Peacock Hotel, Inc. v. Shipman

• Decision Date: 20 November 1931
• Citation: 138 So. 44,103 Fla. 633
• Parties: PEACOCK HOTEL, Inc., et al. v. SHIPMAN et al.
• Court: Florida Supreme Court

138 So. 44

103 Fla. 633

PEACOCK HOTEL, Inc., et al. v. SHIPMAN et al.

Florida Supreme Court, Division B.

November 20, 1931

Suit by Cordelia Shipman and husband and next friend against the Peacock Hotel, Inc., and others. From an adverse decree defendants appeal.

Affirmed. Appeal from Circuit Court, Dade County; Uly O Thompson, judge.

COUNSEL

Hawthorne & Burton, of Miami, for appellants.

Blackwell & Gray, of Miami, for appellees.

OPINION

DAVIS J.

This is an appeal from a final decree of foreclosure of a purchase-money mortgage. The bill of complaint was brought by Cordelia Shipman, joined by A. K. Shipman, her husband. The appellants were defendants in the court below and allege error in the refusal of the court to give effect to a claim on their part that the mortgage was obtained by fraud for which they should be permitted to rescind the transaction in which the mortgage was given.

In the answer of the defendant Peacock Hotel, Inc., it was set forth that certain misrepresentations and fraud had been perpetrated by the complainants upon Coral Peacock, a widow and Cecil A. Peacock, a minor, whose disabilities of nonage had been removed, which answer (purporting to be a defense to the bill as well as a counterclaim by way of affirmative relief) sets forth that Coral Peacock, a widow, inexperienced in business and Cecil A. Peacock, a minor whose disabilities of nonage had been removed but also inexperienced in business, were induced to buy the premises covered by the mortgage sought to be foreclosed and to cause the defendant corporation, the appellant, Peacock Hotel, Inc., to be formed to take title to said premises for hotel purposes and to execute the mortgage under consideration.

The representations made for the purpose of inducing the Peacocks to enter into the transaction are alleged to have been that the Belfort Hotel the property in question contained sixty rooms suitable for hire and income, whereas in truth and in fact it only contained fifty-six; that the hotel was constructed of concrete and concrete blocks and was in excellent repair, whereas in truth and in fact it was made partly of stucco resembling concrete and the roof leaked to a certain degree; that the complainant had made an income from the operation of the Belfort Hotel the previous year of more than $20,000, whereas the hotel only took in $15,000 gross the first year that the mortgagors operated it; that said Peacocks could take over the hotel and make enough in operating it to pay the mortgage in question, whereas in truth and in fact experience proved that they were unable to do so; that the hotel would be conveyed free and clear of encroachments, whereas in truth and in fact there were certain encroachments; that the successful operation of the Belfort Hotel did not call for experience, but was a business which the Peacocks could successfully operate and make enough money to pay off the mortgages as they came due, together with other expenses and leave a balance sufficient to pay said Peacocks handsome profits on their investments; that said hotel was a bargain at $125,000, the total purchase price the Peacocks agreed to pay. The answer contained a prayer for affirmative relief, and treating the same as in the nature of a counterclaim or cross bill, which was not replied to by the complainants, the defendants caused a decree pro confesso to be entered by the clerk taking the so-called counterclaim as confessed.

No attack was made upon the sufficiency of the answer to state a defense, the cause being referred by the court to a special master to make findings to law and fact and report the same to the court, which was done. The master found the equities to be with the complainants and that the defense set up in the answer had not been sustained in law or in fact. This finding of the master was confirmed by the chancellor, who entered the decree of foreclosure appealed from, and appointed a receiver for the properties to operate the hotel pending the appeal. Both the final decree of foreclosure and the order appointing the receiver are involved in this appeal.

It seems to be established by the authorities that where it is perfectly plain to the court that one party has overreached the other and has gained an unjust and undeserved advantage which it would be inequitable to permit him to enforce, that a court of equity will not hesitate to interfere, even though the victimized parties owe their predicament largely to their own stupidity and carelessness. This rule is perhaps most forcibly expressed by Mr. Justice Root, speaking for the Supreme Court of Washington in Stone v. Moody, 41 Wash. 680, 84 P. 617, 619, 85 P. 346, 5 L. R. A. (N. S.) 799, where he said:

'It is well known that many good people and people of average or greater intelligence are sometimes duped and misled by the skill, cleverness, and artifices of those who are adepts in the matter of deceiving their fellow men; and courts should not throw about schemers of this kind a protection that will tend to encourage the practice of their arts. Such people should not find encouragement in the thought that, by keeping their machinations within the letter of the law, they may find sanction for their practices and reap the reward of their craftiness. To the victim it is of little import whether his property is taken from him by a bold and forcible robbery or by an ingenious and unsuspected deception. The injury to him is the same; and the evil effect of court decisions which permit the wrongdoer to enjoy the fruits of his chicanery is of no small import when viewed from the standpoint of public policy. It is not the function of courts to make contracts for parties, or to relieve them from the effects of bad bargains. But where the simplicity and credulity of people are taken advantage of by the shrewdness, overreaching and misrepresentation of those with whom they are dealing, and they are thereby induced to do unwittingly something the effect of which they do not intend, foresee, or comprehend, and which, if permitted to culminate, would be shocking to equity and good conscience, we think a court of equity may with propriety interpose.'

But in the present case it was enither alleged nor proven that there was any overreaching on the part of the appellees, or that they gained an unjust or undeserved advantage which it would be inequitable or unrighteous to permit them to obtain. On the contrary, it appears that both Mrs. Peacock and her son were well informed, or in a position to be well informed, of every detail of the transaction that they were entering into and of its probable consequences. Eliminating all other testimony and taking their own statements at their full face value, they have failed to demonstrate wherein they are entitled to rescind the transaction and obtain the...