Hullum v. Bre-Lew Corp., BRE-LEW

• Decision Date: 22 March 1957
• Docket Number: BRE-LEW
• Parties: Phyllis K. HULLUM and Calvin Hullum, her husband, Appellants v.CORPORATION, a Florida corporation, et al., Appellees.
• Court: Florida Supreme Court

Page 727

93 So.2d 727

Phyllis K. HULLUM and Calvin Hullum, her husband, Appellants v. BRE-LEW CORPORATION, a Florida corporation, et al., Appellees.

Supreme Court of Florida, Division B.

March 22, 1957.

Douglas D. Reed, Miami, for appellants.

L. J. Cushman, Miami, for appellees.

DREW, Justice.

This is an appeal from an order of the trial court dismissing an amended complaint to impress and foreclose an equitable lien against real estate.

The salient facts around which this litigation revolves as set forth in the amended complaint are as follows:

Chester G. Breese and Ruth B. Breese (hereinafter called Mr. and Mrs. Breese) were the owners of a parcel of real estate located in Dade County, Florida, known as Lots 2, 4, 6 and 8 of Elmira, a subdivision within said county. Mr. and Mrs. Breese and Don Lewis and Helen Lewis, his wife (hereinafter called Mr. and Mrs. Lewis), entered into an agreement to construct and operate a motel on said real estate. In order to provide financing for such construction, Mr. and Mrs. Breese borrowed $25,000 from Borton Investment Company and secured said indebtedness by a first mortgage on the above real estate. This first mortgage shall be hereafter referred to as the Borton mortgage. A little while after the Borton mortgage was executed Mr. and Mrs. Breese borrowed $3,159.69 from their daughter, Phyllis Hullum, and secured said loan by a second mortgage on the premises. Financial difficulties were encountered in the development of the project and the holders of the Borton mortgage threatened foreclosure in the latter part of 1951. Faced with this situation, Mr. Breese prevailed upon his daughter, Mrs. Hullum, and upon a third party to advance sufficient funds to pay off the sum owing on the Borton mortgage at that time in order to prevent a foreclosure. Such funds were advanced and the Borton mortgage, upon which there was then due an amount in excess of $15,000, was paid off and satisfied. Mr. Breese promised adequate security to his daughter and the third party for these loans and, according to the record, an attorney was employed to prepare the necessary papers but according to the complaint and unknown to Mrs. Hullum and the third party, Mr. and Mrs. Breese had conveyed the land prior thereto to Bre-Lew Corporation, of which Mr. Breese was president, Mrs. Breese, vice-president and Mr. Lewis, secretary and resident agent. Shortly after funds were advanced to pay off the Borton mortgage, Mr. Breese signed a memorandum which he sent to his agent which directed the agent to hold the Borton mortgage, which had been satisfied, with the understanding that it was to be assigned to Mrs. Hullum and the third party who had joined Mrs. Hullum in furnishing the funds and that said mortgage would be held by them until suitable security was provided. The security, however, was never provided and the third party who had joined with Mrs. Hullum in furnishing a substantial part of the funds to pay off the Borton mortgage threatened to sue for the recovery of his funds sometime in December, 1952 whereupon Mr. Breese again persuaded his daughter to pay off the third party in order to protect the motel and the business venture even though at this time the property had been conveyed by Mr. Breese to the corporation, a fact which was unknown to the daughter. It is alleged that Mr. Breese continued to assure his daughter that adequate security in the form of the assigned first mortgage or a new one would be provided or was provided to protect her on the advances she had made. Sometime later and on towit: February 9, 1953, the corporation, still in financial difficulties, secured a loan from a Mr. Jordan and executed a mortgage to Mr. Jordan to secure the payment of another loan. The holder of this mortgage is not a party to this litigation and the plaintiffs admit that their claim is subordinate and junior to the rights of this mortgagee. March 1, 1953, Bre-Lew Corporation executed a note signed by Mr. Breese, as president, to his daughter for $6,000 mentioning a first mortgage which was to be security for the payment of the obligation evidenced by the note and on March 4, 1953, Mr. and Mrs. Breese issued another note to their daughter's husband, Mr. Hullum, for $2,500. Mrs. Hullum continued in her efforts to obtain the promised security on the obligation and on March 6, 1953, Bre-Lew Corporation executed and delivered to Mrs. Hullum an $8,000 note signed by Mr. Breese, president, and Mr. Lewis, secretary. This note was an attempt to recapitulate the debts then owing to the daughter but apparently was not accurate as to amount and the $8,000 note refers to the fact that a first mortgage is to be executed to secure the sum involved but said mortgage was never so executed. Some four months later, on to-wit: June 6, 1953, and with the foregoing notes outstanding representing the indebtedness of the corporation, Bre-Lew Corporation executed a note for $9,000 secured by a mortgage on the real estate to Mr. and Mrs. Lewis which was shortly thereafter assigned to Lloyd Averett Grace, who was the accountant for the corporation. It is this latter mortgage which the complaint alleges to be fraudulent and void or at least entirely subordinate to the claims of the plaintiffs. After alleging the foregoing facts the complaint then alleges:

'Plaintiffs aver that in equity and good conscience, by reason and on account of the facts and circumstances as herein related, they are subrogated to all of the rights and interest of the Mortgagee in, and to said Borton Mortgage aforesaid, and have by virtue of...