Special Tax School Dist. No. 1 of Orange County v. Hillman

• Citation: 179 So. 805,131 Fla. 725
• Parties: SPECIAL TAX SCHOOL DIST. NO. 1 OF ORANGE COUNTY et al. v. HILLMAN et al.
• Decision Date: 08 March 1938
• Court: Florida Supreme Court

179 So. 805

131 Fla. 725

SPECIAL TAX SCHOOL DIST. NO. 1 OF ORANGE COUNTY et al. v. HILLMAN et al.

Florida Supreme Court, Division B.

March 8, 1938

Rehearing Denied April 1, 1938.

Suit by Herman Hillman and another against the Special Tax School District No. 1 of Orange County, Florida, and others for an accounting and to establish and foreclose a lien on realty. From an interlocutory order denying a motion to dismiss the bill of complaint and from an order striking certain paragraphs of defendants' answer, the defendants appeal and the complainants cross-assign as error the denial of motion to strike an additional paragraph of defendants' answer.

Orders affirmed and cause remanded, with directions.

ELLIS C.J., dissenting in part. Appeal from Circuit Court, Orange County; M. B Smith, Judge.

COUNSEL

G. B Fishback, of Orlando, for appellants.

Hugh Akerman and William H. Dial, both of Orlando, for appellees.

OPINION

BROWN Justice.

The general question here presented is whether a court of equity can decree that the vendors have a lien for the unpaid purchase price on land which they had sold and conveyed to the trustees of a special tax school district, to secure which the trustees, as such, had executed their notes and mortgage on the land, and afterward erected a school building thereon, where neither such trustees, nor the school district, had any lawful authority to make the purchase or to execute the notes and mortgage.

This appeal is from two interlocutory orders, one denying a motion to dismiss the bill of complaint, and the other striking certain paragraphs and refusing to strike one paragraph of defendants' answer to the bill of complaint.

On October 12, 1925, Charles Lord, P. Phillips, and Herman Hillman, each owning a one-third interest in 'Block 'H' of Eola Park Heights, according to plat thereof recorded in Plat Book 'H,' page 33, public records of Orange County, Florida,' conveyed said property to C. E. Howard, R. P. Buckmaster, and Ruth Godfrey, as trustees of Special Tax School District No. 1, Orange County, Fla., their successors and assigns, for a consideration, the total amount of which is not disclosed by the deed. A promissory note in the amount of $40,000, due on or before twenty years after October 12, 1925, with interest at 8 per cent. per annum, payable semiannually, was given to each of the three grantors by said trustees. A mortgage on said property, of even date therewith, to secure the unpaid part of the purchase price of $120,000, was executed and delivered to the three grantors named by the aforementioned trustees, as trustees of said district.

Herman Hillman and P. Phillips, on June 20, 1933, filed their bill of complaint, which was subsequently amended, against Special Tax School District No. 1 of Orange County, Fla., and certain named individuals as trustees of said district, the Board of Public Instruction of Orange County, Fla., and certain named individuals as constituting said board, praying for an accounting, and that the court decree that complainants have a lien upon an undivided two-thirds interest in said real property superior to the rights of defendants, or any of them, or of any person, firm, or corporation claiming or acquiring a lien thereon from and after December 9, 1925; that complainants have foreclosure of their lien as provided by law upon their undivided two-thirds interest in said property; that it be sold to satisfy said lien; and that complainants have a right to bid at said sale.

