Opinion
May 2, 1952. Rehearing Denied May 28, 1952.
Appeal from the Circuit Court, Dade County, William A. Herin, J.
Kass, Fuller Culbreath, Miami, and J. Lewis Hall, Tallahassee, for appellant.
Robert C. Lane and Curtiss B. Hamilton, Miami, for appellees.
This appeal was taken from an order dismissing the bill of complaint against M.H.C. Realty, Inc., so we have only to analyze the bill of complaint to determine whether this defendant should have been retained as a party litigant.
Central figure in the goings on assailed in the bill was E. Will Cohen, who was charged with owning, operating and controlling three corporations, each said to have been his alter ego.
First, there was M.H.C. Realty, Inc., in the name of which a ninety-nine year lease was obtained to certain property to be used as a site for a hotel. Next, Kimberly Hotel, Inc., came into existence to operate the hotel when built. Then Allied Construction Company, Inc., was organized to engage in construction work in general, and to build Kimberly Hotel in particular.
To finance the project, $130,000 was borrowed from Jefferson Standard Life Insurance Company and secured by a mortgage from the owner of the fee and M.H.C. Realty, Inc., owner of the leasehold; a second mortgage for about forty thousand dollars was given to a furniture company by M.H.C. Realty, Inc.; a third mortgage for one hundred sixty odd thousand dollars was executed by the corporation to two individuals; an additional mortgage was made by the corporation to the same persons for fifty thousand dollars. Cohen signed all four mortgages as president of M.H.C. Realty, Inc.
It was alleged that Cohen's son was associated with a firm of lawyers through whom appellant had made "various preliminary loans" to Cohen in aid of the construction of the hotel, the attorneys receiving from appellant a percentage of the profits as a consideration for the protection of the lender. It was charged that these lawyers also represented Cohen and Cohen's corporations.
Then came the deal that precipitated this suit.
The sum of twenty-five thousand dollars was procured from appellant on recommendation of the lawyers and their assurance that although the hotel was then worth six hundred thousand dollars the only encumbrances against it were the two mortgages, to the life insurance and furniture companies. It was averred that information about the other mortgages was withheld.
So appellant lent the money receiving a note made by Allied Construction Company, signed by Cohen as an officer of that company, payable to Cohen, and endorsed by Cohen: "Pay to the Order of Leonard Gross." Simultaneously, Cohen, in consideration of the twenty-five thousand dollars, executed an assignment to Gross of all right, title and interest he, Cohen, then had or might obtain in the Kimberly Hotel to the extent of twenty-five thousand dollars, and so on.
It was charged that Cohen was insolvent; that Allied Construction Company was bankrupt; that M.H.C. Realty, Inc., was an undisclosed principal and had received full benefit of the loan, only a tenth of which had been paid.
The appellant prayed for a declaratory decree and for relief against the alter ego of Cohen, M.H.C. Realty, Inc., that had profited by Cohen's manipulations and appellant's funds.
The motion to dismiss contained three grounds: lack of equity, failure to state a claim, and misjoinder of M.H.C. Realty, Inc.
We think the allegations in the bill of complaint portray a fertile field for the operation of a court of conscience and justify a determination of whether M.H.C. Realty, Inc., alter ego of Cohen, can escape responsibility for a debt of Allied Construction Company, alter ego of Cohen, evidenced by a note from that company to Cohen, endorsed by him to the debtor, and secured by an assignment of interests which were not Cohen's but those of M.H.C. Realty, Inc. These transactions undermine the position that no equity was sufficiently asserted against M.H.C. Realty, Inc., in the bill.
The decree is reversed with directions to reinstate that corporation as a party, and to proceed accordingly.
Reversed.
SEBRING, C.J., MATHEWS, J., and DICKINSON, Associate Justice, concur.