State Ex Rel. Smith v. Gomez

• Decision Date: 05 January 1938
• Citation: 179 So. 651,131 Fla. 385
• Parties: STATE ex rel. SMITH et al. v. GOMEZ et al.
• Court: Florida Supreme Court

179 So. 651

131 Fla. 385

STATE ex rel. SMITH et al. v. GOMEZ et al.

Florida Supreme Court

January 5, 1938

Original proceeding by the State of Florida, on the relation of M. A Smith, as liquidator of the Dade County Security Company, and another, for a writ of prohibition to prevent Arthur Gomez and other judges of the Eleventh Judicial Circuit from exercising jurisdiction in a chancery suit to restrain relators from effectuating a sale of a portion of the assets of such company or a common-law action by Thomas S. Newcomb and other holders of liquidator's certificates.

Writ absolute granted.

COUNSEL John M. Murrell, of Miami, for relators.

Lee M Worley, John Bouvier, Jr., and M. Lewis Hall, all of Miami and Whitfield & Whitfield, of Tallahassee, for respondents.

OPINION

CHAPMAN Justice.

This is a proceeding in prohibition, a case of original jurisdiction. It has been made to appear that the Honorable H. F. Atkinson, one of the judges of the circuit court of Dade county, Fla., on August 5, 1935, upon the application of Thomas S. Newcomb and Minnie Newcomb et al., holders of liquidator's certificates of Dade County Security Company, granted a restraining order against the liquidator and comptroller from carrying into effect a sale of the most valuable portion of the assets of Dade County Security Company to Miami Mortgage & Realty Company for $1,000,000 in cash. Answers were filed, evidence taken, and motions to dissolve were heard by Honorable Paul D. Barns, one of the judges of the circuit court of Dade county, Fla., in the absence of Judge Atkinson from the circuit, and on September 5, 1935, an order was entered dissolving and vacating the temporary injunction or restraining order previously issued and additional time allowed for filing an amended bill of complaint, and December 4, 1935, further time was by the court granted Thomas S. Newcomb, Minnie Newcomb, a widow, Bertha Clark, et al., for leave and authority to file an amendment to the bill of complaint, later on subsequent orders were entered by the court extending the time in which to file the amendment, when on December 15, 1936, Thomas S. Newcomb et al. filed: (a) A petition by stockholders for allowance of costs, expenses, and attorneys' fees; (b) petition by attorneys for allowance fo attorneys' fees; (c) petition by stockholders for allowance of costs, expenses, and attorneys' fees; (d) petition at common law; and (e) a petition of attorneys for allowance of attorneys' fees. The applications (a), (b), (c), (d), and (e), broadly speaking, requested an order or orders of the court for costs, expenses, and attorneys' fees by the chancellor for obtaining the issuance of a restraining order by Honorable H. F. Atkinson under date of August 5, 1935, and which was later dissolved by Honorable Paul D. Barns, a judge of said circuit court, on the 5th day of September, 1935.

The items referred to in this opinion as (a), (b), (c), (d), and (e), supra, were each attacked by the comptroller and liquidator by motion to strike on the ground that the circuit court of Dade county, Fla., was without jurisdiction to grant the relief prayed for in each of said petitions. The applications were heard by Honorable Arthur Gomez, one of the judges of the circuit court of Dade county, Fla., and after argument of counsel on the 3d day of November, 1937, made and entered an order denying each of said motions to strike and in effect holding that the circuit court of Dade county had jurisdiction by statute necessary for the making of order or orders on each of the petitions referred to herein as (a), (b), (c), (d), and (e). The petition prays that a writ of prohibition be issued prohibiting the Honorable Arthur Gomez, judge, supra, from exercising any jurisdiction in the chancery suits or common-law action. It is the contention of counsel for respondents that bringing the suit by liquidator's certificate owners of the Dade County Security Company in the form of a class suit and obtaining a temporary restraining order not only preserved the assets but provided beneficial to all liquidator's certificate holders of the Dade County Security Company. The equity suit upon which the restraining order issued was for the use and benefit of all certificate holders. The case of United States v. Equitable Trust Company of New York, 283 U.S. 738, 51 S.Ct. 639, 75 L.Ed. 1379, is cited and relied upon by counsel for respondents. A similar principle of law is expressed in Perry on Trusts and Trustees, vol. 2, 6th Ed., par. 910, pp. 1473-1475, viz.:

