Opinion
Opinion filed March 23, 1931. Petition for rehearing denied May 29, 1931.
Appeal from Circuit Court, Palm Beach County; C. E. Chillingworth, Judge.
Affirmed.
Baynes Rowe, for Appellant;
Bussey, Johnston Lillienthal, for Appellees.
This appeal is from a final decree foreclosing a third mortgage on certain property in Palm Beach in the principal sum of $35,000.00 securing a note of the same amount both dated October 24, 1924, payable five years from date with interest at the rate of ten per cent payable semiannually. The mortgage provided for acceleration of the payments of the principal and all interest at option of mortgagee in the event the mortgagor defaulted for a period of thirty days in the payment of any semiannual interest payment. The bill of foreclosure was filed February 21, 1928, and the only breach relied upon as constituting ground of foreclosure was the default in making the semiannual payment falling due October 24, 1927.
The defendant claims a waiver of mortgagee's right to exercise the option contained in the mortgage to accelerate the payments in that after several previous defaults to pay interest on the date stipulated that mortgagee accepted from mortgagor such interest payments without protest, and that complainant by accepting several past due interest payments in instalments, including interest on past due interest, and by her previous conduct toward defendant in delaying to exercise her option, that such delay operated thus to her advantage in that defendant by reason thereof made several costly repairs and additions to its public baths located on said property after such interest payments were in default, all with full knowledge of complainants; that ultimately such delay resulted to the detriment of defendant, and complainant should thereby be estopped and adjudged to have waived her right to exercise her option to foreclose because of the delay in payment of the semiannual interest due October 24, 1927.
The main defense seems to be based upon the contention that a certain check in the sum of $500.00 which defendant claims to have drawn on February 20, 1928, and mailed to complainant in part payment of the interest due October 24, 1927, was received and accepted. This check of $500.00 if received and accepted by complainant would have necessarily constituted part payment on the interest instalment of seventeen hundred fifty dollars maturing October 24, 1927, which is the instalment in controversy in this suit, and under such circumstances the general rule is that it would have had the effect of waiver of the right to accelerate by reason of any default in payment of the semiannual interest due October 24, 1927. 2 Jones on Mortgages (8th Ed.) Section 1518. It developed that this check was "certified" by the bank upon which it was drawn, but apparently at the instance of some unidentified party. The "slip," showing such certification by the bank, was among defendant's cancelled checks, and that amount was charged to the account of defendant. It is admitted however, that no such check was ever cashed or returned to the bank as paid. The complainant testified, as did her husband, that they never received said check nor caused this or any similar check to be certified at said bank or anywhere else nor ever did any business at the bank upon which the check was drawn.
It is not disputed that a check of $500.00 dated February 20, 1928, was certified at the Citizens Bank of West Palm Beach on February 24, 1928, that complainant had no account at that bank, that the check was not cashed, nor has it been located since the alleged certification at the bank. Both the defendant and the bank gave testimony that no such cancelled check was in their custody.
If it could be determined from the testimony as to who caused the check to be certified it might solve the other controversies. It cannot be assumed that because defendant on February 16, 1928, wrote Mrs. Lightbown that it expected to mail certain checks mentioned in said letter including the one in dispute and that all of those listed were returned by complainant's solicitors by letter of February 27, 1928, save and except the check dated February 20, 1928, that the complainant received and accepted it. In this connection it may be stated that it is not one of the functions of the court to solve mysteries. The problem before the able chancellor was a most difficult one and any doubt as to the sufficiency of the evidence should be resolved in favor of the chancellor's decree.
It does appear from the testimony that several defaults in interest payments had previously run along over a period of months upon which interest on interest had been tendered and accepted. 41 C. J. 861, Sec. 1055.
"It is a general rule that the fact that a mortgage is not foreclosed on the first default in payment does not prevent a foreclosure for a subsequent default, since such indulgence cannot affect a right not yet accrued." Kreiss Potassium Phosphate Co. v. Knight, 98 Fla. 1004, 124 So. 751; and cases there cited.
It seems that in this case the only benefit which could have accrued to the complainant by failure to exercise her option to foreclose before she did, was the placing of the improvements and additions on the property by defendants during the period of default. It does not appear that the improvements were made at the request of complainant, but no doubt they were made with her knowledge.
