Proctor v. Hearne

• Decision Date: 12 November 1930
• Citation: 100 Fla. 1180,131 So. 173
• Parties: PROCTOR et al. v. HEARNE.
• Court: Florida Supreme Court

131 So. 173

100 Fla. 1180

PROCTOR et al. v. HEARNE.

Florida Supreme Court

November 12, 1930

Commissioners' Decision.

Suit by W. D. Hearne against Donella Proctor and others. From orders overruling demurrer to the bill and granting motion to strike certain part of the answer, defendants appeal.

Affirmed and cause remanded for further proceedings. Appeal from Circuit Court, Hernando County Fred L. stringer, judge.

COUNSEL

F. B Coogler, of Brooksville, for appellants.

Paull E. Dixon, of Tampa, for appellee.

OPINION

DAVIS C.

The appellee, who is the assignee 'without recourse' of a real estate mortgage executed by one Donella Proctor, filed his amended bill of complaint in the circuit court of Hernando county for the foreclosure of same; the appellants being therein named as parties defendant. In addition to the usual allegations in such cases, the bill further alleges that Donella Proctor by warranty deed conveyed the property in question to 'Fredrick E. Lewis, Trustee,' wherein and whereby the said Lewis, trustee, assumed and agreed to pay the notes secured by the said mortgage; that the said grantee and John Drew purchased the said land as a joint adventure or partnership, doing business in the name of Frederick E. Lewis, trustee, and that the said grantee in so purchasing the said land and in assuming and agreeing to pay the said notes was acting for the said joint adventurers or partners, and that the assumption to pay said notes was made as part of the consideration for the purchase price of said land, and due credit upon the agreed purchase price was taken by the said Lewis and the said Drew for the amount represented by the said notes, and that they are jointly and severally liable for the payment of the sums represented by said notes. It is further shown that the appellants Lewis and Drew entered into an agreement in writing wherein it was stipulated and agreed that the said land should be purchased by them and title thereto taken in the name of Lewis, trustee, for the convenience of handling, selling, and disposing of same; that they should contribute equally toward the purchase price thereof; share equally in the net proceeds from the sale of same; and contribute equally to the payment of all outstanding obligations against said property which should fall due prior to the sale thereof. The bill contains a prayer for the foreclosure of the mortgage and for general relief.

The defendant John Drew filed a separate demurrer to the bill, based upon the grounds that he was improperly joined as defendant; that the assumption of Frederick E. Lewis, trustee, to pay the notes sued on was in contravention of the statute of frauds; that no liability attaches to said defendant by reason of the giving of a second mortgage by Lewis, trustee, and the acceptance of the deed of conveyance; and that the allegations of the bill fail to connect said defendant with the transaction.

This demurrer was overruled by the court, and the defendant Drew then answered the bill. The said answer makes denial of the material allegations of the bill that seek to connect the said defendant with the deal, and further avers:

'That in accepting the said assignment without recourse that the said complainant thereby accepted the mortgage on the real estate described in the amended bill of complaint as the sole security for said indebtedness.'

The complainant, W. D. Hearne, moved the court to strike the quoted portion of the answer upon the grounds that it states a conclusion of law and is wholly immaterial and irrelevant. This motion was granted by the court, and the case is now here upon appeal from the order overruling the demurrer and granting the motion to strike said portion of the answer.

In Slottow v. Hull Inv. Co. (Fla.) 129 So. 577, 579, the court says:

'It is now well established that a grantee who purchases mortgaged land from the mortgagor and assumes and agrees to pay the mortgage thereon becomes, as to the mortgagor, the principal debtor, and the mortgagor a surety. Brownson v. Hannah, 93 Fla. 223, 111 So. 731, 51 A. L. R. 976; Ackley v. Noggle, 97 Fla. 640, 121 So. 882; 2 Jones on Mortgages (8th Ed.) § 920. See, also, Gilliam v. McLemore, 141 Miss. 253, 106 So. 99, 43 A. L. R. 79, and note 21 A. L. R. 504.

'There is, however, a marked diversity of judicial opinion as to the effect upon the rights of the mortgagee of the relation thus created between the mortgagor and his grantee. By some courts it is held that the relation is binding upon the mortgagee from its inception. Other courts take the view that the mortgagee is not affected in any event, even though the latter disregards the mortgagor in subsequent dealings with the grantee.

'The doctrine which commends itself to us as sanctioned by reason as well as by the present weight of authority lies between the two extremes just stated. For one reason or another, the courts are gradually uniting upon the doctrine, which we have adopt, that the relation of principal and surety between the mortgagor and his grantee, created in the manner above stated, does not in and of itself involve the mortgagee in its legal effects. His rights remain unchanged, unless by his voluntary agreement, or by his dealings with the grantee, the mortgagee in effect accepts the grantee alone as the principal debtor or estops himself to further assert a personal liability against the mortgagor. Until the mortgagee thus recognizes the grantee alone as the principal debtor, the mortgagee may treat both the mortgagor and the latter's grantee as principal debtors, and may have a personal decree against both or either, the obligation of the grantee being an additional obligation of which the mortgagee may avail himself or not, at his election. The mortgagee may sue the mortgagor alone, or may accept the grantee's assumption of the debt and may bring his action against the latter.'

In Ackley v. Noggle, 97 Fla. 640, 642, 121 So. 882, 883, the court said:

'It may be assumed to be settled in this state that when a deed contains a covenant by the grantee assuming and agreeing to pay a mortgage on the land, and the deed is accepted by him, he obligates himself to pay the mortgage debt as conclusively as if he had signed a written agreement to that effect as a part of the consideration to be paid for the lands conveyed, and also that by the assumption by the grantee in a deed of a mortgage indebtedness the grantee thereby becomes the primary obligor of the debt.' See also 19 R. C. L. 374-376 and Vol. 6 Permanent Supplement to R. C. L.

In making Drew a party defendant to the suit, the complainant, appellee herein, evidently intended to put himself in a position to obtain a deficiency decree against both Lewis and Drew in the event the property, upon sale, should not bring enough to satisfy his demand. Therefore, in disposing of the appeal from the order overruling the demurrer, it develoves upon us to determine whether liability has been shown upon the part of appellant John Drew. It is the theory of appellee that Lewis and Drew were joint adventurers or partners in the deal, and that, when title to the property was taken by Frederick E. Lewis, trustee, by a conveyance in which it was stated that he agreed to assume and pay the indebtedness secured by the mortgage, then upon the property, it was just as binding upon Drew as upon Lewis.

A joint adventure has been defined as a special combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation; as an association of two or more persons to carry out a single business enterprise for profit; as a limited partnership, not in a statutory sense as to liability, but as to its scope and duration; and as a joint undertaking for the mutual benefit or pleasure of the parties. See annotations, 63 A. L. R. 910, and 48 A. L. R. 1055. See, also, 33 C.J. 841; 15 R. C. L. 500.

In this case it is alleged that Lewis and Drew agreed in writing to buy the land in question, and, for convenience in handling selling, and disposing of same, to take title in the name of Frederick E. Lewis, trustee; each to contribute equally towards the purchase price and in the payment of all outstanding obligations against the property which should fall due prior to its sale, and share equally in the net proceeds received from the sale of same. Upon the admissions of the dem...