This suit was instituted in Okeechobee County, Florida, in August of 1931 by the County of Okeechobee against the Florida National Bank of Jacksonville and the Liquidator of the Peoples Bank of Okeechobee.
This case comes to this Court on appeal from a final decree rendered by the Circuit Court for Okeechobee County, Florida. The final decree was in favor of the defendant, The Florida National Bank of Jacksonville.
On January 19, 1940, this Court filed an opinion written by Mr. Justice BUFORD reversing the chancellor, Elwyn Thomas, and remanding the cause for further proceedings. Justice Chapman dissented from the majority opinion. A petition for rehearing was filed by the appellee, The Florida National Bank of Jacksonville, which was granted, and the case is before this Court again on rehearing.
By this suit the plaintiff sought to hold The Florida National Bank personally liable for $81,361.54 which Okeechobee County had on deposit in the county depository, Peoples Bank of Okeechobee, and which was lost when the Peoples Bank closed on June 5, 1929.
The Florida National Bank filed its appearance and a motion to dismiss based upon 12 U.S.C.A., Section 94, which confers upon national banks the privilege of being sued in the courts of the county in which the bank is located. *Page 523 This venue privilege was briefed and argued and an order was entered dismissing the suit as to The Florida National Bank. Thereupon an appeal was taken by the county and the lower court was reversed by a divided Court. See 150 So. 124; 112 Fla. 309.
After the case was remanded on the venue question, The Florida National Bank filed a motion to dismiss the bill on the equities. This motion was denied by the circuit court and from this order an appeal was taken to this Court by the Florida National Bank. This Court affirmed the order of the circuit court. The opinion appears in 157 So. 570, 117 Fla. 262, in which it was stated:
"The extent of the liability of each of the banks is a matter which must be determined either upon pleadings or upon pleadings which present issues and proof submitted in support thereof.
Therefore, we do not undertake at this time to determine whether or not a liability exists on the part of either bank, or, if it does exist, the amount thereof.
"We only here determine that the bill of complaint contains sufficient equity and sufficient allegations to require an answer thereunto."
After the decision of this Court holding the bill of complaint sufficient to require an answer, The Florida National Bank filed its answer to the bill. This answer admitted certain allegations of the bill, expressly denied many of its averments and then set up a number of affirmative defenses.
In order to test the legal sufficiency of the affirmative defenses, plaintiffs filed a motion to strike. The circuit court granted certain parts of the motion to strike but denied the motion as to certain of the affirmative defenses. After the order was entered sustaining as a matter of law, certain of the affirmative defenses contained in the answer, the cause was at issue upon the bill and answer. *Page 524
Upon stipulations of facts and oral testimony, the case came on for final hearing upon the bill of complaint, the answer thereto, such of the oral testimony as was relevant and admissible and the stipulations of facts.
After the final hearing the case was argued at length, briefs were submitted and after mature consideration, a decree was entered under date of October 18, 1938, dismissing the bill of complaint as to The Florida National Bank. The learned chancellor after relating many of the pertinent facts and circumstances, stated in his opinion as follows:
The circumstances above related should be given great weight in a court of equity, and the court feels that to fix the responsibility on The Florida National Bank for the amount of the deposit in the Peoples Bank of Okeechobee at the time it closed would work an injustice."
The case is now here on appeal from the final decree of the circuit court.
Appellant contends that this Court is limited upon this appeal to the consideration of the reasons advanced by the learned chancellor for On decree, rather than the correctness of the decree itself. On the contrary, appellee contends that said final decree is supported in law and in fact by the record, and upon this appeal must be affirmed; and that, although appellant may show that some of the views taken by the court below were erroneous, nevertheless consideration of the whole record establishes that the decree was unexceptionable, no matter what reasoning the chancellor employed in arriving at his conclusions.
In the early case of Smith v. Croom, 7 Fla. 180 195 (1857) this Court said:
"This Court will always gladly avail itself of the light which may be furnished by the reasoning of the court below, but when it comes to decide, it has to do only with the *Page 525 conclusions as they are embodied in the judgment or decree — the logic of the judge is beyond its control.
