Parsons v. Federal Realty Corp.

• Citation: 105 Fla. 105,143 So. 912
• Parties: PARSONS et al. v. FEDERAL REALTY CORPORATION et al.
• Decision Date: 15 December 1931
• Court: Florida Supreme Court

143 So. 912

105 Fla. 105

PARSONS et al. v. FEDERAL REALTY CORPORATION et al.

Florida Supreme Court, Division B.

December 15, 1931

Rehearing Granted Feb. 2, 1932.

On Rehearing En Banc, Sept. 29, 1932.

Error to Circuit Court, Dade County; H. F. Atkinson, Judge.

Action by Lucille F. Parsons and husband against the Federal Realty Corporation and another. Judgment was entered for defendant the National Surety Company, and plaintiffs bring error.

Affirmed.

On Rehearing.

COUNSEL

William Otis Badger, Jr., of New York City, and Kurtz & Reed and Loftin, Stokes & Calkins, all of Miami, for plaintiffs in error.

Knight Adair, Cooper & Osborne, of Jacksonville, and Evans &amp Mershon, of Miami, for defendants in error.

OPINION

DAVIS J.

Upon the trial of an action at law before the circuit judge sitting without a jury, a jury trial having been waived, a general verdict in favor of the defendant National Surety Company was found in an action against such company on a bond alleged to have been executed by it to secure the payment of $100,000 by the Federal Realty Corporation to plaintiffs in error who were the obligees named in the bond.

The bond sued on recites that it is made by the Federal Realty Corporation, as principal, and by the National Surety Company, as surety. It was not one of the regular printed form bonds prepared by the Surety Company and turned over to its agents for execution in its behalf, but appears to be a bond of an unusual and special character which was prepared by the attorney for the obligees to be executed by the surety company to meet the requirements of the particular transaction in which the bond was to be given. For the surety company it is signed, 'National Surety Company, by D. W Raie, Attorney in Fact.' The National Surety Company's seal appears to be attached. The issue which was raised by the pleadings, and upon which the verdict for defendants was entered by the circuit judge at the trial, is whether or not the bond sued on by the plaintiffs is such a bond as made the defendant National Surety Company liable thereon as a surety under the facts and circumstances of this particular case as disclosed by the pleadings and the evidence.

On this point there were special findings by the circuit judge, in addition to the general verdict. These special findings, while only pertinent to be considered as indicating the process of reasoning followed by the circuit judge in reaching his general verdict, are to the effect that it had not been made to appear from the evidence that the agent, Raie, had authority to execute and deliver the bond in question; further, that if, notwithstanding this fact, it should be contended that the bond ought to be upheld because the agent, Raie, had apparent authority to execute the bond sued on, and thereby to bind the surety company in the interest of an innocent third party, nevertheless the court had found on that point that the circumstances shown to have surrounded the negotiations for the bond, as well as its execution and delivery, were such as put the plaintiffs, and those acting for the plaintiffs, upon inquiry as to the nature and extent of the agent's actual authority which did not authorize such an undertaking to be signed by him. ^[1]

After the verdict was rendered, plaintiffs moved for a new trial. Such motion for a new trial, containing, as it does, appropriate grounds for that purpose, brings up for review the sufficiency of the evidence to sustain the findings of the judge. Such is the case in a common-law action, when a jury has been waived. Alley Co. v. Ball, 102 Fla. 1034, 136 So. 704, 706.

It appears from the evidence that a real estate boom syndicate composed of M. R. Gano, of Philadelphia, and others, in August, 1925, through a sales agent, agreed to purchase the winter home of Mr. and Mrs. J. Lester Parsons, who were the plaintiffs in the court below; that the agreed purchase price was $250,000, $7,500.00 cash being paid down, $67,500 paid on closing the trade, and the balance of $175,000 to be represented by a purchase-money mortgage; that before the sale was completed Gano and associates (following the custom of boom transactions of this character) resold the property to Federal Realty Corporation for $307,000, out of which transaction Gano and associates expected to make a profit of $45,000.

