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Filing # 100163973 E-Filed 12/11/2019 03:19:48 PM
IN THE 20™ CIRCUIT COURT IN AND FOR
CHARLOTTE COUNTY, FLORIDA
CASE #2017 CA 000181
IRIS BEAUGRAND, etc.,
Plaintiff/Counter-Defendant,
v. BOB O’TOOLE’S MEMORANDUM IN
SUPPORT OF HIS MOTION FOR
ROBERT O’TOOLE, PARTIAL SUMMARY JUDGMENT
Defendant/Counter-Plaintiff.
/
Iris Beaugrand has filed a lawsuit against Bob O’Toole to foreclose upon
his homestead. She does this by way of an action for partition based upon a
handwritten deed (that she wrote) that she induced him to sign. This deed, that
purports to place her name on the title to his home, is unlawful. This is because
she was the real estate agent representing Bob in his purchase of the property at
a short sale that, under federal law, prohibited her from participating in the
closing as a buyer. In prior testimony, she admits that this is so!.
She also paid no money for this deed that she extracted from Bob.
These are the undisputed, material facts that were developed during a trial
between the parties that took place in Sarasota circuit court. These facts (as well
| She testified that she knew the short sale regulations prohibited the transfer but that her
broker told her it would be OK if she waited 90 days after the closing to do it. Yet she
inexplicably had Bob sign the deed only 32 days after the closing. Motion for Partial
Summary Judgment at 5-6, citing record material in support of these facts. Neither she nor
her broker have proffered any legal basis for the proposition that a real estate agent (and her
broker) can violate the anti-fraud provisions of the federal regulations applicable to short
sales, by simply waiting 90 days (or any other period of time) after the closing.Beaugrand y. O'Toole
Case #2017 CA 181
as others concerning the course of the dealings between the parties) are laid out
in some detail in Bob’s motion seeking partial summary judgment. References
to the source material for these facts is set forth in the motion.
Based on these essential facts concerning Beaugrand’s attempt to foreclose
on her ex-boyfriend’s homestead? Bob O’Toole has filed a motion for partial
summary judgment which sets forth his arguments as to why, as a matter of law,
(1) she cannot foreclose on his homestead (pages 7-8) in violation of the Florida
Constitution; (2) she cannot enforce any rights under the quit claim deed in her
favor that she illegally induced her client to execute (pages 8-10); and (3) she
cannot claim rights to the property as a co-tenant because she did not contribute
any consideration in exchange for the errant deed she procured(10-12).
Given the undisputed facts germane to these three issues, Bob O’ Toole is
entitled to judgment as a matter of law in his favor and against Iris Beaugrand on
her claim to the partition and forced sale of his homestead, and in his favor and
against her on his counterclaim to quiet title to the property*.
The legal analysis in support of these arguments is well-briefed in the
speaking motion now before this Court, and are summarized here:
? Bob was obliged to move into his present quarters on the occasion of his having to leave the
home the parties shared together for nearly nine years. He could not move back into the
house where he used to live because, again at the insistence of Beaugrand, he had rented that
property and at the time of the separation his other home was occupied by tenants.
> The motion also advances a fourth, unrelated argument conceming the undisputed facts as
to the contract between the parties and the breach of that contract by Beaugrand.Beaugrand y. O'Toole
Case #2017 CA 181
1. The Homestead Rights Issue
As set forth more fully in the motion, The Florida Constitution grants
strong homestead protection to real property. Art. X, § 4(a), Fla. Const. This
protection is liberally construed; "the Florida constitutional exemption of
homesteads protects the homestead against every type of claim and judgment
except those specifically mentioned in the constitutional provision itself[.]"
Havoco of Am., Ltd. v. Hill, 790 So. 2d 1018, 1021 n.5 (Fla. 2001) (internal
quotation omitted).
Unsecured creditors (creditors such as Beaugrand and/or her mother who
do not have a note secured by a mortgage to this property) are not included as an
exception to the homestead exemption. Chames v. DeMayo, 972 So. 2d 850, 852
(Fla. 2007) (other citations omitted here). The purported “note” attached to the
Beaugrand complaint (even if it were not a forgery) is insufficient as a matter of
law to avoid the homestead protections because it is not a mortgage. See Chames
v. DeMayo, at 854 (noting the difference between promissory notes, retainer
agreements, and other unsecured instruments, versus mortgages).
Beaugrand is unable to prove that the forced sale of Bob O’Toole’s home
is permissible under the Florida Constitution, nor has she met the standing and
vigorous pleading requirements in a foreclosure case. See, Russell v. Aurora
Loan Services, 163 So.3d (Fla. 2"! DCA 2015); Fla.R.Civ.Pro. 1.115.
3|PageBeaugrand y. O'Toole
Case #2017 CA 181
No pleadings concerning these issues were filed by Beaugrand in the
Sarasota Circuit Court (which lacked subject matter jurisdiction over the
foreclosure of a Charlotte County homestead), nor were these issues joined in
that court so as to be properly adjudicated. O’Toole also did not (and could not)
“waive” his constitutionally protected rights to homestead as Beaugrand has
argued before this Court. (See, her Reply at 2, paragraph 4). 972 So.2d 854.
