Pineapple Orange Co. v. White

• Citation: 152 So. 863,113 Fla. 774
• Parties: PINEAPPLE ORANGE CO. et al. v. WHITE.
• Decision Date: 18 January 1934
• Court: United States State Supreme Court of Florida

152 So. 863

113 Fla. 774

PINEAPPLE ORANGE CO. et al. v. WHITE.

Florida Supreme Court

January 18, 1934

Rehearing Denied March 7, 1934.

Suit by Charles W. White against the Pineapple Orange Company and others. From an order denying defendants' motion to strike certain paragraphs of a second amended and supplemental bill of complaint, and denying motion to dismiss such bill of complaint, defendants appeal.

Affirmed.

BROWN J., dissenting. Appeal from Circuit Court Marion County; W. S. Bullock, judge.

COUNSEL

Caraballo Graham & Cosio, of Tampa, Sam Mathews, of Jacksonville, and J. D. Moran, of Tampa, for appellants.

Hilburn & Merryday and Thomas B. Dowda, all of Palatka, for appellee.

OPINION

BUFORD Justice.

The appeal here is from an order denying motion to strike certain paragraphs of a second amended and supplemental bill of complaint and also denying motion to dismiss such second amended and supplemental bill of complaint.

The bill was to coerce an accounting to the appellee for the proceeds of the sale of certain lands and other relief.

It appears from the allegations of the bill of complaint here under consideration, which will hereafter be called the bill of complaint, that in 1904 the title to the lands involved was vested in two corporations, but the appellee, White, was the owner of all the stock in the corporations and held the beneficial interest in the land. The corporations were mere conduits. Between 1904 and 1908 one Williams and one Camp advanced certain moneys to White, and certain of the lands were conveyed to Williams as security for White's obligation to Williams and Camp. In 1908 a contract in writing was entered into between White of the one part and Camp and Williams of the other. Under this agreement Camp and Williams agreed to organize a corporation. White was to convey to the corporation certain lands which included all of the lands previously transferred to Williams as security. Williams and Camp were to advance the moneys necessary to clearing the lands embraced in the agreement from incumbrances, the lands embraced in the agreement from incumbrances, with the moneys already advanced to White, were estimated to total $41,000. If the total amount did not exceed $41,000, then White was to have one-third of the stock of the corporation free of indebtedness, and, if the amount totaled more than $41,000, White was to be charged with the excess as an indebtedness due by him to Camp and Williams. The payment of this excess amount was to be secured by White's one-third of the stock in the corporation.

The parties carried out the contract, and in doing so the total indebtedness of White became $48,000 instead of $41,000. White caused a deed to be made by the two corporations holding the legal title to Williams, and White joined in the deed as a grantor. The deed on its face shows that this conveyance was not intended to vest in Williams the legal title, but was merely a step in carrying out White's agreement to convey the property to the corporation which was to be organized under the terms of the contract.

Later the lands having been cleared of incumbrances at the expense of White as above set forth, and the conditions of the contract having been met, White prepared a deed which was executed by Williams and wife, and delivered the same to the corporation organized, as heretofore stated, under the name of Pineapple Orange Company conveying the said lands pursuant to the contract theretofore entered into between the parties as above stated, and thereupon the stock in the corporation was issued, White's stock being held by Williams and Camp as security for the payment of the difference between $41,000 and $48,000 which had been found needful in the clearing of the title to the land.

In 1926 Pineapple Orange Company sold the land to Orange Lake Company.

Now, in short, the question involved is whether or not the deed from Williams and wife, who held the title merely for the purpose of conveying it to the corporation, conveyed the fee-simple title to the corporation, or was merely a mortgage to secure the indebtedness of White to Williams and Camp in the sum of $41,000. The appellants contend that it was a deed absolute and that the allegations of the bill of complaint establish it as such, while the appellee contends that it was made and executed as a conveyance to secure the indebtedness of $41,000, and having once been a mortgage, that it was always a mortgage.

