Flanigan's Enterprises, Inc. v. Barnett Bank of Naples

• Decision Date: 05 March 1993
• Docket Number: No. 92-104,92-104
• Citation: 614 So.2d 1198
• Parties: 18 Fla. L. Weekly D643, 19 UCC Rep.Serv.2d 1230, 20 UCC Rep.Serv.2d 1459 FLANIGAN'S ENTERPRISES, INC., Appellant, v. BARNETT BANK OF NAPLES, et al., Appellees.
• Court: Florida District Court of Appeals

Page 1198

614 So.2d 1198

18 Fla. L. Weekly D643, 19 UCC Rep.Serv.2d 1230,

20 UCC Rep.Serv.2d 1459

FLANIGAN'S ENTERPRISES, INC., Appellant, v. BARNETT BANK OF NAPLES, et al., Appellees.

No. 92-104.

District Court of Appeal of Florida Fifth District.

March 5, 1993.

Richard E. Whitaker of Maguire, Voorhis & Wells, P.A., Orlando, for appellant.

Tucker H. Byrd of Winderweedle, Haines, Ward & Woodman, P.A., for appellee Barnett Bank of Naples.

PER CURIAM.

Flanigan's Enterprises, Inc. appeals from a final judgment which held it was estopped to seek damages against Barnett Bank of Naples and Barnett cross-appeals from the trial court's initial determination that it could have been held liable to Flanigan's pursuant to section 818.01, Florida Statutes (1983). That section is a criminal statute which prohibits the sale of personal property subject to a lien without the consent of the lienholder. Flanigan's held an unperfected security interest in a liquor license and belatedly asserted a superior statutory landlord's lien pursuant to section 83.08(2), Florida Statutes (1977). Barnett had a perfected security interest in the license, and after default, pursued its remedies under the Uniform Commercial Code and Chapter 561, Florida Statutes, to foreclose on the license and sell it to a third party. We affirm for two reasons: the record adequately supports the trial court's finding of estoppel, and we also think that section 818.01 provides no basis to assert civil liability against Barnett.

The record in this case is complicated and in dispute. Where there was conflict in the evidence, we resolve it in Barnett's favor, as the trial court obviously did.

In 1973, Flanigan's leased a liquor lounge on South Orange Blossom Trail in Orlando, Florida, on a long-term basis. It subleased the lounge and sold its liquor license to Level 3 in 1978. Level 3 changed its name to Spirits Orlando South, Inc. Spirits pledged its equipment and furnishings to Barnett in 1983, for a loan made to a related corporation, and entered into a security agreement covering its liquor license for the premises. Barnett checked the U.C.C. filings in Tallahassee, and checked with the Beverage Department for prior liens on the license. Finding none, Barnett perfected its security interest by filing with the Secretary of State and with the Florida Beverage Department.

While working on the documentation for its loan to Spirits, Barnett's attorney sent Flanigan's a letter requesting that it waive any landlord's lien it might have on Spirit's equipment and furnishings in the Orlando lounge. Flanigan's attorney declined. When asked at trial why Barnett did not also seek a waiver of its landlord's lien on the liquor license, the attorney testified he had no idea that a liquor license could be encumbered by a landlord's lien for rent, absent a filing with the Beverage Department and/or the Secretary of State, pursuant to the U.C.C.

In early 1984, the Barnett loan went into default and in June, Spirits ceased paying rent to Flanigan's. Spirits surrendered the liquor license to Barnett, and Barnett proceeded to have it escrowed with the Department in July of 1984, so that it could be sold to a third party, pursuant to Chapter 561. On October 10, 1984, Barnett sold the license to Hickory Point Industries, Inc. It applied the $105,000 proceeds it received to reduce a much larger indebtedness.

Hickory Point filed for Chapter 11 bankruptcy protection, nineteen days after it paid Barnett. Apparently, Flanigan's has not been able to collect its past due rent owed by Spirits, nor has it been able to assert its landlord's lien against the liquor license in the context of the bankruptcy proceedings. Flanigan's claims in this lawsuit that Barnett's sale of the license to Hickory Point and the subsequent bankruptcy completely destroyed its landlord's lien. For purposes of this opinion, we assume Flanigan's assertions of complete loss are true.

After Barnett contracted with Hickory Point to sell the liquor license, the attorney for Barnett, McMackin, received a telephone call from Flanigan's attorney, Kastner. Kastner first asserted Flanigan's had a perfected security interest in the liquor license, created by the sublease. However, Kastner admitted to McMackin that Flanigan's had failed to file or record any U.C.C. documents, and it filed no notice with the Beverage Department. Kastner then offered to buy the license from Barnett for $95,000.

