Atlantic Shores Corporation v. Zetterlund

• Decision Date: 01 December 1931
• Citation: 138 So. 50,103 Fla. 761
• Parties: ATLANTIC SHORES CORPORATION v. ZETTERLUND et ux.
• Court: Florida Supreme Court

138 So. 50

103 Fla. 761

ATLANTIC SHORES CORPORATION v. ZETTERLUND et ux.

Florida Supreme Court, Division B.

December 1, 1931

Suit by Olof Zetterlund and wife against the Atlantic Shores Corporation. From a final decree foreclosing mortgage and from a subsequent order by which a deficiency decree was entered against defendant, defendant appeals.

Reversed and remanded. Appeal from Circuit Court, Broward County Vincent C. Giblin, judge.

COUNSEL

Loftin Stokes & Calkins, of Miami, for appellant.

Benson McGarry & Sullivan, of Miami, for appellees.

OPINION

DAVIS J.

On February 2, 1928, Zetterlund and his wife filed their bill of complaint in the circuit court of Broward county to foreclose a purchase-money mortgage. Atlantic Shores Corporation, the purchaser, and several hundred persons who had acquired rights in the lands, were named as parties defendant to the suit. The bill set up an indebtedness on the mortgage of $2,653,517.30, with interest from November 29, 1928. The original purchase price of the land is shown to have been $3,002,500.

The foreclosure was sought prior to the natural due dates of installments of the mortgage indebtedness, which was represented by fifty-one notes representing partial payments. The basis of the right to foreclose was the invocation by complainants of an acceleration clause contained in the mortgage.

The mortgage security consisted of some 800 acres of land, 70 per cent. of which are shown to have been partly submerged or swampy, and all of which were at the time of the purchase wild, unimproved, and unoccupied.

After acquiring these lands, the Atlantic Shores Corporation cleared and graded a substantial portion of the lands and made the same suitable for habitation. It did a considerable amount of dredging, built dikes, and otherwise made permanent improvements on the property which increased it in value. It caused the lands to be subdivided into lots and blocks, and laid out streets thereon, put in roads and bridges at places where they were needed, built walks, placed lighting posts, planted trees, made terraces, and christened the enterprise with the name of 'Atlantic Shores.'

The mortgage in question contained a recital to the effect that the mortgagor was going to subdivide the property and make a plat of it, and sell lots therefrom, for which releases were to be obtained from time to time, on the terms and conditions specified in the mortgage.

Originally the mortgaged premises were sold by the mortgagees to the mortgagor for $3,500,000. The same land was later purchased by the mortgagee vendors at the foreclosure sale for $200,000. Between the date of the original sale and the ultimate foreclosure, large sums of money aggregating $1,107,398.38, are alleged to have been paid over to the mortgagee vendor for principal and interest on the purchase price.

The appeal here is from the final decree and the subsequent order of the court by which a deficiency decree was entered against the Atlantic Shores Corporation for $2,834,249.09.

The assignments of error question the action of the chancellor in striking a part of the answer interposed by way of affirmative defense, and challenge the correctness of his action in entering a deficiency decree for $2,834,249.09 after having stricken the portion of the defendant's answer referred to.

That portion of the answer which was stricken by the circuit judge set up that the complainant in the suit, who was the vendor of the property, tried to bring about the early foreclosure of the mortgage by preventing lot purchasers from the defendant from completing payments on their contracts; this they were charged with having done by representations that the Atlantic Shores Corporation would not be able to put the improvements on the property that it had agreed with said purchasers to put there, and would not be able to pay off the mortgage, in consequence of which complainant would invoke the right to foreclose the mortgage and destroy the subdivision in so far as releases had not been obtained, and thereby destroy the rights of such lot purchasers.

It was alleged that because of this the defendant's lot purchasers discontinued payments on their installment contracts, and as a result that the Atlantic Shores Corporation was damaged to the extent of $3,000,000 and was rendered powerless to meet its payments on the mortgage sought to be foreclosed. Affirmative relief was prayed for.

The appellant here, who was the answering defendant below whose answer in part was stricken as aforesaid, contends that it was error for the chancellor to strike this portion of the answer, for the reason that the stricken portion of the answer had a direct, material, and pertinent bearing on a part of the relief sought by the complainant's bill, namely, the deficiency decree which was specially prayed for in one paragraph of the prayer, even if the answer was otherwise insufficient as a defense to the foreclosure suit itself.

There is nothing in the answer which warrants an inference that the stricken portion was intended solely as a defense against the foreclosure, so its bearing, if any, was obviously on some other phase of the case.

It is evident, moreover, from the grounds stated in the motion to strike and from the ruling of the chancellor granting such motion, that the stricken portion of the answer was so stricken by the chancellor because it was not regarded by him as a sufficient defense to the foreclosure, or as a sufficient legal basis for substantive affirmative relief by way of decree in favor of the defendant for the damage referred to as having been caused by the activities of the complainant.

That such was evidently the reason for striking it is confirmed by the argument made in appellee's brief and in his oral argument here attempting to justify such action on the ground that the stricken matter, considered either as standing alone or in connection with the entire remainder of the answer, was 'wholly lacking in the essential requirement of an adequate defense to the bill of complaint.'

But if the matter in question was pertinent as an answer to resist the granting of a deficiency decree in the case, or as a ground for asking that, if the court did grant a deficiency decree, such decree by granted for a less amount than was actually granted, because of equitable considerations requiring that course, it was not essential that such allegations of the answer should constitute a defense to the foreclosure of amount to a complete answer to the merits of the bill.

This court is committed to the rule, as expressed in Realty Mortgage Co. v. Moore, 80 Fla. 2, 85 So. 155, that a mortgagee, in a mortgage foreclosure, where the mortgaged property did not sell for a sufficient sum to satisfy the decree, does not have the absoluto and unqualified right to demand that a deficiency decree be rendered in his favor for any balance that may be found to be due to the plaintiff over and above the proceeds of the sale of the mortgaged property, but that the mortgagee's right to a deficiency decree depends on the facts and circumstances in each case, and that the power exercised by the chancellor in granting such a decree is a discretionary one that may be exercised or not as the court deems best when it has considered such facts and circumstances.

In Etter v. State Bank of Florida, 76 Fla. 203, 79 So 724, 726, it was pointed out by Mr. Justice Ellis that any defense that may be offered against a deficiency decree against a mortgagor personally liable for the debt in a foreclosure proceeding should...