VICTOR ADES AND DONNA ADES, HIS WIFE, APPELLANTS,
v.
BANK OF MONTREAL, APPELLEE
AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.
The Ades and their business associate signed personal guaranties with Bank of Montreal to secure business overdrafts. When Mr. Ades refused to sign a second, larger guaranty, the bank proceeded with guaranties signed only by Mrs. Ades and Mr. Beltram. The court held that no novation occurred because the bank did not intend to discharge Mr. Ades' original guaranty, and therefore both guaranties remained valid and enforceable.
No novation occurred because the Ades failed to establish that the bank intended to extinguish the original indebtedness; the bank's subsequent negotiations regarding alternative collateral and failure to cancel the original note demonstrate the second guaranty did not replace the first. The interest calculation was not improper or duplicative because the guaranties secured the same underlying debt and the bank could not recover more than the single amount due.
[1] Novation requires a mutual agreement to cancel a prior obligation and substitute a new one in its place.
[2] The party asserting novation bears the burden of proving its essential elements by clear and satisfactory evidence.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“Novation is a mutual agreement between the parties concerned for the discharge of a valid existing obligation by the substitution of a new valid obligation.”
Establishes the legal definition and essential requirements of novation that applies to this case.
Previewing 1 of 3 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceMr. and Mrs. Ades and Mr. Beltram signed an initial personal guaranty with Bank of Montreal to secure business overdrafts. When the overdraft amount g…
The full statement of facts, procedural history, and disposition for this case are member content.
Join FLexlaw to unlock all legal intelligence© FLexlaw, Inc. — AI-generated enrichments are proprietary. All rights reserved.
PER CURIAM.
Mr. and Mrs. Ades and their business associate, Mr. Beltram, signed personal guaranties with the Bank of Montreal in order to borrow money by way of overdrafts to finance their business. As the overdraft amount grew, the bank required a second, larger guaranty. Mr. Ades re fused to sign the second guaranty and it was returned to the bank with the signature of only Mrs. Ades and Mr. Beltram. When the overdraft amount continued to increase and the business was no longer able to make interest payments on the borrowed funds, the bank demanded repayment. Mr. Ades argued novation of his signed guaranty by the subsequent guaranty executed by Mrs. Ades and Mr. Beltram. The bank disagreed claiming Mrs. Ades and Mr. Beltram were liable under the second guaranty but that Mr. Ades remained liable under the first guaranty.
Novation is a mutual agreement between the parties concerned for the discharge of a valid existing obligation by the substitution of a new valid obligation. Miami Nat’l Bank v. Forecast Constr. Corp., 366 So. 2d 1202, 1204 (Fla. 3d DCA 1979); see Murphy v. Green, 102 Fla. 102, 135 So. 531 (1931).
Two of the essential elements which must be presented in order for a novation to exist are (1) an agreement by the parties to cancel and extinguish the first debt or obligation, and (2) agreement of the parties that the second contract or agreement takes the place of the first obligation. Miami Nat’l Bank, 366 So. 2d at 1204; United Bonding Ins. Co. v. Southeast Regional Builders, Inc., 236 So. 2d 460 (Fla. 1st DCA 1970).
See also § 46.015, Fla.Stat. (1987) (release of one guarantor does not discharge the liability of remaining guarantors).
The party pleading novation as an affirmative defense has the burden of proving it by clear and satisfactory evidence. Babe, Inc. v. Baby’s Formula Serv., Inc., 165 So. 2d 795 (Fla. 3rd DCA 1964).
Here, the Adeses failed to establish the bank’s intention to extinguish the original indebtedness. Testimony indicates that upon the bank’s receipt of the guaranty without Mr. Ades’ signature, discussion immediately began between the lender and the borrowers as to whether a collateral mortgage on Mr. Beltram’s residence would suffice in lieu of Mr. Ades’ signature. These negotiations are supportive of the bank’s position that the second guaranty did not take the place of the first guaranty. Further, the original note was never cancelled. Thus, the evidence presented failed to establish these essential elements of a novation agreement. See Taines v. Capital City First Nat’l Bank, 344 So. 2d 273 (Fla. 1st DCA 1977), cert. denied, 355 So. 2d 517 (Fla.1978).