Other questions are presented, but it is not necessary to discuss such other questions in this opinion. It is sufficient to say that, so far as those other questions are involved, we find no error reflected in the orders appealed from.

To determine the controlling question in this case we must look to the contract and gather the intent of the parties at the time the same was made. Mr. Pomeroy in his work on Equity Jurisprudence (3d Ed.) § 1195, says:

'Whether any particular transaction does thus amount to a mortgage or to a sale with a contract of repurchase, must, to a large extent, depend upon its own special circumstances; for the question finally turns, in all cases, upon the real intention of the parties as shown upon the face of the writings, or as disclosed by extrinsic evidence. A general criterion, however, as been established by an overwhelming consensus of authorities, which furnishes a sufficient test in the great majority of cases; and whenever the application of this test still leaves a doubt the American Courts, from obvious motives of policy, have generally leaned in favor of the mortgage. This criterion is the continued existence of a debt or liability between the parties, so that the conveyance is in reality intended as a security for the debt or indemnity against the liability. If there is an indebtedness or liability between the parties, either a debt existing prior to the conveyance, or a debt arising from a loan made at the time of the conveyance, or from any other cause, and this debt is still left subsisting, not being discharged or satisfied by the conveyance, but the grantor is regarded as still owing and bound to pay it at some future time, so that the payment stipulated for in the agreement to reconvey is in reality the payment of this existing debt, then the whole transaction amounts to a mortgage, whatever language the parties may have used, and whatever stipulations they may have inserted in the instruments. On the contrary, if no such relation whatsoever of debtor and creditor is left subsisting, then the transaction is not a mortgage, but a mere sale and contract of repurchase. The writings may show on their face that the relation of debtor and creditor still continues, and that its existence and consequences are contemplated by the parties; or they may entirely fail to show any such fact and may consist simply of an absolute conveyance and of a naked agreement to reconvey. While in the former case parol evidence is clearly inadmissible to contradict the terms of the writings, and to destroy their necessary character as a mortgage, in the latter case extrinsic parol evidence is always admissible to show the real situation of the parties, the existence of a debt, their intention to secure payment of that debt, and the actual character of the instruments as constituting a mortgage.'

See, also, Holmberg et al. v. Hardee et al., 90 Fla. 787, 108 So. 211.

When we turn to the contract, we find that this agreement or memorandum recites in its opening paragraph: 'Memorandum of land and orange grove owned by C. W. White, and outline of plan for putting them into orange grove company to be formed by W. M. Camp, J. R. Williams and White, and financed by them (C. and Williams) whereby White may preserve the property, and pay off the remainder of his creditors.' Then follows a description of the lands with a memorandum of the incumbrances. Then the agreement recites.

'I, White must have cash to pay unsecured debts to H. E. Taylor, Gainesville, H. G. Dunn, Citra, William Hocker, Ocala, R. A. Burford, Ocala, S. R. Pyles, Ocala, J. M. Graham, Gainesville, Massey and Nat. Bank St. of Fla. judgment, all estimated, $10,200.00.

'Balance to make $41,000.00 to White for personal uses. Now Williams and Camp agree to furnish White at once a credit, subject to his check, a sum which added to his present debt to Williams, shall equal $41,000.00, and organize a Company, and put W. J. Crosby on the Board, and make him an incorporator and Secretary, as White's nominee, and besides the $41,000.00 issue to White one-third of the capital stock of the Company free, provided he gets the said land above named turned into the Company with use of the $41,000.00, but if not then he shall be given the further sum required and be charged with it, and be given time to repay it with 8% interest.

'Williams is to make White a direct personal loan sufficient in addition to the above, to pay a debt of Mrs. E. O. Brown on his Citrahome, and take a deed from Mrs. Brown to operate as a Mortgage to secure him ultimate payment, and will further, with Camp, loan White $5,000.00 on Colorado Mine Property.

'White can have one year from deeding of property to new Company when former to decide if he will repay all...