(75 Fla. 159) SOMMERS et al. v. APALACHICOLA NORTHERN R. CO. et al. (Supreme Court of Florida. Jan. 31, 1918.) (Syllabus by the Court.) 1. PRINCIPAL AND AGENT 78 (3)-BILL FOR ACCOUNTING-DEMURRER. and other appropriate relief, upon the alleged ficiary, wife of the insured," and it is alleged that, as changed according to the provisions of the policies for changing the beneficiary, the proceeds were made “payable after death of said Julius S. McRee to his executors, administrators, or assigns." The special pleas aver that payment was made "to EuA bill in chancery which seeks an accountgenia G. McRee as administratrix of the es- ing from the agents of the complainants of montate of Julius S. McRee," and that such pay-eys spent, profits made, and obligations incurred, ment was in accordance with the laws of the state of Alabama, where the policies were issued, and with the laws of the state of Georgia, where the beneficiary was changed, and with the laws of the state of New York, where the policies were payable. This presented an issue as to whether the contracts of insurance made in another state were as to the party to whom payment of the proceeds may be made, controlled by the Florida statute which provides that the "insurance shall inure exclusively to the benefit of the child or children and husband or wife of such person in equal portions," though by their terms the policies are made payable to the executor or administrator of the insured, and such parties are authorized to collect the proceeds under the law of the state 3. EQUITY 39(1)-JURISDICTION-FULL REwhere the contract was made. The averments of the pleas that payment was made "to Eugenia G. McRee, as administratrix of the estate of Julius S. McRee," in compliance with the policies, and that such payment was authorized by the law of Alabama, of Georgia, and of New York, are admitted by the demurrers. REMEDY AT LAW. Equity will lend its aid where there is not a complete and adequate remedy at law. LIEF. A court of chancery having jurisdiction for one purpose will retain the bill as to all other matters germane and necessary to the attainment of justice between the parties. 4. PRINCIPAL AND AGENT 78(2)-BILL FOR ACCOUNTING-COMPLICATED ACCOUNTS-JU RISDICTION. Where it is not clear that the remedy at law is full and adequate, equity will entertain jurisdiction in a cause between principal and agent to compel an accounting and for other appropriate relief, where the relations between the parties involve complicated accounts and fraudulent practices by one to benefit himself [3] The statute herein quoted cannot affect the rights of an insurer under a contract made in another state; and neither the law nor the public policy of this state forbids the payment of the proceeds of insur-at the expense of the other. ance policies to an administrator of a person who dies in this state while a resident of and domiciled therein, when the policy contracts are made in another state without reference to the laws of this state, and such contracts expressly provide that the policies shall be payable to the administrator of the insured, and payment to the administrator of the insured is authorized by the law of such other state. The administrator is appointed under the law of the decedent's domicile at his death, and this was doubtless contemplated in making the policy contracts. The demurrers to the pleas should have been overruled. Appeal from Circuit Court, Franklin County; C. L. Wilson, Judge. In American Fire Ins. Co. v. King Lumber & Mfg. Co., 74 Fla. 77 South. 168, it was held that the fire insurance policies there in controversy were issued by a foreign insurance company through an agent of the insurer in this state. Judgment reversed. Bill in equity by David Sommers and others against the Apalachicola Northern Railroad Company and others. From an interlocutory order sustaining demurrers to the bill, interposed by a part of the defendants, complainants appeal. Reversed. Y. L. Watson, of Quincy, and W. C. Marshall, of St. Louis, Mo., for appellants. W. J. Oven, of Tallahassee, and George H. Williams, of St. Louis, Mo., for appellees. PER CURIAM. The appellants who were complainants below, exhibited their bill in equity in the circuit court for Franklin county against the appellees who were defendants below. The bill, which is very lengthy, purports to contain the history and details of a very elaborate and complicated, but fraudulent, scheme on the part of certain persons named as defendants to defraud the complainants BROWNE, C. J., and TAYLOR, ELLIS, as stockholders of the Apalachicola Northand WEST. JJ., concur. ern Railroad Company and the St. Joseph Land & Development Company, which are named as defendants, by assuming to exercise powers not resting upon them either by contract with the complainants or the corporations nor as officers or stockholders of the two corporations; by dishonest financial operations; wasteful expenditure of moneys held by them in a fiduciary capacity, and fraudulent operations under a contract with a Construction Company named in the bill as one of the defendants, which the same persons named as defendants controlled, and in which they were financially interested. with which to complete the road and make sufficient payments upon the lands to secure them. They needed $1,500,000, and applied to the defendants Whittaker & Co. and Van Riper to procure the loan, which was to be secured