Finally, the Adeses argue that even if the trial court correctly found two guaranties, interest was improperly calculated on each guaranty separately. We disagree. The trial court’s final judgment clearly acknowledged that the disputed guaranties were “guaranteeing payment of the same underlying debt” and that the bank could not recover a sum greater than the single amount claimed due. See Flagship Bank of Orlando v. Bryan, 384 So. 2d 1323,1324, n. 3 (Fla. 5th DCA 1980); see also Fegley v. Jennings, 44 Fla. 203, 32 So. 873 (1902); Anderson v. Trade Winds Enter. Corp., 241 So. 2d 174 (Fla. 4th DCA 1970), cert. denied, 244 So. 2d 432 (Fla.1971); Luckey v. Thornton, 171 So. 2d 410 (Fla. 3d DCA 1965). Thus, the interest charged was not duplicative.
Accordingly, the final judgment entered in favor of the Bank of Montreal is affirmed.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
-
Jakobi v. Kings Creek Vill. Townhouse Ass'n, Inc., 665 So. 2d 325 (Fla. 3d DCA 1995)…cordingly, owner may claim the reciprocity benefits of Section 57.105(2). A novation is a mutual agreement between the parties for the discharge of a valid existing obligation by the substitution of a new valid obligation. Ades v. Bank of Montreal, 542 So. 2d 1013 (Fla. 3d DCA), rev. denied, 551 So. 2d 460 (Fla.1989). A statute in effect at the time of a novation will determine the rights and obligations of the parties to the novation even if the statute was not in effect at the inception of the original cont…
-
Thompson v. Jared Kane Co., Inc., 872 So. 2d 356 (Fla. 2d DCA 2004)…tual agreement between the parties for the discharge of a valid existing obligation by the substitution of a new valid obligation.” Jakobi v. Kings Creek Vill. Townhouse Ass’n, 665 So. 2d 325, 327 (Fla. 3d DCA 1995) (citing Ades v. Bank of Montreal, 542 So. 2d 1013 (Fla. 3d DCA 1989)). To prove the substitution of the new contract for the old, four elements must be shown: (1) the existence of a previously valid contract; (2) the agreement of the parties to cancel the first contract; (3) the agreement of the pa…
-
DE LAS Cuevas v. Nat'l Enters. Inc., 927 So. 2d 41 (Fla. 3d DCA 2006)…e is a mutual agreement between the parties to discharge a valid existing obligation by the substitution of a new valid obligation. Jakobi v. Kings Creek Vill. Townhouse Ass’n, 665 So. 2d 325, 327 (Fla. 3d DCA 1995) (citing Ades v. Bank of Montreal, 542 So. 2d 1013 (Fla. 3d DCA 1989)). Whether a novation takes place depends upon the intent of the parties. The intent can be determined by the documents if the terms are not in dispute. If there is a dispute as to the intent of the parties, then it is a question o…
Previewing 3 of 6 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited (12 total)
- Anderson v. Trade Winds Enters. Corp., 241 So. 2d 174 (Fla. 4th DCA 1970)
- Murphy v. Green, 102 Fla. 102 (Fla. 1931)
- Babe, Inc. v. Baby's Formula Serv., Inc., 165 So. 2d 795 (Fla. 3d DCA 1964)
- Mathews v. Pihos, 102 Fla. 62 (Fla. 1931)
- Fegley v. Jennings, 44 Fla. 203 (Fla. 1902)
- Miami Nat'l Bank v. Forecast Constr. Corp., 366 So. 2d 1202 (Fla. 3d DCA 1979)
- Flagship Bank OF Orlando v. Jackson Bryan, 384 So. 2d 1323 (Fla. 5th DCA 1980)
- Taines v. Cap. City First Nat'l Bank, 344 So. 2d 273 (Fla. 1st DCA 1977)
- United Bonding Ins. Co. v. Se. Reg'l Builders, Inc., 236 So. 2d 460 (Fla. 1st DCA 1970)
- Trade Winds Enters. Corp. v. Anderson, 244 So. 2d 432 (Fla. 1971)