Johns v. Gillian

• Decision Date: 15 October 1938
• Citation: 184 So. 140,134 Fla. 575
• Court: Florida Supreme Court
• Parties: JOHNS et ux. v. GILLIAN et al.

184 So. 140

134 Fla. 575

JOHNS et ux. v. GILLIAN et al.

Florida Supreme Court

October 15, 1938

Rehearing Denied Nov. 14, 1938.

Foreclosure suit by the Everglade Lumber Company, for which Sam Gillian was substituted as party plaintiff, against J. J. Johns and Rachel Johns, his wife, and others. Decree for plaintiff, and the named defendants appeal.

Affirmed. Appeal from Circuit Court, Broward County George W. Tedder, judge.

COUNSEL

G. H Martin, of Fort Lauderdale, for appellants.

Robert J. Davis, of Fort Lauderdale, for appellees.

OPINION

PER CURIAM.

This appeal is from a final decree rendered in a suit involving the foreclosure of a mortgage on real estate. In 1923 Pearl M. Brown, a married woman, was the owner of the property, and purchased building material from Everglade Lumber Company, a corporation, for the purpose of repairing and improving the property. In payment either in full or in part for the material, the said Pearl M. Brown, and her husband Charles L Brown, made, executed and delivered to the Everglade Lumber Company their promissory note secured by a mortgage upon the property. The mortgage was not recorded until shortly before the institution of this suit.

In 1926 Pearl M. Brown reduced the indebtedness to $400 by payment to the corporation, for which it granted her an extension of 90 days on the payment of the balance, and delivered to her the original note with the understanding that the corporation would receive a new note as evidence of the unpaid balance. The new note was given and signed by Pearl M. Brown alone which the corporation accepted. Pearl M. Brown died, leaving as her heirs her husband and a minor daughter. The husband subsequently re-married and moved away, leaving the property abandoned.

Sam Gillian, plaintiff in the court below, had a considerable interest in Everglade Lumber Company, holding more than a majority of the stock. In 1927-28, when the Everglade Lumber Company fell into financial difficulties, Gillian advanced money to the corporation for which it delivered to him a number of securities, among which was the mortgage herein sued on. No written assignment of the mortgage was made at that time.

Gillian was concerned for the protection of the property, and about 1932 he took possession of the mortgaged premises, allowing appellant J. J. Johns to move in. There is some conflict in the testimony relating to the arrangement entered into between Gillian and Johns. Gillian contends that Johns was to repair the house during his spare time and take care of it, that he (Gillian) was to furnish the materials for making it livable and that Johns could apply whatever charge he made for services on the rent. Johns contends that the property was to be the home of himself and his wife for the balance of their lives.

In January, 1937, Gillian began foreclosure proceedings in the name of the corporation, naming as defendants the heirs of Pearl M. Brown and Johns and his wife. When it was discovered that the debt and mortgage had been transferred to Gillian in 1927 or 1928 the directors of Everglade Lumber Company executed a written assignment, purporting to assign the mortgage to Gillian, and Gillian was substituted as plaintiff. Decrees pro confesso were entered against the heirs of Pearl M. Brown. Appellants J. J. Johns and Rachel Johns, his wife, appeared and upon their amended answer the issues were made up and the cause proceeded.

A final decree was rendered in favor of the plaintiff allowing him credits for payments made on taxes, materials and plumbing supplies. The lower court recognized Johns as a tenant of Gillian, and allowed the heirs of the mortgagor a credit for rent in the final decree, but refused to allow appellant Johns any credit for the improvements made by him. From the final decree this appeal was taken.

Appellant Johns in his brief has stated his first question as follows:

'Where there is no proof that a corporation of Florida has or has not been dissolved, does an Assignment of Mortgage, executed by several persons designated to be directors, who signed in their respective individual capacity, operate to transfer ownership of a mortgage of which the corporation is mortgagee?'

Section 5672, Comp.Gen.Laws 1927, sets out the method by which a corporation may convey lands:

'Any corporation may convey lands by deed sealed with the common or corporate seal and signed in its name by its president or any vice-president or chief executive officer.'

