Waldorff Insurance And Bonding, Inc. v. Eglin National Bank

453 So. 2d 1383 (Fla. 1984)


Choctaw, a developer, was constructing condominiums. In June 1972, Choctaw executed a promissory note and mortgage on the condos in the amount of $850,000. The mortgage was recorded. This note and mortgage was eventually assigned to Elgin National Bank (P) in January 1975. At that time, the principal balance remaining on the note and mortgage was $41,562.61 down from a high of over $1.1 million. Choctaw sold a unit to Waldorff Insurance and Bonding, Inc. (D). D paid $1,000 down on a purchase price of $23,550. In April or May of 1973, D began occupancy of the unit and purchased furniture worth $5,000. On October 10, 1973, Choctaw then executed a note and mortgage for $600,000 with P. The D condo was included in this mortgage. Another note was executed in 1974 for $95,000, and once again the D unit was part of that security. Choctaw was a client of D, and in 1974, Choctaw owed D over $35,000 in insurance premiums. Choctaw agreed to consider the purchase price of the unit paid in full in return for cancellation of the debt. D wrote off the debt and Choctaw executed a quitclaim deed (however, D also deducted the bad debt from its tax returns). That deed was recorded in March 1975. In 1976, P foreclosed against Choctaw, D, and others. A final judgment of foreclosure was entered, but it did not foreclose on D’s unit. Jurisdiction was retained and a hearing held, and the court determined that P’s interest was superior to D’s. The trial court held that mere possession did not give P notice of D's ownership and that D’s occupancy was equivocal as Choctaw allowed several other units to be used for free and D did not pay adequate consideration for the unit. The court held the quitclaim deed was void. D appealed.