S.E.C. v. Elliott
| Decision Date | 27 February 1992 |
| Docket Number | Nos. 89-5457,89-5528,s. 89-5457 |
| Citation | 953 F.2d 1556 |
| Parties | 16 UCC Rep.Serv.2d 1150 SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. Charles Phillip ELLIOTT, et al., Defendants, Charles O. Farrar, Receiver-Appellee, Kenneth J. Davis, Linda J. Davis, Leroy H. Moeller, As Personal Representative of the Estates of Adolph Hagstrom, Squire J. Kingston, Elizabeth Woods, Caroline Estelle, Lynnis H. McClain, Ted Masco, Anita K. Hailey, Earl Setterblade, Francis Setterblade, Lloyd Schutzman, Shirley Schutzman, Albert C. Heil, Melvin Burkhardt, Rosa Ella Burkhardt, Howard Dore, Ruth Dore, Gerald J. Braun, Christie Braun, Monica Brooke Braun, C. Albert Ducharme Trust and Catherine F. Ducharme Trust, Seaton F. McDaniel, Josephine McDaniel, Trudy and Sidney Kleiner, Claimants-Appellants. SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. Charles Phillip ELLIOTT, et al., Defendants, Charles O. Farrar, Receiver-Appellee, Melvin Burkhardt and Rosa Ella Burkhardt, Movants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Merrill N. Johnson, Naples, Fla., for K. Davis.
Kathleen Monahan, Miami, Fla., for L. Moeller.
Mark A. Ebelini, Ft. Myers, Fla., for H. Dore.
Ronald L. Stetler, Naples, Fla., for Virginia Moore.
John Charles Coleman, Robert J. Coleman, Seaton F. and Josephine A. McDaniel, Ft. Myers, Fla., Gertrude and Sid Kleiner, Naples, Fla., Kathleen A. Monahan, Joaquin Mendez, Miami, Fla., for C. Albert Ducharme Trust.
Lyons and Farrar, Miami, Fla., for Farrar.
Frank P. Murphy, Naples, Fla., for S.J. Kingston, Melvin and Rose Ella Burkhardt.
Marsha Lyons, Lyons & Farrar, William Sadowski, Miami, Fla., for Securities and Exchange Com'n.
Appeals from the United States District Court for the Southern District of Florida.
Before FAY and HATCHETT, Circuit Judges, and HILL, Senior Circuit Judge.
It appears to the United States Court of Appeals for the Eleventh Circuit that this case involves a question of Florida law which is determinative of the cause, but unanswered by controlling precedent of the Supreme Court of Florida. We therefore certify the question for resolution by the highest court of Florida.
This case comes to the United States Court of Appeals for the Eleventh Circuit on appeal from the United States District Court for the Southern District of Florida.
This appeal poses the question whether Florida tax certificates represent interests in land for purposes of Article 9 of the Uniform Commercial Code, thus excluding them from the scope of Article 9. Appellants Howard Dore, Ruth Dore, Gerald J. Braun, Christie Braun, and Monica Brooke Braun challenge the district court's finding that tax certificates are general intangibles under Fla.Stat. § 679.106. These parties had loaned money to Charles Elliott. As collateral for these loans, Elliott tendered the appellants' tax certificates which he had endorsed in blank before a notary public. When Elliott's assets were put into an equitable receivership, the appellants attempted to collect taxes paid on the liened properties, but the tax certificates were frozen by the district court's order. In its Final Order, the district court found that tax certificates are general intangibles, that the only way to perfect a security interest in general intangibles is by filing a financing statement with the secretary of state, and that the appellants had failed to do so. Thus, the Receiver had a superior lien, and the appellants were unsecured creditors.
The Florida courts have yet to classify tax certificates for purposes of Article 9 of the Uniform Commercial Code. The appellants argue that tax certificates are interests in land and thus are excluded from the scope of Article 9 by virtue of Fla.Stat. § 679.104(10) which excludes "the creation or transfer of an interest in or lien on real estate, including a lease or rents thereunder." If the appellants are correct, then Article 9 does not govern the perfection of a security interest in tax certificates; and the appellants' failure to file a financing statement may not be fatal to their claim of secured status.
