A brief rebuttal to Thomas Ice’s article, “Negotiating the American Dream” (Dec. 2012) begins with a reading of the terms of a typical uniform instrument note. Paragraph one of the UI note states (emphasis added): “Borrower’s Promise to Pay — In return for a loan that I received, I promise to pay…to the order of the Lender.” Paragraph one of that note further states: “I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the ‘Note Holder.’”
By the clear language of the note, the borrower promises to pay to the order of the lender, and further acknowledges that the note may be transferred, and that anyone entitled to receive payments under this note is called the “note holder.”
For a court to rule that the note is not transferable, or that the note holder is not entitled to enforce the note, would have the effect of rewriting the unambiguous terms of the written contract between the parties and would severely prejudice the note holder. F.S. §673.1041 provides (emphasis added): “the term ‘negotiable instrument’ means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order.”
Although the case of General Motors Acceptance Corp. v. Honest Air Conditioning and Heating, Inc., 933 So. 2d 34 (Fla 2d DCA 2006), is cited for its holding that a note is not a negotiable instrument, that case involved a contract for the sale of an automobile, not a note and mortgage on real property. As set forth in the court’s opinion in GMAC, the Uniform Commercial Code comment to §673.1041 provides, in part: “Words making a promise or order payable to bearer or to order are the most distinguishing feature of a negotiable instrument and such words are frequently referred to as ‘words of negotiability.’”
As for a “thief” being able to enforce a note, courts have correctly held that even if the borrower could prove that the signatures of indorsement on the note were fraudulent, that would be a dispute between the rightful owner and the thief. Harvey v. Deutsche Bank Nat Trust, 69 So. 3d 300 (Fla 4th DCA 2011). It would not relieve the borrower from his or her obligations under the terms of the note to pay the note holder.
James J. Spanolios, Tampa
It seems equitable subrogation comes up in an article that discusses the Fishbein case (Palm Beach Sav. & Loan Assn. v. Fishbein, 619 So. 2d 267 (Fla. 1993)), about once a year. That case should have never been decided against my client for two reasons that the court conveniently overlooked in depriving both Ms. Fishbein and her minor children of their homestead rights in the real estate at issue in the case.
First, the Florida Constitution had been amended twice since equitable subrogation was recognized in Florida. The voters have never amended the Florida Constitution to allow equitable subrogation to deprive an owner of property rights in homestead property. The case should have been decided on that point, i.e., equitable subrogation cannot be used to deprive an innocent party of homestead rights. The cases following Fishbein seem to suggest that it would not be followed today given an innocent party claiming the homestead.
Second, only a few individuals can survive a notice of lis pendens placed against their property. That constitutes prejudice per se in my opinion. A good example is the Fishbein case in which the husband took all the money and left the wife penniless with her only asset being the marital home, which was worth about $2 million. Since there was a lis pendens on the property and the wife had limited assets, she could not borrow $930,000 to pay off the mortgage of Palm Beach Savings and no one would buy the property with the lis pendens against it. No bank would finance a property with a lis pendens filed against it and buyers with that much cash, i.e., $2 million, were inclined to wait and buy it on the courthouse steps for half that amount. Palm Beach Savings bought the property at foreclosure sale and got a windfall of $1 million. They got a property worth $2 million and sold it so that they became whole even though they had been a negligent party that enabled the husband to commit fraud. The mother and her two sons lost their $1 million equity, which was transferred to the bank. The mother and her two sons went from a mansion in Palm Beach to a rental home in West Palm Beach and became three more victims of the golden rule, i.e., “those with the gold make the rules.”
Allan L. Hoffman, West Palm Beach
Do the Right Thing
I read with interest and generally enjoyed the article, “Marching Orders: When to Tell Your Boss ‘No’” (Feb. 2013).
The article concludes that “Ultimately, a lawyer must be prepared to sacrifice his or her employment if a supervising attorney asks him or her to violate a professional duty....”
Lawyers contemplating whether they could live up to this lofty duty of self-sacrifice might take some solace from the fact that in contrast to the cases cited in note 10, the New York Court of Appeals in Weider v. Skala, 80 N.Y.2d 628 (1992), held that a firm who fires an associate attorney for insistence on compliance with governing ethical cannons breaches an implied term of that employment relationship. See also Connolly v. Napoli, Kaiser & Bern, LLP, 817 N.Y.S. 872 (N.Y. County 2006). This implied contract claim and exception to the general employment at-will rule was also recognized by a Connecticut court in Matzkin v. Delaney, Zemetis, Donahue, Durham & Noonan, P.C., 2005 WL 2009277 (Conn. Superior Ct. 2005).
Florida courts have cited New York cases in connection with their employment at-will rulings. Consequently, firms who would be inclined to respond to an associate’s objection that a proposed action appears unethical with something akin to “Good point, you’re fired!” may want to consider that option more carefully.
Wayne R. Gradl, Buffalo, NY