Pappas v. Deringer, 61-615

• Decision Date: 23 October 1962
• Docket Number: No. 61-615,61-615
• Citation: 145 So.2d 770
• Parties: Sam PAPPAS, Appellant, v. Sylvia DERINGER, a/k/a Sylvia Deringer Leon, and Edward Leon, her husband, Appellees.
• Court: Florida District Court of Appeals

Page 770

145 So.2d 770

Sam PAPPAS, Appellant, v. Sylvia DERINGER, a/k/a Sylvia Deringer Leon, and Edward Leon, her husband, Appellees.

No. 61-615.

District Court of Appeal of Florida, Third District.

Oct. 23, 1962.

Bolles & Prunty, Miami, for appellant.

Anderson & Nadeau, Miami, for appellees.

Before PEARSON, TILLMAN, C. J., and HORTON and BARKDULL, JJ.

PEARSON, TILLMAN, Chief Judge.

The plaintiff appeals from a final decree dismissing his complaint which was entered after testimony was presented by both parties but prior to the completion of the final hearing. The complaint prayed for a declaration of plaintiff's and defendants' rights under a lease agreement between them and also asked for an accounting of certain funds. In addition, plaintiff sought a court order that the security deposit held by defendants be returned after deducting therefrom the amount of actual damages. The position of the appellee-lessor is that the security deposit was properly forfeited by the lessee upon breach of the lease agreement. The parties in this cause have considered the decree as a declaration that the security deposit was properly forfeited, and we will so consider it.

The parties entered into a lease involving the rental of certain property known as the Montgomery Motel located on Miami Beach. The lease was for a period of five years and provided for an annual rental of $32,500.00, payable $8,125.00 on the first day of January, 1959, and a like sum on the first day of February, March and April, 1959, and similar payments during each calendar year thereafter for the term of the lease.

The lease contained the following provision for a security deposit:

'* * * The Lessee does hereby agree to pay unto the Lessor a security deposit of Thirty-Two Thousand Five Hundred ($32,500.00) Dollars as follows: Twenty-One Thousand Five Hundred ($21,500.00) Dollars at the time of the ensealing and delivery of these presents, and thereafter on August 15, 1958 the sum of Three Thousand ($3,000.00) Dollars, on December 15, 1958 the sum of Four Thousand ($4,000.00) Dollars, and on February 15, 1959 the sum of Four Thousand ($4,000.00) Dollars. Said sum of $32,500.00 to be held as security for the performance of the covenants of this lease, and is to be refunded to the Lessee on the following basis:

$8,125.00 on January 8, 1963;

$8,125.00 on February 8, 1963;

$8,125.00 on March 8, 1963,

and the balance of

$8,125.00 on April 8, 1963.'

* * *

* * *

'(f) the security deposit hereinbefore referred to shall not bear interest and the Lessor may commingle said deposit with their own funds. That the said security deposit shall never be applied as rent, nor shall the Lessee be or become entitled to any waiver of default or extension of time of the occupancy accruing to the Lessee hereunder by reason of the making of such security deposit. If this lease is cancelled by the Lessor because of the Lessee's default, before the Lessee becomes entitled to receive a refund of the security deposit, then the Lessor may at their option declare the said security deposit as liquidated and agreed damages.'

The plaintiff-lessee failed to make the rental payment on March 1, 1959, and on April 5th the lessee was removed from the premises in compliance with a statutory landlord and tenant action. In September, 1959, the lessee filed the instant action seeking, among other things, the return of the security deposit less any actual damages.

Appellant urges error because of the chancellor's failure to declare the forfeiture of the security deposit a penalty. If the chancellor had so found, he presumably would have proceeded with the requested accounting and ordered the return to the lessee of that portion of the security deposit remaining after deducting damages proved by the lessor. In this connection, appellant points out that the lease provision as to the security deposit did not automatically forfeit the security deposit upon lessee's default and cancellation of the lease, but gave the lessor an option to declare the security deposit as liquidated and agreed damages. The specific provision referred to provides:

'If this lease is cancelled by the Lessor because of the Lessee's default, before the Lessee becomes entitled to receive a refund of the security deposit, then the Lessor may at their option declare the said security deposit as liquidated and agreed damages.' [Emphasis supplied.]

Ignoring for the moment the option of the lessor to declare the security deposit as liquidated damages, under the tests laid down in Hyman v. Cohen, Fla.1954, 73 So.2d 393, the deposit held by the lessor cannot be characterized as a penalty. This is true because the basic principles discussed in the Hyman case are...