The appellee argues that a tax certificate is personal property and a general intangible under Fla.Stat. § 679.106. This provision was intended to bring into Article 9 "miscellaneous types of contractual rights and other personal property which are used or may become customarily used as commercial security." Fla.Stat. 679.106, Uniform Commercial Code Comment (1972). This provision has been held to cover the assignment of a tax refund as collateral; In re Ljosheim, 4 U.C.C.Rep. 46 ( ; the proceeds of an impending lawsuit; Estate of Hill, 27 Or.App. 893, 557 P.2d 1367 (Or.Ct.App.1976); and tickets and ticket proceeds; Klinger v. Pocono Int'l Raceway, Inc., 289 Pa.Super. 484, 433 A.2d 1357, 31 U.C.C.Rep. 1223 (Pa.Super.Ct.1981).
If the tax certificates represent an interest in land, then their assignment as collateral would not be governed by Article 9. Rucker v. State Exchange Bank, 355 So.2d 171, 23 U.C.C.Rep. 1020 (Fla.Dist.Ct.App.1978) (). Merely because a security agreement bears a relation to land does not mean the agreement falls within the land exception. The assignment of the right to receive payments under a contract for sale of real estate is a personal property right. In re Heide, 915 F.2d 531, 533, 12 U.C.C.Rep.2d 813 (9th Cir.1990); In re Freeborn, 94 Wash.2d 336, 617 P.2d 424, 29 U.C.C.Rep. 1625 (1980). Likewise, the assignment as collateral of the general partner's interest in a real estate venture was treated as personal property. In re Kelley, 34 U.C.C.Rep. 691, 21 B.R. 495 ( ().
The appellants argue that the Florida courts and statutes refer to tax certificates as creating first liens on property. Fla.Stat. § 197.122 and § 197.432(2) (1985). 1 Gautier v. Town of Crescent City, 138 Fla. 573, 189 So. 842 (1939) (). However, the use of the term "lien" may not be dispositive of whether a tax certificate is an interest in land for purposes of Article 9. The Florida statute does not give the tax certificate holder the right to proceed directly against the land or the landowner to recover the amount paid for the tax certificate. This appears to distinguish a tax certificate holder from a mortgagee, who can foreclose on the land in court.
The manner of obtaining and enforcing tax certificates is set out in the statutes. The tax collector sells at auction tax certificates on lands for which the taxes have not been paid. § 197.432. A certificate is struck off to the person who will pay the taxes, interest, costs and charges and will demand the lowest rate of interest on the obligation not exceeding the maximum rate. § 197.432(5). The successful bidder receives a "tax sale certificate" which represents his first lien on the property. § 197.122. (This was the sort of certificate endorsed by Elliott and tender by him as security).
If, after two years and less than seven years from the issuance of the certificate, the tax certificate is not redeemed by the delinquent tax payer, the certificate holder may apply for a tax deed from the tax collector. § 197.502. The certificate holder must pay the tax collector the price for redemption of all other "outstanding tax certificates, plus interest, any omitted taxes, plus interest, any delinquent taxes, plus interest, and current taxes, if due, covering the land." § 197.502(2). The tax collector then notifies the clerk of the circuit court that the certificate holder has paid all fees, and the clerk administers the sale of the property at auction. § 197.502(4) and (5). If no higher bid is made than the value necessary to redeem the tax certificate, then the certificate holder gets a tax deed to the property. § 197.542. Section 197.432(2) provides, "A lien created through the sale of a tax certificate may not be enforced in any manner except as provided in this chapter."
This was not always so. A 1929 statute prescribed procedure for tax certificate holders to enforce their tax liens against the land in a court of equity. 1929 Fla.Laws ch. 14572. After several foreclosure cases were brought pursuant to this statute; First Trust & Savings Bank v. West Lake Investment Co., 105 Fla. 590, 141 So. 894 (1932); Ridgeway v. Reese, 100 Fla. 1304, 131 So. 136 (1930); this statute was repealed by 1935 Fla.Laws ch. 17442.
After the 1935 repeal, the Florida Supreme Court held that a statutory method of enforcing tax liens was not necessary for a court of equity to foreclose a tax lien. Brickell v. Palbicke, 123 Fla. 508, 510, 167 So. 44 (1936) (); Leland v. Andrews, 129 Fla. 429, 433, 176 So. 418, 420 (1937) ().
However, the Florida legislature, in the present statute, seems to mandate that the statute provides the only procedure by which a certificate holder can recover on the certificate. § 197.432(2). If this is correct, a certificate holder can no longer foreclose on the certificate. The repeal of this foreclosure procedure may clarify the...
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