Vassar v. Smith

• Decision Date: 15 October 1938
• Parties: VASSAR v. SMITH.
• Court: Florida Supreme Court

183 So. 705

134 Fla. 346

VASSAR v. SMITH.

Florida Supreme Court

October 15, 1938

Action by M. A. Smith, as liquidator of the Fort Pierce Bank against W. E. Vassar, as trustee, wherein defendant filed a counterclaim. From an order sustaining a motion to dismiss the counterclaim, the defendant appeals.

Affirmed.

BROWN J., dissenting. Appeal from Circuit Court, St Lucie County; Elwyn Thomas, judge.

COUNSEL

Thad H Carlton, of Fort Pierce, for appellant.

Walter M. Rogers, of Fort Pierce, for appellee.

OPINION

CHAPMAN Justice.

This case is here on appeal from an order dated February 17, 1937, entered by the Circuit Court of St. Lucie County, Florida. The order sustained a motion to dismiss a counterclaim. The question for decision here is: May a bank, to retain or obtain general deposits of private funds, pledge its assets for the security of such deposits? The facts set up in the counterclaim and stricken by an order of the court, are, viz.: On or about November 16, 1931, W. E. Vassar was Successor-Trustee for San Lucie Plaza Corporation, and Successor-Trustee for the T. F. Faulkner Trust, and as Trustee for said Trusts, had in his possession $3,500. The Fort Pierce Bank, desiring to obtain from the Trustee a deposit with of the said $3,500, by and through its officers and Board of Directors, pledged to the said W. E. Vassar as security for said deposit certain Liberty bonds which the officers aforesaid of the Fort Pierce Bank placed with W. E. Vassar, as Trustee, and upon the receipt thereof delivered or deposited with the Fort Pierce bank the trust funds in the sum of $3,500. The officers of the Fort Pierce Bank and W. E. Vassar, as Trustee, by a subsequent or later agreement, substituted for the Liberty bonds as security, $7,500 worth of bonds issued by the Orange Hotel Company, of Orlando, Florida. The bonds of the hotel company were the property of the Fort Pierce Bank and through its officers were duly and regularly pledged and placed with W. E. Vassar, as Trustee, to secure the payment of the deposit by the bank in the sum of $3,500. The Trustee is now in possession of the hotel bonds under the pledge or security agreement entered into between the Trustee and the Fort Pierce Bank, and there is due the Trustee the principal sum of $353.72, as balance due on the original deposit, and the further sum of $345.37 as interest on the said deposit.

The transcript of the record shows that the Fort Pierce Bank formerly operated under the name of Fort Pierce Bank & Trust Company, and at the time W. E. Vassar was Vice-President, and the bank subsequently discontinued its Trust Department and operated only as a banking institution. It is shown by the bill of complaint that W. E. Vassar unauthorizedly took the $7,500 worth of Orange Hotel bonds, while acting and serving as Vice-President of the bank while it retained its Trust Department, and continued in the unauthorized possession of the bonds after the discontinuance of the Trust Department.

It will be observed that Section 8 of Chapter 13576, Laws of Florida, Acts of 1929, gives banking companies of Florida the power to pledge or otherwise obligate its securities for the purpose of securing the payment of public money deposited with them, and the section is, viz.:

'Section 8. That Section 4147 of the Revised General Statutes of the State of Florida be amended so as to read as follows:

'Section 4147. To be Depositories of Public Money. All banking companies organized under this chapter, which shall be designated by the Comptroller of such purpose, shall be depositories of public money under such regulations as may be prescribed by the Comptroller and they may also be employed as financial agents of the State, and they shall perform such reasonable duties as depositories of public money and financial agents of the State as may be required of them. The Comptroller shall require banking companies thus designated to give satisfactory security, by the deposit of bonds of the United States or of the State of Florida, or other satisfactory security, for the safekeeping and prompt payment of the public moneys deposited with them and for the faithful performance of their duties as financial agents of the State. All sheriffs, tax collectors, city treasurers, clerks of courts, receivers and treasurers or other agents of the State, or of the courts thereof, may deposit any moneys they may have in their possession or custody with such banking company, but shall not be required to do so by virtue hereof. And executors, administrators, trustees, guardians of Life Insurance Companies having or controlling life insurance funds, may deposit the funds held by them with such company upon receiving sufficient security.'

It is contended that the pledge of the securities, supra, is not ultra vires and is within the implied power of a bank, that the same is incidental and necessary to carry on the general business of banking institutions and...