Logan v. Slade & Etheredge

Raney, C. J.: 1. This case is on rehearing. The preceding statement and the next ten paragraphs of this opinion were prepared by Chief-Justice McWhorter, and are adopted and approved by the court as now' constituted. “ The first error assigned is the granting the order restraining the defendant from selling said merchandise except for cash, and requiring him to deposit the proceeds in the registry of court. The niortgage, if valid, a question which we will consider hereafter, was meant as a security for the debts described therein and intended to be secured thereby. It is a well-settled principle that a court of equity vfilKeestrain a mortgagor from doing any act that wfill destroy or impair the security upon which the mortgagee, by virtue of the mortgage, has a right to rely for the payment of his debt. If there were no such right in the mortgagee to — 710 — preserve intact liis security, and no such jurisdiction vested in a court of equity to aid him in its preservation, mortgages would be of little value. Story’s Equity Jurisprudence, vol. 2, secs. 914, 915. “The evidence shows that the mortgage was executed on the 18th day of November, 1884 ; that on the 19th, the day after its execution, goods were sold from the store to different parties, amounting in the aggregate to the sum of three hundred and five dollars, to pay said parties debts owing them b y the defendant. It is true the answer, which was filed February 20th, says that these goods were sold by defendant’s clerk in his absence, but in his affidavit previously filed, to-wit: on the 22d day of November, three days after such sales, defendant swears that ‘he had not sold or disposed of any goods, wares or merchandise except in the usual course of his business.’ This denial in the first place when the transaction must have been known to him and fresh in his memory, and subsequent admission of it and the attempt to avoid its force by saying it was done by his clerk in his absence, bear a suspicious appearance. If it is true that the goods were sold by the Clerk in his - absence, it nevertheless remains that he does not say that they were sold without his knowledge or direction. We must assume that such sales were known to and approved by him. It cannot be denied that the sales of over three hundred dollars’ worth of goods in one day after the mortgage was made, and no cash realized therefrom, being sold to pay his other debts, was an impairment of the — 711 — mortgage, which the mortagagee had a right to prevent, and brings it, within the principle mentioned above. There was no error in granting the restraining order. “Thenext error assigned is the appointment of a receiver. AYe think the facts set forth in the petition., and which were not denied, justified the Chancellor in the exercise of a sound discretion in appointing a. receiver. The same reason that would induce the Chancellor to grant an injunction to prevent the impairment or destruction of a mortgage security, when the injunction was found insufficient for the purpose intended, would justify him in appointing a receiver when it was made apparent to him that it -was necessary for the preservation of the property intended as a security. It was a apparent from the amount of sales that a longer time would elapse before the complainants could realize the amounts due them than the law would require them to wait. It was also apparent that the expenses were bearing too heavy a proportion to the amount of sales, and that some quicker and less expensive method was necessary. “It will be seen from the pleadings that the bill seeks a foreclosure and sale of the property. The answer admits the making the morgage and seeks to avoid it on two grounds ; that its execution was procured by fraud, and that the complainants agreed not to record it in 20 days, and not then if satisfactory payments were made. These are the only two points that — 712 — are raised by the bill and answer, and all that this court would be justified in deciding. “A very careful scrutiny of the evidence convinces us that while the defendant, whom it seems was young and without experience, was very probably not aware of the full legal cousequences of the papers he signed at the time he executed them, that there was no fraud or misrepresentation on the part of the complainants or their agents to induce him to execute the mortgage and obligations. He did it voluntarily, and if he made a hard bargain he cannot complain. The answer does not deny any of the allegations of the bill. It sets up matter in avoidance, and defendant must be held to prove them. Lucas vs. Bank of Darien, 2 Stewart, 280. His proof is his own testimony and what inference might be drawn from the fact that the paper, supra, given to him by Parrish, agent for Slade & Etlieredge, and which was the only one of all of them which he was to retain, speaks of no mortgage but one to Slade & Etheredge. “ This in connection with the fact that all the claims were embraced in one mortgage, we admit is a strong circumstance in support of his testimony, but we think it is overborne by the testimony of McKinnon and Parley who are