Protective Holding Corp. v. Cornwall Co.

• Decision Date: 30 October 1936
• Citation: 173 So. 804,127 Fla. 252
• Parties: PROTECTIVE HOLDING CORPORATION et al. v. CORNWALL CO. et al.
• Court: Florida Supreme Court

173 So. 804

127 Fla. 252

PROTECTIVE HOLDING CORPORATION et al. v. CORNWALL CO. et al.

Florida Supreme Court, Division B.

October 30, 1936

Rehearing Denied Nov. 18, 1936.

On Rehearing March 22, 1937.

Further Rehearing Denied April 24, 1937.

Suit by the Cornwall Company against the Protective Holding Corporation and others, wherein defendant Alice L. Zapf, also known as Alice L. Bossert, filed a counterclaim. From an adverse decree, the defendants appeal.

Reversed in part and affirmed in part.

BROWN J., dissenting.

On Rehearing. Appeal from Circuit Court, Duval County; George Couper Gibbs, judge.

COUNSEL

Shutts & Bowen, of Miami, George A. Pierce, of Jacksonville, and A M. Woore, of Miami, for appellants.

Austin Miller and S. S. Blondheim, both of Jacksonville, for appellees.

OPINION

PER CURIAM.

The Cornwall Company brought its bill of complaint against the Burns Mortgage Company, the Protective Holding Corporation the Miami Building & Loan Association, and Alice L. Zapf, a free dealer also known as Alice L. Bossert, praying that the deficiency decree rendered against Alice L Bossert be decreed null and void and of no effect as against Alice L. Zapf, also known as Alice L. Bossert, and removed as a cloud from the title of plaintiff to its real property hereinafter described.

The bill of complaint alleged in substance that plaintiff owned in fee simple 'Lot Two (2), Block two (2) St. Elmo, according to plat thereof recorded in Plat Book 3, page 77, of the public records of Duval County, Florida,' which was conveyed to plaintiff by Alice L. Zapf, a free dealer, by deed dated April 18, 1932, purporting to convey a free, unincumbered title in free simple; that Alice L. Zapf, also known as Alice L. Bossert, married Joseph F. Zapf in Columbia county, Fla., on December 8, 1924, and is still married to Joseph F. Zapf; that Alice L. Zapf was, by an order of the circuit court of Duval county, July 23, 1931, made a free dealer under the name of Louise Zapf; that Louise Zapf, Alice L. Zapf, and Alice L. Bossert are one and the same person; that Cecil E. Kirby and wife, Gwendolyn Smoak Kirby, being indebted to the Miami Building & Loan Association in the sum of $34,000, did execute and deliver to the latter their promissory note in that amount together with their mortgage encumbering certain described property located in Dade county; that thereafter on December 10, 1925, Cecil E. Kirby and wife, Gwendolyn, Smoak Kirby, conveyed said property to Alice L. Zapf under the name of Alice L. Bossert, the latter assuming the mortgage; that on October 17, 1928, the Miami Building & Loan Association brought its bill of complaint in the curcuit court of Dade county to foreclose said mortgage, naming as parties defendant Cecil E. Kirby and wife, Gwendolyn Smoak Kirby, Alice L. Zapf under the name of Alice L. Bossert, and others, but did not make Joseph F. Zapf, husband of Alice F. Zapf, a defendant; that final decree was entered in said cause and the property sold by the master on rule day in 1929 to Miami Building & Loan Association for $5,000; that the sale was confirmed by the court, and on September 19, 1929, a deficiency decree was entered against Alice L. Zapf, under the name of Alice L. Bossert, and others, for $43,734.39; that on October 1, 1931, a certified copy of said deficiency decree was duly recorded in Duval county, Fla.; that the Miami Building & Loan Association, on January 13, 1930, assigned said deficiency decree to the Protective Holding Corporation, said assignment being recorded in Dade and Duval counties; that plaintiff is informed and believes that Protective Holding Corporation has parted with its interest in said deficiency decree to Burns Mortgage Company; that said deficiency decree constitutes a cloud upon plaintiff's title in the hereinabove described property; that said deficiency decree was, as to Alice L. Bossert, also known as Alice L. Zapf, at the time of its entry, and has been at all times since, null and void, because Alice L. Zapf was, on December 10, 1925, the date she assumed the mortgage in the deed from Cecil E. Kirby and wife, Gwendolyn Smoak Kirby, and at all times since, the wife of Joseph F. Zapf; and Joseph F. Zapf has not joined Alice L. Zapf, also known as Alice L. Bossert, in any documents, deeds, contracts, mortgages, or other papers in any wise connected with said property and/or mortgage; and that Alice L. Zapf has not, since being licensed as a free dealer, in any wise assumed any liability arising out of the same.