by a mortgage on all of the property of the Railroad Company and of the Land Company. Whittaker & Co. and Van Riper agreed to negotiate the loan for complainants, and to that end two contracts were entered into on May 10, 1905. One contract was between Duffy, Hemphill, Hauze, and Sommers on the one side and Whittaker & Co. and Van Riper on the other; Sommers being described in the contract by mistake as being associated with Whittaker and Van Riper instead of with Duffy, Hemphill, and Hauze. According to the bill of complaint the scheme was originated and is being carried out by Edwards Whittaker and H. Blaksley Collins, who were associated in business in St. Louis, Mo., as Edwards Whittaker & Co., J. C. Van Riper, president of the Illinois This contract recited that Duffy and othState Trust Company, and R. H. Hemphill ers desired to obtain $1,000,000 to construct of St. Louis, Mo., who had for their object and equip the railroad for operation, the the ultimate ownership of all the stock own-stock of which company they owned and coned by the complainants in the Railway and trolled; that Whittaker and Van Riper were Land Companies which are named as defend- ready, willing, and able to obtain the sum ants, the control of those corporations by ac- desired by using the stocks, bonds, and other quiring through fraudulent means the stock securities of the road "in the manner set therein and the bonds issued by them, thus forth in another and separate agreement datplacing themselves in control of the fran-ed the chises and properties of the two corporations, which were alleged to be of the value of several million dollars. It is alleged that in this fraudulent scheme the above-named persons were assisted by certain other individuals, among whom was the defendant Xenophon P. Wilfley. The bill is too lengthy to be quoted in full, especially as little benefit would be gained by so doing. We will undertake, however, to state the substance of its allegations. day of May, 1905," and that as payment for obtaining the $1,000,000 it was "agreed that Whittaker & Co. should have one-twelfth (1/12), J. C. Van Riper onetwelfth (1/12), and Sommers two-twelfths (2/12) of said Railroad Company." The remaining eight-twelfths were to be distributed between Hauze, Hemphill, Duffy, Trump, and Beverly. All the stock was to be pledged as security for the payment of the indebtedness, and the stock should be pooled and voted for a period of 5 years according to The complainants and Hemphill were, on the terms of the "said other agreement dated the 10th and 11th days of May, 1905, and May - 1905." The second agreement for a time prior thereto, the owners of all dated May 10, 1905, was between the same the stock of the Apalachicola Northern Rail-parties, Sommers by mistake being describroad Company, a Florida corporation, which ed as of the second part instead of one of stock amounted at that time to $500,000, which was the amount of its legally authorized capital stock. Ten per cent. of the capital stock had been paid in. They were also the owners of all the stock of the St. Joseph Land & Development Company, a Florida corporation, the authorized capital stock of which is not given. The railroad corporation was organized to construct a railroad and operate it from River Junction, Fla., to St. Joseph Bay on the Gulf in this state. That the complainants and Hemphill had acquired a right of way for the railroad between the two points, lands for turnouts, switches, yards, and depots, had graded 4 miles of railroad bed, and spent $6,000 therefor, and had acquired from the state of Florida a land grant of 5,000 acres per mile. That they had also acquired an option on over 190,000 acres of land and 7,000 acres of land, with 7 miles of water front at St. Joseph's Bay. the parties of the first part. This agreement also recited that all of the parties were interested in the construction, equipment, and operation of the railroad, and that the parties of the first part had commenced the formation of a corporation to be known as the St. Joseph Land & Development Company to handle the lands and properties which they had acquired; that Whittaker and Van Riper had furnished $500,000 to be used in the purchase of the lands, options upon which had been secured as stated, and that as consideration for what Whittaker and Van Riper had done they were to receive each oneseventh of the capital stock of the corporation. The remaining five-sevenths were to be distributed between Hemphill, Hauze, Sommers, and Duffy. It was also agreed, as in the first agreement, that all of the capital stock should be pledged as collateral security for the payment of the "indebtedness mentioned in a certain agreement, dated should be held in a pool and voted for a pe- [ should be conveyed to the Land Company, riod of five years,” according to the terms of the said agreement. and that all contracts for lands should also pass to the company. It was provided that the entire bond issue of the Railroad Company should "not be less than eighty-five per cent. of their par value"; that certain lands might be sold at the price fixed; that during each year the pooling agreement remained in force the president of each of the three companies should be named by the trustees selected by Duffy; the treasurers should be selected by the trustees named by Whittaker and Van Riper; that all moneys derived from the sale of lands, timber, turpentine