Baum v. Corn, 4613

• Decision Date: 02 October 1964
• Docket Number: No. 4613,4613
• Citation: 167 So.2d 740
• Parties: Louis BAUM and Mary Baum, his wife, Appellants, v. Morton CORN, Dr. Sam H. Rosenthal, Rudolph Schiffman, Dr. Louis J. Novak, Murray Wertheim, Rhea Harris, Joseph Schechter and Irving Hoffman, individually and as Trustee for LaBelle Realty, Inc., Appellees.
• Court: Florida District Court of Appeals

Page 740

167 So.2d 740

Louis BAUM and Mary Baum, his wife, Appellants, v. Morton CORN, Dr. Sam H. Rosenthal, Rudolph Schiffman, Dr. Louis J. Novak, Murray Wertheim, Rhea Harris, Joseph Schechter and Irving Hoffman, individually and as Trustee for LaBelle Realty, Inc., Appellees.

No. 4613.

District Court of Appeal of Florida, Second District.

Oct. 2, 1964.

Thomas A. Thomas and Judson A. Samuels, Hollywood, for appellants.

Abrams, Anton & Robbins, Hollywood, for appellee, Morton Corn.

Milton A. Friedman, Miami, for appellee, Irving Hoffman.

Koenig & Katz, Fort Lauderdale, for appellees, Dr. Samuel J. Rosenthal, Dr. Louis J. Novak, Rhea Harris, Rudolph Schiffman and Murray Wertheim.

WEHLE, VICTOR O., Associate Judge.

This is an appeal from a summary decree entered on cross claim against two of the defendants and in favor of the other defendants below.

The basic question involved is the validity of a certain mortgage given to the appellants by one of the defendants and affecting property in which all of the other parties had an interest.

Early in 1957, Irving Hoffman, an attorney and real estate investor, conceived the idea of buying a substantial piece of acreage in Lee County, Florida. A number of Hoffman's friends and clients agreed to participate in the purchase in various proportions and Hoffman was to form a corporation to handle the deal. Early in August, 1957, Hoffman made an initial cash deposit for the purchase of the land and two of the other investors paid in their participating shares. A few weeks later, Hoffman made an additional down payment All of the monies so invested were placed in All of the monies so invested were placed in Hoffman's trust account. The corporation to be formed was to be known as 'LaBelle Realty Corporation.' The deal for the purchase of the property was closed on October 1, 1957, and the property was conveyed to 'Irving Hoffman as Trustee for LaBelle Realty Corporation, a Florida corporation.' The corporation had not as yet been chartered, but was chartered on October 10, 1957, the same day the deeds to the acreage were recorded. Hoffman became the President of the corporation and from time to time collected from the stockholders their proportionate share of the taxes and purchasemoney mortgage payments due on the property. The property was never actually conveyed to the corporation, although everyone regarded it as and it actually was the sole asset of the corporation. The conveyance or conveyances of the property to Hoffman were silent as to any terms of the trust; neither was there any trust instrument ever entered into attempting in any way to fix the terms of the trust of the duties, obligations or rights of the Trustee or the beneficiary. In June, 1959, Hoffman apparently without the knowledge or authority of anyone involved in the corporation, with the possible exception of Morton Corn, a stockholder, mortgaged the property to the appellants herein, Louis Baum and wife, for $15,000.00. Hoffman is alleged to have diverted the proceeds of the loan to the individual benefit of Morton Corn. At least the corporation did not receive the proceeds. The Baums had relied entirely upon Hoffman's advice in making the loan and had not employed anyone to check the title or to confirm the authority of Hoffman to execute the mortgage involved.

In December, 1960, Morton Corn filed a complaint in Broward County seeking to remove Hoffman as Trustee for the corporation and to obtain from him an accounting of the Baum mortgage proceeds. The other stockholders were made individual defendants and by their answers, agreed with the plaintiff that Hoffman had violated his trust duties and should be required to account. Hoffman filed his answer claiming that he had executed the mortgage with full knowledge on the part of the stockholders and that he had resigned as Trustee in December, 1960. The other defendants filed numerous other pleadings, including a motion to add Baum and wife as additional defendants so as to determine the validity of the mortgage, and a Court order to this effect was entered. The other defendants then sought by cross claim to have the mortgage nullified and, after numerous other pleadings, a summary judgment was entered voiding the mortgage, requiring the Baums to execute and deliver a satisfaction of it, and to dismiss with prejudice a complaint for the foreclosure of the mortgage which they had commenced in Lee County, Florida, some four months after they had been joined as defendants in the principal litigation in Broward County.

The problem to be first decided is that concerning the venue of this litigation. Appellants maintain that the cross claim seeking to have the mortgage declared null and void could be maintained only in Lee County where the mortgaged land is located. The Chancellor ruled that the suit could be maintained in Broward County and with this we agree.

The general rule in matters of this sort is stated in 56 Am.Jur. 24, as follows:

'Owing to the fact that courts of equity act in personam rather than in rem, the rules relating to the venue of local actions at law do not apply with their full rigidity to suits in equity. In the absence of any statutory or constitutional provision to the contrary, a suit in equity may be maintained in any jurisdiction wherein the defendants can be found, even though the suit affects lands not within the territorial jurisdiction of the court. This is because the decree made will not of itself necessarily be binding on the lands, but will take effect only through the action which the parties to the suit are compelled to take. Statutes which require actions concerning land to be tried in the county in which the...