Feemster v. Schurkman

• Decision Date: 12 March 1974
• Docket Number: 72--982,Nos. 72--981,s. 72--981
• Citation: 291 So.2d 622
• Court: Florida District Court of Appeals
• Parties: Ruth E. FEEMSTER, Executrix under will of Robert M. Feemster, Deceased, and also known as Ruth E. Cooper, formerly known as Ruth E. Feemster, Individually, and Thomas T. Cobb, as Trustee for Linda F. Fallon, etc., et al., Appellants, v. Julius SCHURKMAN, d/b/a S & S Associates, Appellee.

Page 622

291 So.2d 622

Ruth E. FEEMSTER, Executrix under will of Robert M. Feemster, Deceased, and also known as Ruth E. Cooper, formerly known as Ruth E. Feemster, Individually, and Thomas T. Cobb, as Trustee for Linda F. Fallon, etc., et al., Appellants, v. Julius SCHURKMAN, d/b/a S & S Associates, Appellee.

Nos. 72--981, 72--982.

District Court of Appeal of Florida, Third District.

March 12, 1974.

Rehearing Denied April 9, 1974.

Blackwell, Walker, Gray & Powers and Mark Hicks, Truett & Watkins, Michael H. Kramer, Miami, for appellants.

Koeppel, Stark, Marks & Newmark, Miami, Robert V. Shea, Coral Gables, for appellee.

Before BARKDULL, C.J., and CARROLL and HAVERFIELD, JJ.

HAVERFIELD, Judge.

In these consollidated appeals, defendant-appellants seek review of an adverse final judgment in a mortgage foreclosure action and also join with plaintiff-appellee in appealing an order awarding $14,000 as a receiver's fee.

Ruth E. Feemster, as executrix of the estate of her husband, Robert, assigned a twenty year leasehold interest in an office building to Caribbean Properties, Inc. (hereafter cited as Caribbean). In exchange for this assignment, Caribbean transferred to Mrs. Feemster 10,000 shares of stock of Windjammer International Corporation. ¹ In addition to the above consideration, Caribbean also granted Mrs. Feemster an option to (1) retain or dispose of the 10,000 shares of Windjammer stock or (2) exchange the stock for an $80,000 note secured by a mortgage ² upon the leasehold interest, such mortgage to be subject to a first mortgage held by Biscayne Federal Savings and Loan Association and the existing ground lease held by Caribbean. This option agreement was recorded on August 28, 1969.

In 1970, Caribbean was in need of money and its president Captain Burke through the assistance of one Grandwetter, a business associate who was acting as an intermediary, arranged to obtain a $65,000 loan from plaintiff-appellee, Julius Schurkman d/b/a S & S Associates, an unlicensed mortgage brokerage venture. Upon being approached by Grandwetter for the loan, Schurkman, in his customary way of raising the necessary funds, contacted a group of potential investors to consider the proposition. He then obtained the requisite amount of money from those interested investors to make the loan and each investor-lender became a participant therein. Most of the negotiations for the loan to Caribbean were carried on by Mr. Grandwetter with Schurkman. On August 18, 1970, the closing day, Captain Burke met with Mr. Schurkman and in exchange for the loan signed a note in the principal sum of $65,000 with interest at the rate of 15% Per annum and pledged as security a mortgage deed encumbering Caribbean's leasehold interest in the office building. After much protestation, Burke also agreed to pay Schurkman $7,500 off the top as a 'finder's fee' for procuring the loan. This mortgage was made subject to the first mortgage held by Biscayne Federal Savings and the ground lease of Caribbean and was recorded on September 2, 1970. Thereupon, Schurkman disbursed a total of $57,500 to Caribbean and retained the remaining $7,500 which he later split with Grandwetter. Captain Burke had no knowledge at that time that Schurkman was not the investor or that the finder's fee was split with Grandwetter.

Thereafter, Caribbean began to default on the payments and plaintiff Schurkman instituted suit to foreclose the mortgage on the leasehold interest. Upon his motion, the trial court appointed Robert V. Shea, Esq., as receiver to administer the property during the litigation. The complaint named as defendants in addition to Caribbean, Ruth Feemster, Richard Kramer, Thomas Cobb and Clyde Banks, who claimed an interest in the leasehold interest by virtue of their being the beneficial owners of the 10,000 shares of Windjammer stock involved in the recorded option agreement of August 28, 1969. These defendants filed an answer and counterclaim in which they alleged that the option agreement was prior in time and right to plaintiff's mortgage. Defendant Caribbean filed an amended counterclaim alleging plaintiff's note and mortgage were unenforceable as violative of the Florida usury statutes as a result of the $7,500 finder's fee. Plaintiff-appellee in response to Caribbean's counterclaim alleged that he was acting as the agent of Caribbean in obtaining the loan and since he had no financial interest in the loan, his taking the finder's fee did not make the loan usurious. After a trial on the cause, the judge issued the following findings and order thereon:

'(A) That there are two issues for determination, namely the question of usury, if any and the question of priority between a prior recorded 'option to mortgage' and the mortgage herein sought to be foreclosed.