rights, the operation of the railroad, or from any source should be paid to the Illinois State Trust Company as trustee, and at an agreed time should be used in the payment of the indebtedness. It was further provided by this agreement that Whittaker and Van Riper should receive for their services in disposing of the notes or bonds to be issued by the holding company the sum of $750,000 to be paid in 3 years and the collateral securities of the holding company were to be held in trust for the payment of that sum of money, as well as for the payment of the $1,500,000 in bonds; that when the indebtedness should be paid the securities held by the trust company should be returned to the Florida or It is further alleged that Whittaker and Van Riper, instead of causing bonds of the Railroad and Land Companies to be issued and secured by a mortgage upon the properties of the said companies as a means for raising the money desired, they "caused Chas. B. Duffy to enter into a contract with them, dated the 11th day of May, 1905." A copy of this contract, as well as copies of the two before referred to, are attached to the bill as exhibits A, B, and C. The bill alleges that this contract of May 11th constituted part of the scheme to injure and defraud the complainants. That contract was entered into between Chas. B. Duffy of the first part and Whittaker & Co. and J. C. Van Riper, parties of the second part. It recited that Duffy owned all the capital stock of the Railroad Company which amounted, according to the contract, to $2,000,000, and that he owned all the capital stock of the Land Company, which the contract recited amounted to $1,000,000, and that Duffy desired to borrow $1,500,000 for the purpose of building the railroad and paying for the lands. It was agreed on the part of Duffy that he was to organize a corporation to be a holding company, and that the company, when organ-holding company. On the part of Whittaker ized, should become the owner of all the and Van Riper it was agreed that if they stocks and bonds of the Railroad Company were satisfied with the regularity of the proand the Land Company, and that the holding ceedings in the matter of the organization company should pledge such stocks and bonds of the corporations, and were satisfied with as collateral security for the repayment of the title to the lands, as well as the value of the $1,500,000 on or before 3 years after the same, they would "negotiate said notes date, with 5 per cent. interest; that the stock or bonds and obtain $1,500,000 as aforesaid, of the Railroad and Land Companies should and agreed to advance the sum of $250,000 be pooled for 5 years, be controlled by four of this amount to be used in exercising the trustees to be selected by Duffy and Whit- option of purchase" on certain lands. The taker and Van Riper. There should be sev- bill alleges that these three agreements were en directors in each of the companies, three prepared by the defendant Wilfley as attorney of whom to be selected by Duffy's trustees, for Whittaker and Van Riper, and that he three by Whittaker and Van Riper's trus- also organized the Florida Company in Maine, tees, and the seventh by the Illinois State and prepared all the documents, forms, stocks, Trust Company, who was to be the trustee bonds, and notes used in the transaction unin both pooling agreements; that the holding der the direction and control of Whittaker company, which was to be known as the Flor- and Van Riper. It is then alleged that the ida Company, should have seven directors defendants Whittaker and Van Riper, having selected in the same manner; that the con- secured the agreement with Duffy of May tract for building and equipping the railroad 11th, above referred to, which it is alleged should be let to the Morey Engineering & was part of the scheme to defraud the comConstruction Company at cost and 10 per plainants, proceeded unlawfully and withcent. profit. This contract, according to the out authority to increase the capital stock allegations of the bill, contained many provi- of the railroad; that they caused it to issue sions relating to the evidences of indebted- $2,000,000 of bonds, which were secured by ness which were to be issued by the Florida a mortgage on all its properties, caused the Company and the security therefor. Some Land Company to issue $2,000,000 of bonds reference is made to a collateral agreement secured by mortgage on all its properties, and collateral notes which were to be in such and then transferred its bonds to the Illiform as designated by Whittaker and Van nois State Trust Company, and have not Riper; that the money derived from the up to this time sold or negotiated any of notes was to be used to pay for the lands of them. At the same time and without any lethe Land Company and the office expenses gal authority they issued certificates for of the Railroad Company during construc- $3,000,000 of stock of the Railroad Company tion; that the title to all the lands at St. and $2,000,000 of stock of the Land Compa same to be indorsed by him in blank, and the fraudulent purpose of giving the Conwere by Whittaker and Van Riper delivered struction Company a lien upon the railroad to the Illinois State Trust Company, which properties prior to the lien of the bondholdholds the same; that the issuing of such ers of that company. That Whittaker and bonds and stocks was never authorized by Van Riper did not