McMullen, Et Ux. v. Inland Realty Corp.

Davis, J. J. I. Kellums and wife executed a mortgage to one Charles W. Rinehart. Rinehart assigned it to Inland Realty Corporation, a Maryland corporation. The assignee, without undertaking to qualify as a foreign corporation authorized to do business in Florida, brought a suit to foreclose, based upon its being the assignee of the mortgage. The Kellums had previously conveyed the legal title to the property to F. C. McMullen, who thereupon assumed and agreed to pay the mortgage. So the foreclosure suit was accordingly brought against the Kellums, as the original mortgagors, and against McMullen as holder of the legal title under the original mortgagor’s deed. The only defense to the foreclosure was interposed by McMullen, who filed an answer. In this answer he asserted that Inland Realty Corporation was not a bona fide assignee for value from Rinehart — that Rinehart had made a pretended assignment of his mortgage and that this had been done by him merely for the purpose of defeating a valid setoff which McMullen would have been entitled to plead against Rinehart, as mortgagee, had he sued in his' own name. The answer also questioned the authority of the Inland Realty Corporation as an unqualified foreign corporation, to maintain the suit. The chancellor struck the material paragraphs of the answer relied on to defeat the foreclosure, and likewise struck the paragraphs undertaking to assert a cross claim. The appeal is from the final decree of foreclosure thereafter entered. The answer alleged that at the time the suit was instituted F. G. McMullen was entitled to a setoff against Charles W. Rinehart, the original mortgagee, in the amount of *478 $4,000.00; that after McMullen had acquired title to the property from the original mortgagor, of which fact Rinehart was fully advised, that Rinehart thereafter dealt with McMullen as the primary debtor and agreed by a written instrument to extend payment of the mortgage debt for a period of one year; that the assignment of the mortgage to complainant, Inland Realty Corporation, by Charles W. Rinehart, the original mortgagee, was after maturity and without consideration; that the assignment was a fraudulent one and was not intended to, and did not actually transfer, the title to or ownership of the note and mortgage and was made solely for the purpose of avoiding McMullen’s counterclaim. The setoff itself consisted of a claim that Rinehart became indebted to McMullen for moneys received by Rinehart from him to apply on a certain indebtedness due by McMullen to Rinehart in the sum of $10;000.00, which the said Rinehart did not apply on said indebtedness, but, on the contrary, applied to his own use without the knowledge, consent, approval or ratification of McMullen whereby said Charles R. Rinehart had become indebted to McMullen for money had and received by him in the sum of $4,000.00. At the time this suit was determined in the court below, Section 4906, C. G. L., 3120 R. G. S., provided that an answer in chancery should state in short and simple form any counterclaim aidsing out of the transaction which was the subject matter of the suit. The statute also provided that the defendant might, without cross bill, set out any setoff or counterclaim against the plaintiff which would be the subject of an independent suit in equity against him and that such setoff or counterclaim so set up should have the same effect as a cross suit so as to enable the court to *479 pronounce a final judgment in the same suit, both on the original and cross claims. The alleged setoff attempted to be asserted in this case consisted only of a legal demand for money had and received upon which the opposite party had the right to demand and have a trial by jury. Such demand was not the subject of an independent suit in equity against Rinehart, the original mortgagee, or against his assignee, Inland Realty Corporation. Such alleged setoff had no connection whatsoever, so far as it appears from the answer, with any transaction connected with the mortgage attempted to be foreclosed. On the contrary, it appears that the demand attempted to be set off was entirely a separate transaction between Rinehart and McMullen, entirely legal in its nature and in no wise germane to the claim of the complainant arising under the mortgage which was foreclosed. The court was therefore without error in eliminating the attempted setoff from consideration, assuming that for the purposes of the case it may be held that McMullen was entitled to any right of setoff against Inland Realty Corporation that he would have been entitled to assert against the assignor. Lovett v. Lovett, 93 Fla. 611, 112 Sou. Rep. 768; Turner v. Utley, 93 Fla. 910, 112 Sou. Rep. 837; Norris v. Eikenbury, 103 Fla. 104, 137 Sou. Rep. 128; Day v. Weadock, decided at the present term. The answer further alleged that the complainant corporation had never qualified under the provisions of Sections 6026, 6028 and 6029, C. G. L., 4095, 4097 and 4098, R. G. S. Section 6029, C. G. L., supra, provides that no action shall be maintained, or recovery had in any of the courts of this State by any foreign corporation, or its successors or assigns, so long as such foreign corporation fails to comply with the provisions of the Florida statute re *480 quiring a foreign corporation to file in the office of the Secretary of State a duly authenticated copy of its charter, or articles of incorporation, before it shall begin to transact business, or acquire, hold, or dispose of property in this State. In the case at bar, it appears that Inland Realty Corporation was a foreign corporation organized under the laws of Maryland; that it had never complied with, or attempted to comply with, the foreign corporation laws of this State. The allegations of the answer in this respect were sufficient to show this fact and were not denied by the complainant. The effect of our statutes relating to qualification of foreign corporations, when applicable, is to suspend the right of foreign corporations to maintain suits in the courts of Florida so long as such foreign corporations shall fail and refuse to comply with the laws of this State which require them to file in the office of Secretary of State an authenticated copy of their charters, together with payment of the fees incident thereto. And the fact that the statute does not defeat the right to institute a suit without first showing compliance with the law (Farrell v. Forest Investment Co., 73 Fla. 191, 74 Sou. Rep. 216) has never been held to defeat an objection on this ground when affirmatively raised in an appropriate pleading by the defendant. A majority of the Court are of the opinion that Section 4098, R. G. S., 6029 C. G. L., applies only to corporations which have violated Section 4095, R. G. S., 6026 C. G. L., and to suits or actions based upon contracts or obligations resulting from its transactions in disregard of the statutes relating to foreign corporations transacting business, or acquiring, holding or disposing of property in this State. A majority of the Court are also of the opinion that the allegations of the defendant’s answer attempting to raise the *481 objection that complainant foreign corporation was' not entitled to maintain the suit because it had not qualified under Sections 6026, 6028 and 6029, C. G. L., supra, are not sufficient to show that the Inland Realty Corporation, complainant, had violated any provision of Section 4095, R. G. S., 6026, C. G. L., in bringing the suit it did, as assignee of the Rinehart mortgage. Therefore, the chancellor committed no error in striking those portions of the defendant’s answer which undertook to raise an objection under the foreign corporation statute, to the maintenance of the suit by Inland Realty Corporation on the ground that it had not qualified in this State under said foreign corporation laws. Whether or not the acquisition by a foreign corporation by assignment of a real estate mortgage recorded in this State, amounts to a violation of the provision of the statute which provides that “no foreign corporation shall * * * acquire, hold or dispose of property in this State until it shall file in the office of the Secretary of State a duly authenticated copy of its' charter or articles of incorporation, and shall have received from him a permit to transact business in this State,” is a question not required to be decided on the present record, and is therefore reserved for future consideration should it hereafter be made necessary to determine it. The- decree appealed from should be affirmed and it is so ordered. Affirmed. Buford, C. J., and Whitfield and Terrell, J. J., concur. Brown, J., concurs specially. Ellis, J., dissents.