GOULD, INC., A CORPORATION, APPELLANT,
v.
HYDRO-SKI INTERNATIONAL CORPORATION, APPELLEE
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Gould, Inc. sued to foreclose on a security agreement securing two promissory notes from Hydro-Ski International. The trial court ruled that Hydro-Ski's leasehold interest was not subject to the security agreement despite the agreement's broad language covering all "contract rights." The appellate court reversed, holding that a leasehold is personal property and a contract right subject to such security agreements.
The court held that a leasehold interest is personal property and a contract right subject to the security agreement. The trial court erred in ruling that the leasehold was not encumbered by the security agreement's broad language covering "all of its contract rights."
[1] A leasehold interest constitutes a contract right for purposes of a security agreement.
[2] A security agreement that grants collateral for "all of its contract rights" includes a lessee's leasehold interest.
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“The provision of the security agreement is all inclusive and unequivocal. It granted to appellant as collateral security "all of its contract rights". Unquestionably, the lease in question is one of appellee's contract rights.”
The court's core holding that the broad language of the security agreement encompasses the leasehold interest as a contract right.
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Join FLexlaw to unlock all legal intelligenceGould loaned Hydro-Ski several hundred thousand dollars secured by two promissory notes backed by a security agreement encumbering all of Hydro-Ski's …
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DOWNEY, Judge.
Appellee is engaged in the manufacture of watercraft at Port Everglades in Fort Lauderdale, Florida. One of its assets is a leasehold of the premises occupied by the manufacturing plant, which lease contains a prohibition against assignment without lessor’s approval.
Appellant loaned appellee several hundred thousand dollars, represented by two promissory notes, which in turn were secured by a security agreement encumbering all of appellant’s inventory, accounts re ceivable, equipment, all of its contract rights, and all of its general intangibles. Asserting that the notes were in default, appellant sued to foreclose the security agreement. In aid of foreclosure a writ of attachment was procured with instructions to levy upon two specified vessels “and other property as is described in the security agreement, etc.” Appellee filed a traverse and answer and the court in due course entered an order based upon a stipulation which essentially allowed appellee to continue in business without prejudice to appellant’s right ünder the security agreement and the attachment. Several weeks later appellee moved the court for leave to renegotiate the aforementioned lease. Appellant objected to said motion on the ground that the lease was encumbered by the security agreement as one of appellee’s “contract rights” referred to in said agreement.
The trial court ruled that the appellee’s leasehold was not subject to the security agreement and. that appellant could proceed to renegotiate the lease. This interlocutory appeal seeks review of that order.
Appellant contends that a leasehold interest is personal property, Thalheimer v. Tischler, 55 Fla. 796, 46 So. 514 (1908); that a lessee may mortgage his leasehold interest, Johnson v. Metzinger, 116 Fla. 262, 156 So. 681 (1934); Oliver v. Mercaldi, Fla.App. 1958, 103 So. 2d 665, regardless of the prohibition contained therein against assignment without the lessor’s approval, Great Southern Aircraft Corporation v. Kraus, Fla.App.1961, 132 So. 2d 608; and that the security agreement encumbers the leasehold.
We agree. The provision of the security agreement is all inclusive and unequivocal. It granted to appellant as collateral security “all of its contract rights”. Unquestionably, the lease in question is one of appellee’s contract rights.
The parties have devoted a considerable portion of their briefs to the validity vel non of the attachment in this case. However, the sole question passed on by the trial court and presented for review here is whether or not the security agreement covered the leasehold interest. As we construe the security agreement it does encumber the appellee’s leasehold interest as one of its contract rights. Accordingly, the trial court erred in holding to the contrary in its order of April 16, 1973, which order is hereby reversed.
OWEN, C. J., and CROSS, J., concur.
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City OF Gainesville v. Charter Leasing Corp., 483 So. 2d 465 (Fla. 1st DCA 1986)…f a lessee in mortgaging the leasehold is not such a transfer as would violate a non-assignable provision.” Great Southern Aircraft Corp. v. Kraus, 132 So. 2d 608, 609-10 (Fla. 3d DCA 1961); accord Gould, Inc. v. Hydro-Ski International Corporation, 287 So. 2d 115, 116 (Fla. 4th DCA 1974); see also 36 Fla.Jur.2d Mortgages § 22 (1982). [*468] The judgment below is in its entirety AFFIRMED.1 JOANOS and BARFIELD, JJ., concur. . Appellee’s right of possession of the leased premises under paragraph 15.b. of the…
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Bank OF NEW York Mellon v. P2D2, LLC, 100 So. 3d 205 (Fla. 2d DCA 2012)…So. 2d 12, 13 (Fla. 4th DCA 1990). However, unlike the facts in Roberts, in this case Jorgensen owned a leasehold interest on the property. A leasehold interest is an asset which can be mortgaged by the lessee. Gould, Inc. v. Hydro-Ski Int’l Corp., 287 So. 2d 115, 116 (Fla. 4th DCA 1973). Regardless of the language in the mortgage documents in this case, “[wjhere a mortgage purports to convey or encumber a greater estate than the mortgagor owns, it passes as much as [the mortgagor] has a right to convey.” 59…
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Barnett Bank of S. Fla., N.A. v. Weitzner (In Re Kavolchyck), 164 B.R. 1018 (S.D. Fla. 1994)…Rochfort Co., 22 B.R. 826, 828 (Bankr.S.D.Fla.1982) (“it would appear that Article 9 of the UCC has no application to the transfer of a lease on real estate. § 679.104(10)”). Barnett Bank relies on Gould, Inc. v. Hydro-Ski Int’l Corp., 287 So.2d 115 (Fla. 4th DCA 1973), to support its contention that a security interest in a leasehold interest is personal property that is perfected through the filing requirements of the UCC, Fla.Stat. § 679.401. Gould involved a security agreement that en…
Authorities Cited
- Thalheimer v. Tischler, 55 Fla. 796 (Fla. 1908)
- Great S. Aircraft Corp. v. Kraus, 132 So. 2d 608 (Fla. 3d DCA 1961)
- Oliver v. Mercaldi, 103 So. 2d 665 (Fla. 2d DCA 1958)
- Johnson v. Emil Metzinger, 116 Fla. 262 (Fla. 1934)