"From a careful review of the authorities, we are satisfied that an appeal in equity is substantially a rehearing of the cause and that the appeal opens the whole case to the respondent in the appellate court; and although the appeal may show that the view taken by the court below was erroneous, yet on the other hand the respondent may argue, and show if he can, that upon the whole case the same result must be attained here." See also, Roe v. Roe, 95 Fla. 488, 117 So. 108 (1928), headnote 5:
"A correct ruling of a chancellor will not be disturbed because of erroneous or wrong reasons assigned therefor, it being with the ruling itself and not with the reasons given therefor with which an appellate court is concerned." Reynolds v. Smith, 49 Fla. 217; Hoope v. Crane, 56 Fla. 395; Bell v. Niles, 61 Fla. 114; Sherlock v. Varn, 64 Fla. 447; Warren v. Warren, 66 Fla. 138; Eli Witt Co. v. Somers, 99 Fla. 592,127 So. 333; Ritch v. Adams, 102 Fla. 983, 136 So. 718; Knight v. City of Miami, 127 Fla. 585, 173 So. 801; Gulf Coast Title Co. v. Walters, 124 Fla. 134, 168 So. 537.
The bill of complaint iterated and reiterated that a large sum of the county's money was on deposit in The Florida National Bank at the time Peoples Bank closed and at the time of the institution of this suit.
Among other things the bill avers:
"Under the provisions of said trust agreement of April 10, 1927, said funds were on June 5th, 1929, and have ever since been, on deposit in The Florida National Bank of Jacksonville, Florida. . . ."
"Said moneys being on deposit in the Florida National Bank of Jacksonville, Florida, pursuant to said agreement of April 10, 1927, as trust funds belonging to said County, *Page 526 of Okeechobee, were not affected by the closing of the Peoples Bank of Okeechobee, Okeechobee, Florida, but are, or should be, in the Florida National Bank . . ."
". . . On the 5th day of June, A.D. 1939, the said The Florida National Bank of Jacksonville, Florida, declined to honor any further drafts, warrants, claims, vouchers, cheques or orders on said account. . . ."
". . . The said The Florida National Bank of Jacksonville, Florida, holds, or should be holding, the said sum of money, viz.: $81,361.54, on deposit in its said bank in Jacksonville, Florida. . . ."
The proof shows to the contrary: "That on August 10, 1929, the account of the Peoples Bank of Okeechobee, with the Florida National Bank, was finally closed and from and since August 10, 1929, the said The Florida National Bank has not had and does not now have any money, funds, credits or deposits of any nature or kind whatsoever, theretofore received from said Peoples Bank of Okeechobee," which shows that the account with The Florida National Bank was fully and finally closed on August 10, 1929. The proof is further, that:
"All of the proceeds of the sale of State Road No. 29 bonds that were deposited in The Florida National Bank of Jacksonville, were deposited by and to the credit of Peoples Bank of Okeechobee and subject to its checks and orders and were not deposited by or to the credit of the County of Okeechobee nor were the same subject to the check, draft, warrant or other order of the County, nor did said County ever at any time draw any checks, drafts, warrants, vouchers or orders upon said The Florida National Bank of Jacksonville."
"That no money ever came into the hands of The Florida Bank in connection with the aforesaid agreement of April 10, 1927, except the initial deposit of $480,851.83 made by *Page 527 and to the credit of Peoples Bank of Okeechobee in April, 1927, all of which was repaid in full to said Peoples Bank and/or its receivers more than two years prior to the institution of this suit."
In the bill of complaint, grave charges of misconduct are made against The Florida National Bank and wrong-doing is attributed to it. It is charged in this connection that D.R. McNeill was the "agent" of The Florida National Bank and that "as its representative," he sought improper action from the county officials in fraud of the county's rights. On this point the averments of the bill are:
"Complainants therefore say that by reason of the irregular release of said pledged and hypothecated securities, which release was improperly secured by the Peoples Bank of Okeechobee, Florida, and in the said The Florida National Bank of Jacksonville, Florida, the complainants . . . have lost the net sum of $81,361.54. . . ."
"The action aforesaid was undertaken at the request of D.R. McNeill, who was President of Peoples Bank of Okeehobee, Okeechobee, Florida, and who then and there acted as the duly authorized representative of The Florida National Bank of Jacksonville, in seeking said action by said Board."
"That said three trustees, namely, the said Board and the said two banks, could not by agreement and connivance, the one with the other, deprive those for whom they were trustees. . . ."
But on the contrary, the proof before the chancellor shows:
"The safe keeping receipts issued by the Federal Reserve Bank and held by the County Commissioners of Okeechobee County were surrendered to The Florida National Bank through the Peoples Bank in regular course of business by United States mail and without any knowledge of said *Page 528 Florida Bank or any alleged irregular or unlawful action or conduct on the part of anyone."