Another circumstance in the case was that at the time defendant claims the check dated February 20, 1928, and certified February 24, 1928, was received in part payment of the $1750.00 semiannual interest due October 24, 1927, complainant had already accepted a check dated February 14, 1928, for the sum of $500.00 plus $33.33 interest thereon from April 24, 1927, to date of payment on February 14, 1927, the latter payment having been received and accepted, after the October instalment of interest had been delinquent for several months and before bill was filed in this case. The fact that complainant insists she accepted this latter check only after legal advice that its acceptance was "with the understanding" that she did not waive her right to declare the mortgage due and payable, does not ipso facto fix the legal status of such acceptance which would more properly be determined by the intent as well as the act of acceptance, and in order to be binding upon defendants such "understanding" would have to be with defendants and not between complainant and her attorneys or some other person.
Upon the question as to the effect of a delay in declaring a mortgage due under an acceleration clause, in a number of jurisdictions, the courts have in effect rejected the so-called "reasonable notice" or "reasonable time" rules, and have adopted an even broader one, holding that mere delay does not constitute a waiver, and that the option exists so long as the default continues, provided only, that in the meantime the mortgagee shall not have gained any advantage or the mortgagor have suffered any detriment or loss. See 5. A.L.R. 437; 19 R.C.L. 497, Sec. 292; 41 C.J. 860, Sec. 1053; 53 A.L.R. 525. However, this Court has said that under an acceleration clause similar to the one in the instant case,
"The mortgagee has a reasonable time after default in which to elect to declare the whole of the principal sum due, and if he does not so elect within a reasonable time, he will be deemed to have waived his right to exercise his option." Kreiss Potassium Phosphate Co. v. Knight, supra.
It appears from the testimony that considerable money was spent in necessary repairs, and in constructing at least one addition, some of which were made after the semiannual interest due October 24, 1927, was delinquent, which condition was duly presented by the testimony for the consideration of the chancellor. Thus complainant must have benefited by the delay to some degree if not to the extent of working a waiver.
Although the testimony was taken before a special master who made findings of facts, there is a well recognized rule that the findings of a chancellor on the facts will not be disturbed by an appellate court unless such findings clearly appear to be erroneous. Sirkin v. Schupler, 90 Fla. 68, 105 So. 151; Kirkland v. Hutto, 85 Fla. 82, 95 So. 429. Smith v. Hollingsworth, 85 Fla. 431, 96 So. 394; Smith v. Dowling, 81 Fla. 867, 80 So. 315; Commercial Bank of Ocala v. First Nat. Bank of Gainesville, 80 Fla. 685, 87 So. 315; Hill v. Beacham, 79 Fla. 430, 85 So. 147. It is for the above reason alone that the writer feels the decree should stand.
Finding no reversible error the decree of the Circuit court is affirmed.
The record in this cause having been considered by the Court, and the foregoing opinion prepared under Chapter 14553, Acts of 1929, adopted by the Court as its opinion, it is considered, ordered, and decreed by the Court that the decree of the court below should be, and the same is hereby affirmed.
BUFORD, C.J., AND WHITFIELD, ELLIS, TERRELL, BROWN, AND DAVIS, J.J., concur.
ON REHEARING. Opinion on Rehearing, Filed May 29, 1931.
1. A pleading setting up tender of payment in money as a defense to a suit, to be good, must show a production of the money to be paid and offer of it to the person to whom it should go, and that the debtor has ever since been ready to pay, and must be accompanied by a payment of the money into the court. A mere offer to pay is not a tender of money.
2. The institution of a suit to foreclose is in effect exercise of an option of the mortgagee to declare the whole of the principal sum and interest secured by the mortgage due and payable.
3. An option to declare the whole of a mortgage debt "forthwith" or immediately due signifies immediately upon or after the holder's election, and if an election is within a reasonable time there is no implied waiver by conduct.
Appeal from Circuit Court, Palm Beach County; C. E. Chillingworth, Judge.
Petition for rehearing denied.
E. M. Baynes, for Petitioner;
Bussey, Johnston Lillienthal, for Appellees.
It is contended on the petition for rehearing that before suit was filed, the interest payments past due were "tendered" to the mortgagee by mortgagor and were rejected and returned by her to defendant after suit was filed on February 21, 1928. The default in interest relied upon accelerating this suit was that which became due and payable October 24, 1927, and not the semiannual interest which fell due February 24, 1927. The "tender" made as to the interest due October 24, 1927 was in the form of a letter dated February 16, 1928, the pertinent portions of which read as follows:
"Palm Beach, Florida 2-16-28
"Mrs. Ella M. Lightbown Palm Beach, Florida.
"Dear Mrs. Lightbown:
"We are enclosing check for $500 to apply on account of the interest maturing on your mortgage on Oct. 24, 1927 and we expect to be able to mail you the following checks as indicated to take up the balance of the account:
On Feb. 20 $500.00 Feb. 25 $500.00 Feb. 28 $250.00 Feb. 28 interest on past due items to date 46.54
"We are contemplating refinancing our obligations and believe we could arrange to take up your mortgage in full before it matures if a sufficiently attractive proposition is made us. Kindly let us know just what you are willing to do in case we are able to make such an arrangement. * * *
"Very truly yours, Gus' Baths, Inc. By Gus Jordahn President."
