Rinehart v. Phelps

• Decision Date: 14 April 1942
• Citation: 150 Fla. 382,7 So.2d 783
• Parties: RINEHART et al. v. PHELPS et al.
• Court: Florida Supreme Court

7 So.2d 783

150 Fla. 382

RINEHART et al. v. PHELPS et al.

Florida Supreme Court

April 14, 1942

Rehearing Denied May 14, 1942.

Appeal from Circuit Court, Dade County; Arthur Gomez Judge.

Stuart Mackenzie, of Miami, for appellants.

L. Earl Curry, of Miami, for appellees.

BUFORD, Justice.

The appeal brings for review final decree overruling Master's Report and dismissing bill of complaint at the cost of plaintiffs.

The salient facts are, as revealed by the record, that M. E Earnest was appointed administrator of the estate of Leila May Rogers, deceased. There was in the assets of the estate a real estate mortgage to secure the payment of a debt of $4,000. At the time of the death of Mrs. Rogers there was pending an application to refinance the mortgage with the Home Owners Loan Corporation. After the death of Mrs. Rogers the negotiations were continued by the administrator. The administrator applied for and procured an order from the County Judge as Judge of Probate authorizing the administrator to accept in settlement of the mortgage debt $3,000 of bonds from Home Owners Loan Corporation and a second mortgage on the same real estate in the amount of $1,000. The settlement was made but the second mortgage was not executed and delivered to the administrator and before he procured the execution and delivery of the mortgage he absconded. The American Surety Company of New York, a corporation, was surety on the administrator's bond and was called upon to make good his defalcation.

The purpose of the instant suit was to have adjudicated and impressed a lien on the real estate described in the surrendered and canceled mortgage to enforce the payment of the $1,000 balance due, it being shown that American Surety Company was entitled to one-third of that amount and Hollis Rinehart, Jr., as administrator de bonis non of the estate of Leila May Rogers was entitled to the remaining two-thirds. This was upon the theory that American Surety Company had been required to answer in damages in the sum of $333.70 for the failure of its principal on the surety bond to procure the delivery of the second mortgage and Hollis Rinehart, Jr., who was appointed administrator de bonis non after the absconding of the original administrator was entitled to the balance for the benefit of the estate.

On issue being joined, the matter was submitted to Benjamin Axleroad Esquire, as Special Master, with directions to take and transcribe the evidence and to submit the same to the court within thirty days from date of the Order, together with his findings of law and fact. The order of appointment was executed and thereafter the Master filed his report as follows:

