RALEIGH W. RICE ET UX., APPELLANTS,
v.
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF LAKE COUNTY, 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.
Appellants borrowed $12,000 from appellee lender with a mortgage on a building under construction. The lender deducted a one percent inspection fee and conducted inspections, but construction defects later caused wall cracking and damage. The appellants defaulted and, when the lender foreclosed, counterclaimed for negligent inspection, arguing an implied contract duty existed. The court held no such duty was created merely by the deduction of an inspection fee.
No implied contract duty existed. The court held it would be unreasonable to infer merely from appellee's deduction of an inspection fee a contractual duty to appellants to perform inspections on their behalf. The lender's interest in inspecting construction as security for its investment does not create an implied duty of care toward the borrowers.
“The effect to be given to an alleged implied contract is that effect which the parties as fair and reasonable men presumably would have agreed upon if, having in mind the possibility of the situation which has arisen, they had expressly contracted in reference thereto.”
Establishes the test for determining whether an implied contract exists between parties.
Previewing 1 of 3 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceAppellants borrowed $12,000 from appellee and executed a promissory note secured by a mortgage on a building to be constructed with the loan proceeds.…
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.
Explore caselaw by topic → Browse Mortgage Foreclosure cases and more on FLexlaw
Appellants are appealing a judgment foreclosing a mortgage on a building which they owned. Appellants borrowed $12,000 from appellee and delivered to appellee their promissory note for that amount. As security, they gave appellee a mortgage on the building which was to be constructed partly with the loan proceeds. Appellee *23deducted from the loan proceeds, as a fee for “inspection and supervision,” an amount equal to one per cent thereof. An agent of appellee, in fact, made inspections of the construction site. Soon after the completion of the building, because of certain defects in the construction, its wall began to crack extensively, causing considerable damage.
Appellants defaulted on the payments on their note and appellee sued for foreclosure of the mortgage on the building. Appellants counterclaimed for damages on the theory that appellee had inspected the construction site in a negligent manner so as to breach its contractual duty to appellants to inspect the site for their benefit. They conceded they were in default under the terms of the note and mortgage, and the cause was tried on the sole issue of whether appellee was liable to appellants under the counterclaim. The court below ruled that no contractual duty existed as alleged and ordered foreclosure. The sole question before this court is whether appellee, by undertaking the inspection of the construction site and requiring appellants to pay a fee therefor, impliedly contracted with appellants to make such inspection for their benefit.
The effect to be given to an alleged implied contract is that effect which the parties as fair and reasonable men presumably would have agreed upon if, having in mind the possibility of the situation which has arisen, they had expressly contracted in reference thereto. Bromer v. Florida Power and Light Co., Fla.1950, 45 So.2d 658, 660, 13 A.L.R.2d 1227. It would be unreasonable to infer merely from ap-pellee’s deduction of an inspection fee a contractual duty to appellants to perform such inspection on their behalf. As the court below aptly stated:
“A lender of construction money has an interest in the progress and quality of the construction of its security proportional to the amount of money invested and would reasonably be expected to inspect the construction and be entitled to additional compensation for its additional costs in making such inspection.”
Affirmed.
LILES, C. J., and PIERCE and HOB-SON, JJ., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By (13 total)
-
Milohnich v. First Nat'l Bank OF Miami Springs, 224 So. 2d 759 (Fla. 3d DCA 1969)…of the situation which has arisen, they had contracted expressly in reference thereto.’ 12 Am.Jur. 766.” 45 Sov 2d at 660. The Second District followed this holding in Rice v. First Federal Savings and Loan Association of Lake County, Fla.App.1968, 207 So. 2d 22. I do not think that fair and reasonable men having in mind the possibility of the situation which has arisen would have expressly contracted that the appellee should compensate the appellants for any of the damages claimed. [*764] Since^I_ think —…
-
Chotka v. Fidelco Growth Invs., 383 So. 2d 1169 (Fla. 2d DCA 1980)…efendants, FIDELCO GROWTH INVESTORS, a Pennsylvania Business Trust, et al, [sic] prepared and furnished the development for sale purposes and did complete the sale of the units. . This court held in Rice v. First Federal Savings & Loan Association, 207 So. 2d 22 (Fla.2d DCA), cert. denied, 212 So. 2d 879 (Fla.1968), that a lender is not under any duty to inspect the progress of construction for the benefit of anyone other than itself and may not be held liable for construction defects. Accord, Armetta v. Cl…
-
Kalbes v. Cal. Fed. Sav. & Loan Ass'n, 497 So. 2d 1256 (Fla. 2d DCA 1986)…GRIMES, Judge. This is an appeal from a judgment on the pleadings determining that the complaint failed to state a cause of action on the authority of Rice v. First Federal Savings & Loan Association of Lake County, 207 So. 2d 22 (Fla. 2d DCA 1968). According to the complaint, appellant (owner) and appellee (lender) entered into a construction financing agreement whereby the owner borrowed $94,000 to build his personal residence pursuant to a contract previously entered int…
Previewing 3 of 13 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Bromer v. Fla. Power Light Co., 45 So. 2d 658 (Fla. 1949)