beneficiaries of the trust named in the deed, except Emma Weibusch, who had died, so Earl and A. W. Weibusch, her heirs at law, were named as defendants and R. H. S.W. Holding Company, also A. Kerker and A. D. Hubbard, as defendants, because they are officers and directors of the R. H. S.W. Holding Company.

The purpose of the bill was to attack the validity of the trust deed as having been executed contrary to public policy, in that it violated the rule against perpetuities, perpetual private trusts, or rule against restraints on alienation.

The bill contained appropriate prayers, if the theory upon which it was framed is sound, which is that, as the trust deed was an invalid attempt to create a perpetual trust in violation of the rule against restraints on alienation, and as the conveyance by Mrs. Reimer of her property to the R. H. S.W. Holding Company was part of the same scheme or purpose of Mrs. Reimer to create the trust, her deeds of conveyance and transfer of her property to that corporation, dated July 16, and 21, 1930, respectively, should be canceled, as well as the assignment of the stock in the corporation to Smith as trustee.

There was also a prayer that C. W. Smith and the beneficiaries named in the trust deed be declared to hold the stock as trustees for the complainant as administrator of Mrs. Reimer's estate, and that they be each enjoined from disposing of the stock, and that the R. H. S.W. Holding Company be required to account for all funds and properties which may have come into its possession. There was also a prayer for general relief.

A demurrer to the bill was sustained, and from that order the complainant appealed.

The only question presented involves the rule as to private perpetual trusts or the rule against restraints on alienation as applied to the circumstances as alleged in the bill of complaint.

The chancellor held that no invasion or violation of the rule was apparent from the allegations of the bill. If the trust deed is valid, it of course follows that the conveyance of land and transfer of the mortgage by Mrs. Reimer to the R. H. S.W. Holding Company, evidenced by her two deeds of July 16 and 21, 1930, were not invalid.

The trust deed deals only with personal property, as it involves only the shares of stock held by Mrs. Reimer in the corporation. Personal property, as well as real property, at common law, was subject to the rule against restraints on alienation. 21 R. C. L. 335.

An examination of the deed discloses certain features which it will be well to observe: First, the stock was transferred to the trustee, with full power of ownership therein 'and the attendant privileges in that regard, such as voting of same.' Under this phase of the deed the stock could be registered in the name of the trustee; that is, transferred upon the books of the corporation, which is effected by the taking up of the old certificates and the issuing of new ones by the corporation in the name of the trustee. See sections 6543, 6544, 6545, Comp. Gen. Laws 1927; 14 C.J. 751.

The legal title to the stock was intended to be completely vested in the trustee, as shown by the use of the phrases 'full power of ownership therein' and 'the attendant privileges in that regard such as voting of same.' The right to vote at a stockholders' meeting is an incident of the ownership of stock in a corporation, and to deprive a stockholder of the right to vote is to deprive him of an essential attribute of his property, which ordinarily is not permissible. 14 C.J. 898, and authorities cited.

A trustee is entitled to vote in respect of the stock standing in his name as trustee of others even where the trustee has no beneficial interest in it. Where the trust is not disclosed on the company's books, the reason is even more cogent that the trustee may vote the stock. 14 C.J. 903.

There are authorities holding that the trustee must be the trustee of an active trust before being permitted to vote, or, if he holds the stock uncoupled with an interest, he must vote as the beneficiaries direct.

In the case at bar, however, the terms of the deed creating the trust definitely settled all such questions. The deed recited that the shares had been transferred to C. W. Smith to be held by him for the benefit of the parties thereafter named in the deed. Nothing to the contrary appearing, the...