Bankers Life & Cas. Co. v. Carol City Utilities, Inc.

• Decision Date: 11 December 1968
• Docket Number: 67--674,Nos. 67--673,s. 67--673
• Parties: BANKERS LIFE AND CASUALTY COMPANY, Appellant, v. CAROL CITY UTILITIES, INC., and Gaines Construction Co., Appellees.
• Court: Florida District Court of Appeals

Page 808

216 So.2d 808

BANKERS LIFE AND CASUALTY COMPANY, Appellant, v. CAROL CITY UTILITIES, INC., and Gaines Construction Co., Appellees.

Nos. 67--673, 67--674.

District Court of Appeal of Florida, Third District.

Dec. 11, 1968.

Rehearing Denied Jan. 9, 1969.

Shutts & Bowen and Herbert L. Nadeau, Miami, for appellant.

L. J. Cushman, Miami, for Gaines Construction.

Walton, Lantaff, Schroeder, Carson & Wahl, Miami, for Carol City Utilities.

Before CHARLES CARROLL, C.J., and BARKDULL and SWANN, JJ.

PER CURIAM.

This appeal and cross appeal are directed to a final decree entered by the circuit court of Dade County on trial of two consolidated cases. Certain phases of the cause previously were presented here for review. See Bankers Life & Cas. Co. v. Gaines Construction Co., Fla.App.1966, 191 So.2d 478; Bankers Life & Cas. Co. v. Gaines Construction Co., Fla.App.1967, 199 So.2d 482; Carol City Utilities, Inc. v. Gaines Construction Co., Fla.App.1967, 201 So.2d 242.

In a comprehensive decree the trial judge set out the facts and dealt with the legal questions presented and involved, as follows:

'The above styled consolidated causes coming on for trial and final hearing upon the pleadings and proceedings in the above styled causes, and the Court having heard the testimony of the parties and their witnesses, considered the exhibits admitted in evidence on behalf of the respective parties, heard the argument of their counsel, and having duly considered same, finds the facts as established by the testimony adduced and exhibits admitted in evidence to be as follows:

'On April 15, 1966, Gaines Construction Company recovered a judgment in the sum of $658,297.04 against Carol City Utilities, Inc. in Case No. 61L 282 in the Circuit Court of Dade County, Florida, which was duly recorded on April 21, 1966, in Official Record Book 5028 at Page 227 of the Public Records of Dade County, Florida, upon which execution was issued on May 5, 1966, and placed in the hands of the Sheriff of Dade County, Florida. On May 17, 1966, 'Gaines' filed its suit entitled Gaines Construction Company, a Florida Corporation, Plaintiff vs. Carol City Utilities, Inc., Bankers Life and Casualty Company and Jack P. Schliefer, as Defendants, Case No. 66C 5294, in this Court seeking appointment of a receiver in aid of its said execution to satisfy its judgment against 'Carol City.' Three days later, on May 20, 1966, Bankers Life and Casualty Company filed its suit, Case No. 66C 5499, in which it sought to foreclose a $390,000.00 mortgage and, as a second cause of action, alleged that a deed made by 'Carol City' to 'Bankers' dated July 5, 1955, recorded in Deed Book 4118 at Page 516 and 517, a copy of which was attached to Ex. 'B' to said complaint, was executed and delivered to secure future advances in the total amount of $3,572,553.47, with interest to March 31, 1966, and sought foreclosure of said deed as a mortgage. Said deed, Ex. 'B' to 'Bankers" complaint is marked Plaintiff's Ex. 2, and is One of Twenty-eight deeds executed and delivered under, by virtue of, and in accordance with a letter of May 26, 1955. The suit brought by 'Gaines,' Case No. 66C 5294, was consolidated with the suit brought by 'Bankers,' Case No. 66C 5499, for trial, and all of the proceedings, testimony and evidence in this cause has been considered as having been received in Case No. 66C 5294.

'In paragraph 9 of the 'Bankers' complaint, it is stated that 'Carol City' consented to the appointment, without notice, of a receiver in 66C 5499, and a telegram attached to the complaint signed by Horace D. Miller, as President of 'Carol City' dated May 20, 1966, consented to such appointment. It appeared during the interim proceedings which resulted in the appointment of W. C. Herrell, as Receiver in both these causes, that Miller was an employee of 'Bankers,' and that 'Bankers' now owns 80% Of the stock of 'Carol City.' Under such circumstances, it is understandable why 'Carol City' took no active part in this case, not offering any testimony or evidence but participating only with 'Bankers.' It appears clear, and the Court so finds, that the suit was filed by 'Bankers' for the sole purpose of defeating the judgment recovered by 'Gaines.' Until the 'Gaines' judgment was recovered nothing had disturbed the relationship between 'Bankers' and 'Carol City' for years.

