Silber v. Cn'R Industries of Jacksonville, Inc.

• Decision Date: 27 May 1988
• Docket Number: No. 87-582,87-582
• Citation: Silber v. Cn'R Industries of Jacksonville, Inc., 526 So.2d 974, 13 Fla. L. Weekly 1281 (Fla. App. 1988)
• Parties: 13 Fla. L. Weekly 1281 Esther F. SILBER, Saul Silber, O.G. Feaster, Jr., Beacher's Lodge, Inc., a Florida corporation, and Affordable Construction Company, a Florida corporation, Appellants, v. Cn'R INDUSTRIES OF JACKSONVILLE, INC., d/b/a Cooper Mechanical Contractors, Appellee.
• Court: Florida District Court of Appeals

Page 974

526 So.2d 974

13 Fla. L. Weekly 1281

Esther F. SILBER, Saul Silber, O.G. Feaster, Jr., Beacher's Lodge, Inc., a Florida corporation, and Affordable Construction Company, a Florida corporation, Appellants, v. Cn'R INDUSTRIES OF JACKSONVILLE, INC., d/b/a Cooper Mechanical Contractors, Appellee.

No. 87-582.

District Court of Appeal of Florida First District.

May 27, 1988.

Stephen B. Rakusin of Rakusin & Ivey, P.A., Gainesville, for appellants.

Jeffrey D. Dunn, Jacksonville, for appellee.

ZEHMER, Judge.

Esther Silber, Saul Silber, O.G. Feaster, Jr., Beacher's Lodge, Inc., and Affordable Construction Company, the defendants below, appeal a final judgment entered in favor of Cn'R Industries of Jacksonville, d/b/a Cooper Mechanical Contractors, which granted appellee Cooper recovery on a promisory note, with interest and attorney's fees, and denied appellants recovery on their counterclaims.

This case arises out of the construction of a hotel and condominium known as Beacher's Lodge. The Silbers, Feaster and Beacher's Lodge, Inc., are the owners of the project. Affordable Construction Company is the general contractor. Cooper had entered into a subcontract with Affordable to provide the plumbing and mechanical work described in the general contract, plans and specifications for the project. Cooper in turn subcontracted the plumbing work to C.S. Rutledge Plumbing Co., Inc. Rutledge performed a portion of the plumbing work and then left the job claiming nonpayment by Cooper.

Sometime prior to May 20, 1986, a dispute arose between Cooper and Affordable concerning payments for work performed by Cooper. Cooper claimed that Affordable owed it $135,000. Affordable disputed the adequacy of Cooper's work. This dispute was settled on May 20, 1986, and settlement was evidenced by a written settlement agreement executed by Affordable and Beacher's Lodge, referred to collectively as "owner," and Cooper, referred to as "a subcontractor of owner." This agreement purported to "resolve all disputes and disagreements that may exist between them amicably," and required, among other things, that: (1) owner will release all claims against Cooper except "payments due subcontractors or suppliers to Cooper and claims which arise from latent defects not known of at time of execution of this agreement"; (2) owner will pay Cooper a total of $95,000, $45,000 payable upon execution of the agreement and the balance covered by a note for $50,000, to be signed by Affordable, Beacher's Lodge, the Silbers and Feaster, and made payable to Cooper in 90 days, with 12% interest due after 90 days, and "attorney fees for collection"; (3) Cooper will deliver releases of lien from its subcontractors, including Rutledge; (4) Cooper will "finish the work under the plumbing contract and Fire Standpipe System contract"; and (5) "this agreement is intended to be a complete resolution of all rights between the parties and there are no additional or oral agreements or understandings other than those set forth herein." Pursuant to this agreement, a note was executed by the designated parties. No documentary tax stamps were affixed to the note, however.

When the 90-day period passed and payment was not made, Cooper brought suit against appellants to enforce the note. As affirmative defenses, appellants alleged failure of consideration because Cooper (a) had not obtained releases of liens and paid all subcontractors and suppliers, and (b) had not completed work on the Standpipe System of the project, as required by the settlement agreement. Appellants further alleged (c) a right to set-off or reduction of the amount due Cooper on the note to the extent of damages incurred by appellants due to Cooper's failure to perform its subcontract with Affordable, and (d) that the note was "unenforceable under applicable Florida law." Appellants also filed a counterclaim for damages.

The case went to trial and Cooper presented evidence to establish his claim on the note. The note was introduced in evidence without the required documentary tax stamps affixed or any other proof that such tax had been paid. After Cooper rested its case, appellants moved to dismiss Cooper's cause of action to enforce the note, contending among other things that the note was unenforceable for failure to comply with section 201.08, Florida Statutes (1985). That section requires that documentary tax stamps due on a promissory note must be paid and affixed before the note can be enforced by any court of this state. After some discussion regarding the applicability of section 201.08(1) to the note in this case, the trial court allowed Cooper to reopen its case, remove the note from evidence, purchase the requisite documentary stamps and affix them to the note, and again place the note, now properly taxed, in evidence. The trial court then denied appellants' motions and proceeded to hear appellants' evidence in support of their other affirmative defenses and the counterclaim. At the conclusion of all the evidence, the court entered judgment for Cooper in the full amount of the note plus interest, and awarded Cooper attorney's fees in the amount of $18,500 pursuant to the terms of the note.

Appellants raise three points on appeal. The first point asserts, essentially, that the trial court erred in entering judgment for Cooper in the full amount of the note because appellees established their defenses of failure of consideration and set-off. This argument is premised primarily on Cooper's alleged failure to pay its subcontractors and complete its part of the work in a timely fashion. Our review of the record reveals no error by the trial court in respect to its ruling on these defenses. The settlement agreement did not contain any provision requiring Cooper to pay its subcontractors as a condition of performance. ¹ Moreover, neither the settlement agreement, the general contract nor Cooper's subcontract contained any explicit provision requiring completion of the work on or before the Memorial Day holiday weekend, and none of the provisions of these documents required the trial court to imply such an obligation, as argued by appellants.

Appellants' second point contends that the court below erred in permitting recovery on the note because it was unenforceable under section 201.08 and the court should not have permitted appellants to reopen their case to correct this material deficiency in their case. They argue that the trial court abused its discretion in allowing Cooper to reopen its case, withdraw the note, pay the tax, and affix the documentary stamps to correct this legal impediment to enforcement of the note after appellants had rested their case. Appellants' point three is somewhat interrelated and contends that the trial court erred in awarding attorney's fees to appellee in the amount of $18,500 because (1) the note was unenforceable due to appellee's failure to purchase the requisite documentary stamps, and (2) appellee failed to lay a credible foundation upon which the trial court could assess a reasonable fee in accordance with the requirements of Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985). We discuss these two points together.

At the outset, we hold that the attorney's fee award was erroneous and must be reversed because the trial court failed to comply with the criteria established in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985). See also Multitech Corporation v. St. Johns Bluff Investment Corporation, 518 So.2d 427 (Fla. 1st DCA 1988). Therefore, the attorney's fee award must be reversed and remanded for compliance with this authority.

The provisions of section 201.08 apply to the note in this case, and there was no error in the lower court so ruling. This statutory provision is concerned primarily with enforcement of the taxing statutes and collecting monies due the state for documentary stamps on designated instruments. Until Cooper paid the tax due and affixed the requisite documentary stamps to the promissory note, its suit was based upon an unenforceable note. Yet the mere fact that the tax has not been paid when due does not render the note forever unenforceable, as "nothing in Florida law would deny enforceability of promissory notes...