Adams v. Citizens Bank of Brevard, 70--562

• Decision Date: 07 June 1971
• Docket Number: No. 70--562,70--562
• Parties: Charles C. ADAMS et al., Appellants, v. CITIZENS BANK OF BREVARD, a Florida banking corporation, Appellee.
• Court: Florida District Court of Appeals

Page 682

248 So.2d 682

Charles C. ADAMS et al., Appellants, v. CITIZENS BANK OF BREVARD, a Florida banking corporation, Appellee.

No. 70--562.

District Court of Appeal of Florida, Fourth District.

June 7, 1971.

Robert T. Westman, of Stromire & Westman, Cocoa, for appellants.

Joe Teague Caruso, of Spielvogel, Goldman & Caruso, Merritt Island, for appellants-Cocoa Masonry, Inc. and Rinker Materials Corp.

Charles F. Broome, of Crofton, Holland & Starling, Titusville, for appellee.

OWEN, Judge.

This is a mortgage foreclosure suit in which the several defendants appeal from a final judgment of foreclosure in favor of the plaintiff bank.

The principal question presented here is the order of procedure to be followed by the trial court when a civil action is filed seeking relief historically cognizable only in a court of equity, and the answer contains a compulsory counterclaim legal in nature for which the defendant is entitled to (and demands) trial by jury.

Our decision is governed by the law as announced in Hightower v. Bigoney, Fla.1963, 156 So.2d 501; Sarasota-Manatee Airport Authority v. Alderman, Fla.App.1970, 238 So.2d 678, and Southwestern Life Insurance Co. v. Gerson, Fla.App.1966, 187 So.2d 63, together with the decision of the United States Supreme Court in the case of Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959), the reasoning of which was either expressly or inferentially approved in the Hightower case, supra, and the Sarasota-Manatee Airport case, supra. Applying the law and rationale of the cited cases to the facts in the case at bar, we conclude that the judgment of foreclosure must be reversed.

Although Rule 1.040 R.C.P., 30 F.S.A., which became effective January 1, 1967, eliminated the distinctions between law and equity procedure, it was not intended to abolish the substantive distinction between law and equity, R.C. No. 17 Corp. v. Korenblit, Fla.App.1968, 207 So.2d 296, nor does the merger of law and equity operate to narrow the range of issues triable by jury, Sarasota-Manatee Airport Authority v. Alderman, supra. This is the view which the federal courts take of similar federal rules of procedure. Beacon Theatres, Inc. v. Westover, supra.

In December, 1968, appellants Adams, Randall and Arnette, obtained a construction loan from the appellee bank for the purpose of constructing an apartment building in Titusville, Florida. These appellants executed a promissory note, a construction loan agreement, and a mortgage encumbering the real property upon which the apartment building was to be constructed. Appellants Morgan and Shumway, who owned a fractional interest in the real property, joined in the execution of the mortgage. The construction loan agreement provided a schedule upon which the funds were to be disbursed as the construction progressed, and contained a number of covenants, restrictions and requirements on the part of the mortgagors, an itemization of which is unnecessary to this opinion. There was also a provision to the effect that if the mortgagors should breach any of such and should fail to cure or correct the same within five days after written notice from the bank, the latter could terminate the agreement and demand immediate payment of all sums theretofore advanced.

Construction commenced in January, 1969, and by the end of February the bank had made two advances totaling approximately $60,000. On March 3, 1969, the bank advised the mortgagors that no further disbursements would be made on the construction loan. In the latter part of April the bank gave written notice to the mortgagors that they were in default of the construction loan agreement and unless the same was cured within five days the bank would demand immediate payment of the sums advanced. The nature of the defaults was not specified. Approximately month later the bank again gave written notice of default, this time specifying the same in detail. Within a short time thereafter the bank filed this suit to foreclose its mortgage.

The complaint (as ultimately amended) alleged that the mortgage was in default because the mortgagors had (1) failed to timely pay certain taxes and interest on the sums advanced, and (2) breached certain provisions of the construction loan agreement. ¹ The answer contained several affirmative defenses, one of which was to the effect that the bank had initially breached the construction loan agreement in that it had arbitrarily and without just cause withheld further disbursements on the construction loan, thereby bringing about one or more of the conditions complained of in the complaint. The mortgagors also filed a compulsory legal counterclaim seeking monetary damages alleged to have been caused by the bank's wrongful refusal to disburse funds as required by the schedule of the construction loan agreement. The legal counterclaim contained a timely demand for a jury trial.

At pretrial conference the mortgagors orally moved the court to submit to a jury the issues made by the counterclaim, before holding a nonjury trial on the mortgage foreclosure suit. The court denied this motion and proceeded to try the case nonjury, resulting in the final judgment of...