disinterested witnesses, by the testimony of Parrish, who is also disinterested as to the mortgage to all the complaints in the bill except Slade & Ether-edge, and.there is no contention as to their mortgage — 713 — except as to recording it, by the evidence of Liddon and .Carter, who all swear that the mortgage was read in full to defendant, and by his own letter to Liddon and Carter that he would come to their- office and either pay or secure the claim then in suit against him of (iarrett & Sons, the other claims mentioned in the mortgage coming to their hands after he wrote the letter, and before executing the moitgage. •1 The agreement not to record the mortgage within twenty days, and not then if satisfactory payments were made, is a question of some difficult)'. An agreement not to record a mortgage of personal property withina a limited time not unreasonably long would not in our opinion vitiate it so far as the parties to it were concerned, in the absence of a conflict with the rights of purchasers and creditors in the intervening time. " If it was clear that by a contemporaneous written agreement the mortgagee had bound himself not to record the mortgage if satisfactory payments were made on it in the twenty days, an agreement not to do the very thing that the statute says is indispensable • to its validity, we should be inclined to hold, if such payments were made, that the. mortgage was rendered void by such agreement as a security for the unpaid balance after deducting the. ‘satisfactory payments,’ so far as the personal property was concerned. The proviso that ‘unless in the opinion of Wlade & Ether-edge’s attorneys it should be necessary to record the — 714 — mortgage in order to protect tlieir interests, ’ applied only to the first clause as to the recording within the twenty days. It had no' force as to the contingency of making satisfactory payments in the twenty days, that is, if the mortgage was not lecorded in the twenty days, and in the meantime the mortgagor made such payments, it would have been the absolute right of the mortgagor if the agreement was valid, that the mortgage should not be recorded. “But the right to record the mortgage within twenty days if the attorneys of Slade & Etheredge should think it necessary, and the exercise, of it by recording the same before the lapse of that time, if for proper cause, necessarily nullified the last clause not to record it if satisfactory payments were made, because the vitality of the agreement was dependent upon its not being recorded in the twenty days, or if wrongfully recorded within that time that such payments were made before the time mentioned had elapsed. After its record under the power to do so if thought necessary to protect the interest of Slade & Etheredge, it be recorded before any satisfactory payments were made, the rights of the mortgagor under the latter clause of the agreement necessarily terminated. “ The facts set forth ajid considered heretofore as being sufficient to justify the granting of the restraining order were also sufficient to justify the attorneys for — 715 — Slade & Etlieredge in tlie exercise of the discretion vested in them in filing the mortgage for record.” II. It was also held in another paragraph of the opinion that certain points made in this court by the appellant could not be considered because they had not been made in the loAver court. These points were: That the suits were prematurely brought, that the mortgage was not recorded in accordance with law or not sufficiently proven to entitle it to be admitted to record, and, third, that the obligations sued on were void because of the stipulations therein to pay attorneys’ fees. A rehearing was applied for on the ground that there was error in this conclusion, and some doubts having arisen as to this conclusion, the rehearing was granted. In Southern Life Ins. & T. Co. vs. Cole, 4 Fla., 359, it was held that an appeal in equity is substantially a rehearing of the cause, and the appellate court has the right to look into the whole case as it is qiresented by the record, and may even consider points made primarily there if raised by the pleadings and proofs, yet care must be taken that neither the appellant, nor appellee, be permitted to surprise or mislead his adversary, or to make objections which if made in the court below might have been obviated. See also Fairchild vs. Knight, 18 Fla., 770; Proctor vs. Hart, 5 Fla., 465; Beekman vs. Frost, 18 Johns., 344; Bank of Utica vs. Smedes, 3 Cowen, 684; 2 Daniell’s Chancery Pl. & Pr., 1488, et seq. — 716 — In tlie case before us there was a demurrer to the bill as being multifarious, and because a prior mortgagee of the property was not a party, and this demurrer Inning been overruled the defendant answered, but in his answer he does not raise any of these defenses. The objection that the suit was prematurely bought is based upon the idea that the writings obligatory sued on and secured by the mortgage were entitled to grace, and that the days of grace had not expired when the bill was filed. AVe will not be understood as assenting to the proposition that a bill single or writing