Marion Mortg. Co. v. Howard

• Decision Date: 09 December 1930
• Citation: 131 So. 529,100 Fla. 1418
• Parties: MARION MORTGAGE CO. v. HOWARD et al.
• Court: Florida Supreme Court

131 So. 529

100 Fla. 1418

MARION MORTGAGE CO. v. HOWARD et al.

Florida Supreme Court

December 9, 1930

Commissioners' Decision.

Suit by the Marion Mortgage Company, as trustee, against G. Norton Howard and others. From an order sustaining exceptions to the master's report and from the final decree, complainant appeals.

Affirmed. Appeal from Circuit Court, Dade County; H. F Atkinson, judge.

COUNSEL

Redfearn & Ferrell, of Miami, for appellant.

Philip Clarkson, of Miami, for appellees.

OPINION

DAVIS C.

The appellant, whom we will hereafter refer to as the complainant, was engaged in business in the city of Miami under the name of G. L. Miller Bond & Mortgage Company; its name being subsequently changed to Marion Mortgage Company. The defendant G. Norton Howard was the owner of certain real estate upon which she desired to erect an apartment house. One George W. Langford was engaged in building operations, and the owner of the land entered into a contract with him to erect a building upon her land. It being necessary for the owner to borrow money in order to complete the building, she and Langford took the matter up with the complainant, who agreed to make the loan. A 'temporary' mortgage was prepared by the complainant covering the land, and also purporting to create a lien upon furniture and furnishings which might be put in the building after its completion. When the defendant G. Norton Howard accompanied by Langford, went to the offices of the complainant to execute this mortgage, Langford stated that the furniture and furnishings could not be covered by the mortgage because they were to be purchased on a retain title contract. The complainant then agreed to take a mortgage that did not include the furniture and furnishings, and prepared another paper which, as agreed by the parties, was to be only a 'temporary' mortgage to be later superseded by a permanent mortgage. It was also agreed by all parties that the mortgage to complainant was to be a first mortgage upon the land. This 'temporary' mortgage was executed by the owner of the land, upon Langford's advice, on October 16, 1924, and recorded October 18, 1924, and no mention was made of furniture or furnishings in this paper. After the execution of the 'temporary' mortgage, Langford as trustee took a mortgage on the land and on the furniture and furnishings, the same being dated as of September 1, 1924 but not recorded until November 19, 1924. Still later it was discovered by the complainant that there was an error in the description of the land as set out in the 'temporary' mortgage, and thereupon complainant drew another mortgage correcting the error in description, but making no reference to the furniture and fixtures. This mortgage was signed by the owner of the land upon the advice of Langford, and was recorded about December 11, 1924. This last mortgage is referred to in the record as the 'corrective' mortgage. After the completion of the building, the complainant, wishing to have what is termed a 'permanent' mortgage on the property, prepared one to its liking, but included therein, not only the land, but also the furniture annd furnishings. Langford, without seeing the paper and taking it for granted that it created a lien only on the real estate, advised Mrs. Howard to execute it, which she did. This last or 'permanent' mortgage was dated as of September 1, 1924, acknowledged on January 17, 1925, and recorded on the 24th day of January, 1925. The complainant thereupon drew what is termed a 'subordinating' agreement to be executed by it as 'first mortgagee,' by Mrs. Howard, the 'owner,' and by Langford, as trustee, as 'second mortgagee.' This 'subordinating' agreement was dated January 20, 1925, acknowledged the next day and recorded on the same day as was the permanent mortgage--January 24, 1925. Among others, it contains the following recitals:

'Whereas, said second mortgagee is the owner and holder of that certain mortgage or trust deed dated September 1, 1924, executed and given by said owner to said second mortgagee encumbering the land hereinafter described which mortgage was filed for record November 19, 1924'; and

'Whereas in order to procure funds with which to complete said construction on said land the said owner has made, executed and acknowledged a mortgage or trust deed given by it to said first mortgagee dated September 1, 1924, encumbering the land hereinafter described, and,

'Whereas said first mortgagee is not willing and will not make the loan desired by said owner of it, to secure which the aforesaid mortgage or trust deed given by said owner to said first mortgagee was given unless said mortgage or trust deed given by said owner to said * * * first mortgagee is a first mortgage, prior in dignity in every respect to the aforesaid mortgage given by said owner to said second mortgagee, and

'Whereas, said second mortgagee, in order to be enabled to construct the aforesaid building and receive the contracted compensation therefor, without delay desires to encourage and promote the said loan by said first mortgagee, to said owner to secure which the aforesaid mortgage or trust deed given by said owner to said first mortgagee was given, tho the loan has not actually been made.

'Now, therefore, the said second mortgagee, in consideration of the aforesaid its desires in the premises, and of the sum of ten dollars, and other valuable considerations to it now in hand paid by the said first mortgagee, does hereby agree to and with the aforesaid owner and the aforesaid first mortgagee, to and does hereby in every respect subordinate and declare its aforesaid mortgage or trust deed dated September 1, 1924, to be inferior in dignity and a subordinate lien to the aforesaid mortgage given by the aforesaid owner to the aforesaid first mortgagee dated September 1, 1924, encumbering the following described land, in Dade County, Florida' (description omitted); and (the owner) 'consents in every respect to the aforesaid agreement and intends by this agreement and by said mortgage or trust deed given by it to said first mortgagee on September 1, 1924, encumbering the above described land, that said mortgage given to said first mortgagee shall be a first mortgage lien prior in dignity, not only to that of the aforesaid second mortgagee, but to all other liens, except taxes.'

The complainant instituted suit to foreclose the 'permanent' mortgage, and the bill therein prayed among other things, that the court decree the complainant's lien to be superior to the rights of the defendant. The defendant Langford, as trustee, filed an answer in which he set up a state of facts in substance as we have stated them, and further 'shows to the court that in violation of the true intent, meaning and purpose of said subordinating agreement, and for the purpose of defrauding defendant with respect to his said lien on said furniture, furnishings, fixtures and equipment, the said G. L. Miller Bond & Mortgage Company fraudulently drew said 'permanent' mortgage so as to make the same appear to give a lien on said furniture, furnishings, fixtures and equipment, superior to the lien thereon of defendant, notwithstanding that the said G. L. Miller Bond & Mortgage Company then and there well knew that defendant had not subordinated the priority of the said lien with respect to the furniture, furnishings, fixtures and equipment, and that he had not so intended to do; that, without defendant's knowledge or consent, and without the knowledge or consent of the said G. Norton Howard, and with the purpose and intent of defrauding defendant, said G. L. Miller Bond & Mortgage Company surreptitiously and fraudulently inserted in said 'permanent' mortgage a provision whereby said furniture, furnishings, fixtures and equipment were therein included, in addition to said real estate, contrary to the said agreement; that defendant relied upon said G. L. Miller Bond & Mortgage Company, pursuant to said agreement, to so draw its said 'permanent' mortgage that the same should include and convey only real estate as the same was described in said 'corrective' mortgage. And defendant says that complainant's alleged lien upon said furniture, furnishings, fixtures and equipment is secondary, subordinate, and inferior to the lien of defendant's said mortgage with respect to said furniture, furnishings, fixtures and equipment, and should be so...