Whitehall Realty Corp. v. Manufacturers Trust Co.

• Decision Date: 19 February 1958
• Citation: 100 So.2d 617
• Parties: WHITEHALL REALTY CORPORATION, a Florida corporation, and Arthur A. Kimmel, Appellants, v. MANUFACTURERS TRUST COMPANY, a New York banking corporation, Appellee.
• Court: Florida Supreme Court

Page 617

100 So.2d 617

WHITEHALL REALTY CORPORATION, a Florida corporation, and Arthur A. Kimmel, Appellants, v. MANUFACTURERS TRUST COMPANY, a New York banking corporation, Appellee.

Supreme Court of Florida.

Feb. 19, 1958.

William O. Yates, Miami, for appellants.

Feibelman & Friedman, Miami, for appellee.

O'CONNELL, Justice.

This is the second appearance of this cause in this Court. On the first appeal a summary judgment entered in favor of the plaintiff, Manufacturers Trust Company, who again is appellee, was reversed for further proceedings for reasons set forth in the opinion in Whitehall Realty Corp. v. Manufacturers Trust Co., Fla.1955, 81 So.2d 475. The defendants, appellants here, now appeal from a judgment for plaintiff entered after entry of a directed verdict for plaintiff at the conclusion of the trial had after remand of this cause by this Court on the first appeal.

The complaint, which was filed February 9, 1954, alleged that the defendant Whitehall Realty Corporation, on March 25, 1952, executed its note for $5,927 payable to Spring Trading Corp. 4 1/2 months after date at the Mercantile National Bank of Miami Beach, Florida, which note was endorsed, prior to delivery, by the defendant Kimmel; that Spring Trading Corp. endorsed and transferred the note to plaintiff; that a similar note in sum of $5,927, dated April 29, 1952, payable 4 months after date was in like manner executed, endorsed and transferred; that no sums had been paid on said notes.

Defendants in their answer pleaded (1) no consideration, (2) payment and (3) lack of corporate authority on the part of the corporate officer who executed the notes.

In the first appeal the mandate of this Court was filed on July 13, 1955. Thereafter, the trial court set the cause for trial for December 12, 1955, and on November 16, 1955 entered an order wherein the issue to be tried was limited to a determination of the issue of consideration as discussed by this Court in its opinion written on the first appeal.

On December 12, 1955, when the cause came on for trial, the defendants moved the court for leave to amend their answer so as to assert, as an additional affirmative defense, that the plaintiff was not a holder in due course and that it did have actual knowledge that no consideration had passed between the defendants, maker and endorser of the notes, and Spring Trading Corp., the payee therein, and that because of such notice Manufacturers Trust took the notes subject to the infirmities, irregularities, and defense of the defendants.

The court denied the motion to amend the answer but said:

'I may allow you to conform with the proofs, if you wish. You came into the courtroom to try the issues already determined. The case has been pending for some time.'

After both sides had presented their evidence and rested their cases, the plaintiff moved the court for entry of a directed verdict which was granted, the trial judge stating that had no motion been made he would have directed a verdict for plaintiff on his own initiative.

In directing a verdict for the plaintiff the trial judge made the following remarks which explain his conclusions of law and also explain to some extent the facts of the case:

'There is a distinction between the initial want of consideration, and a subsequent failure of consideration. At the time of the execution of the note sued on, there was clearly no want of consideration.

'The payee promised and agreed to deliver towels and linen supplies to the maker's hotel in May when the hotel opened; and the maker promised and agreed to pay for the towels and linens in August; and its promise and agreement to make such payment was evidenced by the promissory notes, including the notes sued on in this action.

'If the notes had remained in the hands of the original payee, then the maker, in the event of a breach of the agreement to deliver the towels and linens, could then have pleaded as a defense to an action on the notes, failure of consideration as distinguished from want of initial consideration. But, before maturity of the notes and before any failure of consideration, the notes were endorsed and delivered to the plaintiff in this case for value.

'There was no notice of infirmity to the endorsee, the plaintiff. In fact, at that time there was no infirmity, because there had been no initial want of consideration, and there had been at the time of the endorsement no failure of consideration.

'So, the plaintiff became and is a holder in due course for value; and is, in my opinion, clearly entitled to recover on the notes sued on in this action; and therefore the Court will instruct the jury to return such a verdict, because there is no factual issue or dispute for the jury's determination.'

Defendants' principal contention is that the plaintiff knew, at the time it discounted the notes for Spring Trading Corp., that the only consideration for the notes was an executory contract. They argue that under the decision of this Court in Sumter County State Bank v. Hays, 1914, 68 Fla. 473, 67 So. 109, an indorsee who takes a negotiable note, with knowledge that an executory contract is the sole consideration for the note, is not a holder in due course, without notice of...