No reply appears to have been received by defendant to this letter as to whether or not its offer was acceptable.
Was this a "tender" such an one as should be recognized as binding under the circumstances of this case? As bearing on this, complainant testified that the first $500.00 check, mentioned in the letter as having been enclosed was never received. The bank teller testified that a check was "certified" by him for "some one" but it was never thereafter cashed by the bank. A debit slip among the cancelled checks of defendant shows that $500.00 was "charged against the account" of defendant at the bank.
If this first check for a part of the October 24, 1927, interest was actually accepted by complainant, it would under the general rule in such cases effect a waiver to accelerate the payments. The effect of the chancellor's decree is that it was not received or accepted.
"In the case cited, and apparently relied upon, in petition for rehearing (Kreiss Potassium Phosphate Co. v. Knight, 98 Fla. 1004, 124 So. 751) it was held that
"A pleading setting up tender of payment in money as a defense to a suit, to be good, must show a production of the money to be paid and offer of it to the person to whom it should go, and that the debtor has ever since been ready to pay, and must be accompanied by a payment of the money into the court. A mere offer to pay is not a tender of money."
The Court also held that
"A mere agreement for delay for no definite time and without consideration is not enforceable."
See cases there cited.
The mortgage in the instant suit provides that if any interest payment is not paid within 30 days next after it becomes due that said mortgage shall become "due and payable forthwith or thereafter at the option of the" holder, etc. It was held in the above-cited case that:
"It is quite generally held, as it is in Florida, that the institution of a suit for foreclosure is the exercise of the option of the mortgagee to declare the whole of the principal sum and interest secured by the mortgage due and payable. Prince v. Mahin, 73 Fla. 525, 74 So. 696; Graham v. Fitts, 53 Fla. 1046, 43 So. 512, 13 Ann. Cas. 149; 41 C. J. 851; Corlett v. Wood, 81 Fla. 510, 88 So. 268."
It appears that the only evidence of any exercise of the option which came to the knowledge of defendant was the filing of the suit on February 21, 1928.
In the above case the opinion states that the complainant never at either of the interest paying dates aforesaid indicated that he intended or expected to declare all notes due, but on the other hand specifically stated to the defendants that it would be agreeable to carry said interest on basis of defendants' paying to complainant 8% on said past due interest.
No allegation of similar purport appears in the instant case, nor does there appear any evidence that could be interpreted as a waiver, unless by mere silence or conduct.
The allegations in the answer are insufficient to show a legal tender of the interest due October 1927 prior to complainant's exercising the option to foreclose by filing the bill. It must be admitted that there was no express waiver, and if not, the only question remaining is whether or not the answer and testimony show a waiver by conduct such as will estop the complainant from exercising her option under the acceleration clause of the mortgage.
The option to declare the mortgage debt "immediately due" means the same as "forthwith," which signifies "immediately upon or after the holder's election," and the holder is not bound to elect immediately after default, but may within a reasonable time. The testimony shows that the October 24th interest had been delinquent about sixty days beyond the 30 days of grace when the mortgage was turned over to solicitors to foreclose, which could not be considered an unreasonable time even though complainant had accepted an instalment of interest due April 24, 1927, after interest of October 24, 1927 was past due, as such indulgence cannot affect a right not yet accrued. Kreiss Potassium Phosphate Co. v. Knight, supra; 5 A. L.R. 437.
In the instant case the evidence shows that there are two prior mortgages to the one here being foreclosed; a first mortgage for $110,000.00 and a second for $25,000.00. In the last-cited case above, special mention is made of the fact that the value of the property there involved was alleged in the answer to be twelve times the value of the mortgage debt. Thus, the amount of prior mortgages may become an important element in foreclosures of which a court of equity may take cognizance.
As to the valuable improvements alleged to have been made, they appear to have been chiefly necessary repairs, except a certain lunch stand costing about one thousand dollars for whose construction a lessee of defendant furnished the costs, and therefore it does not become a determining element in this case.
Finding no sufficient cause for granting a rehearing the said petition is denied.
The petition for rehearing filed in this cause having been considered by the Court, and the foregoing opinion prepared under Chapter 14553, Acts of 1929, adopted by the Court as its opinion, it is considered and ordered by the Court that the said petition be, and the same is hereby denied.
BUFORD, C.J., AND WHITFIELD, ELLIS, TERRELL, BROWN, AND DAVIS, J.J., concur.