Rood v. Miami Air Conditioning Co.

• Decision Date: 29 November 1966
• Docket Number: No. 65-855,65-855
• Citation: 193 So.2d 216
• Parties: Nathan B. ROOD and Sidney B. Benerofe, Trustees, Appellants, v. MIAMI AIR CONDITIONING CO., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

Page 216

193 So.2d 216

Nathan B. ROOD and Sidney B. Benerofe, Trustees, Appellants, v. MIAMI AIR CONDITIONING CO., a Florida corporation, Appellee.

No. 65-855.

District Court of Appeal of Florida, Third District.

Nov. 29, 1966.

Rehearing Denied Jan. 18, 1967.

Myers, Heiman & Kaplan and Eugene C. Heiman, Miami, for appellants.

Smith & Mandler, Miami Beach, Joe N. Unger, Miami, for appellee.

Before CARROLL and SWANN, JJ., and BOYER, TYRIE A., Associate Judge.

BOYER, TYRIE A., Associate Judge.

We here consider an appeal by the defendants in a replevin action from a judgment entered in favor of the plaintiff. The parties will be referred to as they stood in the trial court.

The basic facts are not in dispute. The plaintiff is an air-conditioning contractor. In 1955 it sold three Chrysler air-conditioning units to a purchaser whose name was never revealed by the evidence, which units were installed in the Lido Spa Hotel, located at 40 Belle Isle, Miami Beach, Florida. On September 6, 1960 the hotel was acquired by Monterrey Enterprises, Inc., a Florida corporation which was the wholly owned subsidiary of National Capital Corporation, whose address is 350 Lincoln Road, Miami Beach, Florida. On March 16, 1961 plaintiff sold certain air-conditioning equipment to National Capital Corporation. The sale was accomplished via an instrument which is referred to in the briefs as a contract, which contract was never received into evidence. The parties, in their briefs, agree that the contract described National Capital Corporation as purchaser, designating its address as 350 Lincoln Road, Miami Beach, and that neither the name nor the address of Monterrey Enterprises or the Lido Spa Hotel appear thereon. They also agree that the contract was recorded in the Official Records of Dade County, Florida on March 23, 1961.

On May 18, 1961 Monterrey Enterprises executed and delivered to defendants a mortgage encumbering the Lido Spa Hotel and the personal property located therein.

On May 10, 1962 plaintiff sold additional air-conditioning equipment to National Capital Corporation. The contract by which the sale was accomplished was not admitted into evidence, but the parties, in their briefs, agree that the name Monterrey Enterprises, Inc. does not appear in the contract, though it is recited that the property will at all times be kept at 40 Belle Isle, Miami Beach, Florida. It is further agreed that the contract describes five items of airconditioning, three of which were the Chrysler air-conditioning units which were sold by the plaintiff to an unnamed purchaser and installed in the Lido Spa Hotel in 1955. This latter contract was recorded in the Official Records of Dade County on September 27, 1962.

Upon default by Monterrey Enterprises, Inc., a foreclosure proceeding was instituted by the defendants which culminated in a purchase by them of the Lido Spa Hotel at the foreclosure sale on July 1, 1963.

The plaintiff thereafter sought to replevin from defendants the equipment which was described in the two contracts above mentioned. It is from the judgment entered in that action that the present appeal was taken. The equipment sold by plaintiff in 1955 and thereafter included in the 1962 contract was not included in the judgment.

The appellants assigned numerous errors and argued ten separate points in their brief. However, the primary bone of contention relates to the nature and effect of the two contracts above mentioned. The plaintiff claims that it retained title and was entitled to regain possession upon the purchaser defaulting. The defendants deny that the contracts were either conditional sales contracts or retain title contracts.

In order to ultimately resolve the issues involved in this case we find it necessary to consider the applicability of Florida Statute 726.09, F.S.A., which is a part of the Statute of Frauds adopted by Florida and numerous other states from the English statute against fraudulent alienations. (Hudnall v. Paine, 39 Fla. 67, 21 So. 791.) Although the statute had its genesis in England and has been a part of our statutory law since 1823, it has received the favor of few judicial interpretations. We have carefully examined every case which has been brought to our attention or which careful research reveals wherein the Appellate Courts of this state have construed the statute and many other cases from the highest courts of other jurisdictions having the same or a similar statute.