'(B) Upon the question of usury, the Court finds that the circumstances concerning the acquisition of the loan by CARIBBEAN PROPERTIES, INC. and the posture of the Plaintiff with regard to that acquisition and with regard to securing the lenders, is susceptible to two different constructions. The Court finds with regard thereto that the burden of proof of usury according to the law of Florida falls upon the Defendants herein and they are required to prove by competent substantial evidence such accusation.

'(C) From the facts of the case it appears that the Plaintiff was the agent of CARIBBEAN PROPERTIES, INC. with regard to CARIBBEAN obtaining a loan or executing the mortgage being foreclosed; that although the Plaintiff did represent the five participating lenders, the taking of the mortgage in his name was a convenience to aid in disbursing of funds and in the collection of funds; that the Plaintiff had no financial interest in the loan itself and the taking or receiving of a 'finder's fee' from the Defendant, CARIBBEAN, did not make the loan usurious. See Shaffran vs. Holness (Fla.App.), 102 So.2d 35 and Cutri Enterprises, Inc. vs. Pan American Bank of Miami (Fla.App.), 115 So.2d 592.

'(D) At the inception of these proceedings, the Court was of the opinion that the recording of the 'option to take a mortgage four years hence' placed all of the Defendants (except CARIBBEAN) ahead of all persons recording thereafter including the Plaintiff, but after wrestling with the problem and recalling the testimony in the cause and studying the briefs of the parties and the cases cited therein, the Court finds that the controlling cases must be Smith vs. Metzler, et al. (104 Fla. 315), 139 So. 823 and Guaranty Title & Trust Co. vs. Thompson (93 Fla. 983), 113 So. (117) 118.

'(E) The 'option to mortgage' which was recorded by the Defendants (except CARIBBEAN) was taken by those Defendants with the knowledge that if there was a default in the underlying land lease, or in the first mortgage of record, their option to mortgage could be entirely lost. The Defendants (except CARIBBEAN) could have taken back a mortgage themselves but elected to receive the 'option to morgage' instead. The right of these Defendants to convert a nebulous option into a secured mortgage ahead of subsequent creditors or subsequent purchasers does not accord with equity and justice.

'(F) The Court is of the opinion that the option to create a mortgage which was recorded about one year prior to the mortgage herein being foreclosed, was not a lien nor could it create a charge upon the property. The Court is of the opinion that if a mortgage was to be effective pursuant to the exercise of option to give the Defendants a mortgage, such mortgage might only become a lien dated from December 31, 1972 (provided Defendants recorded the same) and would be based upon a totally new or different consideration than that which gave rise to the creation of the option initially. Since no debt has been in existence or is asserted to be in existence between the time of recording of the option agreement to the present time, the recording of the option agreement must be determined to be and it continues to be without any present vitality and without any present effect as a lien or charge against the property.

'Therefore, it is, upon consideration thereof;

'ORDERED AND ADJUDGED as follows:

'2. There is due to the Plaintiff the sum of $65,000.00 as unpaid principal of the indebtedness agreed to be paid on the mortgage herein foreclosed and the note secured thereby; the sum of $10,651.25 as interest on that principal to the date of this Judgment at the rate of fifteen (15%) percent per annum from August 1, 1970, less nine (9) interest payments made; the sum of $24,349.80 as additional advances made by the Plaintiff to preserve the good standing of the prior lease and first mortgage, less two rent payments turned over to Plaintiff by Defendant, CARIBBEAN; reasonable attorneys' fees to be hereafter assessed and the costs of this action, including abstracting, filing fees, sheriff's costs, court reporter charges, Receiver's fees and all other proper charges to be hereafter taxed and assessed.

'3. The lien held by Plaintiff, JULIUS SCHURKMAN, d/b/a S & S ASSOCIATES, is superior in dignity to any right, title, interest, or claim of each and every of the Defendants named herein upon the mortgaged property herein foreclosed situated in Dade County, Florida, . . .

'4. If the sums previously referred to and the additional sums to be taxed as costs and attorneys' fees be not paid to the Plaintiff from and after the date of this Judgment and all costs of this proceeding incurred subsequent to the date of this Judgment are not paid forthwith, the Clerk of this Court shall sell the aforedescribed interest of the Plaintiff and the property herein foreclosed at public sale within the legal hours of sale on the 10 day of August, 1972 (a day not less than ten nor more than thirty days after the date of this Judgment) to the highest and best bidder or bidders for cash, in the lobby of the Dade County Courthouse in the City of Miami, Florida after first having given...