"That the Florida National Bank never at any time requested or authorized the Peoples Bank of Okeechobee or D.R. McNeill to request or procure a release or surrender of any of the securities pledged to the County, and The Florida National Bank never had any knowledge that any request for a release or surrender of securities was ever made."
Upon the evidence above quoted, the chancellor found that the Florida National Bank had no knowledge of and did not participate in the alleged irregular transaction complained of. The decree recites: "It seems to be established that this meeting was not regularly held and that The Florida National Bank had no knowledge of, or participation in, the transactions then had between the Board of County Commissioners and the representative of the Peoples Bank of Okeechobee. Again from the final decree: ". . . that The Florida National Bank did not participate in the negotiations with the Board of County Commissioners of May 6th, 1929. . . ."
The plaintiff failed to prove the two material averments of the bill above referred to. On the contrary, the proof clearly establishes that these averments are untrue.
On April 10, 1927, The Florida National Bank of Jacksonville, the Peoples Bank of Okeechobee and the Board of County Commissioners of Okeechobee County entered into the following contract:
"This agreement entered into this 10th day of April, A.D. 1927, by and between Florida National Bank of Jacksonville, Florida, Peoples Bank of Okeechobee, Florida, and Board of County Commissioners of Okeechobee County, Florida, has for its purpose the following:
"In consideration of the loan to the Peoples Bank of *Page 529 Okeechobee by the Florida National Bank of Jacksonville of $300,000.00 of obligations of the United States of America, and other bonds as represented by Custodian's Receipts Nos. 1424, for $28,000, 4010 for $50,000, 4113 for $10,000, 4142 for $100,000, 4143 for $75,000, 4150 for $25,000, and 4151 for $25,000 of the Jacksonville Branch of the Federal Reserve Bank of Atlanta, Georgia, assigned to the Board of County Commissioners of Okeechobee County, the Peoples Bank of Okeechobee has directed that the proceeds of the Okeechobee County Road No. 29 Bond Issue amounting to approximately $500,000.00 be deposited with the Florida National Bank of Jacksonville, in an account designated 'Peoples Bank of Okeechobee.' It is understood that the bonds referred to are to secure the aforesaid deposit and said funds so deposited are to be withdrawn from the Florida Bank of Jacksonville, by the Peoples Bank of Okeechobee, or to be withdrawn by the County Commissioners of Okeechobee County, from the Peoples Bank of Okeechobee only upon surrender by the Board of County Commissioners of Okeechobee County, to the Florida National Bank of Jacksonville, through the Peoples Bank of Okeechobee, of the Custodian's Receipts in the following manner:
"None of said Custodian's Receipts shall be released by said Board of County Commissioners until the aforesaid deposit with the Florida National Bank of Jacksonville has been reduced, by withdrawals therefrom by the Peoples Bank of Okeechobee, to a sum equal to the face value of all said Custodian's Receipts ($300,000.00). Thereafter the said Custodian's Receipts shall be surrendered and released by the Board of County Commissioners of Okeechobee County, Florida, through the Peoples Blank of Okeechobee, to the Florida National Bank of Jacksonville, in blocks of $50,000.00 face value. When the deposit described herein has been reduced to $300,000.00, $50,000.00 of the Custodian's *Page 530 Receipts shall be released. When the deposit has been reduced to $250,000.00, $50,000.00 of the Custodian's Receipts shall be released. When the deposit has been reduced to $200,000.00, $50,000.00 of the Custodian's Receipts shall be released. When the deposit has been reduced to $150,000.00, $50,000.00 of the Custodian's Receipts shall be released. When the deposit has been reduced to $100,000.00, $50,000.00 of the Custodian's Receipts shall be released. When the deposit has been reduced to $50,000.00, the remainder of the Custodian's Receipts shall be released as prescribed herein by the Board of County Commissioners of Okeechobee County to the Florida National Bank of Jacksonville through the Peoples Bank of Okeechobee.
"It is agreed between the parties hereto that the Custodian's Receipts referred to herein shall be kept in a vault for safekeeping, preferably in a lock box on which two keys are required to open, and it is further understood that in the event all or any portion of said Custodian's Receipts are lost or misappropriated by the officials to whom they are delivered by the Peoples Bank of Okeechobee, then the Florida National Bank of Jacksonville, shall deduct from the said deposit a sum equivalent to the par value of such said Custodian's Receipts as are lost or misappropriated."