2. The Short Sale Issue
At the time Bob purchased his home the property was subject to a
federally-insured mortgage lien held by FEDERAL NATIONAL MORTGAGE
ASSOCIATION and was under the jurisdiction of this Court by way of a pending
foreclosure action. Federal National Mortgage Association v. Sennello, Case
#2014 CA 2394 (Porter, J.)*.. Beaugrand acted as Bob’s real estate agent in the
transaction and received a commission at closing. For this reason, by her own
admission, she was legally prohibited from taking title to the property.
This transaction (the closing was on December 18, 2015) was governed by
the restrictions of the anti-fraud provisions of duly promulgated regulations of
the Federal Housing Finance Agency (FHFA) and 12 U.S.C. Section 4642,
+ The Court may take judicial notice of these facts which are recounted at page 8, paragraph 13 of O’Toole’s
Counterclaim. Beaugrand does not deny the allegations, saying she is “without knowledge” of them.
4|PageBeaugrand y. O'Toole
Case #2017 CA 181
specifically the Anti-Fraud in Connection with Standard Short Sale/HAFA
regulations which provide, in relevant part?:
Neither the borrower nor purchaser will receive any funds or
commissions from the sale of the subject mortgage property
(emphasis supplied).
Beaugrand, as the real estate agent and author of the original purchase and
sale agreement, and representing the best interests of O’Toole as buyer in the
transaction, was obliged to amend the agreement so as to remove her as a co-
buyer of the property, as to do otherwise would be unlawful under federal law’.
Despite these laws and regulations, on January 20, 2016, she prepared a
hand-written quit claim deed of the homestead property, witnessed by her
daughter, and instructed O’Toole to execute the deed (she recorded the deed,
reproduced as Exhibit B to the Counterclaim, on January 22, 2016).
Beaugrand, as a licensed real estate agent with a fiduciary obligation to act
in the best interest of her client (Bob O’ Toole) testified that she knew that it was
not legal for her to take title to the property, and she has presented no legal or
factual argument that would make her actions lawful. Consequently, the deed
she induced O’ Toole to sign was invalid as a fraud upon the lender, See, Johnson
* The statement set forth in the foregoing entire paragraph of this motion are recounted at page 8, paragraph 14
of O’Toole’s Counterclaim. Beaugrand does not deny the statement in her Answer.
6 This paragraph is also set forth verbatim from the Counterclaim at page 9, paragraph 15, Beaugrand did not
deny that this statement is true, instead stating, again that she was “without knowledge” of these things.
5|PageBeaugrand y. O'Toole
Case #2017 CA 181
v. Dowell, 592 So.2d 1194 (Fla. 2d DCA 1992), and her attempt to assert rights
to the property in violation of the law may not succeed in this Court.
The deed Beaugrand unlawfully procured from Bob O’Toole is illegal and
is void. Frye v. Taylor, 263 S02d. 835 (Fla. 4" DCA 1972)(note executed by the
victim in furtherance of an unlawful “pyramid” scheme). As stated in Frye:
The courts of this state should be loathe to lend their support to
or give approval to any obligation which has an unlawful
transaction as its genesis.
263 So.2d 840, quoted verbatim with approval in Ekonomou v. Glenn Wright
Construction, 30 So3d 660 (Fla 4° DCA 2010)(scheme to defraud lenders in real
estate transactions). This is part of a broad refusal by the courts of Florida to
aid the enforcement of illegal contracts:
The principle that courts will not enforce illegal contracts is well
established. . . . [T]here can be no legal remedy for that which is itself
illegal. Indeed, there rests upon the courts the affirmative duty of
refusing to sustain that which by the valid laws of the state, statutory
or organic, has been declared repugnant to public policy. To do
otherwise would be for the law to aid in its own undoing.
Gonzalez v. Trujillo, 179 So. 2d 896, 897-98 (Fla. 3d DCA 1965) (citations
omitted); see also Harris v. Gonzalez, 789 So. 2d 405, 409 (Fla. 4th DCA 2001)
(where a contract is void as violative of Florida law, it "confers no enforceable
rights on appellants based upon it"); Schaal v. Race, 135 So. 2d 252, 256 (Fla. 2d
DCA 1961) (""[W]hen a contract or agreement, express or implied, is tainted with
6|PageBeaugrand y. O'Toole
Case #2017 CA 181
the vice of such illegality, no alleged right founded upon the contract or
agreement can be enforced in a court of justice." (quoting Local No. 234, etc. v.
Henley & Beckwith, Inc., 66 So. 2d 818, 821 (Fla. 1953))).
3. Lack of Consideration Issue
The facts are undisputed that Beaugrand tendered no consideration for the
unlawful deed she procured from Bob O’Toole. The facts are also undisputed
that the parties had an agreement in the nature of a joint venture whereby they
would each contribute a proportionate share of the costs of acquisition and
management of the property, in accordance with their contributions’.
Where, as in this case, a party such as Beaugrand does not acquire an
interest in property by the payment of consideration for that interest, she is not
regarded as holding title as a joint tenant, and she does not become a full one-half
owner. Waldeck v. Marks, 328 So.2d 490 (Fla. 3d DCA 1976). In Waldeck,
because Mr. Marks did not invest in the property by paying any consideration to
acquire an interest in the property, “the trial court was in error in considering the
parties as joint tenants at the beginning of this litigation.” 328 So.2d 493.
