Court Opinion

ID: 3386802
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:42:24.024377+00
Date Added: 2024-06-11T13:36:58.978683
License: Public Domain

This case is in this Court the third time. The first appeal, Persky v. Gables Racing Assoc., Inc., 156 So. 392, the second appeal, Persky v. Gables Racing Assoc., 180 So. 24, and now on rehearing. *Page 638 
It was instituted as a suit to foreclose a mortgage. After taking considerable testimony that theory was practically abandoned and the bill was remanded to foreclose the same alleged debt as an equitable lien. This theory of the case was approved, if proven, on the second appeal. We are now satisfied also from the evidence and pleadings the mortgage was not the defendant's mortgage.
We are now concerned only with the sufficiency of the evidence to establish an equitable lien.
It is difficult if not unwise to attempt a definition of an equitable lien. Difficult because of the variety of circumstances out of which it may arise. Unwise because we must not draw a limit on the scope of equity jurisdiction. This Court, however, has recognized equitable liens: Pratt v. Weeks,1 F. Supp. 953; International Realty Associates v. McAdoo,87 Fla. 1, 99 So. 177; Craven v. Hartley, 102 Fla. 282,135 So. 899; Folsom v. Farmer's Bank of Vero Beach, 102 Fla. 899,136 So. 524; Jones v. Carpenter, 90 Fla. 407, 106 So. 127; 43 A.L.R. 1409. In Jones v. Carpenter supra this Court in an opinion by Mr. Justice TERRELL, after reviewing a number of cases said:
"From the foregoing it is seen that equitable liens arise from two sources, viz: (1) A written contract which shows an intention to charge some particular property with a debt or obligation; (2) is declared by a court of equity out of general consideration of right and justice as applied to the relations of the parties and the circumstances of their dealings in the particular case."
What then is there in the plaintiff's case here to entitle him in right and justice to equitable relief as against the property here involved? *Page 639 
The plaintiff having come to a court of equity for relief must himself and those in privity with him be free of any inequitable conduct relative to the controversy.
Simon Persky became interested in this transaction about March 1931, when one Kantor offered in consideration of $15,000 to give Persky 51%, of the stock in a dog track which was to be purchased outright and in full for the $15,000. Persky was to place his son on the track to take in the cash and when his money was repaid he would retain his 51% of the stock. In the meantime, Persky was to take a third mortgage as additional security on the Mayflower Hotel. To accomplish this deal Persky consulted his attorneys. See Persky's testimony, page 150. This deal never materialized.
Persky returned from Miami, Florida, to New Haven, Conn., and Kantor came to see him in June of 1931 with another proposition to-wit:
That Persky was to loan $15,000 to purchase another race track. In return Persky was to have his son, the plaintiff, remain in the Mayflower Hotel which belonged to one of Kantor's companies until the debt was paid. Persky was to get a third mortgage by Nator Holding Company on the Mayflower Hotel for $19,000 and a second mortgage on the race track as additional security for $15,000. Transcript of record, Persky, page 152. Without executing any papers Persky advanced $7,000 to Kantor, took certain papers from Kantor and transmitted them to his, Persky's, attorneys by letter. See plaintiff's exhibit No. 56, dated June 30, 1931. Persky relied thereafter entirely on his attorneys, to protect his interest.
It then appears that Persky's attorneys received *Page 640 
the letter of transmittal and handled the business for Persky.
Persky's attorneys, in collaboration with Kantor, prepared the note and mortgage upon which the original bill herein was based. The corporate records of Gables Racing Assoc., Inc., were not had to ascertain whether the purported officers were authorized to involve the corporation with debt. No abstract was procured to see if the mortgagor had a good title. It is clear from the testimony that Persky's attorneys "trusted Kantor too much." He relied on Kantor for all data relative to the title of the property; the officers of the company, its charter and powers. He said he thought no harm could come inasmuch as the money had not been disbursed. He evidently overlooked his client's letter, exhibit No. 56, informing him that $7,000 had already been advanced to Kantor. Transcript, p. 219. Neglect, if any, of the plaintiff's attorneys is chargeable to plaintiff.
We see therefore that Persky and his attorneys entrusted Kantor to take the money and use same or a part of same to consummate the proposed deal. In fact the company and its property sought to be charged only got the benefit of $5,100 which amount was returned by the company long before its officers or agents learned of the claim of Persky.
