Smith v. Fleetwood Bldg. Corp.

• Decision Date: 07 January 1935
• Citation: 120 Fla. 481,163 So. 293
• Parties: SMITH v. FLEETWOOD BLDG. CORPORATION.
• Court: Florida Supreme Court

163 So. 293

120 Fla. 481

SMITH v. FLEETWOOD BLDG. CORPORATION.

Florida Supreme Court

January 7, 1935

Rehearing Denied Aug. 28, 1935.

En Banc.

Bill by the Fleetwood Building Corporation, a Florida corporation, on behalf of itself and all other bondholders, against M. A Smith, as liquidator of Trust Company of Florida, as trustee. From an order appointing a receiver and denying motion to dismiss the bill of complaint, the liquidator appeals.

Affirmed.

BROWN J., dissenting.

On Petition for Rehearing. Appeal from Circuit Court, Dade County; Worth W. Trammell, judge.

COUNSEL

Edward E. Fleming, of Miami, for appellant.

Harry I. Lipton, of Miami, for appellee.

OPINION

PER CURIAM.

The appeal in this case is from an order appointing a receiver and denying motion to dismiss the bill of complaint.

Bill of complaint was filed by Fleetwood Building Corporation for and on behalf of itself and all other bondholders and holders and owners of participating ownership certificates similarly situated. The bill sought the appointment of a receiver pendente lite, the discharge of M. A. Smith liquidatortrustee of the Trust Company of Florida, as trustee for the particular property described in the bill of complaint, for an accounting, and the appointment of a successor trustee.

We glean from the record that a trust deed was originally executed by one J. Perry Stoltz and his wife, Nellie C. Stoltz, to G. L. Miller Bond & Mortgage Company to secure bonds in the sum of $60,000. The trust deed covered the property involved in this suit. G. L. Miller Bond & Mortgage Company had its name changed to Marion Mortgage Company. Default occurred in payment of the indebtedness secured by the trust deed. Marion Mortgage Company instituted a foreclosure suit which was carried to final decree and the property sold, a conveyance being made to Trust Company of Florida as trustee. Complainants in this suit became owners of ownership certificates issued by Trust Company of Florida in lieu of original bonds in the sum of $6,900. In November of 1931, the Comptroller of Florida took over the Trust Company of Florida for the purpose of liquidation and appointed one Therrell as liquidator. M. A. Smith was later appointed general liquidator and succeeded Therrell and became liquidator-trustee of the trust property.

In May, 1934, Smith, as liquidator-trustee, filed a bill of complaint in the circuit court of Dade county, Fla., to foreclose an alleged trustee's lien against the property in the amount of $10,623.58, and filed lis pendens against the property.

Thereupon, the bill of complaint in this suit was filed, it being alleged that Smith, as liquidator-trustee, by instituting the suit and proceedings to foreclose the alleged trustee's lien, had placed himself in a position antagonistic to the beneficiaries of the trust estate.

It is too well settled to require citation of authorities that where a trustee places himself in a position antagonistic to the cestui que trust he should retire from the trusteeship. The record shows that the order complained of was made after hearing and, therefore in this state of the record it devolves upon the appellant to show that the chancellor abused his judicial discretion in making that order. It has not been made to appear that the chancellor did abuse his judicial discretion in this regard and, therefore, the order appealed from should be affirmed. It is so ordered.

Affirmed.

DAVIS, C.J., and WHITFIELD, TERRELL, and BUFORD, JJ., concur.

On Petition for Rehearing.

PER CURIAM.

On January 7, 1935, this court affirmed the order herein appealed from, which was an order appointing a receiver. It has recently been held that a chancellor's findings regarding the propriety of a receivership for trust property will not ordinarily be disturbed. Douglas Properties v. Stix (Fla.) 159 So. 1. This rule is especially applicable to a case like this one, wherein the chancellor has been satisfied after a full hearing that the interests and activities of a trustee in possession are so antagonistic, adverse, and in conflict with the interests of the beneficiaries of the trust that a neutral receiver should be ordered to take charge of and manage the trust pendente lite. See Pyle v. Pyle, 199 N.Y. 538, 92 N.E. 1099. The mere appointment of a receiver would not defeat the claim of trustee for declaration of a lien on the trust properties for advances nor the granting of authority to sell the property, if that be found warranted.

