Bailey v. Inman

• Decision Date: 15 April 1932
• Citation: 140 So. 783,105 Fla. 1
• Parties: BAILEY et al. v. INMAN et al.
• Court: Florida Supreme Court

140 So. 783

105 Fla. 1

BAILEY et al. v. INMAN et al.

Florida Supreme Court, Division B.

April 15, 1932

As Amended on Denial of Rehearing May 24, 1932.

Suit by G. W. Bailey and wife and others, against Alice F. Inman and others. From a final decree for defendants, plaintiffs appeal.

Affirmed. Appeal from Circuit Court, Polk County; Harry G Taylor, Judge.

COUNSEL

G. P Garrett, of Orlando, Huffaker & Edwards, of Bartow, and Robert T. Dewell, of Haines City, for appellants.

McKillop & Hamilton, of Winter Haven, for appellees.

OPINION

DAVIS J.

This is a case wherein the appellants, as complainants below, filed a bill in the circuit court of Polk county to restrain the further prosecution of certain common-law actions instituted in the circuit court of that county by Helen I. Smith and Alice F. Inman as admin istratrices of the estate of S. C Inman, deceased, against G. W. Bailey, Charles G. Somers, and H. O. Estes. These suits were to recover a judgment on certain promissory notes, signed by G. W. Bailey, Charles G Somers, and H. O. Estes, which were made payable to S. C. Inman, deceased.

Temporart injunctions were granted, but on final hearing, after answer and testimony, the court entered a final decree finding the equities with the defendants. The appeal taken is from that final decree.

The facts are that S. C. Inman, in his lifetime, conveyed by warranty deed to G. W. Bailey, Charles G. Somers, and H. O. Estes, certain lands in Polk county. The purchase price was $9,000 cash and $42,000 in deferred payments secured by a mortgage. The deferred payments were evidenced by promissory notes, each signed by Bailey, Somers, and Estes, payable to Inman. To secure these notes, the makers executed a mortgage to Inman, on the land purchased.

Contained in the mortgage was a release clause which reads as follows:

'Lots of platted size not exceeding sixty by one hundred and fifteen feet (60x115) to be released from time to time on payment by mortgagors of five hundred ($500.00) dollars. The accumulated fund arising from such released payments to be applied to principal notes as same mature or call for payment. No interest to be allowed on such fund during interim between time of payment and application of such fund in payment of principal notes as they are called for payment.'

On September 18, 1925, the purchasers, Bailey, Somers, and Estes, conveyed the mortgaged property to one P. Campbell by warranty deed. This deed contained a provision as follows:

'This deed is subject to taxes for the year 1925, and also subject to one certain mortgage upon the premises in favor of S. C. Inman for $42,000.00 (forty-two thousand dollars) payable in ten semiannual payments of Forty-five hundred ($4,500.00) dollars each for the first four payments of which the first is due January 10, 1926, and then four Thousand ($4,000.00) dollars each for the next six payments, each payment being evidenced by a note dated July 10th, 1925, and bearing interest at the rate of eight per cent per annum, interest payable semi-annually, said mortgage and notes being written payable on or before maturity dates, said mortgage also contains a clause whereby upon the payment of $500.00 one lot of Bonita Heights Subdivision may be released from the operation of the said mortgage, all the lots in this subdivision being subject to this clause, this money to be applied to the payment of the next note due. This deed is subject to the above and all the provisions of this mortgage, all of which the parties of the second part agree to assume and pay.'

While Campbell was in default in his payments under the Inman mortgage, partial releases were made by the mortgagee to ten lots embraced in the mortgage. These releases, it appears, were executed by Inman's administratrices after his death, which occurred in August, 1927.

Appellants' contention on appeal here is that appellants having become sureties on the notes sued on, the release by Inman's administratrices from the mortgage security of these ten lots, coupled with an alleged extension to the grantee-assumer Campbell of the time for payments under the mortgage, with out previous notice to Bailey, Somers, and Estes, the original mortgagors, operated to release and exonerate them as sureties on the notes sued on in the common-law suit sought to be enjoined. The extension relied on as a discharge is alleged to have been made by Inman, the mortgagee, in 1926, after the time it is claimed that Bailey, Somers, and Estes had changed their status from that of makers of the notes to sureties.

The promissory notes thus asserted to have been released and exonerated were signed by Bailey, Somers, and Estes, as makers, and when signed, they each contained a provision which reads as follows: 'And each of us, whether maker, surety, guarantor or endorser hereby severally waives homestead exemption, presentment and demand for payment, and notice of non payment at maturity, and consents that this mote, or any part hereof, may be extended without further notice.'

The chancellor held that no equitable ground had been established for enjoining the actions at law against the makers of the notes, so the bill of complaint was accordingly dismissed.

We are of the opinion that there was no error in this decree.

While a court of equity will not enjoin legal proceedings when the law court is competent to adjudicate, upon proper pleas in the legal action, the matters presented to the equity court as a ground for injunction (Garrett v. Phillips [Fla.] 134 So. 231), the bill of complaint in the present proceeding presented no case falling within this rule. On the contrary, the bill here undertook to set up certain rights inuring to the appellants as sureties, with the corresponding equitable right which they claimed to exist, to have equitable protection as such.

The prayer of the bill was not merely defensive against the prosecution of the law cases, but was affirmative in character. To have granted it would have been beyond the province or powers of a court of law. The court of law could only have sustained a legal defense to recovery without granting the affirmative relief sought by the equitable bill. For this reason, the bill of complaint for receiver, injunction, accounting, exoneration, reimbursement, contribution, and subrogation was properly founded in equity, and was not within the rule of the case above referred to. See Hayden v. Thrasher, 18 Fla. 795; West v. Chasten, 12 Fla. 315. Pepple v. Rogers et al. (Fla.) 140 So. 205, decided at the present term.

But as to the merits of the case as shown at the final hearing, we are of the opinion that the decree was preperly rendered for the defendants.

While the grantee of mortgaged land, assuming an existing mortgage thereon, becomes, as to the mortgagor, the principal debtor, and the mortgagor becomes a surety as to him, the mortgagee may treat both mortgagor and grantee of the mortgaged premises as principal debtors. In is only when the mortgagee, by his dealings with the grantee, so recognizes the granteealone as the principal debtor that he thereby precludes himself from procuring a personal judgment against the mortgagor as well. Slottow v. Hull Investment Co., 100 Fla. 244, 129 So. 577.

Where the principles of estoppel are applicable to such a situation, as they may be in particular cases (Realty Mortgage Co. v. Moore, 80 Fla. 2, 85 So. 155), it was said, with reference thereto, in Slottow v. Hull Investment Co., supra: 'To create an estoppel against the mortgagee, there must be a valid and binding agreement between the mortgagee and the grantee, based upon a sufficient consideration, and materially inconsistent with the terms of the original obligation. In short, the new transaction must amount to a novation between the mortgagee and the grantee.' (Italics ours.) See 100 Fla. text page 253, 129 So. text page 581.

In the case at bar, the mortgagee merely acquiesced in recognizing the grantee-assumer's written request in the form of a letter stating that he should 'like to have an extension of this for six months provided we pay the interest promptly.'

This request was granted, but on condition that applicant pay interest on the extension at 8 per cent., in addition to the interest accruing on the original due dates of the principal notes. By no conception of the term can it be held that this grant of 'extension' contained in the letters passing...