Malt v. Deese

• Decision Date: 20 May 1981
• Docket Number: No. 79-906,79-906
• Citation: 399 So.2d 41
• Parties: Robert C. MALT and B. Ann Malt, his wife, Appellants, v. Samuel H. DEESE and Dorothy M. Deese, his wife, Appellees.
• Court: Florida District Court of Appeals

Page 41

399 So.2d 41

Robert C. MALT and B. Ann Malt, his wife, Appellants, v.Samuel H. DEESE and Dorothy M. Deese, his wife, Appellees.

No. 79-906.

District Court of Appeal of Florida, Fourth District.

May 20, 1981.

Robert B. Cook of DeSantis, Cook, Meehan, Cohen, Gaskill & Silverman, P. A., North Palm Beach, for appellants.

James R. Hustad of Hustad & Kurtz, West Palm Beach, for appellees.

GLICKSTEIN, Judge.

This is a timely appeal by Mr. and Mrs. Malt, the lessors/sellers, of property in Manalapan, Florida, from a final judgment of specific performance, together with an award of attorneys' fees in favor of Mr. and Mrs. Deese, the lessees/buyers.We affirm.

Mr. Malt is a homebuilder and real estate broker.The parties met in 1973 when Mr. Deese responded to an advertisement for the sale of a waterfront home in Manalapan owned by the Malts.¹Upon their meeting, Mr. Deese made known to Mr. Malt his ownership of Letters Patent for a foldable extension ladder and the existence of an Exclusive License Agreement he had given to International Leisure Industries, Inc. for the manufacture and sale of the ladder.²Mr. Malt's interest was apparently aroused to the extent that he let the Deeses into possession of the home without requiring any money from them.³

On September 20, 1974, the board of directors of International Leisure held a special meting which Mr. Deese attended as a guest.The following motion was passed unanimously:

That the board authorize payment of all arrears in royalties for the ladder to be paid to October 1974 at $200.00 per month.Additionally, a prepayment advance of royalties in the amount of $1,400 paid through May 31, 1975 for eight months, at which time a minimum of $2,000 per month be paid Mr. Deese against accrued ladder royalties.

The record indicates that shortly thereafter Mr. Deese may have received $1,400 from the corporation and turned it over to Mr. Malt as some consideration for the Deeses' occupancy from May, 1973, of the subject property.

Shortly after the September, 1974, board of directors meeting, Mr. Malt and Mr. Deese set about the preparation of a Lease, Contract and Assignment of Royalty Agreement, which was ultimately signed by Mr. and Mrs. Malt and Mr. and Mrs. Deese on December 10, 1974, a portion of which provides:

1) The closing shall be on or before the first day of October, 1979.

2) The purchase price shall be One Hundred Thousand Dollars ($100,000.00) cash, plus an additional cash amount equal to all taxes, hazard insurance and the interest of 8.2 per cent per annum paid on that certain first mortgage in the amount of $100,000 held by Community Federal Savings and Loan Association of Riviera Beach, Florida, encumbering said property.Said amounts shall be computed and prorated from the date Lessees took possession of the premises; to-wit: May 18, 1973, to the above date of closing.

3) It is understood and agreed that the royalties paid to Lessors pursuant to the terms of this agreement shall act as a reduction in said purchase price in the following manner:

(a) The first $100,000 of royalty payments shall be retained by Lessors.

(b) Any additional payments shall first be applied to all taxes, hazard insurance, and interest, as noted in Article 2 above then the remainder, if any, shall apply to the reduction of said $100,000 mortgage held by Community Federal Savings and Loan Association of Riviera Beach, Florida.

4) Provided that, prior to the above date of closing, royalty payments to the Lessors have at least equalled $200,000, Lessor shall convey title to the premises to the Lessees by a general warranty deed subject only to the easements and restrictions common to the neighborhood.In the event, by the date of closing, said royalty payments to the Lessors have not at least equalled the purchase price, including said taxes, insurance and interest, the Lessees, jointly and severally, hereby promise to pay forthwith to the Lessors, a sum of money equal to the full purchase price plus the taxes, insurance and interest referred to above less whatever royalty amounts have been paid to Lessors.