obligatory is, either by the law, merchant or the statute of this State, entitled to grace. Randolph on Commercial Paper, sec. 1056; Tiedman on Commercial Paper, sec. 32; Daniell on Negotiable Instruments, secs. 31, 34, 620; Skidmore vs. Little, 4 Texas, 301; Field vs. Mallett, 3 Hawks, 465; McClellan’s Digest, sec. 86, p. 832; Cotton vs. Williams, 1 Fla., 37; Dellas vs. Keyser, 17 Fla., 100, 106-7. But however this may be, our opinion is that if the defendant had wished to test the merit of such a defense he should have done so by the proper pleading in the lower court-, and at an early stage of the proceedings therein. Assuming that such a defense could have been found available, considering the nature of the suit and the character of the instruments secured by the mortgage, it was a defense which went not in bar of the cause of action, but only to the bill or in abatement of the suit, and should have been interposed promptly and before — 717 — the defendant could be said to have waived it. 1 Daniell Chy., 626, 627; Palmer vs. Gardner, 77 Ill., 143. The defendant did not attempt to raise such a defense by his pleadings, and to permit it to be raised here after a long and expensive contest as to the validity of the mortgage, upon the grounds stated in the original opinion, would not only encourage the most misleading practice, but work a great wrong by permitting the defendant to do now what he cannot reasonably be deemed to have ever intended before he appealed to this court. The basis of the point that the mortgage was not duly proven for record, and therefore not legally recorded, and hence is not binding as 'a mortgage of the personal property mentioned therein, is an alleged deficiency in the affidavit of one of the subscribing witnesses upon which the instrument was admitted to record as such oath is shown by the appeal transcript as stated in the certificate of record endorsed on the. original mortgage annexed to the bill as a part thereof. The bill distinctly alleges that the instrument had been correctly recorded on the proof whose sufficiency is now attempted to be assailed. By failing under these circumstances, to take exception in the lower court by proper pleading to the sufficiency of the proof and legality of the record, and (;ontesting the foreclosure of the mortgage throughout a firmly contested and expensive litigation on other grounds, involving that of the right of the mortgagees to record the mortgage at the time they did, the appellant — 718 — must be lield to have waived any defect there may be in such proof. The defendant has tacitly admitted the sufficiency of the proof and the legality of the record in so far as it is dependent upon such proof throughout the litigation, and up to a point at which he cannot be permitted to fake exception to it without imposing upon the complainants great hardship and loss which proper practice upon the part of the appellant could have obviated. Proper practice dictates that he should be held to the position of a tacit admission of the sufficiency of the record knowingly taken by him in the lower court. The objection, taking the most favorable view of it, is not one fatal to the complainant’s claim, but like that of the prematureness of the suit, discussed above, it would only go to the bill, and assuming the objection to the proof to be good and that it could not, had it been made below, have been cured by showing, as for aught we know may appear on the record in the clerk’s office, that there was the most sufficient proof of the execution of the instrument, there can be no doubt, in view of the testimony, that iffid complainants been compelled to dismiss the bill they could have had it recorded on due proof and renewed the suit without delay and without any considerable expense or loss of time. The third ground, which is that the obligations are void, because of the stipulation therein for the payment of attorneys’ fees, is also one which properly — 719 — should hare been taken by demurrer to the bill. There is no such ground in the demurrer filed, nor is it made elsewhere by the defendant’s pleadings. However, if the law rendered any and all contracts of which a stipulation to pay attorneys’ fees was a feature, absolutely void and their enforcement contrary to public policy under any and all circnmstances, which in effect is the position of appellant here, -we are inclined to think the court should refuse to enforce such contract, although the effect of the feature was (jailed to their attention primarily on appeal. Myrick vs. Pittman, 19 Fla., 692; Crosby vs. Huston, 1 Texas, 203; Foster vs. Wilson, 5 Montana, 53. This however, is not the effect of such a stipulation in this State, nor elsewhere according to the authorities which we have been able to find. The decisions of this court affirm the legality of a stipulation for reasonable attorneys’ fees. L’Engle & Hartridgo vs. L’Engle, 21 Fla., 131; Long vs. Herrick, 26 Fla., 356, 8 South. Rep., 50. No contest as to the reasonableness of the amount stipulated for was made in the Circuit Court, and it is not attempted to be made here, if it could be. The decree is affirmed.