Gus' Bath, Inc. v. Lightbown

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 *Page 1207 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 *Page 1208 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 *Page 1209 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 *Page 1210 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.