Tri-County Produce Distributors, Inc. v. Northeast Production Credit Ass'n

• Decision Date: 31 October 1963
• Docket Number: No. E-4,TRI-COUNTY,E-4
• Citation: 160 So.2d 46
• Parties: PRODUCE DISTRIBUTORS, INC., a Florida corporation, Appellant, v. NORTHEAST PRODUCTION CREDIT ASSOCIATION, Appellee.
• Court: Florida District Court of Appeals

Page 46

160 So.2d 46

TRI-COUNTY PRODUCE DISTRIBUTORS, INC., a Florida corporation, Appellant, v. NORTHEAST PRODUCTION CREDIT ASSOCIATION, Appellee.

No. E-4.

District Court of Appeal of Florida, First District.

Oct. 31, 1963.

Rehearing Denied Nov. 27, 1963.

Coxe & Stephens, St. Augustine, for appellant.

Angus W. Harriett, Palatka, for appellee.

WIGGINTON, Judge.

This suit in equity was instituted by appellee, Northeast Production Credit Association, against A. B. Campbell and wife Evelyn M. Campbell, and appellant Tri-County Produce Distributors, Inc., a Florida corporation. The complaint alleges that Northeast is the owner by assignment of two mortgages given by the Campbells to one E. B. Bowles, the first of which was executed on July 13, 1954, and the second of which was executed on December 6, 1956. Each of these mortgages encumbers the homestead of the mortgagors, and was duly recorded in the Public Records of St. Johns County.

The complaint further alleges that Northeast is the owner also of a mortgage given it by the Campbells dated October 7, 1957, which mortgage likewise encumbers the Campbells' homestead, together with certain farm lands and equipment used in connection with their farming operation, and was duly recorded in the records of the county. It is alleged that although a rider attached to and made a part of the mortgage document and the promissory note were executed by Evelyn M. Campbell, her signature thereon witnessed by two subscribing witnesses, and her acknowledgment duly taken by a notary public, through mutual mistake and inadvertance she failed to affix her signature to the mortgage document itself in the space provided for that purpose. The complaint alleges that all three mortgages held and owned by Northeast are in default and the sums secured thereby are past due and unpaid.

The complaint further alleges that Tri-County is the owner and holder of a subsequent mortgage given it by the Campbells dated July 1, 1960, encumbering the homestead and farm property described in Northeast's mortgage of October 7, 1957. It is alleged that this mortgage is subordinate to the lien of the mortgages held by Northeast. The complaint prays for a decree reforming the October 7, 1957 mortgage held by Northeast by including thereon the signature of defendant Evelyn M. Campbell, and that as reformed this, together with the earlier mortgages held by Northeast through assignment from Bowles, be foreclosed.

The Campbells filed an answer to the complaint generally admitting the allegations of the complaint, but denying that the mortgage of October 7, 1957, sought to be reformed and foreclosed was executed by Evelyn M. Campbell, or that her signature was omitted from the mortgage through mutual mistake and inadvertance. Tri-County answered the complaint alleging a lack of knowledge as to most of the allegations contained therein; specifically denying that Evelyn M. Campbell executed the mortgage of October 7, 1957, and denying that her signature was omitted therefrom through mutual mistake or inadvertance. The answer further alleges that title to the homestead of the Campbells described in the October 7, 1957 mortgage is vested in them as an estate by the entirety and that Tri-County had no notice, either actual or constructive, that the fee interest of Evelyn M. Campbell in the homestead and her dower interest in the farm lands were encumbered by Northeast's mortgage of 1957. Tri-County affirmatively alleges that it holds a valid and existing mortgage lien against the homestead and farm lands of the Campbells described in Northeast's mortgage, and that its lien is prior and superior in dignity to the 1957 mortgage held by Northeast as regards the fee interest of Evelyn M. Campbell in the homestead, and her dower interest in the farm lands.

During the course of the proceedings the deposition of the Campbells was taken by plaintiff. Their sworn testimony affirmatively establishes that it was the agreement of the parties that the October 7, 1957 mortgage given to Northeast be executed both by A. B. Campbell and wife, Evelyn M. Campbell, and that it was through mutual mistake or oversight that Evelyn M. Campbell's signature was not affixed to the mortgage document at the time the mortgage transaction was closed.

