Opinion
October 31, 1952. Rehearing Denied December 12, 1952.
Appeal from the Circuit Court for Marion County, F.R. Hocker, J.
Pleus, Edwards Rush, Orlando, for appellant.
Reeves, Allen Dell, Tampa, W. Robert Smith and Greene Bryant, Ocala, Fagan Crouch, Gainesville, for appellees.
This is an appeal from a final decree foreclosing a mortgage held by the appellee, Marine Bank and Trust Company, and certain liens on the property involved subject to a first lien for the purchase price of the lots held by the appellant.
The controversy arose with reference to a contract entitled "Escrow Agreement". The agreement was also referred to as an "Option Agreement" and purported to give Marion Properties, Inc., the option and privilege of purchasing certain lots at the price of $250 each. The contract expressly provided for the building of houses on the lots and with the right of immediate possession of the lots by Marion Properties, Inc. There had been previous contracts between the same parties which had been drawn by a lawyer. The contract in question was drawn by Robert Holman, the alter ego of Highlands Home Builders, Inc.
The prior agreements required Marion Properties, Inc., to pay taxes on the lots actually purchased. The agreement in question required Marion Properties, Inc., to pay taxes on all lots covered by the agreement from the time of its execution. The prior agreements did not require the construction of houses. The present agreement required "that all dwellings shall be constructed * * *." In the agreement in question the appellant agreed not to lease, sell or otherwise encumber the property, and as first written provided that Marion Properties, Inc., should " not sell the lots." This provision of the contract was stricken by Holman, the alter ego of the appellant, and thereby gave to Marion Properties, Inc., not only possession but the right of sale. The prior agreements contained provisions for a notice of intention to exercise the option. The present agreement simply contained a provision for possession and for construction of dwellings.
Marion Properties, Inc., gave a mortgage to Marine Bank and Trust Company, one of the appellees herein, in order to secure money to finance the construction of the dwellings.
There is no question or conflict in the testimony as to the amount due the bank for advances of money and materials which went into the construction of the houses in question. There is no question as to the amounts due the other lienors or the assignees of such lienors. The position of the appellant is that this was strictly an option contract and although more than $25,000 of other people's money at the request of Marion Properties, Inc., had gone into these buildings, it should receive the full benefit of such improvements free and clear of any claim of the Marine Bank and Trust Company, or the other lienors for the amount of money which had actually gone into these improvements.
There is no dispute that the improvements were very valuable. Holman, the alter ego of the appellant, lived about three-quarters of a mile from these improvements. He discussed progress with the contractor from time to time, knew of the money and materials being furnished, and knew that the money was being furnished by a bank. He talked with lienors from time to time and never asserted his ownership to the lots, but did all within his power to aid in the construction of the houses. He testified that he was on the job from time to time and that his presence was known to the materialmen and labormen alike, and that he made no attempt to inform them concerning the claims which he now asserts. Marion Properties, Inc., of which Long was the alter ego, was in the actual possession of the lots with construction going on all the time. The appellant was so much interested in the construction going on that he solicited the assistance from the City of Ocala in furnishing water for use on the lots and in the houses. The Chancellor below in his opinion, among other things, made the following findings:
"The contest in this suit involves Lots 8, 9, 10, 11 and 12 of Ocala Highlands.
"As to these lots the defendant, Highland Home Builders, Inc., made a contract with the defendant, Marion Properties, Inc., dated and filed May 26th, 1950.
"This contract is styled as `option' agreement and gave the Marion Properties the `option and privilege' of purchasing these lots with others for the price of $250.00 each.
"This instrument had other provisions. It expressly contemplated the building of houses on these lots with the right of immediate possession by Marion Properties.
"Dwellings were constructed on the other lots in this contract and the lots paid for and conveyed. As to these lots dwellings were constructed in whole or part, in part with money furnished by plaintiff and in part by the labor and materials of the lienor defendants who have not been paid.
"Prior to May 26th, 1951 the defendant, Highland Home Builders made several unsuccessful efforts to get the money for the lots in question and promptly on May 26th, 1951, picked up the deeds from the escrow agent and declared the option agreement cancelled.
"At this time there were houses on these lots in various stages of construction in which there had been put labor and materials of around $25,000.00. If Highland Home Builders was entitled to cancel this contract it immediately became the owner of this property in fee simple, free and clear of any claims of the other parties hereto. That is the issue.
"This transaction was one of a series of similar ones between the Highland Home Builders and Marion Properties. Holman of the Highland Home Builders and Long of Marion Properties knew that Long or his company were not going to put any appreciable amount of his own money into any houses which might be built on these lots; that such construction would be financed by various methods; the parties furnishing such finances, labor or materials looking to the property until the house could be completed, sold, and the permanent F.H.A. financing arranged.
"These, as I see it, are the pertinent facts.
"It is my opinion that the so called `option agreement' of May 26th, 1950 in view of its provisions as to possession and building was a contract of purchase and sale, rather than a simple option.
"It does not appeal to me as equitable that because $1250.00 worth of lots were not paid for exactly on the day payment was due and this immediately gave the right at the expense of the other parties to seize some $25,000.00 worth of improvements thereon. Especially when the officers of Highland Home Builders knew when they made this contract that houses would be built thereon and that from past experience that various parties would by various ways help finance such construction looking to the completion and sale of such house for their money.
"The parties are in Court and this is a Court of Equity. In so far as these particular lots are concerned Highland Homes, Inc., has a first lien for the agreed purchase price, together with legal interest from May 26th, 1951, and all costs expended by it in this behalf. The lienors or assigned liens have a second lien as to these lots and the plaintiff in so far as its mortgage applies to them has a third lien. As to the other lots the lienors have a first lien and plaintiff a second. I may add that I do not expect to approve any sale which I do not feel represents a fair value of the property. Counsel for plaintiff will prepare and submit draft of decree in accordance herewith."
Based upon said findings the Chancellor entered a final decree adjudging the appellant to have a first lien upon the property in question for the purchase price of the lots plus the lawful rate of interest, foreclosing the mortgage of the Marine Bank and Trust Company and the claims of lienors, the amounts of which were not in dispute, and ordered the property sold. It would be unconscionable and inequitable to uphold the contention of the appellant in this case and permit it to reap the benefit of more than $25,000 which actually went into the construction of the houses in question under the undisputed facts and circumstances appearing in the record in this case. See Jones v. Carpenter, 90 Fla. 407, 106 So. 127, 43 A.L.R. 1409; Board of Public Instruction of Palm Beach County v. McDonald, 143 Fla. 377, 196 So. 859; Todd v. Hyzer, 154 Fla. 702, 18 So.2d 888; Cowgill v. Hopkins, Fla., 52 So.2d 343.
It may be that the written agreement was an option to begin with, but when possession of the lots in question was delivered to Marion Properties, Inc., construction actually begun as contemplated, with the full knowledge, acquiescence and approval of the appellant, the option was exercised and it was converted into a sale and purchase agreement. The fact that the appellee, Marion Properties, Inc., may have been one or two days late in tendering the purchase price of the lots could not change the nature of the contract from a sale and purchase contract after it had been partially performed by the delivery of possession and by actual construction as contemplated by the contract. The final decree fully protected the appellant in ordering paid to it the purchase price of each lot in full together with lawful rate of interest.
We find no error in the record.
Affirmed.
SEBRING, C.J., ROBERTS, J., and GORDON, Associate Justice, concur.