'Trustees have an inherent equitable right to be reimbursed all expenses which they reasonably and properly incur in the execution of the trust, and it is immaterial that there are no provisions for such expenses in the instrument of trust. If a person undertakes an office for another in relation to property, he has a natural right to be reimbursed all money necessarily expended in the performance of the duty. And for losses that may accrue to himself in the proper administration of the trust. (a) Thus a trustee will be reimbursed all his necessary travelling expenses, and all reasonable fees paid for legal advice in the discharge of his duties. (b) And this rule will be applied, although the trust may subsequently be declared void, if the trustees were without blame in the matter. So trustees will be allowed all the expenses of litigation concerning the fund, and all costs which they are ordered to pay to strangers, if the litigation was forced upon them, or was necessary for the protection of the estate; but if a trustee is deprived of his costs, or ordered to pay costs by reason of his own misconduct, or if the suit was improperly instituted by him, he cannot be allowed for such disbursements, but he must bear them personally as a penalty for his misconduct. Nor can a trustee be allowed his expenses in defending himself upon an inquisition of insanity. Allowance for legal expenses and costs are always within the discretion of the court; and such claims can be modified and reduced, if in the judgment of the court they are unreasonable. Interest upon such payments will not be allowed to a trustee, although he had no trust money in his hands at the time of the payment. A trustee can receive pay only for such services and expenses as are within the line of the duties imposed on him by the instrument creating the trust.'

This court has previously passed upon the question whether a court of equity may substitute its receiver for the liquidator appointed by the comptroller under the statutes of Florida to wind up the affairs of the insolvent banking company. The comptroller under these statutes is required to perform official acts throughout the State and may be amenable to the jurisdiction of the courts where official acts, the subject of litigation in such courts, have been performed. The statutes authorize the comptroller to appoint liquidators through whom the comptroller shall administer the assets of insolvent banking companies. If it should be made to appear that the comptroller, or his liquidators violate the law in such administration, the courts may adjudicate controversies or afford relief as to the particular matters that may be involved in such statutory administration. In the case of State ex rel. Dade County Security Co. v. Barns, 99 Fla. 1258, 128 So. 860, 862, this court said:

'But the law does not contemplate that the entire statutory administration of the affairs of an insolvent bank or building and loan association shall be superseded by equity proceedings through a chancery receiver, at least unless it is clearly shown by due allegations and proofs that the statutory administration is inadequate to conserve property rights that are secured by the Federal and State Constitutions. The bill of complaint entertained by the circuit judge seeks to have an equity receiver supersede the statutory liquidator with reference to the entire administration of the affairs of the insolvent building and loan association to the exclusion of the comptroller's statutory authority, without any showing whatever to give a court of equity jurisdiction to afford the relief prayed for, or any relief consistent with that prayed for.'

Prior to the legislative enactment, insolvent banking companies may have been voluntarily liquidated under the supervision of a receiver appointed by a court of equity. The statutes authorizing the state comptroller to supervise the administration of assets of an insolvent bank or trust company does not take from the circuit court any of its inherent exclusive equity jurisdiction under the Constitution. This rule was fully expressed in State ex rel. Landis v. Circuit Court et al., 102 Fla. 112, 135 So. 866, 869, viz.:

'And when such administrative authority is conferred upon the state comptroller, the statutory authority of the circuit court may be thereby curtailed, though the inherent equity powers of the court to take jurisdiction when the statutory remedy through the state comptroller is wholly inadequate to conserve organic rights are not and cannot be impaired by statute. While the authority of the comptroller to administer must be recognized, the court have power to enforce rights during the administration by the comptroller by due course of law. * * *

'The prayer of the bill of complaint filed by Will Allen is that the court appoint a receiver for each of the two trust companies and empower the receiver to immediately take possession, custody, and control of all books, records papers, documents, collateral money, and other things of value held in trust or otherwise by said trust companies; that the directors be enjoined from attempting to act as trustees under the Act of 1911; that the court 'enter such...