Northeast filed a motion for summary decree supported by affidavits of its general manager and the original mortgagee, E. B. Bowles. These affidavits tend to support the allegations of the complaint and to establish the delinquent amounts due on all three mortgages.

In opposition to the motion Tri-County filed an affidavit executed by its manager containing facts which, if true, clothed it with status of a good faith purchaser for value of its mortgage lien against Evelyn M. Campbell's fee interest in the homestead and her dower interest in the farm lands owned by her husband, without actual notice of Northeast's mortgage lien on such interest by virtue of its mortgage dated October 7, 1957. On the day of the hearing upon the motion for summary decree each of the Campbells filed before the court their apposing affidavits stating that Evelyn M. Campbell's signature was not omitted from Northeast's 1957 mortgage through mutual mistake or inadvertence. No explanation was made as to the reason for the conflict between the deposition testimony and affidavits of these parties. The chancellor was therefore justified in disregarding the averments of the affidavits in his consideration of the motion for summary decree.

After oral argument before the court an order was entered by the chancellor in which he found that the mortgage of October 7, 1957, was duly and regularly executed by the Campbells and regularly through mutual mistake and inadvertence that Evelyn M. Campbell's signature was not affixed to the mortgage at the time the transaction was closed. The court therefore ordered the mortgage reformed so as to include the signature of Evelyn M. Campbell. In the light of this order and the other proofs before the court, a summary final decree of foreclosure was entered finding that the equities of the cause are with plaintiff Northeast, and ordering the Campbells to pay the amount found by the decree to be due on all three mortgages held by Northeast, together with costs and attorneys fees, within the time fixed by the decree or that in default thereof the property described in the mortgages be sold by the clerk of the court. It is from the final decree of reformation and of foreclosure and sale that this appeal is taken by Tri-County.

The Campbells joined in the appeal as parties appellant but their appeal was dismissed by this court on motion of appellee Northeast for failure to perfect their appeal in accordance with the rules of this court. ¹ By failing to perfect their appeal and suffering a dismissal thereof, the Campbells have accepted the conclusion reached by the chancellor that in view of Mrs. Campbell's deposition testimony admitting that she intended to be a party to the Northeast mortgage, her subsequent affidavit filed in opposition to the motion for summary decree averring that her signature was not omitted from the mortgage because of mutual mistake or inadvertence should properly be disregarded.

Tri-County presents several points on appeal, only two of which we find it necessary to answer.

It is first contended that in a suit to reform a written conveyance of real estate a court of equity has no authority to decree reformation on the ground of mutual mistake by ordering that the omitted signature of a grantor or mortgagor be added to the written instrument, particularly when a portion of the property described in the instrument consists of a homestead, fee title to which is vested in the party whose signature is alleged to have been omitted by reason of the alleged mutual mistake.

It is appellant's contention that the Constitution and laws of this state relating to alienation of homesteads render null and void any instrument purporting to convey or encumber such property unless the instrument is jointly executed by the husband and wife strictly in accordance with the requirements of law. ² Appellant contends that since the mortgage in question was not signed by Evelyn M. Campbell, it is a nullity insofar as it purports to encumber the homestead to which she and her husband hold title as an estate by the entirety. It is appellant's further position that while a court of equity may reform a written instrument to express the true agreement of the parties, it may not because of alleged mutual mistake create a contract where none theretofore existed, and that by ordering the omitted signature of Evelyn M. Campbell added to the 1957 mortgage held by Northeast, the decree creates a contract where none theretofore existed. It is on this premise that Tri-County contends the court was without authority to reform Northeast's mortgage insofar as it purports to create a lien on Evelyn M. Campbell's dower interest in the farm lands owned by her husband and described in said mortgage.

It is an inherent power of a court of equity to order a written instrument reformed in such manner as to cause the instrument to reflect the true agreement of the parties when the terms of the agreement have not been clearly expressed in the instrument because of the mutual mistake or inadvertence. ³ The foregoing principle is recognized in this state even though it is conceded that the court lacks power to make a new contract for the parties containing terms which were not part of the agreement when the instrument was executed. ⁴

The decisions from this and other jurisdictions dictions are replete with instances in which written instruments have been reformed on the ground of mutual mistake so as to include land erroneously omitted; to delete land which had been erroneously included; to add signatures of witnesses and seals to instruments which were inadvertently omitted. Research reveals only...