Court Opinion

ID: 3393470
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:57:13.878963+00
Date Added: 2024-06-11T13:12:14.038918
License: Public Domain

The Everglades Cypress Company in this suit maintained that its claim for $1250.00 against the State Bank of Orlando 
Trust Company, which was taken over by the Comptroller on August 5, 1929, to administer its affairs, was a preferred claim and as such should be paid from the assets of the Bank with other preferred claims in preference to the claims of the general or ordinary creditors.
The Liquidator admits the character of the claim as one entitled to be classed as preferred but says that there are not enough funds in hand chargeable with a trust to pay in full all preferred claims.
The complainant denies that statement and alleges that all claims of the preferred class presented within the time allowed by law amount to $174,144.00 including those contested and uncontested, that the Bank had on hand when it *Page 682 
closed cash in hand and sundry balances and cash items amounting to the sum of $214,890.39. By stipulation entered into between the parties it was agreed that the cash on hand and on deposit in other Banks amounted to the sum of $205,758.89, and securities pledged with other Banks to secure loans. Those securities, called bills receivable, amounted to $1,566,424.99.
The cash items and deposits in other Banks were made up as follows:
Cash in vaults..................................$58,231.78 Deposit with Atlantic Natl. Bank................ 55,850.21 Deposit with National Park Bank of New York..... 76,845.20 Deposit with Eleven other Banks named........... 14,831.70 __________ $205,758.89
It was also agreed that the Bank owed the Atlantic National Bank the sum of $200,000.00 evidenced by two demand notes of one hundred thousand dollars each and it owed the National Park Bank the sum of $200,000.00 evidenced by a demand note for that amount and that the Atlantic National Bank held the collateral as security for the payment of all three notes. The exhibits attached to the stipulation show two notes to the Atlantic National Bank for $100,000.00 each and one note to the National Park Bank for $300,000.00 instead of $200,000.00. That variation between the agreed statement of facts and the exhibits seems not to have merited any explanation. One of the notes to the Atlantic National Bank showed seven payments on account of that note from Sept. 14, 1929, aggregating $95,197.50, and the other showed four payments from August 15, 1929, aggregating $84,834.27 and one payment on July 31, 1929, a few days before the Orlando Bank closed, of $8,736.25, making a total of $93,570.52. The indorsement of the note of $300,000.00 to the National Park *Page 683 
Bank shows payment received Nov. 25, 1929, signed by the Chase National Bank of New York.
It is stipulated that when the Orlando Bank closed both the Atlantic National Bank and the National Park Bank "offset the deposit" of the Orlando Bank in the two Banks respectively against the notes held by them against the Orlando Bank. The indorsements on the three notes do not show that transaction. It is also agreed that after such deductions were made "the remainder of said indebtedness due" the two Banks "was paid by collections received on said collateral to the extent of $199,149.63. and money paid by the Liquidator of The State Bank of Orlando  Trust Company to said loaning banks."
Now if the credits appearing on the backs of the two notes held by the Atlantic National Bank do not include the deposit of the Orlando Bank then it appears that the Atlantic National Bank was overpaid $44,618.23 but if those recorded payments do include such deposit then there remained due on the two notes $11,231.98. If the deposit held by the National Park Bank was at once set off by it against the note which it held of the Orlando Bank, and which the terms of that note authorized it to do, there was left a balance due that Bank of $123,154.80 which added to the assumed balance due the Atlantic National Bank of $11,231.98 there remained a balance due both Banks of $134,386.78, but according to the stipulation the sum of $199,149.63 was collected on the collateral "bills receivable" and paid over to those Banks, a discrepancy of $74,450.22, which also seems to have merited no explanation.
The stipulation also recites that after deducting $199,149.63 collected on the collateral to pay the two Banks there remained collateral "amounting to approximately" $1,350,000.00 which shows a discrepancy of $17,275.36 which is not explained.
On the other hand, if all the credits of money paid appearing *Page 684 
on the two notes held by the Atlantic National Bank represented collections upon the collateral security held by it after deducting the deposit of $55,850.21 and if likewise collections on such collateral were paid to the National Park Bank after deducting the deposit in that Bank it would have required a sale of $267,304.80 of collateral. If the cash in the vaults and deposits in other Banks amounting to $73,063.48 in all were used to pay the two Banks then only $194,241.32 of collateral was necessary to be sold, another slight variance of only $4,908.31 appears which the Liquidator failed to explain in the stipulation. That difference however is four times greater than the complainant's claim.
The above figures are given by me to show the careless, inaccurate, and entirely inefficient and unsatisfactory statement of the Liquidator of the Orlando Bank in giving an account of his stewardship of the Bank's funds to a person entitled to and who admittedly holds against the Bank a preferential claim. A Liquidator is a mere custodian of trust funds, the clerk and agent of the Comptroller performing his duties under the supervision of that executive officer, and should be at all times able and willing to give an accurate account of his stewardship to the persons who are legally and equitably entitled to it and the funds in his possession.
Approximations and vague general statements concerning the administration of trust funds may be acceptable in some circumstances but they may not be said to be satisfactory or even reasonable when a court requires a frank and complete account of a trustee's stewardship.
There is much irrelevant discussion and "learned talk" about what portion of a defunct Bank's deposits in other Banks may belong to it and to what extent such credits are assets of the defunct bank, but the answer admits that when the bank closed it had $214,000.00 cash and cash items *Page 685 
and balances, eight thousand two hundred dollars more than the bill charged and the stipulation shows. After deducting the deposits in the Atlantic National Bank and the National Park Bank there remained $85,087.00 to which should be added $1,350,000.00 of returned securities making a total of $1,435,087.00 of assets.
Of the returned securities the stipulation does not show what portion has been collected but stated that from all sources the Liquidator has collected $459,451.82 which added to the cash in vaults and on deposit in other banks would make a total of more than one half a million dollars. It is admitted that the total of preferred claims filed with the Liquidator amounts to $142,022.69, so according to the admissions of the Liquidator there are funds enough to pay the preferred claim of the complainant.
I agree with the opinion of Mr. Justice TERRELL that the decree should be reversed, but I think it should be done upon the showing made by the Liquidator in his answer and in the stipulation entered into between him and complainant's solicitor.