The bill of complaint, as amended, after setting forth the facts heretofore stated, alleged in substance that Special Tax School District No. 1 and the Board of Public Instruction for Orange County, by reason of Orlando's increased population, needed land on which to construct and operate public free schools; that the property was purchased for $125,000, $5,000 being paid down, and the unpaid balance being secured by notes and a mortgage on the property; that no part of the balance of the principal has been paid; that each installment of interest was paid up to and including that due October 12, 1932, but defendants failed and refused to pay the installment of interest, amounting to $1,666.66, due April 12, 1933, and have since failed and refused to pay any interest although due demand has been made upon them; that the note made to Charles Lord, and whatever interest Charles Lord had in said land and mortgage subsequent to October 12, 1925, were assigned to Robert Hyer of Orlando, Fla., and complainants are informed and believe that defendants have discharged said obligation on terms satisfactory to said Robert Hyer, but defendants have refused to pay complainants any further sum on said agreement, and have repudiated the entire obligation to complainants; that when said property was sold to said school district, it comprised an entire city block in the city of Orlando, and was well worth the agreed price of $125,000; that defendants thereafter took possession of said land and erected thereon a large school building, which complainants are informed cost approximately $300,000; that since the sale of said land, defendants have been in complete and undisturbed possession thereof, and since completion of said building, defendants have occupied and are now in complete enjoyment and possession of said property; that at the time of the sale of said property, complainants accepted said notes and mortgage executed and delivered by defendant school district; that complainants are owners and holders of two of said notes, each in the principal sum of $40,000; that defendants have suggested, and complainants allege it to be a fact, that said notes and mortgages are void and unenforceable as constituting nothing in law, because the debt was not created in accordance with the statutes of Florida; that it is provided by law that the county board of public instruction shall apply to the county commissioners who shall call an election for the purpose of authorizing the creation of a debt by the county board of public instruction, and none of these proceedings were had; that said notes and mortgage being void, complainants are entitled to a vendor's lien upon their undivided two-thirds interest in said property, in the principal sum of $80,000, with interest at 8 per cent. per annum from April 12, 1933, because each owned an undivided one-third interest in said property, and each holds one of said notes for $40,000; that complainants are entitled to the foreclosure of said lien; that defendants had actual and complete knowledge of the nonpayment of the amounts due complainants, the rights of complainants in and about the premises, and their lien upon said undivided two-thirds interest therein; that defendants are in exclusive possession of said property, and the public records of Orange county show no conveyance of or lien upon an undivided two-thirds interest therein; that complainants' lien has been a public record since December 9, 1925, and complainants' vendor's lien is superior to the rights of defendants, or any firm, person, or corporation claiming any right, title, or interest in said two-thirds undivided interest in said property since said date.

Motion to dismiss the bill as amended was made on the grounds that the bill contained no equity, that complainants' claim is barred by the statute of limitations, and that complainants have accepted other security for any lien they may claim. The motion was denied by the court.

The defendants filed their joint answer to the bill of complaint in which, after denying certain material allegations of the bill, they answered the bill as an entirety. Paragraph 9 of the answer averred that the lands were not worth more than $50,000 at the time of the taking. Paragraph 10 of the answer averred that complainants, at the time of the sale, knew the property was to be used as a site for a school building, but that they stood by, permitted and encouraged the school officers to erect thereon a building at a cost of $300,000, and it is inequitable and unjust now to permit complainants to enforce any lien they might otherwise have against the property, and from the nature of the improvements on said lands, the same cannot be removed without wholly destroying the value thereof. The averments of paragraphs 11, 12, and 13, of the answer are not material on this appeal. The answer concluded with a motion to dismiss the bill of complaint.

Motion was made to strike paragraphs 9, 10, 11, 12, and 13 of the answer. The court, by its order, denied the motion as to paragraph 9 of the answer, and granted the motion as to paragraph 10, 11, 12, and 13 of the answer; and denied the motion to dismiss the bill of complaint. Defendants appealed. On this appeal complainants cross -assign as error the denial of their motion to strike paragraph 9 of the answer.

The first question presented is whether equity will permit complainants to enforce a vendor's lien on the land in view of the fact that they took notes and a mortgage thereon as security for the balance of the purchase price.

The bill of complaint contained an allegation to the effect that defendants suggested to complainants, and complainants allege it to be a fact, that the notes and mortgage are void because the debt was not created in accordance with the statutes of the state of Florida, and that they are therefore unenforceable as constituting nothing in law. It is conceded in the brief of appellants, defendants below, that said notes and mortgage are void.

The board of public instruction in each county of made a body corporate and may acquire and hold real and personal property and perform other corporate acts for educational purposes. Section 523 C.G.L., and sections 717, C.G.L., 576, R.G.S.,...