In carrying out the latter transaction, Gano wished the deed from the Parsons to be made direct to Federal Realty Corporation. This Mrs. Parsons refused to do, stating that it was her property, and that she would not convey it to Federal Realty Corporation without obtaining a surety bond, in addition to the mortgage which was proposed to be made on the premises to secure the balance of the purchase price. The title to the property was in Mrs. Parsons' name, and she remained firm in her determination not to convey the property except upon the conditions which she had elected to exact.

Mrs. Parsons had come to Florida in connection with the sale, and arrived about the last Monday in September. Her husband, J. Lester Parsons, was a man of wide experience, who had been in the fire insurance business for over twenty-five years, and was then the President of two fire insurance companies. Mr. Parsons did not come to Florida at the time of the closing of the sale, but Mrs. Parsons at that time had the services and advice of one Henry J. Wyatt, of New York City, an attorney associated with the Parsons insurance companies, who undertook to represent Mr. and Mrs. Parsons in connection with the deal. Mr. Wyatt was the individual who finally closed the entire transaction for Mr. and Mrs. Parsons after the departure of Mrs. Parsons for New York.

It appears that Mrs. Parsons, Mr. Wyatt, Mr. Gano, and a Mr. Reed, of the law firm of Kurtz & Reed, which law firm represented Mr. and Mrs. Parsons in Miami, met at the office of Kurtz & Reed to discuss and arrange for the closing of the sale and the delivery of deeds. Such meeting appears to have been held shortly after Mrs. Parsons' arrival in Miami. At this conference various conversations were had with reference to obtaining the character of bond insisted on by Mrs. Parsons, which was to secure the payment of the first two notes of Federal Realty Corporation mortgage.

It appears to have been understood from the start that a bond of the kind Mrs. Parsons wanted was unusual in character, and that no ordinary agent of a surety company was authorized to write such a bond. This is indicated by the testimony of a man named Vanderpool, who appears to have represented two or three companies and who stated that he did not want to undertake to write the bond because it was not a customary bond and was out of the regular course.

This led to a solicitation of one Donald W. Raie, a general agent of the National Surety Company, to undertake the task of procuring such a bond to be executed by that company, Raie, it appears, lived at Ft. Lauderdale, and was authorized to act as a general agent, but with limited authority, for the National Surety Company in Dade, Palm Beach, and Broward counties. Raie appears to have also held certain powers of attorney to execute instruments for the National Surety Company, as well as an appointment as agent under an agency agreement which contained rather broad powers, but which did not authorize him to execute bonds of any kind in excess of $50,000 without referring them to the home office of the surety company for specific authorization.

It appears that, when first spoken to with reference to executing the kind of bond Mrs. Parsons wanted, Raie then stated to those present that he did not have authority to execute such a bond without securing the written consent of the National Surety Company, and that it would also be necessary to have an application signed, as well as an indemnity agreement from the individuals who desired to have the bond, so that all of these papers could be sent to the home office of the National Surety Company in New York for approval. These papers were accordingly prepared and appear to have been sent to New York by Raie.

But on Monday, October 5, 1925, Raie was called and told that it was essential that the bond be signed immediately, otherwise that the sale would not go through. At this time Raie was expecting a wire from the company approving the transaction, and had given directions that, if such a wire was received, it should be sent to him in Miami. No such wire arrived, and, finally realizing that the only chance of writing the bond would be lost by the rescission of the trade and the departure of Mrs. Parsons for New York, Raie appears to have taken the chance of executing the bond on behalf of his principal, National Surety Company, knowing that he had not obtained the requested authority so to do, but believing that the application and other papers for it, which he had previously sent in, would be approved in due course by the surety company, and thereby validate all that had been done.

But the surety company did not approve, and expressed its unwillingness to approve under any circumstances, unless the local agent could secure full liquid collateral. This disapproval was communicated to the agent about October 9, 1925, which was after the bond had already been executed without authority and delivered to the obligee on October 5th.

Subsequent to this, it appears that the National Surety Company's officers in New York took prompt steps to advise Mrs. Parsons and her husband that the bond had been executed without authority by Raie, their local agent at Ft. Lauderdale, and that they would resist all efforts to enforce any liability upon it. The circuit judge found, and we think properly so that the National Surety Company promptly denied...