Knowing that a higher contract with Hickory Point had not yet closed, McMackin said he would tell Barnett of the offer and get back with Kastner. He told Barnett about Flanigan's offer, but he did not call Kastner back prior to the sale to Hickory Point. But Kastner never asserted a superior landlord's lien on the license until after the sale to Hickory was consummated.

McMackin testified that had Flanigan's asserted a superior lien on the liquor license prior to the sale to Hickory Point, he would have dealt with the claim and tried to work it out. He would not have proceeded with the sale to Hickory Point. There was no evidence, or even a suggestion, that Barnett (or any of its agents) knew about Hickory Point's impending bankruptcy, and its potential effect on Flanigan's statutory landlord's lien claim against the license.

I. ESTOPPEL

It is well established that when estoppel is raised as a defense, the burden of proof is on the party asserting it. Ennis v. Warm Mineral Springs, Inc., 203 So.2d 514 (Fla. 2d DCA 1967). The silence or inaction by one party does not constitute an estoppel unless the other party has access to knowledge or facts not available to the first. Pelican Island Property Owner's Association, Inc. v. Murphy, 554 So.2d 1179 (Fla. 2d DCA 1989). However, in this case, the record sufficiently supports the trial judge's conclusions that Flanigan's sole assertion of an unperfected security interest when faced with Barnett's perfected security interest, was inconsistent with its later claim to have a prior statutory lien on the license. Had this claim been timely asserted, Barnett would not have sold the license to Hickory Point and the loss of Flanigan's lien following the sale could have been avoided.

II. APPLICABILITY OF SECTION 818.01.

Section 818.01 is a very old statute, having first appeared in 1893. But it has continued through revisions in 1906, 1920, 1922 and 1971. Subsection (1) makes it a criminal misdemeanor to:

[p]ledge, mortgage, sell or otherwise dispose of any personal property to him belonging, or which shall be in his possession, and which shall be subject to any written lien, or which shall be subject to any statutory lien, whether written or not, or which shall be the subject of any written conditional sales contract under which the title is retained by the vendor, without the written consent of the person holding such lien, or retaining such title ...

Admittedly, Barnett did not obtain Flanigan's consent to its sale of the license to Hickory Point.

Barnett argues in its cross-appeal that section 818.01 applies only to tangible personal property, and not to intangible personal property, such as a liquor license. A liquor license is a special form of general intangible property in Florida. ¹ Pursuant to section 679.106, "general intangible" means "any personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments and money." Clearly a general intangible such as a liquor license cannot be seen or handled and it has no substance, body or location. It is similar to those bundles of rights that make up a franchise, a copyright or an annuity. See C.J.S. Property Sec. 15 (1983).

However, the language of section 818.01 is not expressly limited to tangible, as opposed to intangible, personal property. It prohibits disposing of "any personal property to him belonging, or which shall be in his possession ..." (emphasis added). As Flanigan's points out "personal property" is the more general term which encompasses both tangible and intangible personal property. Black's Law Dictionary 1096 (5th ed. 1979). In its choice of words, the courts presume the Legislature intended the plain meaning of those used in legislation. Baskerville-Donovan Enter., Inc. v. Pensacola Exec. House Condo. Assoc., 581 So.2d 1301 (Fla.1991); Shelby Mutual Ins. Co. of Shelby, Ohio v. Smith, 556 So.2d 393 (Fla.1990). Although all of the cases involving section 818.01, which we have found or which have been cited to us, concerned tangible personal property, ² we cannot conclude that intangible or other kinds of personal property, such as instruments and chattel paper, ³ were intended to be excluded. See Hayes v. Jones, 147 Fla. 238, 2 So.2d 588 (Fla.1941).

Barnett also argues that section 818.01 should not be applied in the context of sales of collateral by either inferior or superior lienholders where such sales are permitted by the panoply of remedies afforded by the U.C.C., ⁴ or other laws. ⁵ Other appellate courts of this state have rejected this argument. In Ford Motor Credit Co. v. Hanus, the fourth district held that a purchaser of a truck at a sheriff's sale (the levying judgment creditor) was liable under section 818.01 to the secured creditor whose lien was duly noted on the title when a third party to whom the creditor resold the truck vanished and absconded with the collateral.

Similarly, in Littman v. Commercial Bank & Trust Co., the third district held that the purchaser of a forklift at a sale by an inferior secured creditor, was liable to the superior lienor for the full amount of the superior lien, even though the sale was expressly subject to the superior lien, when the purchasing creditor resold the forklift to a third party who vanished and absconded with the collateral. The Littman court expressly held that section 818.01 had not been impliedly repealed by section 679.311 or any other remedy provision encompassed in the U.C.C. because no...