Manuel Alegre v. Marine Motor Sales Corporation, Debtor

228 F.2d 713, 1956 U.S. App. LEXIS 4379

• Court: Court of Appeals for the Fifth Circuit
• Decided: January 17, 1956
• Docket: 15571_1
• Status: Published

Opinions

RIVES, Circuit Judge.

The appellant petitioned the court, praying in the alternative that the trustee be directed to disclaim any right, title or interest in or to the oil screw Na-zare II, or to pay to the appellant the amount of a judgment he had obtained against the debtor in a Florida state court before making any distribution to creditors, or that the vessel be sold under the supervision of the bankruptcy court and the appellant be allowed a credit of the amount of said judgment on any bid made by him at such sale. ■ The referee ruled that the appellant had an equitable lien upon the vessel to secure the payment of $16,355.79, with 6% interest thereon from April 23, 1954. On petition for review that order of the referee was reversed arid set aside by the court, the court holding: “I consider the judgment creditor, Alegre, to stand on the same level as other common creditors, and that the vessel Nazare II is among the assets of the debtor’s estate free of any claimed lien by Alegre.” This appeal followed.

The facts as set forth in appellant’s petition were not controverted and appear to be without dispute. The debtor entered into a contract with appellant for the construction by the debtor, as contractor, for the appellant, as owner, of a shrimp trawler in accordance with specifications and descriptions set forth in the contract. While such construction was in progress, the appellant advanced to the debtor the sum of $16,000.00 and installed in the trawler certain equipment of the value of $355.79. The trawler was completed on or about March 9, 1954, and the debtor and the appellant caused it to be duly licensed and enrolled as the oil screw Nazare II in the name of the appellant in the United States Customs House, Brownsville, Texas, on or about March 14, 1954. Further pursuant to an agreement between the debtor and the appellant, appellant then executed and recorded in said Customs House a mortgage upon said vessel to the Pan American State Bank of Brownsville, Texas, in the amount of $21,000.00 to secure a loan made by said Bank to appellant. At all times since March 14, 1954 and up to the time of the hearing of appellant’s petition, the vessel had been registered and enrolled in the name of the appellant, and the appellant remained in possession of the consolidated certificate of enrollment and license of the vessel until the deposit thereof in the Florida state court, as hereinafter described.

In the month of April, 1954, the appellant conditionally rescinded the said contract with the debtor on account of breaches of said contract by the debtor, repaid the loan made to the appellant by said Pan American State Bank, secured and recorded in the Customs House at Brownsville, Texas, a satisfaction of said mortgage; and tendered to the debtor said consolidated certificate of enrollment and license, together with a duly executed bill of sale sufficient to vest title of said vessel in the debtor, said tender being conditioned upon restitution by the debtor of the aforesaid amounts advanced by the appellant. The debtor refused to accept title to said vessel so tendered, and refused to refund said advances, and the appellant then instituted a common law action in the Circuit Court of the Fourth Judicial Circuit of the State of Florida in and for Duval County ¹ against the debtor, alleging the aforesaid rescission and making a continuing tender of said title documents conditioned upon restitution being made of said advances.

In said action, the debtor filed an answer denying the appellant’s asserted right to rescind said contract and a counterclaim asserting a lien on said vessel. On November 26, 1954, before the filing of the debtor’s petition herein, said State Circuit Court entered a judgment on said action recognizing the appellant’s right to rescind said contract and providing in terms hereinafter quoted, that the appellant have and recover of the debtor the aforesaid sum of $16,355.79, together with interest at 6% per annum from April 23, 1954, and the costs of said proceeding; and, also, ordering the appellant to deposit with the clerk of said State Circuit Court the aforesaid title documents, to be delivered to the debtor upon payment of the amount of said judgment, otherwise to be disposed of as might be thereafter ordered by said Court. The appellant deposited said title documents as directed. Five days later, the debtor filed a petition for an arrangement under Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq.

