Anderson v. Sokolik

• Decision Date: 23 May 1956
• Citation: 88 So.2d 511
• Parties: James M. ANDERSON et al., Appellants, v. Morris SOKOLIK and Florence Sokolik, his wife, Appellees.
• Court: Florida Supreme Court

Page 511

88 So.2d 511

James M. ANDERSON et al., Appellants, v. Morris SOKOLIK and Florence Sokolik, his wife, Appellees.

Supreme Court of Florida, En Banc.

May 23, 1956.

Rehearing Denied July 19, 1956.

Harry B. Smith, Miami Beach, Smathers, Thompson, Maxwell & Dyer, Feibelman & Friedman, Loftin, Anderson, Scott, McCarthy & Preston, Charles F. Zokvic, Fogle & Fordham and Frank C. Oldham, Miami, for appellant.

A. J. Kaplan, Miami Beach, for appellees.

TERRELL, Justice.

The gravamen of this suit is a 99-year lease, hereinafter referred to as the 'lease'. Morris Sokolik and Florence Sokolik, his wife, filed their complaint against Ocean Park Company, also known as Ocean Park Company, Inc., a Florida corporation; Ozac, Inc., a Florida corporation, R. W. Weeks & Son Plastering Contractors, Inc., a Florida corporation; Bristol Insulation Co., Inc., a Florida corporation; Tri-City Electric Company, Incorporated, a Florida corporation; Tilecraft, Inc., a Florida corporation; Isidore Greenfeder and Nat Fechtner, d/b/a Service Plumbing Company; Maule Industries, Inc., a Florida corporation; Reed Frame Company, f Florida corporation; Reed Frame Company, a Florida Gersten; and Jacob Solomon and Yetta Solomon, his wife. The complaint prayed: (1) That defendant fee owners be enjoined without bond from proceeding further with a certain cause in the Civil Court of Record, Dade County, to secure possession of the premises therein described and that the court determine the rights of the parties; (2) that foreclosure and an accounting against Ocean Park Company and Ozac, Inc., be decreed, including a deficiency judgment against them if the mortgaged premises do not sell for a sum sufficient to pay the claim of plaintiffs; (3) as to defendant Joseph Gersten, the prayer is for immediate restoration of the furniture described in the complaint or for full payment thereof or judgment for its removal, including a reasonable attorney's fee for legal services expended in the cause.

A brief factual recital would clarify the atmosphere. On April 26, 1951, the Solomons executed a 99-year lease to Ocean Park Company, a Florida corporation, which became indebted to Ozac, Inc., a Florida corporation, in a large sum as evidenced by promissory note secured by mortgage deed describing the 99-year lease; that the said note and mortgage deed were purchased by and were assigned to the plaintiffs (the Sokolics) and recorded in Mortgage Book 360 at page 220; that Ocean Park Company constructed a 30 room building on said property, 19 rooms of which were furnished and all of which were encumbered by the mortgage. The suit to foreclose the mortgage was precipitated because Ocean Park Company failed to meet the conditions of the mortgage in that it neglected to pay taxes as they became due; it failed to pay sums due for labor and materials furnished; it failed to pay owners of the fee, the lessors, the sums due as rentals on the leased property and prior to the institution of this suit, Jacob and Yetta Solomon, lessors and also owners of the fee, instituted eviction proceedings in the Civil Court of Record of Dade County to secure possession of the leased premises.

After filing the eviction proceeding to foreclose the lease, the lessors (the Solomons), being the fee simple owners, sold their interest to Royal Food Products, Inc., a corporation which was controlled by appellees. Royal Food Products, Inc., then substituted itself as a party plaintiff in the action pending in the Civil Court of Record of Dade County to secure possession of the leased premises, to cancel said 99-year lease for non-payment of rent and for other reasons. Royal Food Products, Inc., then had itself substituted in the instant cause as party defendant in place of the original lessors, the fee simple owners.

At final hearing, the chancellor decreed that the leasehold interest was devoid of value since the lessee had been lawfully evicted by court order and being so, the claims of the mortgagee and the mechanic lienors against the leasehold interest were worthless. The court further decreed that Royal Food Products, Inc., held title to the leased premises, free of any encumbrance account of the statutory laborers' and mechanics' liens sought to be foreclosed. James M. Anderson and other defendants named as appellants have appealed from the final decree so entered.

