Trueman Fertilizer Co. v. Allison

• Decision Date: 29 July 1955
• Citation: 81 So.2d 734
• Parties: TRUEMAN FERTILIZER CO., a corporation, Plaintiff-Appellant, v. Ethel Mae ALLISON, as Administratrix of the Estate of Wise Perry, deceased, andas an heir of said Wise Perry, Defendants-Appellees.
• Court: Florida Supreme Court

Page 734

81 So.2d 734

TRUEMAN FERTILIZER CO., a corporation, Plaintiff-Appellant, v. Ethel Mae ALLISON, as Administratrix of the Estate of Wise Perry, deceased, andas an heir of said Wise Perry, Defendants-Appellees.

Supreme Court of Florida, En Banc.

July 29, 1955.

Carroll Dunscombe, Stuart, for appellant.

J. Leo Chapman, West Palm Beach, for appellees.

TERRELL, Justice.

Trueman Fertilizer Co., a corporation, instituted this suit against defendants-appellees to foreclose a lien arising from the redemption of tax sales certificates against the pertinent lands. The lien is based on subrogation account of appellant redeeming the tax sales certificates. The second amended complaint (the one involved here) alleges inter alia that Wise Perry died intestate in 1930; that an administrator of his estate was appointed but no inventory was filed, no accounting was made and so far as the record discloses, the estate was not administered. It is shown that appellant filed its claim against the estate of decedent based on notes due it by the deceased.

The second amended complaint also shows that among the assets of the estate was all the capital stock of Perry Realty Co. except one share, and that said company was dissolved in 1936 for failure to pay corporation stock tax. Distribution of assets of the corporation and the stock owned by the estate has not been made. It is further alleged that as a matter of law title to the lands of Perry Realty Company became vested in the administrator and later in defendant-administratrix. Taxes on the real estate owned by the dissolved corporation were not paid in 1938, consequently tax certificates were issued and sold in 1939. In August 1941, appellant's claim against the estate not having been paid, it purchased the tax certificates for $407.08 for the purpose of protecting its claim. In January 1950, appellant reduced its notes to judgment. Motions to dismiss the complaint and the amended complaints were granted without leave to amend. We are confronted with an appeal from this order.

The real point for determination is whether or not appellant had such an interest in the lands of the dissolved corporation as would entitle it under the theory of subrogation to redeem the tax certificates and not be classed as a mere volunteer without equitable remedy.

In his order denying relief, the chancellor gave the following negative answer to this question:

'It appears from the second amended complaint that plaintiff obtained a judgment against the estate of Wise Perry, the decedent, on January 21, 1950, and that said judgment was based upon the promissory notes upon which was based the claim filed by it against the estate of the said decedent in 1930. The allegations of the second amended complaint did not show that plaintiff, at the time of its redemption or payment of the tax certificates, held any security for the payment of the decedent's debt to it or its claim against his estate, nor that plaintiff had any title to or interest in the lands involved in this suit, nor that there was any agreement or request that plaintiff redeem the certificates nor is there any showing of right to subrogation by operation of law.

'Further, the second amended complaint shows that title to the lands involved in this suit is vested in Perry Realty Company, a corporation, that said corporation is now dissolved, that neither the said corporation or the said dissolved corporation or its last directors in their capacity as trustees of its assets were made parties to this suit.

'And further, it appears that although the tax certificates were redeemed by plaintiff in 1941, this suit was not brought until May 7, 1954, nearly fourteen years later."

In 50 Am.Jur., Sec. 22, under the subject of 'Subrogation,' it is said that 'Generally speaking, the party making payment is a volunteer if, in so doing, he has no right or interest of his own to protect, and acts without obligation, moral or legal, and without being requested by anyone liable on the obligation.' Section 23 points out, however, that 'if he has any palpable interest which will be protected by the extinguishment of the debt, he may pay the debt and be entitled to hold and enforce it just as a creditor could. It would seem that one acting in good faith in making his payment, and under a reasonable belief that it is necessary to his protection, is entitled to subrogation, even though it turns out he had no interest to protect.'

In Florida and most other jurisdictions, it is settled law that one having an interest in real property by lien or in some other manner and is required to pay prior tax liens thereon to protect his interest is not a mere volunteer and is entitled to an equitable remedy against the person who should have paid the taxes. Prudential Ins. Co. of America v. Baylarian, 124 Fla. 259, 168 So. 7; Rives v. Anderson, 128 Fla. 794, 175 So. 897; Federal Land Bank of Columbia v. Brooks, 139 Fla. 506, 190 So. 737; Hollywood, Inc., v. Clark, 153 Fla. 501, 15 So.2d 175; Annotations in 91 A.L.R. 389-393 and 106 A.L.R. 1212-1227. See also 50 Am.Jur., Subrogation, Sec. 40, and Annotation 78 A.L.R. 611 and 612. Section 41, Subrogation, 50 Am.Jur., also enlightens the questions and details the general rule as to advances for benefit of decedent's estate.

The doctrine of subrogation is based upon the principle of natural justice and was created to afford relief where one is required to pay a legal obligation which ought to have been met, either wholly or partially, by another. Federal Ins. Co. v. Tamiami Trail Tours, 5 Cir., 1941, 117 F.2d 794. Applying that rule here, one is driven to the conclusion that the claimant is entitled to be reimbursed by the holder of the beneficial title, and for that purpose he should in equity be entitled to a lien against that interest of decedent.

When Perry Realty Company was dissolved in 1936 for non-payment of the capital stock tax, the beneficial title to the corporation assets was vested in the stockholders with legal title in the directors as trustees. Section 9, Chapter 16880, Acts of 1935, F.S.A. § 610.18, the law in effect at that time. Neither the said act, nor the present governing act, F.S. § 608.30(6), F.S.A., places any limit on the time that the directors as trustees may hold title to the property. In this situation, it was the duty of the trustees to pay taxes on the real estate and in case of their failure to do so, that responsibility would fall on the stockholders, the holders of the beneficial title to the realty who were the administrator and the undisclosed holder of the one share of stock.

It is pertinent to point out that whoever held the stock certificate also held the beneficial title to the realty because the latter was attached to the former. It follows that the beneficial interest as such was not vested in the heirs-at-law of decedent as would be real estate owned by decedent at death; the administrator having nothing more than power to sell under court order when necessary to administer the estate. In Gasque v. Ball, 65 Fla. 383, 62 So. 215, the court held that at expiration of the corporation, the legal title passed under the law to the stockholders. Note the change in the law made by Chapter 16880, Acts of 1935. Had the legal and equitable title passed to the stockholders, the titles would have merged and the real property would have descended to the heirs-at-law pro tanto but it...