Storrs v. Storrs , 130 Fla. 711 ( 1937 )

Subsequent to the filing of our opinion and judgment herein on May 20, 1937, a rehearing was granted and, pursuant to such order granting rehearing, this matter has again been argued before this Court and, having reconsidered the record, the briefs and argument of counsel, we are convinced that we reached an erroneous conclusion in regard to the sufficiency of the plea denominated as a plea of "set-off" (and which is shown by the record as the second amended third plea) and in holding that that plea was good as a plea of recoupment in this case.

We cited in support of that holding the case of Allen v. Henn,197 Ill. 501, 54 N.E. 250.

The declaration was in one count and declared upon a promissory note in the sum of $6500.00 and nothing else.

The plea referred to shows that the note was given in part payment for a newspaper plant which was purchased by the maker from the payee about November 1, 1923, at which time the maker having paid $2500.00 as a cash payment and having agreed to pay $6500.00 balance in installments, went into possession of the plant and continued to operate the same and to pay interest on the balance of the purchase price and to pay rent to the payee of the note for the building occupied by the plant until November 1, 1925, when he executed the note sued on for the sum of $6500.00 with interest at 6% per annum payable quarterly from date and due on November 1, 1930; that he continued to rent the building from the plaintiff and to pay interest on the note of November 1, 1925, until June 27, 1935, but did not reduce the principal of the note. The suit was filed on the note of July 25, 1935.

The law is well settled that in case of fraud upon the part of the vendor the vendee who alone has the right to claim rescission may remain silent and bring his action to recover damages for the fraud or may rely on it by way of defense to the action of the vendor, although there has been full acceptance of the property with knowledge of its defects. See authorities cited in original opinion of May 20, 1937.

This principle of law would be applicable to this case if the suit was upon the original contract of purchase but it is not so and the record shows that it was not so. The original contract was made November 1, 1923, and when the purchaser of the property involved in that contract had remained in possession of the property and had full and complete knowledge of all things attempted to be pleaded here, being then in arrears on his contract to pay the balance of the purchase price he made a new promise to pay evidenced by a promissory note payable five years after date with interest payable quarterly at 6% per annum, which was less than the legal rate of interest. So, while the plea does not show that the vendee executed a note at the time of taking possession of the property for the balance of the purchase price the plea does show that he agreed to pay the balance of the purchase price with interest thereon and that he continued to pay interest on the balance of the purchase price up until the time he renewed the promise to pay by the execution and delivery of the promissory note here sued on.

In Padgett, et al., v. Lewis, 54 Fla. 177, 45 So. 29, this Court held:

"One who gives a note in renewal of another note, with knowledge at the time of a partial failure of the consideration for the original note, or false representations by the payee, etc., waives such defense, and cannot set it up to defeat a recovery on the renewal note. And where one giving such renewal note either had knowledge of such facts and circumstances, or by the exercise of ordinary diligence could have discovered them and ascertained his rights it became his duty to make such inquiry and investigation before executing the renewal note, and if he fails so to do he is as much bound as if he had actual knowledge thereof."

In Vining as Receiver, etc., v. Pierson, 101 Fla. 1284,133 So. 346, wherein was involved suit on a renewal promissory note, we said:

"There is testimony adduced under a plea that Ira Embry, an officer of the Ormond Shores, Inc., represented to Pierson that the title to the property for which the note was executed was free and clear and absolutely unencumbered by a mortgage and that such false representation was again made to Pierson by Ira Embry who was President of the East Coast Bank Trust Company when Pierson renewed the note to the latter company, April 17, 1926. But it also appears that the note sued on was a second renewal note executed January 17, 1927, by Pierson and a payment was made on such renewal note. There was no misrepresentation as to the title to the land when the note was again renewed. The mortgage encumbrance of the land was duly recorded when the first note was given which was constructive notice to the purchaser, the maker of the note. Even if the misrepresentation was a defense to the note when the mortgage was of record accessible to the purchaser, the giving of the second renewal note when there was no misrepresentation, was a waiver of the defense."