7 Counterclaim of O’Toole at 15, paragraph 62, admitted as true in Beaugrand’s Answer to
the Counterclaim. See also, paragraph 47 of the Counterclaim as to the existence of the joint
venture and the Answer thereto which does not deny the allegation.
7|PageBeaugrand y. O'Toole
Case #2017 CA 181
Instead, the court found that the interests of the parties were through a
partnership or joint venture, by which their respective equities in the underlying
property was determined by their respective investments in it. 328 So.2d 494.
So too, in this case, because she did not acquire any interest in the property as a
joint tenant (because it was unlawful for her to do so and because she tendered
no consideration for the deed she procured from Bob O’ Toole) Beaugrand cannot
assert a right to force the sale of it by way of partition. The most that she can
recover is her contribution to the expenses to maintain the property®.
Actions for partition are based in equity and are governed by Chapter 64,
Florida Statutes. Marks v. Stein, 160 So.3d 502, 506 (Fla. 2d 2015), citing
Schroeder v. Lawhon, 922 So.2d 285, 292 (Fla. 2d DCA 2006). §64.051
provides that the “court shall adjudge the rights and interests of the parties” and,
where “the rights and interests of a plaintiff are established” the court “may order
partition to be made” and order that “the interest of the plaintiffs, and such of the
defendants as have established their interests to be allotted to them.”
As stated in the motion before this Court, in this case the cause for the
forced sale of Bob O’Toole’s homestead as part of a “partition action” is a lost
5 In her complaint she asks for “an accounting of the income, profits and expenses of the
property”. Complaint at 2 (““Wherefore” clause). O’Toole has also asked for an accounting
and there is no reason that the Court should not grant that relief as to both parties.
8|PageBeaugrand y. O'Toole
Case #2017 CA 181
one for Beaugrand, as a matter of law under the undisputed facts of the case’, and
as a matter of common decency. The Court must enter judgment against her on
her claims for partition, and grant his Counterclaim to quiet title to the property.
The Court should also grant both parties’ request for an accounting and
enter judgment accordingly.
I DO HEREBY CERTIFY that a true and correct copy of the foregoing
(with attached annotations) was caused to be served by electronic mail on
December 11, 2019, upon Steele T. Williams, Esquire, STEELE T WILLIAMS,
PA, attorney for plaintiff, Pineapple Place, 1381 McAnsh Square, Sarasota,
Florida, 34236, SteeleTWilliams@Comeast.Net; and that this filing meets the
requirements of Florida Rule of Appellate Procedure 9.100(1).
Respectfully submitted,
BRET SHAWN CLARK, PA
PO BOX 1133
Englewood, Florida 34295
Tel: (941) 404-4704
BretClark@WebNetLawyer.Com
[Bret Clark
Bret Clark, Esquire FB #384038
Attorney for Robert O’Toole
NOTE: THIS MEMORADNUM WITH THE ATTACHED ANNOTATIONS
HAVE BEEN PROVIDED TO THE PRESIDING JUDGE PRIOR TO THE
HEARING, IN ACCORDANCE WITH HER STANDING REQUIREMENTS.
° The “recommended judgment” on this issue entered by the Sarasota Circuit Court is not,
according to the judge who signed it, binding on this court, nor did that Court have subject
matter jurisdiction concerning the homestead property, as all but conceded by Beaugrand in
that court and the appellate court. It therefore is not res judicata on these issues, and has no
issue or claim preclusion effect.
9|PageFrye v. Taylor, 263 So.2d 935 (Fla. App. 1972)
Page 835
263 So.2d 835
Blue Sky L. Rep. P 71,020
Thomas W. FRYE, Appellant,
ve
Norman W. TAYLOR, Appellee.
No. 73-952.
District Court of Appeal of Florida,
Fourth District.
March 9, 1972.
Page 836
J. Russell Hornsby and Dale E. Anstine, of
Law Offices of J. Russell Hornsby, Orlando, for
appellant.
No appearance for appellee.
MAGER, Judge.
Defendant appeals a final judgment
entered in favor of the plaintiff on a suit to
enforce a promissory note.
Defendant executed the note to secure a
loan of $2,500.00 made by the plaintiff to
enable defendant to purchase a directorship in
Koscot Interplanetary, Inc. Defendant
contends that the note in question is void and
unenforceable since it was given in
consideration of participation in a transaction
declared to be a lottery under Section 849.091,
Florida Statutes, F.S.A. In addition, defendant
counterclaimed for the return of $2,000.00
previously paid for the obtaining of a
supervisor position in Koscot alleging that
such payment was in violation of Chapter 517,
Florida Securities Law. '
From our review of the evidence in the
record we are of the opinion that the
transaction in question unmistakably and as
clearly as the proverbial ‘nose on the face’
constitutes a lottery within the spirit and letter
of F.S. Section 849.091, F.S.A. and that the
note sued upon for participation in such illegal
transaction is void and unenforceable. M.
“1
Lippincott Mortgage Investment Co. v.
Childress, Fla.App.1967, 204 So.2d 919.
The evidence in the record reflects an
ingenious scheme of ‘pyramid franchising’
agreements embracing multi-level
membership recruitments with the payment of
finder's fees for membership recruitment and
‘advancement’ within the various levels of such
plan. The evidence further demonstrates that
the motivating factor inducing persons to
become participants was not the sale of
cosmetics but rather the receipt of a fee or
commission through a chain process of
securing membership.
