Smith v. Boyd
| Decision Date | 21 March 1935 |
| Citation | 161 So. 381,119 Fla. 481 |
| Parties | SMITH v. BOYD et al. |
| Court | Florida Supreme Court |
Rehearing Denied June 3, 1935.
Suit by Robert H. Boyd and Frederick Edwards, constituting a majority of the bondholders' committee, and another, against M. A Smith, as liquidator of Volusia County Bank & Trust Company. From a decree for complainants, defendant appeals.
Affirmed. Appeal from Circuit Court, Volusia County; Geo Wm. Jackson and J. C. B. Koonce, Judges.
George I. Fullerton and J. U. Gillespie, both of New Smyran, for appellant.
Scarlett & Futch, of Deland, for appellees.
Smith as liquidator of Volusia County Bank & Trust Company, appeals from a final decree rendered in favor of appellees, a majority of the bondholders' committee representing holders of first mortgage bonds issued by Putnam Hotel Company. The decree appealed from adjudicated that the Trust Company had rendered itself liable as a defaulting trustee to the bondholders of the first mortgage bonds above referred to, and impressed the payment of the liability as a preferred claim over any and all claims against the Trust Company out of a fund of $10,316.64 deposited with the State Treasurer as security for the protection of trusts under the Florida Trust Company Act of 1911 (section 6131, C. G. L., section 4188, R. G. S.).
The facts of the case as disclosed upon the final hearing may be briefly summarized as follows: On March 19, 1923, Putnam Hotel Company issued $100,000 first mortgage bonds, the Volusia County Bank & Trust Company being named as trustee. The bank accepted the trust and was paid and collected compensation for its trustee services. In the mortgage simultaneously executed as security for the bonds so issued, it was expressly stipulated to be the duty of said Volusia County Bank & Trust Company 'to pay and discharge or cause to be paid and discharged all taes, rates, levies or assessments, ordinary or extraordinary, levied or imposed upon the premises and property mortgaged, * * * the lien of which might or would be held prior or equal to the lien of this indenture, so that the same shall not fall into arrears and so that the priority of this indenture given to secure said bonds shall be preserved.'
Subsequently the Putnam Hotel Company executed an issue of $50,000 second mortgage bonds secured by a second mortgage to said Volusia County Bank & Trust Company. The claim made by the bill of complaint filed in this case was predicated upon an alleged breach of duty on the part of Volusia County Bank & Trust Company, as trustee, in allowing takes and prior liens to accumulate against the first mortgage security to the prejudice of the first mortgage bondholders, while paying out applicable moneys coming into its hands to the satisfaction of unearned as well as earned interest on the second mortgage bonds in preference to the payment of lawful taxes and liens of that character accruing against the mortgage security.
A master reported, and the chancellor approved, a finding to the effect that the trustee, by so permitting the payment out of moneys, totaling $10,620 that should have been applied by the trustee to the satisfaction of taxes, etc., against the first mortgage bondholders' security, the Volusix County Bank & Trust Company had breached the express undertaking of its trust agreement hereinbefore quoted, and that its breach in the premises was an act committed by it in had faith. So the decree appealed from was therefore postulated in part upon a finding of misapplication of trust funds which the defendant trustee, Volusia County Bank & Trust Company (represented here by its liquidator), had made no effort to prevent.
Contained in the same trust instrument in which was included the hereinbefore quoted provision making it the duty of the bank as trustee, to see that the taxes, etc., were kept paid, was a special provision which is as follows: 'The Trustee shall not be answerable for any act, default, neglect or misconduct of any of its agents or employees in connection with the execution of any of the said Trusts, nor in...
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Blaney v. Florida National Bank at Orlando
...clause, thus rendering non-compensable an otherwise actionable breach of fiduciary duty on the part of the bank. See Smith v. Boyd, 119 Fla. 481, 161 So. 381 (1935). A threshold problem faces this court in light of the disposition of this case below. The district court's dismissal for lack ......
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