Blackwelder v. D'Ercole Enterprises, Inc.

Decision Date22 January 1963
Docket NumberNo. 62-78,62-78
Citation148 So.2d 721
PartiesMary Louise BLACKWELDER, Appellant, v. D'ERCOLE ENTERPRISES, INC., a Florida corporation, United States of America, Florida Industrial Commission, Charles J. Bodner, Lueben K. Greenwood and Frances Greenwood, his wife, and Samuel L. Mensh, Appellees.
CourtFlorida District Court of Appeals

Anderson & Nadeau, Miami, for appellant.

Charles J. Bonder and Charles E. Buker, Jr., Miami, for appellees.

Before PEARSON, TILLMAN, C. J., and CARROLL and BARKDULL, JJ.

CARROLL, Judge.

This is the second appeal in this cause. The main facts were set out in the opinion on the first appeal. 1 The present appeal was taken by the plaintiff, Mary Louis Blackwelder, after her husband the plaintiff Leroy J. Blackwelder was dismissed. 2

In proceeding in the circuit court after remand following the first appeal, a final decree was entered holding that a blanket mortgage from D'Ercole Enterprises, Inc. to Blackwelder, dated November 28, 1956, for $50,000, merged into the deed to three lots which he received on December 20, 1956; that the deed was void because it was without consideration; and confirming title to the three lots in the appellee Bodner.

During October and November of 1956, Blackwelder made a number of advances to D'Ercole Enterprises, Inc. which aggregated $41,500. He also caused the corporation to repay him certain amounts during that time, with the result that the balance due Blackwelder on November 28, 1956, was $25,000. On that date he received from the corporation the blanket mortgage and a note for $50,000 payable on demand and without interest. Later, on December 20, 1956, Blackwelder received the deed to the three lots involved in this suit. In the complaint, the Blackwelders did not seek to enforce the nortgage of November 28, 1956, but sought a declaration that the deed of December 20, 1956, was a valid conveyance, or its foreclosure if found to have been given for security.

Appellate Bodner argued that the subsequent deed as well as the mortgage was invalid under § 608.55, Fla.Stat., F.S.A. That section provides in pertinent part as follows:

'No corporation which shall have refused to pay any of its notes or other obligations when due, nor any of its officers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash. * * * Every transfer or assignment or other act done in violation of the foregoing provision of this section shall be void except in the hands of a purchaser for a valuable consideration without notice. * * *'

The financial condition of the corporation was shown to be such that the statute prohibited a transfer to an officer 3 for an antecedent debt. Milbank v. Welch, 74 Hun. 497, 26 N.Y.S. 705 (Sup.Ct.1893); Tierney v. J. C. Dowd & Co., Inc., Sup.Ct.1922, 197 N.Y.S. 155, rev'd on other grounds 238 N.Y. 282, 144 N.E. 583. 4 A mortgage is considered as a transfer of property within the meaning of a statute such as § 608.55, Fla.Stat., F.S.A. See Karasik v. People's Trust Co., E.D.N.Y.1917, 252 F. 324, 334; Munson v. Genesee Iron & Brass Works, 37 App.Div. 203, 56 N.Y.S. 139 (App.Div.1899).

In holding that the blanket mortgage for $50,000 made by the corporation to Blackwelder on November 28, 1956, was invalid and unenforceable, the chancellor was correct, but not on the merger ground which he assigned. The mortgage was invalid for failure to meet the requirements of the statute (§ 608.55) as to consideration for a transfer to an officer by a corporation which is in the financial condition referred to in the statute. The mortgage was given to secure an antecedent debt owed by the corporation to its officer. Blackwelder testified that during the course of the series of advances which he made to the corporation it was agreed that he was to receive security. However, it was not established that there was an agreement at the outset for security for the series of advances, assuming but not deciding that such an agreement had it been made would have satisfied the requirements of the statute. On the other hand the evidence shows that at the time Blackwelder made a particular advance of $20,000 on November 13, 1956, there was an agreement for the deed to be given as security therefor, and that later the deed was given for that purpose. 5