F.S. Section 849.091, F.S.A., sets forth the
type of ‘pyramid club' or ‘chain letter’ which
constitutes a lottery:
"849.091 Chain letters, pyramid clubs, etc.,
declared a lottery; prohibited; penalties.--The
organization of any chain letter club, pyramid
club, or other group organized or brought
together under any plan or device, whereby
fees or dues or anything of material value to be
paid or given by members thereof are to be
Page 837
paid or given to any other member thereof,
which plan or device includes any provision
For the increase in such membership through
a chain process of new members securing
other new members and thereby advancing
themselves in the group to a position where
such members in turn receive fees, dues or
things of material value from other members,
is hereby declared to be a lottery, and whoever
shall participate in any such lottery by
becoming a member of, or affiliating with, any
such group or organization or who shall solicit
any person for membership or affiliation in
any such group or organization shall be guilty
of a felony, and upon conviction thereof shall
be punished by a fine of not less than one
hundred dollars, nor more than five thousand
dollars, or by imprisonment in the county jail
for a period of not more than two years or inFrye v. Taylor, 263 So.2d 935 (Fla. App. 1972)
the state penitentiary not less than one year
nor more than ten years.’ (Emphasis added.)
It is difficult to discern any distinctive
difference between the scheme giving rise to
the debt in question and the prohibited chain
letter or pyramid transaction set forth in
Section 849.091. The transaction in the case
sub judice is ingenious because its survival is
dependent upon a combination of operative
simplicity, financial complexity and the basic
human desire to 'make a fast buck’. It is a
lesson in psychological motivation and
character study the likes of which would bring
an envious smile on the face of P. T. Barnum.
Under the Koscot 'plan’ there are four basic
levels of participation: beauty advisor
(retailer); coordinator (retail manager);
supervisor (wholesaler); and director
(wholesale manager). Each position requires
an investment to be made by the participant.
In the case of a person ascending to the
supervisor level, it is necessary to pay Koscot
$2,000.00; in the case of a person ascending
to the highest level of director it was necessary
to pay Koscot $2,500.00. The person
‘sponsoring’ a participant for the supervisor or
director level receives a 'finder's fee’. In the
case of a Supervisor sponsoring another
person to Become a supervisor a $500.00
finder's fee would be paid; in the case of a
Director sponsoring a person to Become a
supervisor he would receive a $750.00 fee. In
the case where a director sponsored an
individual to Move from supervisor to a
Director position the director would receive a
$2,500.00 fee. Under this latter circumstance,
however, the supervisor Could not move up to
the director position and the director would
not receive his $2,500.00 fee for sponsoring
such individual Unless the supervisor found
someone to replace himself.
Thus, it can be seen how movement occurs
at the various levels and how this chain process
initiates and continues on ad infinitum. This
process, particularly recruitment and
replacement, is perhaps most clearly
illustrated in Koscot's ‘Directors Training
-2-
Manual’ which was admitted into evidence
before the trial court:
"This is the strength of our marketing plan.
Before any Supervisor can reach the highest
position in the field, he must fill his shoes with
another Supervisor. This means the number of
Supervisors you sponsor into the program can
never decrease, but the number of Directors
you have will be continually increasing.”
In the case sub judice plaintiff was
formerly a supervisor in Koscot having
ascended to a directorship position prior to the
time of the transaction in question. As a
director plaintiff had ‘sponsored’ defendant as
a supervisor for which transaction defendant
Paid Koscot $2,000.00, with plaintiff
receiving a $750.00 finder's fee. Subsequently
plaintiff, as a director, sponsored defendant to
be elevated from his supervisorship position to
director position. It was this latter transaction
that gave rise to the $2,500.00 loan, execution
of the promissory note and this litigation.
Defendant testified, inter alia, that he agreed
to become a director and to pay Koscot
$2,500.00 if plaintiff would loan him that
amount.
Page 838
Accordingly, defendant secured a cashier's
check payable to Koscot and both plaintiff and
defendant took this check to Koscot's office;
whereupon Koscot immediately issued a
cashier's check to plaintiff as his 'finder's fee’
which check, in turn, plaintiff gave to
defendant as the substance of the loan
transaction. As heretofore mentioned, it was
necessary for defendant as supervisor to find a
replacement for himself. The record reflects
that such a replacement was found so as to
perpetuate the chain member-recruiting and
pyramid franchising process. It is interesting
to note that the monies which form the
substance of the loan traveled a full circle
going from defendant to Koscot, from Koscot
to plaintiff and from plaintiff back to
defendant.Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972)
Although there is some reference to the
sale and transfer of cosmetic products which
supposedly is the business in which Koscot is
engaged, the evidence indelibly indicates a
pyramid franchising scheme possessing all of
the requisite features and characteristics so as
to bring it within the proscription of F.S.
Section 849.091, F.S.A. A sampling of the
testimony of the parties and random
references to the Directors Training Manual
illustrates the true nature of this invidious
operation. Quoting from page 21 of the
Directors Training Manual, which embodies
the 'sales pitch’ to recruit participants:
‘As a Director, you sponsor 1 Supervisor in the
program. Now help your Supervisor become a
success. See that he is thoroughly trained
make certain he understands the program, and
help him sponsor other distributors.
‘As soon as he is ready, he will sponsor another
Supervisor to replace him, and he will become
a Director.
