City of Lakeland v. Select Tenures, Inc.

• Decision Date: 27 September 1937
• Citation: 129 Fla. 338,176 So. 274
• Parties: CITY OF LAKELAND v. SELECT TENURES, Inc.
• Court: Florida Supreme Court

176 So. 274

129 Fla. 338

CITY OF LAKELAND v. SELECT TENURES, Inc.

Florida Supreme Court, Division A.

September 27, 1937

Error to Circuit Court, Polk County; H. C. Petteway, Judge.

Action by Select Tenures, Inc., against the City of Lakeland Florida, a municipal corporation. Judgment for plaintiff, and defendant brings error.

Affirmed.

COUNSEL

Carver & Langston, of Lakeland, for plaintiff in error.

Patrick H. Mears and Smith & Petteway, all of Lakeland, for defendant in error.

OPINION

BUFORD Justice.

Defendant in error was plaintiff in the court below and sued the defendant, City of Lakeland, Fla., a municipal corporation plaintiff in error here, in a law action to recover judgment on three municipal improvement bonds of the face value of $1,000 each, together with interest due on the interest coupons attached to the bonds.

Demurrer was filed and overruled.

The defendant then filed pleas to the declaration in the following language:

'First Plea. That it denies that the plaintiff is the owner and holder of the bonds and coupons, or any of them, set forth and mentioned in plaintiff's declaration, but says that the plaintiff is not the owner and holder of the said bonds and coupons, or any of them, but that one C. A. Hardwick of the City of Lakeland, Florida, is in fact and in truth the owner and holder of them, and each of them.

'Second Plea. That the plaintiff, Select Tenures, is not the real party in interest in the above styled suit; that it is neither the owner and holder of the bonds and coupons set forth and described in the plaintiff's declaration; that it is not the owner and holder of any of such bonds, but that one C. A. Hardwick is the owner and holder thereof.'

Demurrers to both pleas were filed and sustained. Default judgment was entered and thereafter final judgment was entered upon proof of claim.

Writ of error was sued out.

There are two questions presented. One is, whether or not the pleas were sufficient; and the other is, whether or not the demurrer to the declaration should have been sustained upon ground 2 of the demurrer, which was as follows:

'2. The Court take judicial notice that the present City of Lakeland, Florida, was not in existence at the time of the issuance of the coupons in question.'

We can see no useful purpose to be served by dealing at length with the questions involved. Bearing in mind that this is a law action and not a mandamus proceeding, it is unnecessary for us to comment on what has been said in cases involving the right to coerce action by mandamus. Dealing with the legal principles applicable to cases at law to recover judgments on such obligations as those here involved, we find the contention of the plaintiff in error is not tenable.

The title or interest of the holder of commercial paper cannot be disputed or inquired into unless such course is necessary for the purpose of a legitimate defense, nor unless a meritorious defense is presented. In the case of Jones v. Central Hanover Bank & Trust Co., 110 Fla. 69, 147 So. 895, 896, we said:

'One who holds the full legal title to a promissory note by assignment, may maintain an action thereon against the maker, notwithstanding he has no beneficial interest in the proceeds. The title or interest of the holder of commercial paper cannot be disputed or inquired into unless necessary for the purpose of a legitimate defense, nor unless a meritorious defense is presented. The maker of commercial paper cannot, as against the endorsee holder thereof, defend against it upon the ground that the holder is not a bona fide holder for value, unless he at the same time asserts some good defense against the original payee or holder which would be good against the latter if he were the plaintiff, in which case he may challenge the bona fides of the endorsee's holding in order to let in a defense that would be good against the original payee or his endorsee, where to deny him that privilege would deprive him of the benefit of such defense.'

Citing 3 R.C.L. 990.

And again in that opinion we said:

'It is not a good plea to allege that a note sued on is the property of another, and not of the plaintiff, without showing some substantial matter of defense against the one asserted to be the owner, and which could not be set up against the plaintiff. Brown v. First National Bank, 86 Fla. 198, 97 So. 351; McCallum v. Driggs, 35 Fla. 277, 17 So. 407; Gregory v. McNealy, 12 Fla. 578.

'If plaintiff in a suit on commercial paper is vested with the legal title, he may maintain an action on such paper without regard to equities existing between himself and his assignor or endorser. The rule is that the holder may sue, although not the full owner, if the maker is not thereby prejudiced in his defense. 8 C.J. 822. There is, of course, an apparent exception to this rule where plaintiff's possession of the paper he sues on is mala fides.'

The rule here enunciated was also enunciated in the case of Durham v. Meyer, 114 Fla. 594, 154 So. 702. In this connection it may be well to say that, in the case of State ex rel. Harris v. Gautier, 108 Fla. 390, 146 So. 562, 147 So. 240, 243, 846, upon which the plaintiff in error appears to rely, we were considering the relators' right to coerce by mandamus a public official in regard to alleged official duties. Paragraph 14 of the answer in that case was as follows:

'14. Affirmatively answering respondents further say that the relators came into possession of all the bonds now held by them, as alleged in the Alternative Writ of Mandamus, as agents and trustees for The City of Miami, and while acting in the employ of The City of Miami as agents, trustees, and brokers, for the purpose of effecting an exchange of the said bonds for other and new bonds which The City of Miami contemplated floating, and which have already been duly and legally authorized and executed, and which are now ready for delivery; that each and all of the bonds held by the relators, if any, were received by them and are still held by them as agents for The City of Miami, and not in their individual right; and that the relators are neither the owners nor holders or bearers in due course for a valuable consideration; and that the relators are not the real parties in interest.'

Paragraph 15 of the answer is, in part, as follows:

'15. Further answering respondents say that the City of Miami, in the early part of 1931, realized that owing to financial conditions and the general depression it would be unable to meet outstanding obligations which had been previously executed by the City of Miami, or by officers purporting to represent the City of Miami; that it thereupon conceived the idea of executing and delivering a refunding...