5D02-1467 Secretary of Veterans Affairs v. Roma Food

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State: Florida

Court: Florida Fifth District Court

Docket No: 5D02-1467

Case Date: 01/27/2003

Preview:IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JANUARY TERM 2003

SECRETARY OF VETERANS AFFAIRS, Appellant, v. ROMA FOOD ENTERPRISES OF FLORIDA, INC., ET AL., Appellee. _________________________________/ Opinion filed January 31, 2003 Appeal from the Circuit Court for Volusia County, William C. Johnson, Jr., Senior Judge. Robert Taylor Bowling and Scott W. Cichon, of Cobb & Cole, Daytona Beach, for Appellant. August J. Stanton, III of Stanton & Gasdick, P.A., Orlando, for Appellees. CASE NO. 5D02-1467

HARRIS, C., Senior Judge. Romeo and Susan Serdari operated a pizza restaurant and were supplied by Roma. After the Serdaris ran up a large account with Roma, they executed an instrument acknowledging a debt of some $60,000 and agreed that said debt would be payable "upon the sale" of specifically described property. This instrument, called a "mortgage," was recorded in the records of Volusia County. One of the parcels described in said "mortgage" was subsequently conveyed but apparently the proceeds were not paid to Roma. Sometime thereafter, the parcel came into the hands of the Secretary of Veterans Affairs through the foreclosure of a mortgage given by a successor in interest of the Serdaris. The "mortgage"

given to Roma, although recorded in the public records, apparently went unnoticed in the Serdaris' chain of title. When Roma became aware that title to property described in its "mortgage" had transferred without the proceeds from the sale being applied to its debt, it filed a foreclosure action against the real property described in the instrument and prevailed below. We reverse. Certainly, the Secretary is deemed to have notice of the recorded instrument. But the extent of its notice is defined by the contents of the recorded instrument and such information that further inquiry might reveal if the recorded instrument indicates such further inquiry is necessary. Tri-County Produce Distribs., Inc. v. Northeast Credit Ass'n , 160 So. 2d 46 (Fla. 1st DCA 1963); State v. Rosenquist, 51 NW 2d 767 (N.D. 1952); Wiseman v. Watters, 174 SW 815 (Tex. 1915). The recorded instrument in this case is simply not a mortgage on real estate and no further inquiry would make it such. The instrument is in the nature of an assignment of proceeds from the sale of specifically described property. Under the terms of the instrument, the real estate could never be subject to foreclosure. The debt does not even become payable until the property is conveyed. Therefore, before sale by the Serdaris, the property is not subject to foreclosure; after the sale, the title to the property has been conveyed to one who does not owe the debt. The property itself was never, according to the terms of the recorded instrument and according to the testimony of Roma's agent at trial, intended to secure the debt1. The clear intent of the instrument is to pledge the proceeds of sale to the

When asked to explain the events leading up to the execution of the "mortgage," the agent testified: "They [the Serdaris] said that they had a piece of property that they were trying to sell and they would

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