Under the terms of the agreement, The Florida National Bank of Jacksonville was to be released from obligation thereunder by the reduction of the deposit referred to. The evidence before the chancellor was clear that the county, through its officers, the board of county commissioners, had made withdrawals from the Peoples Bank of Okeechobee, to a point below $50,000.00, releasing the Florida National Bank from obligation wider the terms of this agreement.
It is contended that The Florida National Bank should be chargeable with two redeposits in the Peoples Bank of Okeechobee after withdrawals had been made of a portion of the *Page 531 deposit, the subject matter of the said agreement. These two deposits were held by the learned chancellor to be unsecured by the Florida National Bank's contract of April 10, 1927. The evidence before the chancellor is clear and undisputed that these two additional deposits (if they can be said to be deposits) never came into the possession of The Florida National Bank. One of the so-called deposits was a book credit as interest by, the Peoples Bank of Okeechobee of $2,439.50 entered on the Peoples Bank ledger, and the other so-called additional deposit was a matter of transferring on the books of the Peoples Bank of Okeechobee, an item of $31,500.00, by drawing a warrant on another county fund in the Peoples Bank and having the account in question credited with it. There is nothing in the record to show that The Florida National Bank was a party to such transaction or that it had any knowledge of the transaction.
The learned chancellor correctly held that these two items were not properly chargeable against The Florida National Bank, for to hold otherwise as to the latter of these two would be to hold that The Florida National Bank is liable on its express guaranty of a specific deposit in one account for money already on deposit in another and different account, simply because the County had figures transferred on another bank's account books, thereby switching the credits. This can hardly be termed adeposit by the County.
But it is contended that the agreement above quoted isultra vires. If the agreement is void, The Florida National bank, which received the deposit under the ultra vires contract, became merely a debtor, and did not become a trustee or co-surety unless there had been fraud or misconduct on its part. See Texas Pacific Railway v. Pattorff, 54 U.S. Sup. Ct. 416, 78 Law Ed. 514. From what has been said before, it is clear that there was no wrong-doing or misconduct *Page 532 proven on the part of The Florida National Bank. When this case was before this Court before (157 So. 570), there was not and could not be a decision on the facts; only the sufficiency of the pleadings was in question, and what was said then could not predetermine whether The Florida National Bank, under the proof, was trustee, debtor, or legally liable in any capacity.
The record does not show any covin, deceit or fraud of any kind on the part of The Florida National Bank so as to make it liable for the acts of the Peoples Bank of Okeechobee. Anultra vires pledge of its assets in good faith to secure a deposit of public funds, in another bank, does not create the relationship of trustee, but that of debtor. See Leonard v. Gage, 94 Federal 2d 19. See also, the holding by U.S. District Judge STRUM, formerly of this Court, in Ross v. Lee,15 F. Supp. 972.
Moreover, The Florida National Bank, even had it been shown by the evidence to be a co-trustee of the Peoples Bank of Okeechobee, cannot be held legally liable for the acts of the Peoples Bank of Okeechobee. A trustee is not liable to the beneficiary for a breach of trust committed by a co-trustee:
"Where there are two or more trustees, one of them is not liable for a breach of trust committed by another. Each trustee is liable only if he is himself guilty of a violation of a duty to the beneficiary." Scott on Trusts, Vol. 2, Section 224. See also, 26 R. C. L., Trusts, Section 198; Broorne v. Mordecai,117 S.C. 194, 108 S.E. 407; Purdy v. Lynch, 40 N.E. 232.
The loss of the County was occasioned by the closing of the Peoples Bank. The Florida National Bank had no part in this default. From the evidence before the chancellor it was made to appear clearly that The Florida National Bank was at all times acting in good faith. It was not *Page 533 shown that it had knowledge of the impending insolvency of its co-trustee. Moreover, the learned chancellor's findings, based on the record, establish that The Florida National Bank was guilty of no fraudulent conduct. On the other hand, the beneficiary, the County, by word and conduct, induced The Florida National Bank to turn over the County's assets to the Peoples Bank of Okeechobee, through which the County suffered a loss by reason of the failure of the Peoples Bank.
For the reasons pointed out, the decree of the learned chancellor should be affirmed.
Affirmed.
BROWN, C. J., WHITFIELD, TERRELL and CHAPMAN, J. J., concur.
BUFORD, J., dissents.
THOMAS, J., disqualified.