Rehearing Denied July 11, 1975.
Robert D. Gatton, of Johnson, Motsinger, Trismen & Sharp, Orlando, for appellant.
Allison E. Folds, of Fagan, Crouch, Anderson & Folds, Gainesville, for appellee, Charter Bank of Gainesville.
Appellant/defendant appeals from a summary judgment in favor of appellee/plaintiff Bank in a suit wherein the appellee sought to foreclose a note and mortgage given by appellant.
The appellee Bank was the assignee from appellees Rogers and Blythe of a promissory note and purchase money mortgage executed and delivered by the appellant. The note, executed April 28, 1972, contains the following stipulation:
This note with interest is secured by a mortgage on real estate, of even date herewith, made by the maker hereof in favor of the said payee, and shall be construed and enforced according to the laws of the State of Florida. The terms of said mortgage are by this reference made a part hereof. (Emphasis supplied.)
Rogers and Blythe assigned the promissory note and mortgage in question to the appellee to secure their own note. Appellee sued appellant and joined Rogers and Blythe as defendants alleging a default on their note as well as a default on appellant's note.
Appellant answered incorporating an affirmative defense that fraud on the part of Rogers and Blythe induced the sale which gave rise to the purchase money mortgage. Rogers and Blythe denied the fraud. In opposition to appellee Bank's motion for summary judgment, the appellant submitted an affidavit in support of its allegation of fraud on the part of agents of Rogers and Blythe. The trial court held the appellee Bank was a holder in due course of the
note executed by appellant and entered a summary final judgment against the appellant.
The note having incorporated the terms of the purchase money mortgage was not negotiable. The appellee Bank was not a holder in due course, therefore, the appellant was entitled to raise against the appellee any defenses which could be raised between the appellant and Rogers and Blythe. Since appellant asserted an affirmative defense of fraud, it was incumbent on the appellee to establish the non-existence of any genuine issue of any material fact or the legal insufficiency of appellant's affirmative defense. Having failed to do so, appellee was not entitled to a judgment as a matter of law; hence, we reverse.
The note, incorporating by reference the terms of the mortgage, did not contain the unconditional promise to pay required by Fla.Stat. § 673.3--104(1) (b).  Rather, the note falls within the scope of Fla.Stat. § 673.3--105(2) (a).  Although negotiability is now governed by the Uniform Commercial Code,  this was the Florida view even before the U.C.C. was adopted. E.g., the Supreme Court in Brown v. Marion Mortgage Co., 1932, 107 Fla. 727, 145 So. 413, held that certain bonds which were 'to be received and held subject to' a certain mortgage were non-negotiable. See also, First Bank of ...