Whitfield v. Webb

• Decision Date: 07 January 1931
• Citation: 131 So. 786,100 Fla. 1619
• Parties: WHITFIELD v. WEBB.
• Court: Florida Supreme Court

131 So. 786

100 Fla. 1619

WHITFIELD v. WEBB.

Florida Supreme Court, Division B.

January 7, 1931

Error to Circuit Court, Sarasota County; Paul C. Albritton, Judge.

Action by L. B. Whitfield against George T. Webb. Judgment for defendant, and plaintiff brings error.

Reversed and remanded.

COUNSEL King & Barringer, of Sarasota, for plaintiff in error.

Burket & Fish, of Sarasota, for defendant in error.

OPINION

STRUM J.

This is an action at law by the indorsee of four promissory notes representing a portion of the purchase price of realty against a grantee of the lands who is alleged to have assumed payment of said notes as a part of the consideration for the conveyance of the lands to the grantee-defendant.

A demurrer was sustained to plaintiff's amended declaration, followed by entry of final judgment for defendant, to which judgment plaintiff took writ of error.

The declaration alleges the following facts:

E. H Price Company, Inc., conveyed lands in Sarasota county to J S. Huselton. As a part of the purchase price, Huselton executed a series of notes payable to E. H. Price Company, Inc. Payment of said notes was secured by a mortgage on the lands conveyed. Four of the notes, being those here in suit, were thereafter indorsed by the payee to the plaintiff, L. B. Whitfield. Huselton conveyed the lands to the Cummer Company, who in turn conveyed to the defendant George T. Webb. The deed to the defendant Webb, made a part of the declaration, contains the following covenant:

'This conveyance is made subject to the following mortgages on the lands described, which mortgages and the notes secured thereby the party of the second part expressly assumes and agrees to pay. * * *

'(d) J. S. Huselton to E. H. Price, dated September 14th, 1925, securing twenty-one notes aggregating $131,828.12 bearing interest at the rate of 7% per annum payable semiannually.'

The notes, also made a part of the declaration, bear the following recitation immediately before the signature, and after the provisions usually found in a promissory note:

'This note is given for purchase money and is secured by a mortgage on real estate in Sarasota County, Florida, known as 1851 acres in Sections 19, 20, 21, Twp. 39 S. Range '18' E; and 11 1/2 acres in Twp. '24' S. Range 18 E.'

The deed above referred to, from the Cummer Company to Webb, containing the covenant above quoted upon which plaintiff relies, describes the lands thereby conveyed and covered by the mortgage securing the indebtedness assumed by the grantee Webb, as lying in township 39 S., range '19' east, and in township '39' south, range 18 east.

The deed also refers to the payee of the note as 'E. H. Price,' instead of 'E. H. Price Company, Inc.,' the payee of the note as shown by its face.

Plaintiff alleges that these discrepancies are errors of the scrivener; that the memorandum description upon the notes was intended to correspond with the description in the deed; that the reference to the payee of the notes appearing in the deed to the defendant Webb should have described the notes assumed as payable to E. H. Price Company, Inc.; and that as a matter of fact the notes described in the declaration are four of the series of notes payment of which was assumed by the defendant by the covenant aforesaid, which notes the defendant has not paid.

Defendant contends that there can be no recovery against him because his signature does not appear upon the note, basing his contention upon section 6778, C. G. L. 1927, a part of the Negotiable Instruments Law, which provides that no person is liable upon a negotiable instrument whose signature does not appear thereon (except as therein otherwise provided); further, that no contractual liability from defendant to plaintiff is shown because the notes sued upon do not appear to be the notes assumed; and that to admit parol testimony to identify them as such would be to vary, alter, or contradict a written instrument by parol.