In the present case the court specifically found as follows:

'It further appearing to the court that the defendant herein has instituted his suit in this court to foreclose his alleged lien, for advances against the trust property involved in this cause, the record title of which is in the name of the defendant, as trustee, and it appearing further that the interests of the defendant, as trustee, are in conflict with and inconsistent with the interests of the beneficiaries of the trust, and that there should be someone, other than the present trustee, to represent all of the beneficiaries of this trust, in the suit instituted by the trustee seeking to foreclose his alleged lien for advances to said trust, and it further appearing that the state, county and municipal taxes for several years assessed and levied against the property covered by said trust have remained unpaid, and it further appearing that the trust property is in grave and immediate danger of being lost to the beneficiaries; and it further appearing that a notice of lis pendens has been filed and recorded against the trust property, by the defendant, as trustee, in his suit for the foreclosure of his alleged lien for advances. * * *

'It is further ordered, adjudged and decreed that C. L. Clements be, and he is hereby appointed receiver herein with all the powers and charged with all the duties in such cases made and provided, and to take charge of the property and collect such rents, issues, and profits as may be due or become due arising therefrom, etc.'

We hold the chancellor's finding to be sustained by the record and entirely sanctioned by the law as applicable to the situation thus found to exist.

Rehearing denied.

WHITFIELD, C.J., and ELLIS, TERRELL, BUFORD, and DAVIS JJ. concur.

DISSENTING

BROWN Justice (dissenting).

The mere fact that the Trust Company of Florida, which is being liquidated by the bonded statutory liquidator appointed by the State Comptroller, had a lien, or the right to have one declared and enforced, on the assets of the trust estate for advances made to conserve and protect said estate for the benefit of the holders of the participating ownership certificates (the cestuis que trustent), which lien the Liquidator of the Trust Company sought to have declared and protected as a first lien upon the trust estate, or its proceeds, when and if it should be ordered sold by the court does not, in my opinion, create an antagonistic interest on the part of the statutory liquidator which would disqualify him and require his displacement by a court receiver. The lien or the right to it, would continue to exist, and hence would disqualify the court receiver and successor trustee appointed by the court as much as it would the liquidator, for it would likewise become their duty to enforce such lien. The prime duty of a trustee is the faithful and efficient conservation of the trust. Kay v. Bostwick, 83 Fla. 308, 91 So. 112. And trustees are entitled to reasonable compensation for their services in that regard, and for reimbursement for costs and expenses properly incurred, including attorney's fees, for defending the trust estate and enforcing the trust for the benefit of the cestuis que trust. Smith v. Mass. Mutual Life Ins. Co., 116 Fla. 390, 156 So. 498, 95 A. L. R. 508. And in Bay Biscayne Co. v. Baile, 73 Fla. 1120, 75 So. 860, this court held that the circuit courts have the power to declare a lien on the trust estate in favor of the trustee for the enforcement of the payment of such expenditures, costs, and counsel fees out of the same, by a sale thereof, and may prevent the delivery of the trust property, after the abrogation of the trust by the settler, until all proper expenses, counsel fees, and costs incurred by the trustee have been paid.

It appears from the record in this case that the purpose of the bill filed by the liquidator of the Trust Company of Florida in May, 1934, was not merely to foreclose the trustee's lien for advances made in behalf of the repair and preservation of the trust property, and for compensation to the trustee, but the general purpose of the suit was to secure the authority of the court to sell the trust property, on such terms and conditions as the court might authorize, the proceeds of the sale to be deposited in the registry of the court for the purpose of adjudicating all rights therein, including the rights, of the beneficiaries, as well as the right of the plaintiff liquidator by reason of the lien of the trustee, the Trust Company of Florida, for advances made for the benefit of said property.

The liquidator of the Trust Company of Florida (which company had acquired this property by foreclosure of a trust deed, and held title for the benefit of the bondholders to whom participating ownership certificates had been issued) was engaged in the performance of his official duty, under the appointment and supervision of the State Comptroller, and as a part of the machinery set up by the Legislature for this very purpose. He had no personal interest in this matter. It was his legal duty, to the creditors of the defunct Trust Company, as the statutory liquidator of the Trust Company, to insist upon the reimbursement of all the proper advances made...