‘Now you have 1 Director and Still 1
Supervisor, don't you? Work with your new
Supervisor and see that he understands the
program and becomes a success. Once he is
properly trained, He will replace Himself and
He will become a Director. Now you have Two
Directors and 1 Supervisor to work with.
‘Continue to help the Supervisor you always
have, and make him a success. If it takes you
an entire month to advance each Supervisor to
Director, you will earn over $33,000 a year!
But again, get serious about this! Work with
your Supervisor full-time! Advance one
Supervisor to Director each week in your
organization and you will earn over $143,000
a year! And as a Director you sponsored only 1
man.
‘Now let us show you the greatest financial
opportunity that KOScot has to offer--the 2%
Dividend that Directors earn from the
Directors they have sponsored!
"As a Director, suppose you sponsor only 5
Supervisors into the program, and then you
work with these to make them successful.
‘If it takes you a full month to advance each
Supervisor to a Director, then at the end of 1
month, you will have 5 Directors and 5
replacement Supervisors.
‘At this rate you will gain 5 new Directors per
month, or 60 per year. In 2 years, then, you
will have 120 trained Directors with women
managers running their retail organizations.
"Suppose the average monthly volume of each
of your Directors is only $5,000. You are
receiving a 2% Dividend, and 2% Of $5,000 is
$100 a month for each Director. $100 times
120 Directors is $12,000 a month or $144,000
a year in dividends you can be earning in 2
years’ time!’ (Certain diagrams and reference
numbers omitted.)
The Training Manual dwells at great
lengths on various techniques for recruiting
Page 839
prospects. One such ‘Helpful Hint' to be
followed by a recruiter is:
"DON'T GO INTO DETAILS. Never explain the
program to a prospect before bringing him to
an Opportunity Meeting. Do not mention
Kosmetics or give any particulars, as many
people will prejudge the program and decide it
is not for them before they see the
presentation.’ (Emphasis ours.)
Under a section of the Manual entitled
‘Persuasion Techniques’ for recruitment the
following reference to the signing up of a
prospect is further illustrative of the shadowy
aspects of this operation:
‘Contract! This is another stop sign in our
language. Everyone is afraid of a contract. That
is why we have none in KOScot. We use
application forms and agreement pads.Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972)
‘No one wants to sign anything either. Ask a
prospect to sign a contract and you have just
asked him to read all the small print that you
can't always explain well enough to him. It is
much better to have him okay the agreement.’
The following testimony of plaintiff on
direct examination by defendant's counsel is
indeed illuminating:
'Q Okay. Now, was it necessary to go from a
supervisor to a director that the supervisor
going to director replace himself as a
supervisor or recruit another supervisor?
‘A Yes. I would say yes.
'Q And is this--there is Helen B. Thompson
here. Is this the supervisor who replaced Mr.
Frye?
‘A She was, yes, supervisor. And I used her to
replace and bring Mr. Frye up as director.
'Q So you recruited her rather than Mr. Frye?
‘A No. Mr. Frye was the man.
'Q Are you saying that you did not get Mrs.
Thompson to replace Mr. Frye?
‘A Oh, yes, I did that.
‘Q You found Mrs. Thompson. Is that correct?
‘A I did, that is right. She was a supervisor and
used her to bring Mr. Frye in as a Director.
'Q This was a requirement of Koscot, wasn't it?
‘A That's right.
‘Q Were you in the wholesale or retail end of
the Koscot business, Mr. Taylor?
‘A I went in the retail end of it as a supervisor,
and I wasn't interested in retail; and I went to
director and wholesale of it.
'Q Okay. Now, does the word wholesale have
any particular meaning in the parlance of
Koscot lingo?
‘A I don't know what you mean.
'Q Well, what do you mean by the term
wholesale?
‘A Go out and recruit people and bring them in
the program.’
One witness who was not a party testified:
'Q When you were a director of Koscot what
was your primary endeavor, what did you do
for Koscot as a director?
‘A I did everything that I could to recruit
people to bring in as directors.’ (Emphasis
ours.)
Schemes similar in purpose and operation
have received judicial scrutiny and were held
to be violative of the law. M. Lippincott
Mortgage Investment Co. v. Childress, supra;
Florida Discount Centers, Inc. v.
Page 840
Antinori, Fla.App.1969, 226 So.2d 693, affd
Fla.1970, 232 So.2d 17. See also Bond v. Koscot
Interplanetary, Inc., Fla.App.1971, 246 So.2d
631.
In Bond y. Koscot, supra, this court had
occasion to review the Koscot operation in the
context of whether the allegations in plaintiff's
complaint against Koscot were sufficient to
establish a cause of action. We observed in
part:
',.. If the plaintiffs are able to prove that the
method and alleged scheme as described in
their complaint constitutes a pyramid or
lottery as prohibited by Section 849.091, the
contract embodying such scheme or plan
would be unenforceable and void. ...'Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972)
In our opinion the record in the case sub
judice is more than sufficient to prove that the
transaction giving rise to the promissory note
in question constitutes a lottery as prohibited
by F.S. Section 849.091, F.S.A. Since the note
in question was given in consideration of
participation in an illegal transaction the
obligation evidenced thereby is a nullity and is
of no legal effect. M. Lippincott Mortgage
Investment Co. v. Childress, supra.
