Allstate Finance Corporation v. Zimmerman, 17774.

• Decision Date: 01 December 1959
• Docket Number: No. 17774.,17774.
• Citation: 272 F.2d 323
• Parties: ALLSTATE FINANCE CORPORATION and LeRoy Collins, Governor of the State of Florida, for the Use and Benefit of ALLSTATE FINANCE CORPORATION, Appellants, v. Irving ZIMMERMAN et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

272 F.2d 323 (1959)

ALLSTATE FINANCE CORPORATION and LeRoy Collins, Governor of the State of Florida, for the Use and Benefit of ALLSTATE FINANCE CORPORATION, Appellants, v. Irving ZIMMERMAN et al., Appellees.

No. 17774.

United States Court of Appeals Fifth Circuit.

December 1, 1959.

Melvin T. Boyd, T. J. Blackwell and Blackwell, Walker & Gray, Miami, Fla., for appellants.

Milton M. Ferrell, Martin Lemlich, Miami, Fla., for appellees.

Before HUTCHESON, TUTTLE and WISDOM, Circuit Judges.

HUTCHESON, Circuit Judge.

This appeal from an order¹ dismissing plaintiff's suit, without leave to amend, presents the single question whether it presented a recoverable claim.

This is the record: Alleging that the defendants, by the trespasses and other acts set forth in its Second Amended Complaint, had damaged the property described in the complaint; that at the time of such trespasses and damage plaintiff was the holder of a mortgage on the property; and that later, through a foreclosure sale it had become the owner of, and entitled to the possession of the property, plaintiff sued for $35,000 compensatory and punitive damages.

The defendants moved to dismiss on the grounds in effect: that the complaint showed on its face that at the time the cause of action sued on arose, plaintiff had no title to the property and no right to its possession, and, therefore, had no right to, or interest in, the cause of action it sought to assert; and that, if a cause of action against defendants arose out of the acts alleged, it accrued not to plaintiff, the mortgagee out of possession, but to the mortgagors, and plaintiff does not allege or claim that the mortgagors at any time or in any way assigned this cause of action to it.

In addition, defendants alleged in effect that at the foreclosure sale the plaintiff, by bidding for the property the full amount of the mortgage and crediting the judgment and mortgage as fully paid, had been paid in full the amount of the mortgage debt and the only parties who had the necessary interest to maintain the action would be the mortgagors.

These motions coming on to be heard, the district judge, treating the motions as for summary judgment,² on Feb. 18, 1959, entered the order appealed from. On Feb. 26, 1959, appellant filed a motion styled "Motion to Settle Order", in which it was alleged that the recital of sub-paragraph (c) of the order of dismissal, "There was a foreclosure sale had in the State Court on Dec. 4, 1957, at which sale the plaintiff, Allstate Finance Corporation, received payment in full for the indebtedness secured by the said mortgage." is not a statement of fact but merely a conclusion; and that "the attorneys of record have never made such a statement to the court or to anyone else, and in truth and in fact the plaintiff has always made the representation that it merely bid in the property at the time of the sale and received not one penny of payment from any person or corporation."

On March 6, 1959, the defendants filed their response to this motion, asserting: that at the hearing the district judge was advised that plaintiff had bid the property in for the full amount of the debt; that the decree in the State Court foreclosure and the certificate of sale issued by the Clerk were read to the district judge; and that they fully support his finding and conclusion that plaintiff had received payment in full of its mortgage debt, and is without right to sue.

On March 16, 1959, the plaintiff, abandoning its motion to settle judgment, appealed and is here urging: that there was no basis for the court's finding that the purchase of the property at the mortgage sale for the amount of the mortgage debt and judgment had satisfied them; and that the motion to dismiss was therefore without sound basis; and the judgment should be reversed.

The appellees, first moving to dismiss the appeal on the ground that the Motion to Settle the Order had deprived the dismissal order of finality, and, later, in open court, abandoning their motion, urge upon us that the district judge was right both because, under the law as it is settled in Florida and generally elsewhere, plaintiff had no right to maintain the action it brought for damages to the property,³ and because if it ever had an action for damages to its security, the satisfaction of its mortgage had extinguished it.

We are of the clear opinion that appellees are right. It is settled in the law of Florida, indeed appellant on argument conceded that, since plaintiff was without title to, or possession of, the land at the time of the claimed trespasses, no action for the damage it seeks had then accrued to it. Its claim is that, under the doctrine of relation back, its acquisition in the foreclosure suit of title to the land in some way gave it title to the mortgagors' cause of action.

It is Hornbook law that the doctrine of relation back applies only to the title acquired by the purchaser at the foreclosure sale and means only that it relates back to the giving of the mortgage, and that the purchaser takes the mortgagors' title to the property free from all claims to it which arose subsequent to the execution of the mortgage. Neither this doctrine, therefore, nor that of lis pendens, which merely gives notice of a pending suit, bears in any way on the question for decision here or will at all avail appellant.

If plaintiff before the foreclosure sale, or afterwards if the debt had not been satisfied thereby, had brought a suit alleging that its security was diminished and it had sought recovery of the damage, not to the property but to its security, in Florida and generally elsewhere, it would certainly have stated a claim.⁴ It did not, however, do this. Instead, without a showing that the mortgagors' cause of action for damage to the property had been assigned to it, it undertook to assert that cause of action as its own, and this it could not do.

If,...