The Assignment of Royalties portion provides, in part:

1) Commencing from the date hereof, the Lessors shall be entitled to 100% of the royalties and any other monies or considerations paid by the licensee or its assigns under the terms of said exclusive license agreement.Said payment shall be for a period of five (5) years from the date of this agreement or until $200,000 has been received.

2) Subsequent to the time that the Lessor receives a total of $200,000 in accordance with the provisions and time requirements of this agreement, the Lessor shall receive 10 percent of all royalties and other considerations paid to the Lessee or its assigns as long as the Lessee or its assigns receive royalty payments for the attached ladder patent.

3) During the time period from November 1, 1974, until date of closing, October, 1, 1979, the Lessee shall pay to the Lessor all of the royalties received by the Lessee under its license agreement, not to exceed that amount as stated in Article 1, above, but not less than $400.00 per month, beginning November 1, 1974, and continuing until time of closing.In the event the Lessee leases the property to a third party during term of this agreement, and the Lessor at that time is not receiving $2,000 per month, all of the lease monies over $400.00 per month, which is guaranteed by the Lessee, shall be paid to the Lessor and applied to reduce the balance owed by Lessee to Lessor at which time the Lessor is receiving a minimum of $2,000 per month, any rentals received by the Lessee on the described property shall be retained by the Lessee.

After December 10, 1974, the Malts received exactly $400 per month from the Deeses.Unknown to the Malts, by June of 1975, International Leisure's board of directors voted at a special meeting to take the corporation into voluntary bankruptcy.The ladder had never been produced because it had never met the standards of the Occupational Safety and Health Administration and the corporation lacked capital.In this time frame, Mr. Malt was exhorting Mr. Deese to do something about the fact that no royalty payments were being received other than $400 per month actually being paid by Mr. Deese.On July 11, 1975, Mr. Malt wrote the corporation demanding on behalf of Mr. Deese and himself, the $2,000 per month royalties described in the minutes of the board's meeting on September 20, 1974.

Mr. Malt decided in 1976 to rescind the agreement with the Deeses.However, instead of refusing any further payments, the Malts continued to accept monthly payments from the Deeses of $400 through November, 1978, when the trial of this case commenced.Mr. Malt's reason for accepting the $400 was that he wanted help in paying the mortgage on the home.

In January, 1977, the Malts instituted an action in the County Court in and for Palm Beach County to evict the Deeses on the bases that their monthly payments were tardy and that the Town or City of Point Manalapan had notified the Malts in November, 1976, that the Deeses were maintaining a nuisance by operating a garage in the home.The court found in favor of the Deeses.

On August 3, 1977, the Malts filed a complaint for cancellation of the December 10, 1974, agreement, alleging failure of consideration in that the agreement was based on the expectation of royalty payments which were not made.

Mr. Deese wrote to Mr. Malt on August 19, 1977, and proposed that he purchase the property by assuming the existing $100,000 mortgage on the home and paying the difference between the then present balance and the $100,000 purchase price.Mr. Deese also offered to "pay all interest, insurance, and taxes incurred since the existing mortgage was placed on the property, less all payments made" to Malt.Mr. Malt rejected the proposal.

On October 14, 1977, Mr. Deese sent a second letter to Mr. Malt, stating that he would like to exercise the purchase option as set forth in the December 10, 1974, agreement.Mr. Malt indicated that he would require $200,000 as the purchase price, plus taxes, interest and insurance.As Mr. Deese was willing to tender only $100,000, plus taxes, interest and insurance, the purchase was not consummated.Thereafter, the Deeses counterclaimed for specific performance.

The Malts amended their complaint to include four counts: (1) cancellation of the subject contract for failure and gross inadequacy of consideration by reason of nonpayment of royalties to plaintiffs; (2) cancellation of the contract for gross inadequacy of consideration due to the worthlessness of the patent assigned to plaintiff; (3) cancellation for Deese's misrepresentation that the patented product was a marketable commodity; and (4) reformation of the contract to reflect a purchase price of $200,000.

In their answer and affirmative defenses to the amended complaint, the Deeses pleaded payment as agreed, performance in good faith, and the Malts' acceptance of payment in ratification of the agreement.At trial the Deeses were permitted to amend their affirmative defenses by the addition of "estoppel by judgment," which referred to the...