Talco Capital Corp. v. Canaveral International Corp.
Decision Date | 23 January 1964 |
Docket Number | Civ. No. 63-125. |
Parties | TALCO CAPITAL CORPORATION, Plaintiff, v. CANAVERAL INTERNATIONAL CORP. and Bimini Run, Ltd., Defendants. |
Court | U.S. District Court — Southern District of Florida |
Richard P. Kenney, Miami, Fla., for plaintiff.
Robert H. Givens, Jr., Miami, Fla., for defendants.
This action is based on a contractual agreement which the plaintiff contends is a guaranty obligation whereby the defendants guaranteed a loan, which loan was made by the plaintiff to third parties, who are not here involved.
The defendants deny that the agreement created a guaranty. They contend that the agreement in question merely permitted defendants to pay off the loan, at their discretion, if the loan was in default, in order to prevent plaintiff from foreclosing on a trust deed in which both plaintiff and defendants had security interests.
The parties orally stipulated at trial that there were only two issues to be determined by the Court:
The case was submitted to the Court on the pleadings, the pre-trial stipulation, certain oral stipulations at trial, and the documentary exhibits which were admitted at trial. No witnesses testified at the trial.
The parties stipulated that parol evidence should not be resorted to with regard to the construction of the documents; and no parol evidence was received. Pursuant to this last stipulation, the Court has taken pains, in reaching its decision, to exclude from consideration the various depositions previously filed in the case.
Before attempting to examine in detail the contractual provisions which plaintiff claims constitute a guaranty, it will be helpful to briefly outline the complicated maritime subchartering arrangements, pertaining to the vessel "Calypso Liner", which arrangements formed the factual background for the loan made by plaintiff.
At the outset, the "Calypso Liner" was in possession of the defendant Bimini Run, Limited (a wholly owned subsidiary of defendant Canaveral International Corporation) under a bareboat charter from Atlantic Corporation, the owner of the vessel. Defendants desired to subcharter the vessel to two individuals, Rehaven S. Adiel and Harold Derber, who were to form a Bahamian corporation for purposes of operating the vessel under said subcharter. This rather simple object of subchartering the vessel was, for various reasons, implemented by an unusually complex series of transactions.
The defendants on one side, and Adiel and Derber on the other, entered into an "Agreement for Charter of Vessel", dated May 27, 1962, which was a preliminary agreement, which set out the terms to be incorporated later in the actual subcharter document. While the arrangement was in fact a subcharter, it should be noted that the parties used the word "charter" in the various documents involved. To avoid confusion, the court will in this opinion also refer to the arrangement as a "charter".
In preparing to take over the "Calypso Liner" as charterers, Adiel and Derber formed two corporations, instead of the one Bahamian corporation originally intended. The corporations which they formed were: Bimini Run of Bahamas, Limited, a Bahamian corporation; and Bahamas Travel Corporation, a Florida corporation. (The defendant corporation "Bimini Run, Limited" should not be confused with the Adiel-Derber corporation "Bimini Run of Bahamas, Limited".) By a supplemental agreement, dated May 31, 1962, the defendants and Adiel and Derber agreed that the word "charterer" used in the May 27 agreement would include the Florida corporation as well as the Bahamian corporation.
In order to secure the performance of their obligations under the charter, Adiel and Derber arranged to have Universal Timber Corporation, a Delaware corporation, which was wholly owned by them, execute a trust deed on certain Tennessee timberland, which gave the defendants the right to foreclose on the land upon any default by Adiel and Derber, or their corporations, in the performance of the charter covenants.
Under the May 27 agreement, Adiel and Derber were also required to pay to the defendant Bimini Run, Limited, at the time of execution of the charter, the sum of $125,000, for advance charter hire and equipment leases. It was in regard to this required cash payment that the plaintiff Talco Capital Corporation first came into this picture. Talco is a Small Business Investment Company licensed under the Small Business Investment Act of 1958. (15 U.S.C. §§ 681-688)
Talco did make the loan, in the amount of $150,000. The loan was made to Bahamas Travel Corporation, the Florida corporation, which was organized and controlled by Adiel and Derber, in return for a promissory note from that corporation, which note was endorsed by Adiel and Derber.
Talco received separate unconditional guarantees of repayment from Adiel and Derber, individually, and from Bimini Run of Bahamas, Limited, the Bahamian corporation. Talco also received a participating interest in the trust deed on the Tennessee land, which interest was expressly stated to be superior to the interest of the defendants.
Bahamas Travel Corporation used approximately $120,000 of the proceeds of said loan to purchase from Bimini Run of Bahamas a block of passenger tickets on the "Calypso Liner", which tickets Bahamas Travel intended to sell to prospective customers in Florida. Bimini Run of Bahamas used the money received from the sale of said block of tickets to pay $120,000 of the $125,000 which it was required to pay to the defendant, Bimini Run, Limited, upon the execution of the charter.
A balance of $146,000 remains unpaid on the promissory note, which Bahamas Travel Corporation executed to Talco. This sum has been past due since November 1, 1962. It is this sum, with interest, that Talco seeks to recover from the defendants in this cause.
Talco contends that the defendants guaranteed repayment of the loan by virtue of certain provisions in the May 27 and May 31 agreements, which provisions will now be more closely examined.
The first provision to be considered is paragraph 9 of the May 27 agreement. This paragraph refers to Talco and to the loan transaction; and said paragraph 9 is one of the primary grounds for plaintiff's claim against the defendants herein. While paragraph 9 is rather long, it must be set out herein in its entirety if it is to be understood:
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