Court Opinion

ID: 3385371
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:39:09.874637+00
Date Added: 2024-06-11T12:49:09.352330
License: Public Domain

Pennington  Evans, a copartnership, purchased land from J. C. Sims for the price of $7,500.00. A mortgage was executed to Simms for $5,000.00, the balance of the purchase price. The mortgage was dated February 16, 1920. On May 15, 1920, Pennington  Evans, by C. R. Evans, executed a mortgage to Helen K. Dekle to secure the payment of $4,000.00. This mortgage embraces the lands purchased from Sims and was shown on its face to be a second mortgage. This second *Page 564 
mortgage was not recorded until March 7, 1927. When it was recorded an error was made in the description of the land as to a part of Section 1, Township 3 N., Range 10 West. The proper description and that contained in the mortgage was of the North Half of Section 1, Township 3 North of Range 10 West. The record thereof reads, all of West Half of Section 1, Township 3 North of Range 10 West. Of this we shall speak later.
In August of 1926 Evans commenced negotiations with the Federal Land Bank for a loan of $10,000.00. In his application for loan he reported that mortgages were held by J. C. Sims to secure the sum of $5,000.00 and by Henry Sims to secure $1,100.00. He did not report the Dekle mortgage. Negotiations went along until June 16, 1927, two months and nine days after the Dekle mortgage was recorded, when the loan was made from Federal Land Bank to Evans, Evans having in the meantime acquired the interest of his partner, Pennington, in the lands. The mortgage from Evans and wife to the Federal Land Bank was dated June 16, 1927, the same day it was recorded. The mortgage to J. C. Sims and the mortgage to Henry Sims were paid off, discharged and cancelled, the payment being made with the money received from the Federal Land Bank.
On the 4th day of August, 1930, Helen K. Dekle exhibited her bill of complaint in the Circuit Court of Jackson County seeking foreclosure of her mortgage for $4,00.00, making the Federal Land Bank of Columbia, a corporation, and Pennington 
Evans, a co-partnership, parties defendant. By the answer that the Federal Land Bank sought the benefit of subrogation under the Sims mortgage. By final decree the Court held the Federal Land Bank not entitled to the benefits of subrogation. The decree of the court in this regard should be affirmed on authority of the *Page 565 
opinion and judgment in the case of Boley v. Daniel, 72 Fla. 121,  72 So. 644.
The Dekle mortgage was on record on June 16, 1927, the date the mortgage to Federal Land Bank was executed and recorded and had been on record since the 7th day of the preceding March, a little more than three months. The mortgage to Federal Land Bank was in an amount greater than the aggregate of the two Sims mortgages.
I cannot agree that Federal Land Bank can be heard to disclaim notice of the existing mortgage in favor of Mrs. Dekle. To hold that under the circumstances of this case the Federal Land Bank is entitled to be subrogated to the rights of J. C. Sims and Henry Sims under the respective mortgages executed by Pennington  Evans to them would, in my opinion, necessarily overrule the law as enunciated in Boley v. Daniels,supra, which has been accepted as the law in this State since 1917.
It appears to me that to depart from the principles as enunciated as the law in Boley v. Daniels, supra, would be to open the door to unlimited frauds against holders of second and subsequent mortgages. It is true that the Dekle mortgage was held off of record several years, but it was on record more than three months prior to the execution of the Federal Land Bank mortgage and if the Federal Land Bank did not actually know of its existence at the time of the execution of its mortgage such lack of knowledge was the result of negligence on the part of the bank and its agents.
If Mrs. Dekle, holding a second mortgage, knew that the mortgagor was able to pay off the first mortgage and also knew that the mortgagor wished to borrow additional money for the conduct of its business and was negotiating to borrow money with which to pay off the first mortgages and then use its available money in the conduct of its business, *Page 566 
it was her right to record her mortgage so that it would be a first lien, in event that the first mortgages were cancelled. She is not shown to have represented to anyone that she did not have a valid claim against Pennington  Evans, or that she did not have a valid mortgage to secure that claim, and she is not shown to have been in anywise responsible for the representations that were made to the Federal Land Bank in this connection.
By recording her mortgage she secured to herself the rights of one holding the first lien when the prior mortgages were cancelled subsequent to the recording of her mortgage and I do not think that she should be deprived of that right because of the fact that a subsequent mortgagee failed to examine the records which established her right. Therefore, I cannot concur with the majority opinion insofar as it holds Federal Land Bank entitled to subrogation.
                   ON PETITION FOR RE-HEARING