Alice L. Zapf answered the bill of complaint, admitting all the allegations contained therein, and for a counterclaim reaverred the matters alleged in the bill of complaint, and prayed that said deficiency decree, in so far as it purports to enter judgment against this defendant, be decreed to be null and void and of no effect; and offered to do such equity as the court shall deem meet and proper, by executing quitclaim deeds to the property involved in said cause wherein said deficiency decree was entered, or otherwise, as the court may direct.

The defendants Protective Holding Corporation and the Miami Building & Loan Association made a motion to dismiss the bill of complaint, which motion was denied by the court.

A decree pro confesso was entered against the Burns Mortgage Company for failure to answer or make a motion to dismiss the bill of complaint on or before the rule day in July 1932.

The Protective Holding Corporation and the Miami Building & Loan Association filed their answer to the bill of complaint, portions of which were stricken by the court, upon motion. The portion which was allowed to remain stated that defendants were without knowledge as to the allegations in paragraphs 1 and 2 of the bill and demanded strict proof thereof; admitted the allegations in paragraphs 3, 4, and 5 of the bill; and admitted that an undivided portion of said deficiency judgment had been assigned to the Burns Mortgage Company. In further answering the bill of complaint, the answer stated that said deficiency judgment does not constitute a cloud upon plaintiff's title, but that plaintiff's alleged title constitutes a fraudulent attempt on behalf of plaintiff and Alice L. Bossert to defraud the Protective Holding Corporation and the Miami Building & Loan Association; that on October 17, 1928, the Miami Building & Loan Association instituted foreclosure proceedings against Alice L. Bossert as a widow, and she defended as a widow and a subscribing stockholder, and that a deficiency decree was duly, regularly, and properly entered against her; that in furtherance of her scheme, Alice L. Bossert organized the Cornwall Company to make it appear that said company would be an innocent purchaser of the properties against which said deficiency decree became a lien, but said company took title to said property without consideration and subject to said deficiency decree; that plaintiff is not entitled to any consideration or standing in a court of justice or to any relief in a court of equity, because plaintiff is a party to said fraudulent scheme in that plaintiff, appearing to be a separate legal entity, is in fact the defendant Alice L. Bossert; that a court of equity will pierce the corporate veil and find plaintiff and Alice L. Bossert to be the same; and that neither Alice L. Bossert nor plaintiff can come into equity with clean hands because of this fraudulent scheme; that plaintiff is not entitled to any consideration or standing in a court of justice or to any relief in a court of equity, in that plaintiff must first offer to do equity and must come into equity with clearn hands, and in that Alice L. Bossert, as part of her fraudulent plan, is suing through the Cornwall Company, as a separate legal entity, but plaintiff is one and the same as Alice L. Bossert, who not only failed to do equity, but comes into equity with unclean hands in that said corporation, conceived in fraud, wrongfully and fraudulently obtained jurisdiction and is seeking the assistance of a court of equity in the perpetration of fraud upon defendants; that Alice L. Bossert was and is legally bound to pay said deficiency decree regardless of statutory obligations placed upon members of building and loan associations, in that she contracted as a widow and made oath in her contracts that she was a widow, and is estopped to deny the same and to confess criminal fraud; and in that she did make valid contracts when a widow and is now adjudged, as alleged in her bill of complaint, to have the capacity and mentality to transact her own business and be obligated and bound in that she is licensed as a free dealer.

C. C. Howell, Esq., was appointed special master to take testimony and report his findings of law and fact to the court.

Pursuant to this appointment, the special master made his report which contained the following findings:

'The suit is brought to remove, as a cloud from the plaintiff's title to the lands described in the Bill, a deficiency decree rendered by the Circuit Court of Dade County, Florida, against the defendant Alice L. Zapf, who is alleged and proved to have been a married woman at all times now pertinent. Under the name of Louise Zapf, she was made a free dealer by a decree of this Court rendered July 23, 1931. The Deficiency Decree was rendered September 17, 1929, and duly recorded in Duval County, Florida, on October 1, 1931. It grew out of the assumption-of-mortgage transaction, and the foreclosure suit, which are recited in the admitted paragraphs III and IV of the Bill, the married woman having assumed the Mortgage under date of December 10, 1925, and the foreclosure suit having been instituted October 17, 1928. On March 15, 1932, one Austin Miller, who had

...