Opinion
No. 3D99-1998.
Opinion filed August 23, 2000.
An Appeal from the Circuit Court for Dade County, Gisela Cardonne, Judge, L.T. No. 98-10290.
Jack Martin Coe, for appellant.
Pertnoy, Solowsky, Allen Haber and David Haber; Margulies Rones and Victor K. Rones, for appellee.
Before FLETCHER and SORONDO, JJ., and NESBITT, Senior Judge.
Marion Slachter appeals a final order granting summary judgment in favor of David A. Swanson in an action to foreclose a mortgage. The question presented in this appeal is whether a recorded trial court discharge of a mortgage gives implied actual notice to a subsequent purchaser for value that the discharge may be appealed and gives rise to a duty to investigate outside of the Official Records despite no other official recordings of a reversal and two affidavits from the sellers of the property that no liens or pending liens exist on the property. We answer the question in the affirmative and reverse.
On December 19, 1984, the Millmans purchased property located at 8603 S.W. 103rd Street and took out a mortgage with Anderson Associates, Inc. d/b/a Slachter Mortgage Company. The deed was recorded in the Official Records of Dade County. Slachter Mortgage then assigned the mortgage to Marion Slachter, then President of Slachter Mortgage on December 28, 1984. The transfer was not officially recorded until June 21, 1990. Slachter retired from the mortgage company in 1986. After her retirement, Slachter Mortgage filed a foreclosure action against the Millmans in 1986 which was dismissed with prejudice. In 1987, the Millmans filed suit against Slachter Mortgage for wrongful foreclosure and for fraud. The trial court awarded the Millmans $350,000 in final judgment on January 4, 1990.
The Slachter mortgage was backdated to December 28, 1984 in the Official Records.
To collect the judgment, the Millmans obtained a trial court order on October 8, 1992, which discharged the Millman note and mortgage as paid in full. The judgment was duly recorded in the Official Records. Slachter and other investors in Slachter Mortgage filed a timely appeal and the judgment was reversed by this Court which issued a mandate to vacate the trial court discharge. See Marks v. Millman, 641 So.2d 414 (Fla. 3d DCA 1993), review denied , 651 So.2d 1195 (Fla. 1995). On January 23, 1995, six days after the Florida Supreme Court denied review, the Millmans conveyed a warranty deed to David Swanson, who paid $212,500, and executed two affidavits swearing that there were no liens or proceedings which could give rise to a lien on the property. The deed was recorded. The trial court did not vacate its judgment discharging the Millman mortgage until November 4, 1997. Swanson was not made a party to that proceeding or to the Millmans' petition to the Florida Supreme Court.
Slachter was listed as "Miriam Seligman" in the Marks v. Millman case.
On April 27, 1998, Slachter filed a foreclosure action against Swanson on the 1984 mortgage and recorded a lis pendens. The trial court granted Swanson's motion for partial summary judgment on the grounds that Swanson had no knowledge of the Millman mortgage and as a bona fide purchaser, had priority over Slachter. Slachter's timely appeal to this Court followed.
Slachter argues that Swanson was not a bona fide purchaser because he had implied actual knowledge of the Millman mortgage. She posits that a reasonably prudent person upon seeing the trial court's discharge of mortgage judgment in the Official Records would have investigated to see if it was reversed or if there was an appeal pending. Swanson's lack of diligence, she argues, should not be rewarded. Once this Court reversed the trial court's discharge of the Millman mortgage in 1993, the mortgage existed on the Millmans' property even though it was not formally vacated by the trial court until 1997.
Swanson responds that he was a bona fide purchaser in good faith. He argues that he was entitled to rely on the Official Records and the Millmans' affidavits and not required to investigate outside said books. The burden in Florida is on Slachter to properly record her interests to give notice to subsequent purchasers.
Analysis
As a subsequent purchaser for value, Swanson is protected from unrecorded assignments of mortgages by section 701.02, Florida Statutes (1995), as long as he takes title without notice of the assignments prior to the transfer of the real property. Swanson paid valuable consideration to the Millmans and claimed that after examining the Official Records and reading the Millmans' affidavits, he was without knowledge of the Slachter mortgage. A presumption exists under Florida law that a bona fide purchaser acquires a title in good faith and without notice of any liens or mortgages. See Pierson v. Bill, 138 Fla. 104, 117, 189 So. 679, 684 (1939). The burden falls on the party claiming under an unrecorded claim, Slachter, to show the bona fide purchaser acquired a title with notice or else Swanson will be protected by section 701.02. See McCahill v. Travis Co., 45 So.2d 191, 193 (Fla. 1950).