Tt would be contrary to reason and public
policy to enforce such contracts. The rationale
for not enforcing these agreements and for
leaving the parties where the court finds them
is based upon the broad ground that 'no court
will allow itself to be used where its judgment
will consummate an act forbidden by law and
upon the policy of discouraging illegal and
corrupt agreements by refusing all judicial aid
to the parties thereto’. 17 Am.Jur.2d,
Contracts, § 216.
The legislature has made its intent
abundantly clear in the enactment of Section
849.091 by prohibiting chain latter
transactions and pyramid clubs and subjecting
participants upon conviction to criminal
sanctions. The courts of this state should be
loathe to lend their support to or give approval
to any obligation which has an unlawful
transaction as its genesis. The enforcement of
any written instrument arising out of such
proscribed transactions would serve only to
encourage further shadowy ventures and
would be repugnant to sound morality and
civic honesty. A recognition, however, of the
illegality of the transaction will hopefully deter
others from entering into like illegal contracts.
With respect to the defendant's
counterclaim seeking to recover from the
plaintiff $2,000.00 which defendant paid for a
supervisorship it is our opinion that that
transaction, as evidenced by the "Distributor
Application and Agreement’, falls within the
broad definition of ‘security’ as set forth in F.S.
Section 517.02(1), F.S.A. A more detailed
discussion of the basis for this determination
is set forth in Florida Discount Centers, Inc. v.
Antinori, supra, and in State ex rel. Healy v.
Consumer Business System, Ine.,
Ore.App.1971, 482 P.2d 549. Contra Koscot
Interplanetary, Inc. v. King, Tex.Civ.App.1970,
452 S.W.2d 531. Suffice it for us to say that the
‘agreement’ or contract reflecting plaintiff's
sale and defendant's purchase of a
supervisorship position in Koscot constitutes
an ‘interest in or under a profit-sharing or
participation agreement or scheme’ within the
meaning of Section 517.02(1), F.S.A. Since the
sale of the security in question was not shown
to be in compliance with the provisions of
Chapter 517, under the provisions of F.S.
Section 517.21(1), F.S.A., such sale is declared
‘voidable at the election of the purchaser’.
The record in the case sub judice reflects
that the defendant complied with the
prerequisites for seeking the remedies under
Section 517.21. It is not necessary that the
person having made the sale be shown to be a
‘director, officer or agent’ of the seller to
render him liable to the purchaser for the full
amount paid by the purchaser. This section
declares that Every sale in violation of the
chapter is voidable and 'the person making
such sale’ shall be ‘jointly and
Page 841
severally liable to the purchaser’. The evidence
clearly shows that the sale of the
supervisorship was effectuated by the plaintiff
and that the plaintiff received a fee for such
sale.
Section 517.21 reflects a broad legislative
policy against unlawful security sales by
making all persons involved in such sales
civilly responsible regardless of whether such
person is actually acting for the seller or is
himself making the sale. The legislative intent
embodied within the provisions of Chapter 517
and F.S. Section 849.091, F.S.A., can and
should be given meaning and purpose by a
judicial finding that the type of financialFrye v. Taylor, 263 So.2d 835 (Fla. App.
activity involved in the case sub judice is
within the proscription of such laws.
It is our opinion, therefore, that the trial
court failed to give proper legal effect to the
evidence before it. Accordingly, the final
judgment is reversed with directions to enter
judgment in favor of the defendant on
plaintiffs claim and on _ defendant's
counterclaim.
CROSS and OWEN, JJ., concur.
1 It should be noted that the plaintiff-appellee
has not favored us with a brief and
consequently we do not have the benefit of his
intentions in this matter. As the Supreme
Court of Florida observed in Griffith v.
Shamrock Village, Fla.1957, 94 So.2d 854,
858: '. . . Briefs of the parties are of great
assistance to this Court. If such were not true
there would be no cause for allowing them to
be filed. Failure to file a brief frequently reacts
to the detriment of a party.’
-6-onomou v. Glenn Wright,
& Dey. ine, 36 So.3d 669 (Fla. App. 2010)
30 So.3d 660
Nicholas EKONOMOU, Appellant,
v.
GLENN WRIGHT CONSTRUCTION &
DEVELOPMENT, INC., Appellee.
No. 4D09-438.
District Court of Appeal of Florida,
Fourth District.
March 17, 2010.
Rehearing Denied April 16, 2010.
Manuel J. Mari of Manuel J. Mari, P.A.,
Miami, for appellant.
Perry M. Adair and Lilliana M. Farinas-
Sabogal of Becker & Poliakoff, P.A., Coral
Gables, for appellee.
MAY, J.
The plaintiff appeals the dismissal with
prejudice of his second amended complaint for
breach of contract. He argues the trial court
erred in dismissing the second amended
complaint with prejudice and without leave to
amend. We disagree and affirm.
In the second amended complaint, the
plaintiff alleged that he had entered into an
oral agreement with the defendant developer.
The agreement called for the plaintiff to
execute contracts for the purchase of real
properties from the developer so that the
developer could obtain construction loans for
those properties. The plaintiff would tender a
deposit to the developer, but that deposit
would be returned with interest upon the
actual sale of the properties to another buyer.
The plaintiff would not be required to close on
the properties.
The developer moved to dismiss the
second amended complaint because it alleged
an illegal purpose. The trial court agreed and
“1
dismissed the complaint with prejudice. The
plaintiff now appeals.
