Wright v. Board of Public Instruction for Sumter County

• Decision Date: 07 January 1955
• Citation: 77 So.2d 435
• Parties: Ed C. WRIGHT, Appellant, v. BOARD OF PUBLIC INSTRUCTION FOR COUNTY OF SUMTER, State of Florida, a bodycorporate, Appellee.
• Court: Florida Supreme Court

Page 435

77 So.2d 435

Ed C. WRIGHT, Appellant, v. BOARD OF PUBLIC INSTRUCTION FOR COUNTY OF SUMTER, State of Florida, a bodycorporate, Appellee.

Supreme Court of Florida, En Banc.

Jan. 7, 1955.

Rehearing Denied Feb. 8, 1955.

Joseph C. Young and Robert J. Pleus, Orlando, for appellant.

Carroll W. Fussell, Bushnell and Askew & Earle, St. Petersburg, for appellee.

SEBRING, Justice.

This litigation involves twenty of a series of twenty-five time warrants, in the face amount of $1,000 each, issued in 1923 by the appellee, Board of Public Instruction for Sumter County, Florida, pursuant to Chapter 6654, Special Acts of 1913, which authorized their issuance 'upon the common school fund of Sumter County,' and provided that the Board should 'set apart out of the County school funds of Sumter County, Florida, sufficient moneys to meet and pay (the obligations).' By their terms, five of the twenty warrants involve matured in 1933, five in 1938, and ten in 1943. Each of the warrants contained a promise to pay the face amount thereof and 'interest thereon at the rate of 6% per annum, interest payable semi-annually on the first day of January and the first day of July in each year until the principal sum thereof shall be fully paid, upon presentation and surrender of the respective coupons hereto annexed, as they severally become due.' Each also included the provision that it was 'payable out of the Common School Funds of Sumter County, Florida,' and that 'the full faith, credit and resources of the said Board of Public Instruction in and for Sumter County, Florida, are pledged for the * * * payment * * * hereof.' See Wright v. Board of Public Instruction of Sumter County, Fla., 48 So.2d 912, wherein the validity of these warrants was upheld.

When the twenty-five warrants were issued by the Board in 1923, they were purchased by the Citizens Bank of Bushnell. Shortly after this purchase the Citizens Bank hypothecated the twenty-five warrants, of the aggregate face value of $25,000, and certain other collateral, with the Union Trust Company of Baltimore, Maryland, as security for an indebtedness owed by Citizens Bank to Union, Trust Company in the principal amount of $15,000. In due course, the Board paid off the five warrants becoming due and payable in 1928, which left the remaining twenty warrants outstanding in the hands of Union Trust Company to secure the indebtedness owed it by Citizens Bank of Bushnell.

At some later date, the Citizens Bank of Bushnell was placed in receivership. Subsequently, on September 13, 1934, the liquidator of the Bank, in consideration of the surrender of a promissory note of the Citizens Bank, in the sum of $22,265.24, held by Union Trust Company, to evidence the debt of the Bank, assigned and transferred to Union Trust Company all right, title and interest in and to the instruments which Union Trust Company held as security for the payment of the debt; namely, the said twenty time warrants, of the face value of $20,000, and two certain promissory notes payable to the order of Citizens Bank as payee on which there was an aggregate balance due of $4,429.76. On February 21, 1939, the plaintiff, Ed C. Wright, purchased the twenty time warrants from Union Trust Company for the sum of $3,600. Thereafter he instituted the present suit to enforce payment of the face amount of said warrants and the interest coupons attached thereto, plus interest on both the warrants and the interest coupons.

To the complaint filed in the cause the defendant filed defenses to the legal effect that the plaintiff was neither a holder in due course nor a holder who derived his title through a holder in due course and that consequently the warrants in the hands of the plaintiff were subject to all personal defenses which the Board of Public Instruction might have interposed against Citizens Bank of Bushnell, the original purchaser, among which was the defense of partial failure of consideration. Also set up as a defense to the complaint was the plea that the warrants were non-negotiable instruments from their inception and consequently were subject to all personal defenses which the maker thereof might lawfully interpose against the original holder and its assignees in title.

The cause came on for hearing before the trial court, without a jury, who found from the evidence, in respect to the original twenty-five warrants issued in 1923 and payable five in 1928, five in 1933, five in 1938 and ten in 1943, that 'the total amount which the Board of Public Instruction of Sumter County, Florida, ever received for said time warrants is * * * $15,000.00;' that 'about the time that said warrants were delivered to the Citizens Bank of Bushnell, said bank was indebted to Union Trust Company of Baltimore, Maryland, in the sum of $15,000.00 and it hypothecated the 25 time warrants of the aggregate face value of $25,000.00 with said Union Trust Company as security for said indebtedness. The Board * * * paid the Time Warrants which fell due on September 1, 1928, leaving outstanding, in the hands of Union Trust Company * * * (the remaining twenty warrants). On February 21, 1939, the plaintiff, Ed C. Wright, purchased said Time Warrants from said Union Trust Company for the sum of $3,600.00. Prior to said purchase plaintiff (Wright) knew that the Board of Public Instruction had received only $10,000.00 for the twenty warrants of the aggregate principal amount of $20,000.00.'

The trial court found further that the time warrants were payable out of a particular fund and therefore were non-negotiable, with the consequence that all transferees and assignees of the warrants took them subject to the same defenses that the Board of Public Instruction might have interposed against Citizens Bank of Bushnell, the original holder.

Finally, the court found that the plaintiff was not entitled to recover interest after maturity, either as to the time warrants or as to the interest coupons attached thereto.

In accordance with these findings the trial court rendered a judgment in favor of the plaintiff and against the Board of Public Instruction, in 'the sum of $10,000.00 as principal and the sum of $4,800.00 as interest as evidenced by the interest coupons attached to said Time Warrants, or the aggregate sum of $14,800.00 principal and interest, together with the costs of this proceeding * * * said sums to be paid out of the common school fund of Sumter County, Florida, and not otherwise.'

The plaintiff has appealed from this judgment and questions the several findings and rulings of the trial court.

From our study of the record we are of the opinion that there is sufficient evidence to sustain the findings by the trial court that the Board of Public Instruction received only $15,000 for the twenty-five time warrants of the face value of $25,000; that the Citizens Bank of Bushnell hypothecated the twenty-five time warrants to Union Trust Company to secure an indebtedness in the principal sum of $15,000; and that the Board paid off and retired the five time warrants which fell due on September 1, 1928, leaving outstanding in the hands of Union Trust Company the remaining twenty warrants of the face value of $20,000 as security for the debt owed to Union Trust Company by Citizens Bank of Bushnell. There is also sufficient evidence in the record to support a finding that the plaintiff Wright purchased the time warrants from Union Trust Company, on February 21, 1939, for the sum of $3,600 and that at and prior to the time of the purchase Wright knew that the Board contended that it had received only $10,000 for said twenty warrants. However, our approval of the correctness of the findings of the trial court does not necessarily mean that the judgment appealed from must be affirmed;...