The effect of the final decree in the Circuit Court is to terminate the 99-year lease, and permit Royal Food Products, Inc., a corporation controlled by the Sokoliks, to acquire the property without satisfying the mechanics' liens imposed on it for constructing the 30 room building. The point for determination is whether or not under the circumstances this should be permitted.

The chancellor answered this question in the affirmative on the theory that the lease did not require the lessee to construct a building or buildings on the leased property and that there was complete absence of any showing of privity of contract between any of the lienors and the fee owners, and further that the allegations of fraud by the lienors against the plaintiffs and Royal Food Products, Inc., were not proven.

It may be that no specific provision of the lease requires the construction of a building on the leased premises. It is a 38 page instrument, however, and one cannot read and construe it as a whole without reaching the conclusion that when it was executed, the parties contemplated the construction of improvements on the leased premises.

Article IV(A) of the 99-year lease requires payment of all taxes 'on the land and all buildings, fixtures and improvements now or hereafter thereon.' Article V, among other things, provides, 'irrespective of the fact that the lessee is obligated by the terms of this lease to cause improvements to be installed in or constructed upon the premises, nevertheless all persons with whom the lessee may deal, are put upon notice that the lessee has no power to subject the lessors' interest to any claim for mechanics' or materialmen's liens and all persons dealing with the lessee must look solely to the credit of the lessee and to the lessee's assets and not to the lessors or the lessors' assets.'

Article VI inter alia provides that the 'lessors shall have a first lien * * * on the buildings required to be placed upon the premises * * *.' Article VII(A) provides that the 'lessee covenants and agrees that it will, at all times, and at its own expense, keep all buildings and improvements, situated on the demised premises insured * * *.' This section fixes the amount of insurance that must be carried. Articles VIII and IX deal with payment of fire and windstorm insurance premiums. Article XI entitled 'Lessee's Obligation to Build' uses the term 'may' in reference to any building the lessee may propose to erect but requires that they be placed in accordance with approved plans and specifications, and that such improvements become a part of the realty whether by default or by ordinary lapse of time. Article XIV entitled 'Default' has to do with failure to build or rebuild as provided and subjects the lease to forfeiture, including buildings and improvements thereon. Article XXII fixes time and conditions of lessee's option to purchase and Article XXIII is pertinent because it fixes the form of notice to be given not only before building is commenced but after building is completed as well and shows that the parties contemplated the construction of buildings or improvements on the leased premises.

Despite the ruling of the chancellor that there was no specific provision of the lease requiring construction of improvements on the leased premises, we think the foregoing and other provisions of the lease show conclusively that both parties contemplated that buildings or other improvements would be constructed according to plans and specifications to be approved and that they were in fact placed on the premises. It is perfectly obvious that both parties knew that the improvements were the pith of the lease and except for them the lease would not have been executed. They were essential to the purpose of the lease and when the lessee contracted for them, he did so 'in accordance with a contract' with the lessors whose interest in the property was then subject to the mechanics' and materialmen's liens.

The governing statute is F.S. § 84.03(2), F.S.A., as follows:

'Except as provided in §§ 84.12 and 84.13, such liens shall extend to, and only to, the owner's right, title or interest existing at the time of the visible commencement of operations of thereafter acquired in the real property (not exceeding forty acres of land). When an improvement is made by a lessee, in accordance with a contract between such lessee and his lessor, liens shall extend also to the interest of such lessor. If any part of the real property subject to such liens be removed before the discharge thereof, such removal shall not affect the rights of lienors in respect to either the remaining real property or the part so removed.'

In Robert L. Weed, Architect, Inc., v. Horning, 159 Fla. 847, 33 So.2d 648, this court considered various provisions of F.S. Chapter 84, F.S.A., relating to mechanics' liens and held inter alia that said act should be liberally construed to protect laborers and materialmen. This is true whether the obligation to build is express or implied. In either event, the lease attaches to the interest of the lessor fee simple owner. Any other interpretation would make it possible for lessors and lessees to evade the mechanics' lien law and defeat the claims of laborers and mechanics. It would be an open invitation to set at naught the mechanics' lien law and leave the laborer and mechanic without protection. Appellants were materialmen and contractors who had furnished labor and material. They were not parties to the lease agreement consequently questions as to terms of the lease should be resolved in their favor. ...