We have de novo review of dismissal
orders. Kreizinger v. Schlesinger, 925 So.2d
431, 432 (Fla. 4th DCA 2006).
We have reviewed the second amended
complaint and are in accord with the trial
court. "The courts of this state should be loathe
sic to lend their support to or give approval to
any obligation which has an unlawful
transaction as its genesis." Frye v. Taylor, 263
So.2d 835, 840 (Fla. 4th DCA 1972). The
second amended complaint here described a
scheme to defraud lenders by providing fake
contracts for the sale of property to influence
lenders to
[30 So.3d 661]
loan money to the developer. Neither the trial
court nor we will condone such fraud.
Affirmed.
HAZOURI and DAMOORGIAN,
concur.
JJ,Schaal v.
Page 252
135 So.2d 252
Peter SCHAAL, d/b/a Orlando
Advertising Co., Appellant,
v.
Charlie RACE, Appellee.
No. 2482.
District Court of Appeal of Florida,
Second District.
Dec. 8, 1961.
Page 253
Robert G. Murrell, Robert Petree, Sam E.
Murrell & Sons, Orlando, for appellant.
Harvey Crittenden, Crittenden &
Crittenden, Winter Haven, for appellee.
ALLEN, Acting Chief Judge.
Appellant seeks review of a final order
entered by the court below dismissing his
amended complaint with prejudice. Appellee
was defendant below.
Plaintiff filed his original complaint for
damages arising out of defendant's refusal to
pay for advertising services under an oral
contract rendered defendant in connection
with his political campaign for Commissioner
of Agriculture. Defendant moved to dismiss on
the ground that the agreement sought to be
enforced is illegal and unenforceable under
Chapter 99, F.S.A., and does not state a cause
of action for which relief can be granted.
Plaintiff moved for summary judgment
supported by his own affidavit setting forth
essentially the facts alleged in the original
complaint. Defendant's motion to dismiss the
original complaint was granted with leave to
amend, the lower court reserving its ruling on
plaintiff's motion for summary judgment. The
amended complaint set forth basically the
same allegations as the original except that
specific references to a political campaign were
deleted. Defendant moved to dismiss the
amended complaint.
“1
In its final order the lower court dismissed
the amended complaint with prejudice stating
as its reasons therefor that the alleged
agreement set forth in the original complaint
was clearly in violation of Chapter 99, F.S.A.,
and that the amended complaint was
essentially the same as the original except that
it eliminated reference to services to be
furnished plaintiff by defendant as a candidate
for Commissioner of Agriculture. The court,
referring to the original complaint, the court's
order dismissing same and plaintiff's affidavit
in support of motion for summary judgment,
found that the amended complaint is fictitious,
a sham, and molded for the sole purpose of
staying in court. The court's order further
stated:
'The purpose of pleading is to determine in the
suit the real question on controversy. To
accomplish this purpose the law favors
liberality in amendments to pleadings. This
liberality does not mean that a pleader at his
convenience may insert or remove an essential
element in a suit on a contract, which element
materially affects the enforceability of the
contract.’
The plaintiff below has assigned as error
the granting of the motion to dismiss the
original complaint and also the dismissal of
the amended complaint.
We shall consider first the decision of the
lower court in dismissing the amended
complaint as a sham since it was apparent
from the record that the amended complaint
deleted from the original complaint all
references to an election, which showed in the
original complaint an illegal contract. Not only
did the court have before it the original
complaint which showed the true facts in
connection with the subject matter of the
complaint, but the plaintiff had also filed an
affidavit in aid of his motion for summary
judgment which
Page 254Schaal v.
set forth the same facts that were included in
the original complaint, although the court did
not rule on the motion for summary judgment.
In 21 R.C.L., Pleadings, § 17, p. 452, it is
stated:
‘** * And so ina case where a denial is contrary
to an admission, the admission must prevail,
and the denial should be stricken out as sham
or irrelevant.’
See Hayward v. Grant, 13 Minn. 165, 97
Am.Dec. 228.
The Florida Supreme Court in Rhea v.
Hackney, 117 Fla. 62, 157 So. 190, 193, said:
‘A plea is considered ‘sham’ when it is palpably
or inherently false, and from the plain or
conceded facts in the case, must have been
known to the party interposing it to be untrue.
Pleading a matter known by the party to be
‘false’ for the purpose of delay or other
unworthy object, has always been considered a
very culpable abuse against justice, and at
common law was subject to censure and
summary setting aside with costs. 1 Chitty on
Pleading (7th Ed.) p. 541; 2 Bouvier’s Law
Dictionary, p. 680.
‘In most jurisdictions a sham pleading may, in
a proper case, be struck out on motion. The
power is not derived from statute but is
inherent in the court. Its exercise is not
objectionable as infringing the right of trial by
jury, for the right of a defendant to a jury trial
depends upon there being a real issue to be
tried. The court has power to determine as a
matter of judicial cognizance whether there is
such an issue, and whether an ostensible issue
is in reality fictitious and sham, though the
court does not have power to try the issue if
there is one in truth as well as in form.