advance the $250,000 the complainants nor acquiesced in, consented which the contract made on May 11th proto, or ratified by them, and that no money vided they should furnish, and that they whatever was ever paid, either to the Land had received $1,500,000 for the sale of the Company or to the Railroad Company, for 1,500 5 per cent. bonds issued by the Florida any of such certificates of stock or bonds; Company, out of which they had paid $425,that as a part of the scheme to cheat and de-000 on account of the purchase of lands, and fraud the complainants Whittaker and Van Riper then caused the Florida Company to issue 1,500 bonds of the denomination of $1,000 each and 1,500 noninterest-bearing bonds of the denomination of $300 each, all to mature in 3 years; that they caused the Florida Company then to execute a mortgage to secure the payment of said bonds which aggregated $1,950,000, which mortgage was based solely on the stocks and bonds of the Railroad and Land Companies above mentioned, and which were on deposit with the Illinois State Trust Company as trustee. In addition to the above issue of bonds of $1,950,000 Whittaker and Van Riper without any authority caused the Florida Company to issue $300,000 more of bonds, which were also secured by mortgage upon the same stock and bonds for the Railroad | and Land Companies held by the Illinois State Trust Company. The bonds of the Florida Company, so illegally and unlawfully issued as stated, were, so the bill alleges, made payable in 3 years, whereas the bonds of the Railroad and Land Companies were payable in 20 years, it being intended and designed by Whittaker and Van Riper not to complete the railroad within 3 years, so that it could not be earning money enough to pay off and discharge the indebtedness, and that the Land Company should be so mismanaged that it would not yield enough revenue from the sale of lands and turpentine to pay off its indebtedness, and that upon the maturity of the bonds issued by the Florida Company the mortgage would be foreclosed, the stocks and bonds sold, and the complainants thus deprived of all their rights and interests in both companies. The bill alleges this to be the purpose of the defendants Whittaker and Van Riper. It then recites in detail the steps taken by these defendants to accomplish that purpose. It alleges that as soon as these arrangements were made Whittaker and Van Riper assumed control of the affairs of the Railroad and Land Companies; that they caused a contract to be entered into between the Railroad Company and the Morey Engineering & Construction Company which, it is alleged, they owned and controlled, for the construction of the railroad, and that they caused this company to begin work on the railroad before the mortgage given by the railroad to secure its bonds was placed upon record. This was done, so it is alleged, with that they had in their control the remainder of the proceeds of the bonds, amounting to $1,075,000, with which to construct railroads; that instead of using the money for that purpose they, pursuant to their scheme to defraud the complainants, mismanaged the affairs of the railroad through the Morey Engineering & Construction Company, squandered the money in needless and unnecessary expenses, and by fraudulent claims pretended that the total cost of building the SO miles of railroad amounted to $1,618,321, of which only about $790,000 had been paid, and that there remained due to the Morey Engineering & Construction Company a balance of $820,000 approximately. These claims, representations, and pretenses of Whittaker and Van Riper are alleged to be fraudulent, and made for the purpose of defrauding the complainants and pursuant to the scheme to acquire the ultimate ownership of the stock owned by the complainants in the Railroad and Land Companies, to secure control of the corporations and thus acquire valuable properties greatly in excess of the $1,500,000 indebtedness of the two companies, and deprive the complainants of all equity or beneficial interest therein; that as a part of this fraudulent scheme the defendants Whittaker and Van Riper refused to make any sale of turpentine rights, although at one time they had an opportunity to realize over $1,000,000 for turpentine rights from the lands upon which the complainants had secured option; that the refusal to sell these turpentine rights resulted in rendering the companies unable to meet the obligations of the Florida Company when the latter became due; that Whittaker and Van Riper then procured the Morey Engineering & Construction Company in July, 1907, when the road was completed, to institute proceedings in the circuit court for Franklin county to enforce a lien against the railroad for the alleged balance due for constructing the same; that Whittaker and Van Riper employed the counsel for that company, as well as for the Railroad Company and the Illinois State Trust Company, and that the suit was a collusion wholly controlled by Whittaker and Van Riper, based upon a pretended balance due for the construction of the railroad, which balance did not exist in fact and for the purpose of swindling and defrauding the complainants; that pursuant to this scheme and by fraud practiced on the court they secured the ap pointment of Faulhaber as a receiver for gage bonds, or $3,000,000 in place of their the Railroad Company. In the meantime $1,500,000 investment; $2,000,000 of