P. W. Wilkins and Co. v. Stoer

SEBRING, J.: On October 16, 1941, P. W. Wilkins and Company, a corporation, made its real estate mortgage to C. H. Stoer. At the same time Genevieve ■ Wilkins, who was the owner of certain tax certificates issued against the lands covered by the mortgage, assigned them to C. H. Stoer. On April 11, 1942 P. W. Wilkins and Company, the mortgagor, entered into a contract to sell a portion of said lands to J. C. and T. L. Bailey. Thereafter, on May 7, 1942, Stoer assigned the mortgage to Margaret K. Stoer, his mother. Subsequently, on October 14, 1942, P. W. Wilkins and Company conveyed all lands embraced in the mortgage, with the exception of those previously contracted to be sold to the Baileys, to C. H. Stoer, the original mortgagee. On March 24, 1944, the mortgage then being in default, Margaret K. Stoer filed suit to foreclose the same, naming as party defendants P. W. Wilkins and Company, P. W. Wilkins, Genevieve Wilkins, J. C. Bailey, T. L. Bailey and C. H. Stoer. As to the interest of the Baileys sought to be foreclosed, the bill of complaint alleged that on April 11, 1942 P. W. Wilkins and Company had entered into a certain agreement to sell a portion of the lands encumbered by the mortgage to the Baileys but that said contract was executed and delivered after the recordation of plaintiff’s mortgage and hence all interests or claims arising by virtue of such agreement were inferior and subordinate to the plaintiff’s mortgage lien. In due course all parties defendant filed answers of such a nature as virtually to admit the equities claimed in the bill of complaint. Incorporated in a joint answer filed by the Baileys was a counterclaim directed to the co-defendant, P. W. Wilkins and Company, seeking an adjudication of the counterclaimants’ rights under the contract of sale as against P. W. Wilkins and Company, the vendor. The prayer of the counterclaim is for an accounting between the defendants, *567 J. C. Bailey and T. L. Bailey and P. W. Wilkins and Company as to sums of money paid on the agreement, and that the court on such accounting decree what money, if any, is due and owing by the Baileys to entitle them to a deed; that in the event the mortgaged property be sold under a mortgage foreclosure decree, the court determine the rights and equities of all parties to the proceeds; that in the event of the sale of the property and such sale shall not realize a sum sufficient to pay the sums due the plaintiff and the Baileys shall not receive title to the lands described in their contract, then that the Baileys have judgment against P. W. Wilkins and Company for moneys due them by reason of the failure of P. W. Wilkins and Company to carry out its agreement to convey title to the land covered by the contract. The plaintiff was not made a party to the counterclaim. A copy of the counterclaim was served on the defendant, P. W. Wilkins and Company and thereafter the corporation filed its reply to the counterclaim. In the reply P. W. Wilkins and Company denied that it was in default in regard to carrying out its terms of the contract, and averred that the Baileys had forfeited all rights under the contract by failure to carry out on their part certain conditions agreed by them to be done and performed. The cause came on to be heard before the chancellor on September 11, 1944, and testimony was taken before the court on that and subsequent dates. At no time prior to the completion of the testimony did the plaintiff, or any other party to the suit, move to strike the counterclaim for any reason. At the completion of the testimony P. W. Wilkins and Company entered an oral motion to dismiss the counterclaim upon the ground that the statutes and rules governing procedure in chancery do not permit the maintenance of a counterclaim by one defendant against another defendant in the same cause, unless the counterclaim be also against the plaintiff and arises out of the transaction which is the subject matter of the suit, or which might be the subject of an independent suit against the plaintiff. The chancellor denied the motion and entered a final decree. The decree in addition to foreclosing the mortgage *568 held by Margaret K. Stoer adjudicated that the mortgage was a lien superior to the tax certificate which had been assigned by Genevieve Wilkins to C. H. Stoer; that the contract between P. W. Wilkins and Company and the Baileys was in full force and effect; that P. W. Wilkins and Company had failed and refused to carry out and perform its contract with the Baileys by securing a release of the lands from the operation of the mortgage and by a