Folsom v. Farmers' Bank of Vero Beach

• Decision Date: 11 August 1931
• Citation: 102 Fla. 899,136 So. 524
• Court: Florida Supreme Court
• Parties: FOLSOM et al. v. FARMERS' BANK OF VERO BEACH.

136 So. 524

102 Fla. 899

FOLSOM et al. v. FARMERS' BANK OF VERO BEACH.

Florida Supreme Court

August 11, 1931

Suit by the Farmers' Bank of Vero Beach against Elizabeth Harris Folsom and another. From an order overruling separate demurrers to the bill of complaint, defendants appeal.

Order affirmed.

Syllabus by the Court.

SYLLABUS

The bill of complaint sets up an executory agreement which did not convey or transfer any legal estate in the property, but that agreement did stipulate the property should be security for the debt for which the collateral received by the debtor had been theretofore held as security, and this agreement was an equitable pledge of the property for the performance of the obligation of Harris to the bank.

The form or particular nature of the agreement which shall create a lien is not very material, for equity looks at the final intent and purpose rather than at the form, and, if the intent appears to give, or to charge, or to pledge property real or personal, as a security for an obligation, and the property is so described that the principal things intended to be given or charged can be sufficiently identified, the lien follows.

The doctrine of equitable liens is one of great importance and of wide application in administering the rights and remedies peculiar to equity jurisprudence; there is perhaps no doctrine which more strikingly shows the difference between the legal and the equitable conceptions of the judicial results which flow from the dealings of men with each other from their express or implied undertakings.

An equitable lien is not an estate or property in the thing itself, nor a right to recover the thing, that is, a right which may be the basis of a possessory action; it is neither a jus ad rem nor a jus in re. It is simply a right of a special nature over the thing, which constitutes a charge or incumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action, and either sold or sequestered under a judicial decree, and its proceeds in the one case, or its rents and profits in another, applied upon demand of the creditor in whose favor the lien exists.

The doctrine of equitable liens follows the doctrine of subrogation. They both come under the maxim, equality is equity, and are applied only in cases where the law fails to give relief and justice would suffer without them.

A voluntary conveyance by one who is indebted is presumptively fraudulent when attacked by a judgment creditor upon a debt existing at the time of its execution. In such cases it is not necessary to show that the debtor was actually insolvent at the time he executed the conveyance.

Voluntary conveyances by debtors of their real estate are not absolutely fraudulent per se, but are prima facie or presumptive evidence of fraud, which may be rebutted or explained, and the burden of proof to show that the deed was not fraudulent falls upon those claiming under it. Appeal from Circuit Court, Indian River County Elwyn Thomas, judge.

COUNSEL

T. B. Ellis, Jr., of Ft. Pierce, for appellants.

Vocelle & Mitchell, of Vero Beach, for appellee.

OPINION

BUFORD C.J.

The bill of complaint in this case alleges in effect that J. A. Harris was indebted to Farmers' Bank of Vero Beach. He had posted as collateral security to secure his indebtedness to the bank a real estate mortgage with the notes which the mortgage was given to secure. While still indebted to the bank, he went to the bank and procured the mortgage and notes which he had pledged as collateral under an agreement with the bank that he would foreclose the mortgage, buy the property in his own name, and thereupon execute and deliver to the bank a mortgage on the identical property from himself to the bank to secure the then existing loan. Under this agreement, the bank delivered the notes and mortgage to Harris in trust for the purpose of Harris foreclosing the same, acquiring title to the property, and executing a mortgage in favor of the bank as aforesaid; that Harris foreclosed the mortgage, bought in the property, took title in his own name, and then without consideration, and with intent to defraud the bank, conveyed the property to his daughter, Elizabeth Harris Folsom. The bill prayed that the conveyance from Harris to his daughter be decreed to be in fraud of complainant's rights, and that same be set aside and canceled, and that the defendant Harris be held to hold the property involved in this suit in trust for the complainant, the bank, to the extent of the indebtedness of Harris to the bank, and that the bank be decreed to have an equitable lien on the property to the extent of such indebtedness, and that Harris be decreed to pay the amount found to be due the bank within a reasonable time to be fixed by the court, and that, upon failure to pay the same, the equitable lien of the complainant in and to the property be foreclosed and the property be sold to satisfy the lien.

L. P Folsom was made party to the suit because of being the husband of Elizabeth...