Photomagic Industries, Inc. v. Broward Bank

• Decision Date: 10 May 1988
• Docket Number: Nos. 87-500,87-502,s. 87-500
• Citation: 526 So.2d 136,13 Fla. L. Weekly 1131
• Parties: 13 Fla. L. Weekly 1131 PHOTOMAGIC INDUSTRIES, INC., Michael J. Osman, Photomagic International, Inc., Norman Osman, Phyllis J. Osman, Martin Osman and Ellen Osman, Appellants, v. BROWARD BANK, Appellee.
• Court: Florida District Court of Appeals

Page 136

526 So.2d 136

13 Fla. L. Weekly 1131

PHOTOMAGIC INDUSTRIES, INC., Michael J. Osman, Photomagic International, Inc., Norman Osman, Phyllis J. Osman, Martin Osman and Ellen Osman, Appellants, v. BROWARD BANK, Appellee.

Nos. 87-500, 87-502.

District Court of Appeal of Florida,

Third District.

May 10, 1988.

Rehearing Denied June 30, 1988.

Hall & O'Brien and Andrew C. Hall, Miami, for appellants.

Horton, Perse & Ginsberg and Arnold R. Ginsberg, Malcolm H. Friedman, Miami, for appellee.

Before SCHWARTZ, C.J., and HENDRY and NESBITT, JJ.

HENDRY, Judge.

This consolidated appeal from non-final orders, which denied relief from a final judgment of foreclosure in favor of (and judicial sale to) Broward Bank and directed the entry of a certificate of title, was filed by Photomagic Industries, Inc., a Florida corporation; Michael J. Osman; Photomagic International, Inc., a Florida corporation; Norman Osman; Phyllis J. Osman; Martin Osman; and Ellen Osman.

In 1982, Broward Bank loaned $150,000 to Michael Osman and Photomagic Industries, which was owned by Michael's brother, Martin Osman. The loan was evidenced by a promissory note and secured by a mortgage on residential real property owned by Michael. Guarantees were executed by Michael, Photomagic International, Martin Osman and his wife, Ellen, among others.

In May 1986, the bank filed a notice of lis pendens and a complaint for mortgage foreclosure relative to the real property based on nonpayment of installments on a renewal note executed by Photomagic, which then had a principal balance of approximately $55,000. The appellants admitted the allegations of the complaint. Final summary judgment of foreclosure was entered, the court finding that Broward Bank was due the sum of $64,926.65 for principal, interest, costs and attorney's fees. A judicial sale of the real property was ordered for October 17, 1986.

The judgment also provided that notwithstanding the foreclosure against the real property, the bank was entitled to judgment against the guarantors for the full amount of its claim, "for which let execution issue, subject to a set-off for the greater of the sum which is bid at foreclosure sale for the real property ... or its fair market value as established by this court." Broward Bank bid a nominal sum of $300 and was issued a certificate of sale. Photomagic filed an objection to certificate of sale, arguing it was in derogation of redemption rights of defendants according to an alleged oral agreement with the bank to allow them to purchase and redeem the property prior to the sale thereof, for the amount of the foreclosure judgment. Guarantors Martin and Ellen Osman, claiming the right of subrogation by assignment of the judgment, tendered the full amount of the judgment to Broward Bank on November 11, 1986. Refusing to recognize the Osmans' right to subrogate, the bank moved for issuance of certificate of title.

The court granted the bank's motion for issuance of certificate of title, denied the guarantors' motion to substitute parties and set a supersedeas bond of $75,000. The orders under review were entered on January 30, 1987. These interlocutory appeals followed.

The trial court neither committed reversible error nor abused its discretion in entering the orders appealed. Where it was established at the January 29, 1987 hearing that the fair market value of the real property (against which the guarantors' exposure was to be set-off) exceeded the amount of the debt, the guarantors were never in a position of jeopardy and therefore were not entitled to subrogation. See Gottschamer v. August, Thompson, Sherr, Clark & Shafer, P.C., 438 So.2d 408 (Fla. 2d DCA 1983).

By paying without any legal requirement to do so, the guarantors were mere volunteers and the court therefore correctly held there was no right of subrogation. Boley v. Daniel, 72 Fla. 121, 72 So. 644 (1916); Eastern Nat'l Bank v. Glendale Federal Savings & Loan Ass'n, 508 So.2d 1323 (Fla. 3d DCA 1987); DeCespedes v. Prudence Mutual Casualty Co. of Chicago, Ill., 193 So.2d 224 (Fla. 3d DCA 1966), aff'd, 202 So.2d 561 (Fla.1967); Furlong v. Leybourne, 138 So.2d 352, 356 n. 4 (Fla. 3d DCA 1962). In Florida the law is clear, a guarantor is allowed to pursue the primary debtor only when the guarantor is required to pay that debtor's obligation. See North v. Albee, 20 So.2d 682 (Fla.1945); Fortenberry v. Mandell, 271 So.2d 170 (Fla. 4th DCA 1972), cert. discharged, 290 So.2d 3 (Fla.1974); Allstate Life Ins. Co. v. Weldon, 213 So.2d 15 (Fla. 3d DCA 1968). While section 46.041, Florida Statutes (1985), allows guarantors to be joined in an action against the maker of a negotiable instrument, subsection (3) does not...