Court Opinion

ID: 3394396
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:59:15.958365+00
Date Added: 2024-06-11T13:59:22.343022
License: Public Domain

In foreclosure proceedings Hirsch-Fauth Furniture Company, a Florida corporation, in its original and amended bills of complaint sought the foreclosure, as a first lien, of a mortgage encumbering a certain lot in Lincoln Subdivision of Dade County.
Sol Meyer, Ferd S. Meyer and J. J. Kiser, individually and as Trustees, Meyer-Kiser Corporation of Florida, Puritan Investment Corporation, and Albatross Apartments Corporation, in their answer and amended answer to the bill of complaint, denied that complainant had any claim to the property superior to the rights of Ferd S. Meyer and J. J. Kiser, as Trustees, and of Alabtross Apartments Corporation, and in addition thereto set up the allegation that under date of September 25, 1925, Lincoln Securities Company executed in favor of Sol Meyer and J. J. Kiser, as Trustees, a certain mortgage or deed of trust to secure a bond issue of $60,000.00, which said bonds were sold by the named Trustees and the proceeds derived from said sale used to construct a building upon the lands in controversy. It was further alleged that on the same day said Lincoln Securities Company executed and delivered to Meyer-Kiser Corporation of Florida, a second mortgage or deed of trust to secure the payment of a series of notes aggregating $30,000.00, which fund was likewise used in the erection and completion of said building; that such second mortgage was in the summer of 1927 duly assigned to J. J. Kiser and Ferd S. Meyer, as Trustees.
Under date of September 30, 1927, Sol Meyer and J. J. Kiser, as Trustees under the first or $60,000.00 deed of trust, filed a bill in the Circuit Court to foreclose same. *Page 167 
On March 1, 1928, Ferd S. Meyer and J. J. Kiser, as Trustees, filed their bill to foreclose the second or $30,000.00 mortgage. The latter suit was dismissed without prejudice and a compromise agreement entered into under the terms of which Lincoln Securities Company for a consideration of $5,000 conveyed the premises to Puritan Investment Company, subject to the first mortgage.
Puritan Investment Company conveyed the property to Albatross Apartments Corporation subject to the two mortgages and deeds of trust, aggregating $90,000.00, and subject further to certain liens for labor and material asserted by certain named contractors and subject further to taxes and assessments for municipal improvements.
On the same day the title to the real estate became vested in Albatross Apartments Corporation, that corporation executed and delivered three certain purchase money mortgages and deeds of trust as follows: (1) $75,000.00 mortgage in favor of J. J. Kiser and Ferd S. Meyer; $35,000.00 mortgage in favor of J. J. Kiser and Ferd S. Meyer; (3) $35,000.00 mortgage in favor of J. J. Kiser and Ferd S. Meyer. After Albatross Apartments Corporation delivered to J. J. Kiser and Ferd S. Meyer, as Trustees, the $75,000.00 mortgage, a satisfaction of the $60,000.00 mortgage and deed of trust was placed on record. Afterwards the $30,000.00 mortgage, the lien for labor and material, together with all taxes due and payable at the time the property was conveyed to Albatross Apartments Corporation were duly released of record, and the three mortgages executed by said Albatross Apartments Corporation in favor of said Ferd S. Meyer and J. J. Kiser, as Trustees, are alleged to have been substituted in lieu thereof.
The general master to whom the case was referred, found that Albatross Apartments Corporation, as record title *Page 168 
holder, had implied actual knowledge of complainant's unrecorded third mortgage which was sought to be foreclosed in this suit at the time it took title, and that it was not an innocent purchaser for value, without notice of complainant's rights in the premises. The master further held that said Albatross Apartments Corporation was simply a corporate dummy, created by the said Trustees for the sole and only purpose of taking the naked title to the premises involved in this litigation and in turn encumbering the fee to the extent of $145,000.00 by means of the three mortgages hereinbefore mentioned.
Accordingly the master found, as a matter of law, that the mortgages named in the three new mortgages executed by Albatross Apartments Corporation to J. J. Kiser and Ferd S. Meyer could not be subrogated to the rights once held originally by Sol Meyer and J. J. Kiser, as Trustees, under the $60,000.00 deed of trust, nor could they be legally subrogated to the rights originally held by Meyer-Kiser Corporation of Florida, the holder of the $30,000.00 second mortgage. This conclusion was reached by the master, as he stated in his report, largely because the facts of the transaction revealed that the substituted indebtedness was largely in excess of that of the original $60,000.00 and $30,000.00 mortgages; the mortgagor was a different individual entity; and a material discrepancy in those named as mortgagees appeared in the three new mortgages, as compared with the two original mortgages.
The master's finding that the complainant below, Hirsch-Fauth Furniture Company, was the holder of the valid subsisting first lien against the premises in controversy was reversed by the Chancellor who entered a contrary final decree. It is that final decree which is now before the Court on appeal by the Hirsch-Fauth Furniture Company. *Page 169 
A majority of the Court are of the opinion that the Chancellor was in error in setting aside the findings of law and fact reported by the master in chancery and that the report of the master in chancery as rendered by him should have been confirmed by the Chancellor and the exceptions thereto overruled.
Accordingly the final decree is reversed with directions to enter a final decree in accordance with the findings of the master.
DAVIS, C. J., and ELLIS, BROWN and BUFORD, J. J., concur.
WHITFIELD, and TERRELL, J. J., dissent.
                          ON REHEARING