'It appears from the testimony offered in these cases that sometime prior to 1954, Julius Gaines, the late Carl Byoir, W. Carroll Wilson and others were engaged in the development of a large land subdivision and townsite in Northwestern Dade County known as Carol City, Florida, which they carried on primarily through two corporations, one named GW-Ten, Inc., and the other named Carol City Utilities, Inc., herein referred to as 'Carol City.' 'Carol City' borrowed $390,000.00 from Plaintiff, Bankers Life and Casualty Company, hereinafter called 'Bankers,' by its demand note dated September 28, 1954, which was secured by a mortgage of that same date encumbering its water and sewer plant located on the land hereinafter described. At all times material to these cases 'Carol City' has operated a large water and sewer plant under a franchise or certificate of public convenience and necessity issued by the Metropolitan Dade County Water and Sewer Board.

'In the Spring of 1955, GW-Ten, Inc., and 'Carol City' encountered financial difficulties and needed funds to complete the development of said land subdivision and townsite, Carol City, Florida, in order to carry on the actual work of development. This included building bridges, paving streets, completing, enlarging and extending the water and sewer plant and water and sewer lines throughout the townsite, and building houses therein. In order to complete these various projects and to pay off large sums due upon various tracts of land which were a necessary and integral part of said subdivision or townsite, the stockholders of GW-Ten, Inc., and 'Carol City' approached John D. MacArthur, as President of 'Bankers' and extended conferences resulted in a written proposal by 'Bankers' to the stockholders of GW-Ten, Inc., and 'Carol City' to complete the development of said subdivision or townsite, which proposal, was admitted in evidence, without objection.

'This written proposal was accepted by the stockholders of GW-Ten, Inc., and 'Carol City' and each signed a copy of said proposal. It was thereafter agreed that the assets of GW-Ten, Inc. and 'Carol City' would be conveyed to 'Bankers' instead of a 'trustee' designated by 'Bankers,' as provided in said proposal. All parties agreed that 'all of the assets' of GW-Ten, Inc. and 'Carol City' were then conveyed to 'Bankers' by 28 deeds admitted in evidence, all of which were executed and delivered to 'Bankers' for a common purpose, and by a single transaction, namely, to effectuate the agreement embodied in the letter of May 26, 1955.

'After said 28 deeds had been executed and delivered to 'Bankers,' 'Bankers' began to pay out funds under, by virtue of and in accordance with and pursuant to said letter of May 26, 1955, for various purposes connected with the completion of the development of said land subdivision or townsite and over a period extending from May 26, 1955 to May 31, 1966, 'Bankers' paid out between $6,000,000 and $10,000,000 for the purpose of completing the development of the land subdivision or townsite known as Carol City, Florida. The evidence and testimony offered by 'Bankers' shows that one of the funds paid out by 'Bankers' was paid to GW-Ten, Inc. or 'Carol City' directly and the records of 'Bankers' and the testimony of Edward A. Cody, the Manager of the Investment Accounting Department of 'Bankers,' and Chester D. Erwin, an accountant, show all of said funds were paid out on the 'Carol City Project' without any attempt by 'Bankers' to allocate or charge any of such funds to GW-Ten, Inc. or to 'Carol City.' The funds paid out by 'Bankers' on the 'Carol City project' were not carried upon the books or records of 'Bankers' as a loan and, indeed, the records of 'Bankers' do not purport to be an account between 'Bankers' as Creditor, and GW-Ten, Inc. and 'Carol City' as Debtors. The books and records of 'Bankers' reflect a single transaction designated as the 'Carol City Project,' and are devoid of and do not disclose any transaction or account between 'Bankers, on one hand, and GW-Ten, Inc., or 'Carol City' on the other hand; indeed, the names of GW-Ten, Inc., or 'Carol City' do not appear on 'Bankers" books and records. The statement prepared by Erwin, an accountant, employed by 'Bankers,' was prepared from books and records of GW-Ten, Inc and 'Carol City' as 'inter-company transactions between those two entities,' and not from the books and records of 'Bankers' showing as Lender and GW-Ten, Inc., and/or 'Carol City' as Borrowers. In other transactions, the books and records of 'Bankers' reflect 'loans' or 'loans,' viz: 'Bankers" books and records of the $390,000.00 mortgage loan to 'Carol City,' which they seek to foreclose in this case is carried specifically as a Loan. In April of 1957, 'Bankers' as vendor, sold a large part of the subdivision or townsite of Carol City, Florida to G. & G., Inc. as vendee. The purchase money mortgage held by 'Bankers' in that transaction is specifically shown on the books and records of 'Bankers' as a Mortgage. 'Bankers' sold the subdivision known as Carol City, Florida to D. & G., Inc., for a total sum of $9,226,600 and received upon the purchase price $5,807,021.12, according to Edward A. Cody, the Manager of the Investment Accounting Department of 'Bankers' and then later foreclosed its purchase money mortgage and recovered a substantial part of said subdivision.

'The trial of this cause fails to disclose that 'Bankers' has ever at any time during the progress of this cause, claimed to be the legal, equitable and beneficial owner of the property described...