Whether the contract be considered one for the construction of the vessel or for its sale, the appellant was entitled to be put in statu quo when the contract was properly rescinded by him or by the court on his application.² As said by the Supreme Court of Florida in McDonald v. Sanders, 103 Fla. 93, 137 So. 122, 125:

“Where there has been a total or partial payment of' the purchase price by the buyer, the buyer may not be required to show an unconditional return of the property as a prerequisite to rescinding the purchase, where the seller has refused to accept the buyer’s offer to return.”

There is considerable doubt as to whether appellant’s more appropriate remedy might not have been by bill in equity for rescission and for the fastening of an equitable lien on the vessel, the distinction between legal and equitable remedies being fully recognized in' Florida. 1 Fla.Jur., Actions, § 11, p. 136 et seq. While the precise question here presented has not been passed on by the Florida courts, the courts of other states, which recognize the distinction between law and equity, have enforced in common law actions the right of rescission of a contract of sale conditioned on the seller returning to the buyer the part of the purchase price which he had paid. ³

Apparently, the Florida Circuit Court was following that principle, when, after entering judgment for the appellant against the debtor, it added the following paragraph:

“It Is Further Ordered that the Plaintiff do forthwith deposit with the Clerk of this Court the Consolidated Enrollment and License of the 011 Screw Nazare II, Official Number 267175, which was tendered by the Plaintiff in open court, and the Bill of Sale of said vessel from the Plaintiff to the Defendant, which was also tendered by Plaintiff in open court, to be delivered by the Clerk to the Defendant upon payment to the Plaintiff or to his attorneys of record herein of the amount of the foregoing Judgment, otherwise to be disposed of as may be hereafter ordered by the Court.”

It does not appear that any appeal was taken from the judgment of the Florida Circuit Court. That Court had acquired jurisdiction of the parties and of the subject matter. If possible, its judgment should be so construed as to give effect to every provision thereof, and that part of its judgment heretofore quoted should not be held null and void on collateral attack.⁴

It seems to us that legal effect is given to that part of the judgment heretofore quoted, when we hold that, under that judgment, the rescission did not become fait accompli until the debtor paid the amount adjudged against it. Such holding is peculiarly justified when the judgment is construed in connection with the consistent efforts of the appellant to make his tender conditioned upon restitution by the debtor of the amounts advanced by him, and to keep good in court only that kind of conditional tender.⁵

The judgment is, therefore, reversed and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

1 . A state court of general jurisdiction.

2 . 77 C.J.S., Sales, § 117; 46 Arn.Jur., Sales, § 767, notes 6 and 7; § 670; Restatement Contracts, § 480(3); 3 Wil-liston on Sales, Rev. ed., §§ 610, 649.

3 . See Eagan Co. v. Johnson, 82 Ala. 233, 2 So. 302, 304; Jesse French Piano & Organ Co. v. Bradley, 138 Ala. 177, 35 So. 44, 45; Continental Jewelry Co. v. Pugh Bros., 168 Ala. 295, 53 So. 324, 326; Southern Iron & Equipment Co. v. Bamberg, E. & W. Ry. Co., 151 S.C. 506, 149 S.E. 271, 280; Davis v. Ross, Miss., 45 So.2d 273, 274 ; 3 Williston on Sales, Rev. ed., § 649.

4 . Cf. In re Begg’s Estate, 152 Fla. 277, 12 So.2d 145; Keen v. State, 89 Fla. 113, 103 So. 399, 400; State v. Sullivan, 95 Fla. 191, 116 So. 255, 263.

5 . See 46 Am.Jur., Sales, § 767, n. 6 & 7, § 670, § 775, p. 907, n. 6; 52 Am.Jur., Tender, § 25, n. 19, § 33; 86 C.J.S., Tender, § 32, notes 9, 10 & 11; 77 C.J.S., Sales, § 107, note 5, p. 816.