Considering this case as we now are solely on the theory of an equitable lien the failure to file for record the alleged mortgage becomes material.
The chancellor correctly found that no record was necessary as between the parties to a mortgage foreclosure. Here, however, the mortgage theory is out of the case and another rule applies. Jones v. Carpenter, supra. *Page 641 
"An equitable lien is not an estate or property in the thing itself nor a right to recover the thing; that is, a right which may be the basis of a possessory action. It is simply a right of a special nature over the thing, which constitutes a charge or incumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action."
The failure to record the mortgage while other interest intervened is material just as any failure to assert or give notice of a claim while the property sought to be charged was being enhanced is material. While the mortgage is void, it is not void on its face and plaintiff could have recorded it. His failure to place it on record deprived the defendants of notice. Without material conflict the facts are, the alleged mortgage was taken without inquiry at any time of the names of the officers of the mortgagor; without a search of title except to telephone an abstract company and then did not inquire what officers executed the first mortgage. No examination of the corporate records was made.
The second mortgage of $15,000.00, was taken with full knowledge that the mortgaged premises were being purchased for $20,000; that the vendor was taking a first lien of $15,000.00, with full knowledge that the personnel of the officers of the corporation were changing completely; that the officers of the corporation had no notice of the plaintiff's claim; with full knowledge that valuable improvements were being made and would necessarily have to be made in order to enhance the value of the property sufficiently to pay the first and second liens.
For Persky and his privies to remain quiet and withhold from record the alleged mortgage while all *Page 642 
this was transpiring we think in right and justice silences the plaintiff for all time. 4 Pomeroy 3424, Sec. 1443.
"The delay of a party holding an equitable right to property who has permitted another holding a legal right to extend large sums of money to improve the property and enhance the value, which probably would not have been done if the right had been properly asserted, usually is guilty of such laches as to preclude relief."
"Equity will not permit such party to stand by and permit the party who owns the legal title to improve the property until it becomes valuable and then assert it."
We recognize the Racing Company as a separate legal entity. Persky and his attorneys used Kantor as a conduit to transmit the money into the Racing Company and by the same avenue the Racing Company returned the money but unfortunately it did not reach the point of origin.
Persons dealing with corporations are required to take notice of the authority of those attempting to act for the corporation.
We are dealing here not with a debt of the corporation or a mortgage or statutory lien. It is a right granted by a court of equity, arising by reason of the conduct of the parties affected which would entitle one party as a matter of equity to proceed against the property. Jones v. Carpenter,supra:
"Equitable liens are necessarily based on the doctrine of estoppel and usually arise in cases of expenditures by one joint owner on real or other property or in cases where a party innocently and in good *Page 643 
faith makes improvements on the property of another."
Judging the conduct of the parties and their privies by equitable rules we find no neglect on the part of the Racing Company and no act which would mislead the plaintiff or those in privity with him.
The only attempt to charge an officer of the Racing Company with a wrongful act or notice of claim is to Kantor. This is fallacious as he was never an officer of the Company as shown by the evidence and the plaintiff in effect admits this by abandoning his mortgage theory. To uphold this decree will compel the defendant to pay that which it does not owe, never did benefit by, but to the extent of $5100, and as to that amount it repaid. The contract leaves Persky his action against Kantor and Nator Holding Company with security. 19 Am. Juris. 484:
"Where a prejudicial situation results from a wrongful act of a third person, the decision must be against the party whose conduct made possible the wrongful act, either by fraud or negligence."
The appellee earnestly insists that this Court in the last appeal settled the case presented here adversely to appellant. Such is not the case. All of the evidence and the final decree of the chancellor on the evidence was not before the Court on the second appeal.
Without discussing the evidence further, we have concluded from a consideration of the evidence that the decree is contrary to the legal effect of the evidence. Lightsey v. Washington Park Prop., 112 So. 555; Carr v. Leslie, 74 So. 207; Florida National Bank v. Sherouse, 86 So. 279; McGill v. Chappelle, 71 So. 836. *Page 644 
Our former opinion and judgment is hereby vacated and the decree is reversed, and the bill should be dismissed at the cost of the plaintiff.
WHITFIELD, TERRELL, and BUFORD, J. J., concur.
BROWN, C. J., dissents and adheres to original judgment of affirmance.
CHAPMAN, J., dissents.
                          ON REHEARING