Where there is an agreement at the time of the creation of an obligation that it will be secured by a mortgage or security deed, the fact that the mortgage or security deed may be executed and delivered some time of after the creation of the obligation will not place that obligation in the category of an antecedent debt so as to invalidate the security under such a statute as § 608.55, Fla.Stat., F.S.A. In re Metropolitan Dairy Co., 2 Cir. 1915, 224 F. 444; In re Paul Delaney Co., W.D.N.Y.1928, 26 F.2d 937, aff'd mem., 2 Cir., 1929, 30 F.2d 1018; Profaci v. Mamiapro Realty Corp., 130 N.Y.S.2d 851, 855 (Sup.Ct.1954). In the Delaney case, a director of a corporation, on condition that the corporation would furnish him mortgage security, assumed its debt for $23,666.67, and at the same time advanced it $5,000 in cash. About four months later the corporation executed a mortgage to the director in the amount of $35,000 to secure the sum assumed by him and the $5,000 advance; and to secure an open account indebtedness of $5856.95 previously owed to the director by the corporation. The trustee in bankruptcy sought to set aside the mortgage as executed in violation of the New York statute from which § 608.55, Fla.Stat., F.S.A., was adopted. 6 The court held the mortgage valid as security for the amounts assumed and advanced at the time of the agreement, but not as to the open account indebtedness. In so holding, the court said, 26 F.2d at 940:

'I do not discover sufficient cause to hold the mortgage invalid for lack of consideration or for violation of acts prohibited by the Stock Corporation Law. It is shown that full value was given by Renneker for the mortgage. Assumption of liability and subsequent payment of the indebtedness of the mortgagor was equivalent to payment in cash to the corporation. That the security was not delivered until several months and elapsed does not constitute the mortgage a payment for an antecedent debt, as the transactions were not separate, but merely a consummation of what had been agreed upon. In re Metropolitan Dairy Co. (C.C.A.) [2 Cir.,] 224 F. 444. * * *

* * *

* * *

'* * * The $5,856.95 on open account in his favor was concededly an antecedent debt. It was practically unconnected with the mortgage transaction, and, as counsel for Renneker admitted, the consideration for the mortgage perhaps was not sufficient 'to carry with it security for that item.' As to this amount, I think the lien of the mortgage should be decreased, without, however, affecting its alleged validity as to the balance unpaid.'

We conclude the chancellor was in error in holding, in the instant case, that the deed was without consideration. Also we reject the holding of the chancellor that the plaintiffs' suit was barred by laches. There were no allegations or proof of facts sufficient to sustain a contention of laches. Although there was a period of delay, the appellee, Bodner, made no showing that the delay was unreasonable and operated to his disadvantage. See Dacus v. Blackwell, Fla.1956, 90 So.2d 324; Van Meter v. Kelsey, Fla.1956, 91 So.2d 327. The points made on the cross assignment have been considered and held to be without merit.

A deed given for the purpose of securing repayment of an obligation is deemed a mortgage foreclosable in equity and constitutes a lien to the extent of the indebtedness secured thereby. Section 697.01, Fla.Stat., F.S.A. Equitable Building & Loan Association v. King, 48 Fla. 252, 37 So. 181; Holmberg v. Hardee, 90 Fla. 787, 108 So. 211; Stovall v. Stokes, 94 Fla. 717, 115 So. 828; McKinney v. Gainey, 96 Fla. 547, 118 So. 917; Brooks v. Frderal Land Bank of Columbia, 106 Fla. 412, 143 So 749; Torreyson v. Dutton, 145 Fla. 169, 198 So. 796. Its nature as a security interest may be established by parol evidence. Stovall v. Stokes, supra; Markell v. Hilpert, 140 Fla. 842, 192 So. 392; Torreyson v. Dutton, supra.

For the reasons stated the decree appealed from is reversed and the cause remanded for further proceedings to foreclose the security deed as a mortgage for such sum, without interest, as the chancellor may find remains outstanding and unpaid of the $20,000 which was advanced on November 13, 1956, for repayment of which the deed of December 20, 1956, was given as security, less any sums that the appellee, Bodner, may have expended for taxes and assessments on the property involved during the period between March 12, 1958, the date of the dismissal of the appeal from the order of sale of the civil court of record, and June 2, 1959, the date of filing the instant suit.

Reversed and remanded.

PEARSON, TILLMAN, Chief Judge (dissenting).

I must dissent from the conclusion reached by the majority on this appeal because I would hold that there is sufficient evidence to support the findings of the chancellor. They were as follows:

'1. That the subject matter of this suit is the interest of the parties in and to the following described property, towit:

'Lots 13, 14, and 15, Block 78 of SEVENTH ADDITION TO HIALEAH, according to the Plat thereof, recorded in Plat Book 9, at page 6, of the Public Records of Dade County, Florida.

'2. The mortgage dated the 28th day of November, 1956, in the sum of $50,000.00, from D'Ercole Enterprises, Inc., a Florida corporation, and Renato D'Ercole and Betty D'Ercole, his wife, to Leroy J. Blackwelder, recorded on the 22nd day of March 1957, in Official Records Book 145, Page 124, Public Records of Dade County,...

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