Section 6778, C. G. L. 1927, is not applicable here. This action is not upon the notes as such, but is upon the liability of the grantee resulting from his acceptance of the deed containing the covenant to assume and pay the debt evidenced by the notes. By knowingly accepting a deed poll containing the covenant above quoted, the grantee makes the mortgage debt his own. The grantee is as effectually bound by such deed as if he had signed and sealed it and becomes personally liable to the mortgagee. Ackley v. Noggle, 97 Fla. 640, 121 So. 882; Brownson v. Hannah, 93 Fla. 223, 111 So. 731, 51 A. L. R. 976.

Though some conflict may be found in the authorities in other jurisdictions, it is now the established weight of authority, and the rule in this jurisdiction, that a grantee of lands who, as a part of the consideration for the conveyance to him, assumes and agrees to pay a note secured by an existing mortgage on the land, becomes personally liable for such mortgage debt, and may be sued directly in an action at law by the holder of the note. In Realty Holding Corp. v. Noggle, 97 Fla. 643, 121 So. 883, the rule just stated was applied, though the decision was without opinion. See, also, Slottow v. Hull Inv. Co. (Fla.) 129 So. 577; Starbird v. Cranston, 24 Colo. 20, 48 P. 652; Smith v. Davis, 67 Colo. 128, 186 P. 519; Morris v. Fidelity Mtg. Co., 187 Ala. 262, 65 So. 810; Tuttle v. Jockmus, 106 Conn. 683, 138 A. 804; Lowry v. Hensal, 281 Pa. 572, 127 A. 219, and the cases and exhaustive note in 21 A. L. R. 403-531, particularly page 480. See, also, 19 R. C. L. 374, 41 C.J. 743.

In this jurisdiction, the rule just stated does not rest upon the equitable doctrine of subrogation, as is the case in some jurisdictions. See Keller v. Ashford, 133 U.S. 610, 10 S.Ct. 494, 33 L.Ed. 667. The ground of the grantee's liability adopted by this court is that of contract, an application of the now prevailing American doctrine that the grantee's assumption of the mortgage debt is a contract made and intended by the formal parties thereto, not alone for their own benefit, but also for the direct benefit of a third party, the mortgagee, who may sue upon it at law as the real party in interest (see section 4201, C. G. L. 1927), even though the agreement to assume is contained in an instrument under seal. See American Surety Co. v. Smith (Fla.) 130 So. 440, 441; Starbird v. Cranston, 24 Colo. 20, 48 P. 652; Note, 47 A. L. R. 5; 41 C.J. 750; 19 R. C. L. 374; 3 Pomeroy's Equity Jurisprudence (4th Ed.) § 1207.

An indorsee of the mortgage note becomes the legal owner thereof and succeeds to the same rights which were available to the mortgagee. Acquisition of the legal title to the mortgage note by indorsement constitutes the indorsee the real party in interest, as contemplated by section 4201, C. G. L. supra, and entitles him to maintain an action against the grantee. The assumption of the note by the grantee extends, not only to the benefit of the holder of the note at the time the assumption was made, but to any subsequent holder. Fitzgerald v. Barker, 85 Mo. 14; Starbird v. Cranston, 24 Colo. 20, 48 P. 652; Jones on Mortgages (8th Ed.) § 948; Morris v. Fidelity Mortgage Co., 187 Ala. 262, 65 So. 810; Bassett v. Inman, 7 Colo. 270, 3 P. 383; 19 R. C. L. 352.

It follows, therefore, that, if the notes sued upon are embraced within the covenant hereinabove quoted, the plaintiff, as indorsee, may maintain his action at law directly against the defendant grantee, upon the latter's personal liability resulting from the covenant.

Of course, an agreement to assume a particular mortgage debt cannot be construed to embrace another and distinct debt. When, however, the agreement of assumption is in writing, and enough appears by the writing to designate a particular debt as the debt intended by the parties, a latent ambiguity in the written description, arising from extrinsic circumstances, may be explained by parol for the purpose of applying the covenant to the debt. This rule does not violate, but is complementary to, the general rule that parol evidence is not admissible to vary, alter, or contradict a written instrument.

A latent ambiguity in description arises when the writing upon its...