tender of a deed; that the Baileys had paid P. W. Wilkins and Company the sum of $2,445 on the contract; that the Baileys were entitled to possession of the lands and the rentals thereof as against P. W. Wilkins and Company from and after the date of the contract. In the decree the court also retained jurisdiction for the purpose of further adjudicating the equities in the Bailey counterclaim not by the final decree already adjudicated. P. W. Wilkins and Company has taken an appeal from the decree and assigns as error the action of the chancellor in giving consideration to and adjudicating the purported counterclaim of the defendants J. C. Bailey and T. L. Bailey. While it has been thoroughly established by the decision of this jurisdiction that where an utterly foreign subject matter is injected into an equity suit by way of counterclaim filed by one defendant against another the court will strike the pleading upon objections timely filed by any party to the cause, it by no means follows that a chancellor will be held in error for entertaining such a claim when parties make no objection to the procedure and the subject matter is one of equitable cognizance. See Sec. 63.35 Florida Statutes, 1941; Lovett v. Lovett, 93 Fla. 611, 112 So. 768; Turner v. Utley, 93 Fla. 910, 112 So. 837; Hendricks v. Williams, 151 Fla. 538, 9 So. (2nd) 923, for rule relating to counterclaims. For although the statute recognizes as a proper counterclaim only one which claims relief against the original plaintiff, or one in which the matter set up affects the original plaintiff’s rights, the statute contains no outright jurisdictional proscription against the injection into the suit by the defendants of an equitable issue between themselves, even though it may be entirely foreign to the subject matter of the bill of complaint, so long as all persons interested, including the chancel *569 lor and the plaintiff, are in agreement that the issue should be litigated and decided. As appears from the transcript in the case at bar, the plaintiff never at any time objected to the filing of the counterclaim nor sought to have it stricken. The defendant, P. W. Wilkins and Company, was content to litigate the issue raised against it by the counterclaim, for it filed its reply thereto and introduced considerable testimony at the hearing. The chancellor in the exercise of his discretion allowed the contest between the defendants to proceed — for the reason, no doubt, that he felt that by so doing, the respective rights of the defendants to any overplus realized from the sale of the property under a foreclosure decree might be determined. It was only after the testimony had been taken and the chancellor had made certain observations to counsel tending to indicate that he intended ruling in favor of the Baileys and against P. W. Wilkins and Company that the latter, for the first time, interposed the oral objection that the counterclaim was not in accordance with authorized statutory procedure. The subject matter of the counterclaim was of equitable cognizance and was such that a court of equity might have entertained it in an independent suit between the contracting parties. The testimony taken before the chancellor on the issue sustains his findings as to the relative rights and obligations of the parties to the contract. The court below has ordered the property sold under the foreclosure decree entered in favor of the original plaintiff, but has retained jurisdiction of the parties and the cause for the purpose of completely disposing of the issue between the defendants on the counterclaim, and of disposing of any overplus realized at the sale. Although the procedure followed may not be in exact accordance with accepted chancery procedure we are of the view that under the circumstances defendant, P. W. Wilkins and Company has not been prejudiced thereby. Consequently it may not now complain of an order which at most constituted harmless error. Irregularities in chancery practice committed at the instance of a party and by his consent are not available to reverse a final decree entered against him, unless they are of such jurisdictional nature that they may not be *570 waived. See Thompson v. Kyle, 39 Fla. 582, 23 So. 12; Lovett v. Lovett, 93 Fla. 611, text 649, 112 So. 768; Borst v. Gale, 99 Fla. 376, 126 So. 290. We have considered other assignments of error but shall not trouble to discuss them, as we find them to be without merit. The decree appealed from should be affirmed. It is so ordered. BROWN and ADAMS, JJ., concur. BARNS, Circuit Judge, concurs specially. CHAPMAN, C. J., TERRELL and BUFORD, JJ., dissent.