'That Leila May Rogers died intestate in Dade County, Florida on the 31st day of October, 1934; that her estate consisted of personal property of the value of four thousand (4000) dollars, which was a mortgage on real estate of the defendants Edith B Phelps and John B. Phelps, her husband; that thereafter M. E. Earnest was appointed administrator of the estate of the deceased Leila May Rogers and gave a bond, executed by the plaintiff, American Surety Company, for four thousand ($4000) dollars which was duly approved by the County Judge; that the deceased left as her heirs three children; Howard, aged thirteen (13), Frank, aged seven (7) and Earnest, aged three (3); that the said Earnest assumed the management and control of the estate and administered the same until the 29th of July 1938 when he was removed by an order of the County Judge, to-wit W. F. Blanton, because he failed to file any accountings of his doings as administrator and substituted in his place as administrator d.b.n. the plaintiff, Hollis Rinehart; that on the 31st of December, 1934, the administrator M. E. Earnest, through his attorney, S. Grover Morrow, Esq., filed a petition to compromise and settle the indebtedness of the defendants, Edith B. Phelps and John B. Phelps, to the estate; that on the 31st of December, 1934, the County Judge authorized the compromise of the said mortgage indebtedness; that by virtue of order of compromise, Earnest, as Administrator, was authorized to accept in settlement of the said indebtedness Home Owners Loan Corporation bonds in the sum of three thousand (3000) dollars and to take from the said defendants, Edith Phelps and John Phelps, her husband, a second mortgage in the principal sum of nine hundred (900) dollars, bearing interest at six (6) per cent from date, with authority for Earnest to execute instruments necessary to settle and compromise said agreement. The said Earnest on the 16th of January, 1935, executed a satisfaction and mortgage from the said Edith Phelps and John Phelps which instrument was filed for record on the 17th of January in Dade County, being Clerk's file No. 29216; that said Earnest as administrator disobeyed the said order and failed and neglected to take from the defendants, Edith B. Phelps and John Phelps, her husband, the said second mortgage in said sum of nine hundred (900) dollars; that said M. E. Earnest absconded with part of the proceeds of the bonds which he disposed of and that he disappeared on the 3rd of September, 1938. The American Surety Company of New York filed suit, Case. No. 54323, against Earnest, charging that he had absconded; that the American Surety Company was left 'holding the bag' and the case proceeded to a final decree against said American Surety Company on the 2nd of May, 1939, penalizing the Surety in the sum of two thousand twenty-four dollars and seventy-seven cents ($2024.77) which included damages of thirty-three dollars and seventy cents ($33.70); that after the filing of this suit on the 17th of November, 1938, the defendants, Edith B. Phelps and John Phelps executed a mortgage upon the lands hereinabove described for a thousand dollars ($1000) to the defendant, George L. Griley and this mortgage was filed for record on the 16th of December, 1938 in Dade County, Florida, Clerk's file No. L-47102; that the said mortgage to the said George L. Griley is fraudulent, null and void, and if valid at all is at the best a third mortgage; that the defendants here are all of them charged with actual notice of the County Judge's orders, to-wit: plaintiff's Exhibits A, B, C, and D; that from the evidence it appears that the execution of the Griley mortgage was a subterfuge and device to defraud the estate of Leila May Rogers, deceased; that the defendant John B. Phelps had actual notice of the Court's Order; that the Court should enter a decree adjudging and declaring the plaintiff, the American Surety Company, be subrogated to the rights of Hollis Rinehart as Administrator d.b.n. of the estate of Leila May Rogers, deceased, because of the failure of the said Earnest to take said second mortgage and also for the amount which the plaintiff, American Surety Company, paid to Hollis Rinehart; that a lien be impressed upon the property described in the Bill of Complaint superior to all liens of record against the said property except the first mortgage of the Home Owners Loan Corporation and that this lien be in the sum of Nine Hundred (900) dollars and interest from the date of the Court Order, to-wit: Exhibit B, the 31st day of December, 1934, at six (6) per cent, and that from said sum so awarded to Hollis Rinehart as Administrator d.b.n., the American Surety Company of New York by reason of its right of subrogation shall have a lien thereon in the sum of three hundred thirty-three dollars and seventy cents ($333.70) together with interest thereon at eight (8) per cent from the second day of May, 1939.

'That the defendants pay to Hollis Rinehart the aforesaid sum of Nine Hundred (900) dollars together with interest as above stated and the said Hollis Rinehart shall pay to the American Surety Company the sum of three hundred thirty-three dollars and seventy cents ($333.70) with interest from the 7th day of May, 1939, on a short day to be fixed by this Court, in default whereof the property described in the Bill of Complaint to be sold as directed by this Honorable Court.'

And also made and filed his findings of law, as follows:

'Section 44 of the Probate Act [Acts 1933, c. 16103] reads as follows: 'Every County Judge shall record, or cause his clerk to record, in books kept for that purpose, distinctly and at full length, all wills, testaments and codicils of which probate shall be granted, all letters testamentary and of administration, all bonds of personal representatives (exclusive of supersedeas bonds), all orders and judgments made by him, and all other writings in this Act specially required to be recorded. * * *' Redfearn's Wills and Administration of Estates in Florida page 545 section 44.

'The County Judge's Court is undoubtedly a court of record. It is, however, a court of limited jurisdiction having no chancery powers.

"The probate court in this state is a court of limited jurisdiction, and has no chancery jurisdiction, unless the power vested in it is a chancery as well as a probate power.' First National Bank of St. Petersburg et al., v. MacDonald et al. , 130 So. 596.

'If the Phelps knew nothing, however, of the order of the County Judge which required them to execute the nine hundred (900) dollar mortgage, there might be a question as to whether they had actual or constructive notice of the County Judge's order, but it is submitted that all of the evidence is to the point that Mr. Phelps knew all, being advised by the attorney, Grover Morrow, of the proceedings and consequently must have known of the Court's order; such is the contention of Mr. MacKenzie, attorney for the plaintiff, page 5 and 6, tp., and such is the conclusion of the Master.

'It has been held that even though a Court of...