See also Franklin Phosphate Co. v. International Harvester Co.,62 Fla. 185, 75 So. 206; and Hyar v. York Mfg. Co., 58 Fla. 283,50 So. 485. There we said: "The defendants below had every opportunity before the execution of the renewal note sued on, by the exercise of ordinary diligence, to discover whether they had any claim for damages on account of the failure to ship the machinery according to contract. Such defense was waived by the execution of the renewal note."

In Wright v. Peet, 36 Mich. 213, Mr. Chief Justice Cooley in the opinion prepared for the Court, said:

"The defendant seeks to reduce the amount of a purchase money mortgage by showing that he was defrauded in the purchase by false representations regarding the lands and crops thereon. The purchase was made in 1867 and the mortgage was not given until 1872. As defendant had possession of the premises immediately after the purchase, he discovered at once any deception that had been practiced upon him, and his duty was to make prompt complaint. So far from doing so, he made no complaint until after the giving of the mortgage. That was too late. DeArmand v. Phillips, Walk Ch., 186; Whiting v. Hill, 23 Mich. 399."

The difference between that case and this case is that there a mortgage was given to secure the payment of the balance of the purchase price, while here a promissory note was given for the balance admitted to be due the payee.

In Marianna Lime Products Co. v. McKay, 109 Fla. 275, 147 So. 264, Mr. Chief Justice DAVIS, speaking for the Court said:

"A plea of recoupment is purely defensive. It rests on the principle of allowing evidence in reduction of the plaintiff's damages to be introduced, where the plaintiff sues on a contract consisting of mutual stipulations made at the same time, the defendant being allowed to defend against the plaintiff's claim for damages by recouping his own damages that are alleged to have arisen by reason of plaintiff's breach of another part of the same contract, whether the contract consists of one or several parts. Payne v. Nicholson, 100 Fla. 1459, 131 Sou. Rep. 324; Jarrett Lumber Co. v. Reese,66 Fla. 137, 63 Sou. Rep. 581; Delco Light Co. v. Hutchinson Properties, 99 Fla. 410, 128 Sou. Rep. 831. A plea of recoupment implies that plaintiff has a cause of action, but asserts that defendant, too, has a counter cause of action growing out of a breach of some other part of the same contract on which plaintiff's action is founded, or from some other cause connected with that contract. See 57 C.J. 358.

"The first two amended pleas declared on an alleged breach of an independent verbal warranty. While it is not essential that a warranty in the sale of a chattel be in writing (55 C.J. 675) and the existence of a separate oral agreement as to any matter on which a written contract is silent, and which is not inconsistent with its terms, may be proved by parol, if under the circumstances of the particular case it may be properly inferred that the written paper was not intended to be a complete and final statement of the whole transaction between them, and it appears further that the oral agreement is wholly collateral and relates to a subject distinct from that to which the written contract applied (Seitz v. Brewer's Refrigerating Mach. Co.,141 U.S. 510, 12 Sup. Ct. 46, 35 L. Ed. 837), we are unable to say in this case that it does not appear in this case that the written contract sued on was not intended to be a complete and final statement of the whole transaction between the parties. If an agreement in writing is such that it may be properly inferred from it that the written statement (which in this case was under seal and therefore of solemn character) was intended by the parties to it to be a complete and final statement of the whole transaction between the parties, the effect of the writing is to render inadmissible an attempted showing of an independent verbal warranty concerning the subject matter of the written agreement, when the written agreement is regarded as completely covering the subject dealt with, and is silent on the subject of any such warranties. Bryan v. St. Andrews Bay Community Hotel Corp., 99 Fla. 132,125 Sou. Rep. 142; Compare: Supervisors, Inc., v. Arcadia Citrus Growers Ass'n, 101 Fla. 804, 135 Sou. Rep. 296."

So, for the reasons stated, we must recede from our judgment heretofore entered in this cause on May 20, 1937, which we now do, and now affirm the judgment of the Circuit Court.

It is so ordered.

ELLIS, C.J., and BROWN, and CHAPMAN, J.J., concur.

WHITFIELD and TERRELL, J.J., dissent.