J.w. Mcwilliams Co. v. Ft. Myers Development Corp.

• Citation: 105 Fla. 13,140 So. 902
• Parties: J. W. McWILLIAMS CO. v. FT. MYERS DEVELOPMENT CORPORATION et al.
• Decision Date: 16 April 1932
• Court: United States State Supreme Court of Florida

140 So. 902

105 Fla. 13

J. W. McWILLIAMS CO. v. FT. MYERS DEVELOPMENT CORPORATION et al.

Florida Supreme Court

April 16, 1932

En Banc.

Suit by the J. W. McWilliams Company against the Ft. Myers Development Corporation and another, in which defendant named filed a counterclaim. Decree for defendant named, and complainant appeals.

Reversed. Appeal from Circuit Court, Lee County; George W Whitehurst, judge.

COUNSEL

Treadwell & Treadwell, of Arcadia, and J. Bowers Campbell, of Ft Myers, for appellant.

L'Engle & Shands, of Jacksonville, for appellees.

OPINION

ELLIS J.

J. W McWilliams Company, a corporation, owned in 1925 a large tract of land in Lee county containing about twenty-three thousand six hundred and fifty-two acres, which it contracted to sell to Irving Walker at the price of $75 per acre, but at Walker's request entered into a contract with him in which the price was stated to be $90 per acre, and by letter addressed to him dated New York, June 12, 1925, agreed, in consideration of Walker 'handling the tract of land,' to accept his two checks aggregating $354,784.05 and return the same to him upon the payment of the installments due respectively sixty days and four months on the purchase of the lands. The two checks for the amount stated represented the difference between $75 per acre, at which the land was actually sold, and the fictitious price of $90 stated to be the price in the contract.

Walker's purpose was to interest others in the transaction by representing to them that he had purchased the land at $90 per acre, and was himself paying on the purchase price $354,784. This purpose was disclosed to McWilliams Company which, when Walker had succeeded in interesting others who formed a company to take over the land and the first payment was made, gave Walker a receipt for $174,132 although he had neither paid that sum nor given his check therefor, and later he received his note for $180,651.99 from the McWilliams Company, although it was not paid.

When Walker having interested certain persons in the purchase of the land who organized a corporation named the Ft. Myers Development Corporation, with himself as president to take over the purchase, the McWilliams Company received from the Ft. Myers Development Corporation notes aggregating the sum of $1,697,829.44, which is $76,090.81 less than the price of the land at $75 per acre and less by the sum of $430,874.86 than the cost of the land at $90 per acre, and accepted a mortgage from the Ft. Myers Development Corporation upon the lands to secure the payment of the notes.

Out of that transaction grew the litigation which is here on appeal from the chancellor's decree holding that the Ft. Myers Development Corporation is entitled to rescind its purchase of the lands from J. W. McWilliams Company and to demand of that corporation the return of the money paid and interest upon it.

The J. W. McWilliams Company exhibited its bill in chancery in the circuit court for Lee county to enforce the mortgage lien against Ft. Myers Development Corporation in July, 1926. The defendant answered that Walker's dealings with it and his transactions with the complainant constituted a fraud upon the defendant to which the complainant was a party, not only because the complainant, vendor, had given Walker, its vendee, a contract reciting a false consideration for the purpose of enabling him to defraud his principal and associates by securing to himself a large profit at their expense in the fiduciary capacity in which he acted with and toward them, but that the complainant with a knowledge of the facts aided and abetted Walker in the execution of the scheme.

The answer setting up that defense and seeking the affirmative relief of rescission and restitution of the money paid was held by this court in a former appeal to be a good answer and counterclaim. See Ft. Myers Development Corporation v. J. W. McWilliams Company, 97 Fla. 788, 122 So. 264.

In a very carefully considered opinion by Circuit Judge West, who sat in place of Mr. Justice Buford, who was disqualified, it was stated, speaking from the averments of the answer, that 'Walker was first the promoter, and after its organization as a corporation, president of the defendant. Therefore, in all the dealings between him and the defendant relating to the subject-matter of this controversy, the utmost good faith was exacted, and, if complainant conspired with and corrupted Walker and aided and abetted him in a breach of his fiduciary duty to defendant, and his double dealing, in which complainant concurred, so operated upon defendant as to induce it to incur obligations that it would not otherwise have assumed, complainant is not in position to urge actual fraud or resulting pecuniary injury as a prerequisite to defendant's right to rescind.'

The above-cited case contains a full statement of the averments of the answer showing in what manner the defendant claims that it was induced by the fraud of Walker, aided by the complainant, to incur obligations which it would not have otherwise assumed. The judgment of the court in that case is the law of the case so far as the sufficiency of the answer is involved. See First Nat. Bank of St. Petersburg v. Ulmer, 66 Fla. 68, 63 So. 145; Peacock v. Our Home Life Ins. Co., 73 Fla. 1207, 75 So. 799; Tampa Water Works Co. v. Wood (Fla.) 139 So. 800, decided at the present term.

The case was referred to a special master to take and report the evidence, and his report was filed on the 25th day of February, 1929, about three months before the decision of this court on the sufficiency of the answer was rendered and four months before the mandate was sent to the clerk.

The final decree was rendered on December 11, 1929. The chancellor held that the equities in the case were with the Ft. Myers Development Corporation; that it had proved the material averments of its answer and was entitled to a rescission of the contract of purchase of the land, cancellation of the mortgage, and restitution of the money paid to the complainant. A pro confesso decree had been taken against Walker, who was made a cross-defendant by Ft. Myers Development Corporation in its answer and counterclaim. The decree ordered the payment by J. W. McWilliams Company to Ft. Myers Development Corporation of the sum of $451,443.87 which was several thousand more than the answer averred had been actually paid to the complainant with interest and in default thereof that the lands should be sold and the proceeds of the sale be applied to the extinguishment of the defendant's lien, and that the stock certificates held by Walker of the stock in Ft. Myers Development Corporation be surrendered by him for cancellation.

J. W. McWilliams Company appealed from the decree. In the caption of the notice of appeal, Walker, who was brought into the case by the answer of Ft. Myers Development Corporation as defendant, was named as an appellee.

No question is raised as to the sufficiency of the notice of appeal on the ground that it names no one in the body of the notice as appellees, and its sufficiency is questionable as to the designation of the cause by 'its usual title in the inferior court.' See chapter 11890, Laws 1927; Smith v. Fidelity Trust Co., 96 Fla. 168, 117 So. 791.

So the point is not considered, although the jurisdiction of this court may depend upon the use of the plural word 'defendants' in the body of the notice, the names of Walker and the development corporation appearing in the caption.

The record does not disclose that Walker was ever served with subpoena; nor that he appeared in the cause, nor that substituted service of process against him was obtained by publication. The only reference to him in that connection is the recital in the final decree that 'a decree pro confesso has been duly entered herein against the cross-defendant Irving Walker.'

Walker's interests were very materially affected by the decree, in that the certificates of stock held by him in the Ft. Myers Development Corporation were required to be surrendered by him and canceled as a result of the fraud which the chancellor held he perpetrated with complainant's participation and active assistance upon the defendant and counterclaimant Ft. Myers Development Corporation. If Walker perpetrated no fraud, it follows that complainant perpetrated none. It seems that the answer of the principal defendant rests upon the theory of a conspiracy between Walker and McWilliams Company to perpetrate a fraud upon the defendant Ft. Myers Development Company. Upon the existence of such conspiracy, the relief which the Ft. Myers Development Corporation...