The subject statute provides as follows:

'When any loan of goods and chattels shall be pretended to have been made to any person with whom or those claiming under him, possession shall have remained for the space of two years without demand and pursued by due process of law on the part of the pretended lender, or where any reservation or limitation shall be pretended to have been made of a use or property by way of condition, reversion, remainder or otherwise in goods and chattels, and the possession thereof shall have remained in another as aforesaid, the same shall be taken as to the creditors and purchasers of the persons aforesaid so remaining in possession, to be fraudulent within this chapter, and the absolute property shall be with the possession, unless such loan reservation or limitation of use or property were declared by will or deed in writing proved and recorded.'

The Supreme Court of Alabama, construing a similar statute containing a three year provision rather than a two year period as provided in the Florida Statute, in Carew v. Love's Adm'r, 30 Ala. 577, cited and approved by the Supreme Court of Florida, in Hudnall v. Paine, supra, and Dillon v. Mizell Live Stock Co., 66 Fla. 425, 63 So. 824, held, in a detinue action by an owner of a slave against defendants who purchased the slave at an execution sale against a loanee who had possession of the slave under a loan from the owner, that the right or title of the lendor of personal property cannot, under the statute, be in any manner affected by any act or contract of the loanee, unless such act be done, or such contract be made, after the possession under the loan has continued for the statutory period. That court further held the principal to be equally applicable to a creditor of the loanee. The case is particularly enlightening in view of its specific holding that the fact that credit has been extended on the faith of the property does not bring the case within the statute; the court stating as follows:

'The circumstances that credit has been given on the faith of the property, does not bring the case within the statute. Joy v. Campbell, 1 Sch. & Lef. 328. That circumstance might belong to a variety of cases obviously not within the statute. Thus, B. might hold a slave and a horse of A. under a loan, for two years only; at the end of the two years, A. might resume and continuously retain the possession of the property; but during the two years, B. might obtain credit on the faith of the property. In such case, the statute certainly would not authorize the persons who had become the creditors of B. on the faith of the property, to subject it to the payment of their demands against him. To entitle the creditor of the loanee, under the statute, to divest the title of the lender, by a sale under legal process against the loanee, it is essential that the credit be given, or the liability contracted, After the completion of three years from the commencement of the loan.'

* * * 'a sale under legal process Against the loanee, for A debt contracted before the loan has continued for three years, does not by virtue of the statute, divest the title of the lender.'

'There is no evidence tending to show that the loanee either contracted a debt, or made a sale, After his possession had continued for three years. The entire claim and defense of the defendants rest upon a sale under legal process against the loanee, for a debt contracted by him Before his possession had continued for three years. Under the statute above cited, that sale conferred no title on the defendants, and did not affect the title of the lender. Upon the uncontroverted facts of the case, the plaintiff was clearly entitled to recover.' (Emphasis by writer of that opinion)

The Supreme Court of Florida, in Campbell Printing Press & Mfg. Co. v. Walker, 22 Fla. 412, 1 So. 59, recognized that in Florida the question as to whether a contract is in its legal effect a mortgage or a conditional sale (or retain title contract) is of particular importance by reason of the fact that a mortgagee is not entitled to acquire possession of mortgaged property except by purchase at a foreclosure sale. That case involved a suit by a conditional vendor against the assignee of the personal property of the conditional vendee; the conditional sale having been made on May 8, 1883 and the property having been retained by the vendee until April 24, 1884, when the vendee made an assignment of all property of every kind and description to the defendants for the payment of the vendee's debts. The court held, after first holding the contract there under consideration to have been a conditional sale contract as distinguished from a mortgage or absolute bill of sale, that the contract, as against creditors and bona fide purchasers would be void under the predecessor to Florida Statutes 726.09, F.S.A. if not recorded in two years after delivery of possession to the buyer. Considering the exact question involved in the case sub judice, the court stated:

'The only remaining question is, is such a conditional sale as the one under consideration valid as to subsequent judgment creditors and purchasers for valuable consideration without notice? This is a question upon which there is great conflict in the authorities.

'In the case of Jackson Sharpe (Sharp) Co. v. Holland (14 Fla. 384) supra, Holland was the purchaser, at a judicial sale, of property in possession of the purchaser, in which the seller had reserved title....