Florida law creates three kinds of notice to subsequent purchasers of real property: constructive, actual, and implied actual. See Symons v. State, Dep't of Bank. Fin., 490 So.2d 1322, 1323 (Fla. 1st DCA 1986). Constructive knowledge is a legal fiction imputed primarily for the promotion of sound policy. See id . It is imputed to creditors and subsequent purchasers by virtue of any document filed in the grantor/grantee index of the Official Records. See Dunn v. Stack, 418 So.2d 345, 349 (Fla. 1st DCA 1982), rev'd on other grounds, 444 So.2d 935 (Fla. 1984). Actual notice is expressed, direct information. See id . Implied actual notice arises when a subsequent purchaser has the means of knowledge and the duty to investigate but does not. See Symons , 490 So.2d at 1324. This concept is based on the premise that, "A person has no right to shut his eyes or ears to avoid information and then say he had no notice; it will not suffice the law to remain willfully ignorant of a thing readily ascertainable when the means of knowledge is at hand." Id. (citing Sapp v. Warner, 105 Fla. 245, 255, 141 So. 124, 127 (1932)).
Slachter argues that the recording of the 1992 discharge of the Millman mortgage by the trial court should have given rise to implied actual notice to Swanson of the possibility of a reversal or a pending appeal to reinstate the lien. In order to charge a person with notice of information which might have been discovered with inquiry, circumstances must exist that would reasonably suggest that further inquiry is needed. See Rafkind v. Beer, 426 So.2d 1097, 1099 (Fla. 3d DCA 1983). Normally this is a question for the trier of fact. Id .
The Attorney's Title Insurance Fund, Inc.'s notes state:
The Fund does not authorize reliance on final decrees quieting title, foreclosing mortgages, etc., until the time for appeal has run, and if appealed, until the time for applying for a writ of certiorari to the Supreme Court of Florida has run.
Attorney's Title Insurance Fund, Inc., Fund Title Notes § 12.02.02 (1990).
Swanson points out in his answer brief that Slachter failed to record the 1993 reversal of the Millman mortgage discharge and that the Official Records showed a clear title. Additionally, he claims that he relied on two sworn affidavits from the Millmans claiming the property was clear of prior and pending liens. Restitution cannot be compelled from bona fide purchasers who were strangers to the prior court proceedings and whose rights were not affected by a subsequent reversal of judgment. See Sundie v. Haren, 253 So.2d 857, 859 (Fla. 1971); Simms v. City of Tampa, 42. So. 884, 885 (Fla. 1906). He claims he should not be responsible for tracking the progress of over ten years of litigation, to none of which he was a party. We disagree.
Upon seeing the discharge of the Millman mortgage, Swanson was on implied actual notice that it was highly likely an appeal would be taken in the case. Swanson correctly observes that a purchaser may rely on the chain of title found in the Official Records of real property in the absence of actual notice of an adverse unrecorded right, see Koschler v. Dean, 642 So.2d 1119, 1121 (Fla. 2nd DCA 1994), but Koschler is silent as to the chain's reliability with the presence of implied actual notice. The law is clear that a subsequent purchaser is required to look outside of the Official Records where the same "becomes a duty, . . . the failure to make such inquiry in order to determine the true status of the title to the property described in the recorded instrument [constitutes] a negligent omission." Tri-County Produce Distribs., Inc. v. Northeast Prod. Credit Ass'n, 160 So.2d 46, 51 (Fla. 1st DCA 1963); Smith v. Federal Deposit Ins. Corp., 61 F.3d 1552, 1558 (11th Cir. 1995). All Swanson had to do was call, or visit, the County Clerk's office to see if the Millman mortgage discharge had been appealed. The information is public record and would have been quickly discovered at little, if any, cost. A subsequent purchaser who fails to perform his duty of inquiry outside of the record is bound by his neglect. See Rafkind, 426 So.2d at 1099. Even if there is a dispute as to what Swanson should have done upon seeing the discharge, summary judgment is not proper where factual issues exist as to whether a subsequent purchaser had implied actual notice of a prior claim to property. See Gordon v. Aqua-Solar Assocs., 722 So.2d 910 (Fla. 1st DCA 1998).
Swanson's other arguments lack merit. Summary judgment was not proper in this case. Swanson was on implied actual notice that the mortgage could have been reinstated by an appellate court. The burden on him to investigate the status of the case was minimal. Given the fact that it was a trial court decision which was recorded, Swanson should have investigated outside of the officially recorded chain of title.
Reversed and remanded for further proceedings consistent with this opinion.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DISPOSED OF.