first Whittaker and Van Riper represented to mortgage bonds, $2,000,000 of common stock, complainants that in obtaining the receiver and $250,000 of preferred stock to remain in they merely desired to preserve the status the treasury, and $275,000 of common stock of all the companies during the then finan- to be sold. This arrangement, so the bill alcial stringency of the money market, while leges, would place Whittaker and Van Ripthey were in fact secretly engaged in an at-er and the holders of the Florida Company's tempt to impose upon the court and obtain $1,500,000 5 per cent. bonds in control of the a decree by consent in favor of the Morey new company, and thus "freeze out all the Engineering & Construction Company against stockholders" of the Railroad and Land the defendants in the suit. Companies. It is also alleged that in the fall of 1907 The bill contains allegations to the effect Whittaker and Van Riper caused the Flori- that Whittaker and Van Riper, pursuant to da Company to notify the Illinois State their scheme to defraud the complainants of Trust Company that there were no funds in all their interests in the Railroad and Land the Florida Company with which to pay in- Companies and the properties and equities terest upon the coupons on the bonds issued therein which they had secured, intentionally by the Florida Company, which coupons were mismanaged the affairs of the two companies, due in September of that year; that the squandered and wasted the moneys in their railroad had been completed to River Junc- hands to be used in the interests of the two tion at a cost of $1,600,000; that the lands companies, had refused to pay the balance at St. Joseph's Bay had been fully paid for, due on the lands, had supported the frauduand that part of the purchase price of the lent claims of the Morey Engineering Comtimber lands had been paid, and there was pany which the defendants owned and congtill an indebtedness on account of the pur- trolled, and that their every act was part of chase of the lands and on account of the bal- the original scheme to defraud the complainance due to the Morey Engineering & Con- ants, which they originated at the very outset struction Company, which had a lien upon of the transaction, when the complainant apthe property of the railroad; that the replied to them to procure a loan of $1,500,000. sources of the company amounted to a total of $4,850,000, and that the liabilities of the company amounted to $2,590,000, leaving a balance in resources over liabilities of $1, 259,500; that Whittaker and Van Riper, pursuing their original scheme to defraud the complainants, proposed to form a new company, which was to become the purchaser of all the securities held by the Illinois State Trust Company for the Florida Company at a foreclosure sale of the mortgage made by the latter company. This new company was to issue $4,000,000 of common stock, $1,000,000 of preferred stock, $2,000,000 of 10-year bonds, and $1,500,000 6 per cent. 10-year bonds, making a total stock and bond issue of $8,500,000. This stock and bonds of the new company were to be distributed between the holders of the first $1,500,000 of the Florida Company's bonds and the $450,000 noninterest-bearing bonds and the holders of the $300,000 second mortgage bonds and the remainder, not so distributed, was to be sold, and that which was not sold to be placed in the treasury. The distribution of bonds and stock in the new company thus to be formed was to be made, so the bill alleges, in such manner as that Whittaker and Van Riper should receive $750,000 of preferred stock and $225,000 of common stock in the new company for the $750,000 of the Florida Company's bonds which they took as compensation for negotiating the original loan of $1,500,000 on the stocks and bonds of the Railroad and Land Company; that the holders of the $1,500,000 Florida Company's bonds should receive a like amount in com It is also alleged that the Railroad and Land Companies are officered, managed, and controlled by the defendants, and that the complainants have been denied all right to participate in the affairs of the companies, and ousted of their rights to properties which they had originally acquired for the Land Company, but they had nevertheless made written demands upon the Railroad and Land Companies and upon Faulhaber, as receiver of the Railroad Company, to bring such suits as might be necessary in the interest of the two companies to relieve them of the entanglements in which they had become involved by the fraud and mismanagement of the defendants, but that such request had been denied. The bill prays that the three contracts referred to be canceled; that the bonds and mortgages of the Railroad and Land Companies be declared a cloud upon the lands and properties of the companies; that the Illinois State Trust Company be ordered to deliver the bonds and mortgages and stock of the Railroad and Land Companies to the said companies, respectively, and that the legally owned stocks be ordered issued to the stockholders of the companies in proportion to their interest therein set out, except that Whittaker and Van Riper be divested of all interest because of their fraudulent practices; that the first and second mortgage bonds of the Florida Company be declared null and void; that the Pine Forest Land Company be enjoined from foreclosing a certain mortgage; that the amount found to be |