The formal parts of the assignment are as follows:

'Know all men by these presents: That U.S. Caoyt, Sam Gillian, Mrs. Ivey Stranahan and William Wingate, Directors of Everglade Lumber Company, a corporation, of the first part, in consideration of the sum of Ten Dollars and other valuable consideration, Dollars, lawful money of the United States, to them in hand paid by Sam Gillian, * * *' etc.

The attestation clause reads thus:

'In witness whereof, we have hereunto set our hands and seals, the 17th day of February, in the year one thousand and nine hundred and thirty-seven. U.S. Cayot, Pres. (Seal); Sam Gillian, Sec. Tr. (Seal); Ivy J. Stranahan (Seal); William Wingate (Seal):'

The certificate of acknowledgment states that:

'* * * before me personally came U.S. Cayot, Sam Gillian, Mrs. Ivey Stranahan and William Wingate, to me known to be the individuals described in and who executed the within and foregoing assignment, and they acknowledge before me that they executed the same for the purposes therein expressed.'

Private seals of officers and directors are not seals of the corporation. Mitchell v. St. Andrews Bay Land Co., 4 Fla. 200. It is essential to the proper execution of a deed or mortgage by a corporation that it be done in the name and in behalf of the corporation, and under its corporate seal. The seals affixed in the above assignment are the private seals of the parties signing, and not the common seal of the corporation. The attestation clause is conclusive of this point, and as the corporation could only convey under its corporate seal, the assignment is necessarily inoperative as the foundation of any right or claim to the corporate property. A corporation may alter its seal at pleasure, and may adopt as its own the private seal of an individual if it chooses to do so, but when adopted it must be used as the seal of the individual, it cannot be treated as that of the corporation, and a declaration in the instrument that it is so affixed is conclusive of its character and effect. Brown et al. v. Farmers' Supply Depot Co. et al., 23 Or. 541, 32 P. 548; Richardson v. Scott River W. & M. Co., 22 Cal. 150; Shackleton v. Allen Chapel African M. E. Church, 25 Mont. 421, 65 P. 428; Combe's Case, 9 Co. Rep. 75(a), 76(b), 77 Reprint 843, 847; Brinley v. Mann, 2 Cush., Mass., 337, 48 Am.Dec. 669; Notes to 7 Am.Dec., page 450; See, also Campbell v. McLaurin Investment Co., 74 Fla. 501, 77 So. 277.

However, it has frequently been held that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt. If the note or other debt secured by a mortgage be transferred without any formal assignment of the mortgage, or even a delivery of it, the mortgage in equity passes as an incident to the debt, unless there be some plain and clear agreement to the contrary, if that be the intention of the parties. Jones on Mortgages, Vol. 2, Sec. 1033; Collins v. W. C. Briggs, Inc., 98 Fla. 422, 123 So. 833; Miami Mortgage & Guaranty Co. v. Drawdy, 99 Fla. 1092, 127 So. 323.

The renewal note signed by Pearl M. Brown alone was, of course, void. Although an action may not be maintained on the note itself, it can be used in the foreclosure proceedings as evidence of the amount of the unpaid indebtedness and the terms on which the loan was made. National Granite Bank v. Tyndale, 176 Mass. 547, 57 N.E. 1022, 51 L.R.A. 447.

Although the assignment of the mortgage from Everglade Lumber Company to Gillian was defectively executed, it may be taken as evidence to show that the company had, before the commencement of the suit, sold and transferred to Gillian its entire interest in the note and mortgage. Dougherty v. Randall, 3 Mich. 581. A mere delivery of a note and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered. Daly v. New York & G. L. Ry. Co. et al., 55 N.J.Eq. 595, 38 A. 202.

'The transfer of the note or obligation evidencing the debt being as a general rule the equivalent of the assignment of the debt itself, such transfer operates as an assignment of the mortgage securing the debt, and it is not necessary that the mortgage papers be transferred, nor, in order that the beneficial interest shall pass, that a written assignment be made.' 41 C.J., Mortgages, Sec. 686, pp. 673.

'Generally speaking, wherever it was the intention of the parties to a transaction that the mortgage interest should pass, but a written assignment was not made, or else the writing was insufficient to...