eee
eee
-2-
‘A ‘sham’ plea is one good on its face but
absolutely false in fact. A 'frivolous' plea is one
which on its face plainly sets up no defense,
although it may be true in fact. One is as
objectionable as the other in frustrating the
orderly administration of justice. * * * Hence it
is a judicial prerogative inherent in a court to
strike out pleadings that are either sham or
frivolous. * * *
In the case of Meadows v. Edwards,
Fla.1955, 82 So.2d 733, 735, the Supreme
Court, in an opinion by Justice Barns, stated:
"In order to justify the striking of a pleading for
being sham or false it must be so undoubtedly
false as not to be subject to a genuine issue of
fact. The motion should be tested by the same
standards as a motion for a summary
judgment in the following respects. Such
procedure is a method for promptly disposing
of actions in which there is no genuine issue as
to any material fact and the term ‘genuine
issue’ is not meant to be necessarily confined
to a pleading or paper issue. To use the
language of Judge Cardozo, later Justice, made
in reference to the law applicable to motions
for summary judgment, 6 Moore's Federal
Practice 2d 2028, to the effect that the very
object of a motion for judgment because of
sham pleadings 'is to separate what is formal
or pretended in denial or averment from what
is genuine or substantial, so that only the latter
may subject a suitor to the burden of trial.' * *
et
We hold that the lower court was justified
in dismissing the amended complaint as a
sham in view of the record in the case then
before him.
When questioned by the court, the
attorney for the appellant-plaintiff answered
frankly that it would serve no purpose to
overrule the lower court on dismissing the
amended complaint as the data eliminated
Page 255Schaal v.
from the original complaint would necessarily
be brought out ina trial of the case and that the
real question with which they were concerned
was whether or not the court erred in
dismissing the original complaint because the
indebtedness incurred violated the corrupt
practice provisions of Florida's election code.
The circuit Court of Hillsborough County
upheld the constitutionality of Chapter 99,
F.S.A., in the case of Smith v. Ervin. The
Supreme Court in Smith v. Ervin, Fla.1953, 64
So.2d 166, 168, quoted copiously from the
opinion and decision of the late Circuit Judge
Henry C. Tillman, who was the lower court
judge, as follows:
‘The learned Chancellor who heard and
decided this case wrote an able opinion.
Pertinent portions of the opinion are:
"This case involves the constitutionality of a
part of what has come to be known as The
Election Code, which was enacted as Chapter
26870, the laws of Florida 1951, the
codification of which is Section 99.061, which
is a section dealing with contributions to
candidates, expenditure of campaign funds,
and the filing of reports in relation thereto.
Subsections (4)(a) and (7) of Section 99.161
are as follows:
"(4) Campaign Treasurer in Charge of Funds:
Time Limit.----
"(a) No contribution or expenditure of money
or other thing of value, nor obligation therefor,
shall be made, received, or incurred, directly
or indirectly, in furtherance of the candidacy of
any candidate for political office in the State of
Florida except through the duly appointed
campaign treasurer or deputy campaign
treasurers of the candidate.
nee
eee
"(7) Written Authorization of Expenditure
Required.----
"No expenses shall be incurred by any
candidate for election or nomination to
political office, or by any person, corporation,
or association in his behalf, or in furtherance
or aid of his candidacy, unless prior to the
incurring of the expense a written order shall
be made in and upon the form prescribed, and
signed by the campaign treasurer of the
candidate authorizing the expenditure, and no
money shall be withdrawn or paid by any
campaign depository from any campaign fund
account except upon the presentation of the
written order, so signed, accompanied by the
certificate of the person claiming the payment,
which certificate shall state that the amount
named in the order, or such part thereof as
may be claimed, naming the amount claimed,
is justly due and owing to the claimant, that
the order truly states all of the purposes for
which the indebtedness was incurred, and that
no person other than the claimant is
interested, directly or indirectly, in the
payment of the claim, and unless an order for
payment in and upon the form prescribed, and
signed by the campaign treasurer or deputy
treasurer, is presented to the campaign
depository; provided that any such
authorization may be issued by the campaign
treasurer to the candidate for traveling
expenses still to be incurred. The order
authorizing such expenditure, the certificate
and the order for payment shall be on the same
piece of paper.’
"This statute provides a penalty amounting to
a misdemeanor for violation of Section 99.161
by an individual, and which reads as follows,
in Section 104.27:
104.27 Penalties for violation of § 99.161.----
™() Any person who knowingly violates the
provisions of § 99.161 shall be deemed guilty of
a misdemeanor and subject to a fine of not
more than oneSchaal v.
135 So. 2d 252 (Fla. A
Page 256
thousand dollars or to imprisonment for not
more than six months.’
oa
eee
“Otherwise, how could the elector ever tell who
was behind this candidate or that; and the
Legislature chose the only way by which the
contributions to campaigns could be policed
and become the knowledge of any man who
would take the trouble to go to the state agency
where the reports are assembled. There would
be little use in the balance of the act
prohibiting the contributions from race track
owners, dog track owners, public utilities, and
other interests considered undesirable
proponents of a candidate in Florida unless the
Legislature devised a way by which it could be
ascertained by the people as to who were
supporting and putting up the money for the
candidate."
The Supreme Court in Citizens' Bank &
Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714,
717, said:
‘In Lassiter & Co. v. Taylor, 99 Fla. 819, 128 So.
14, 19, 69 A.L.R. 689, in an opinion written by
Mr. Commissioner Davis, this court said,
quoting with approval from Berka v.
Woodward, 125 Cal. 119, 57 P. 777, 45 L.R.A.
420, 73 Am.St.Rep. 31:
"This, then, is the undoubted rule, that, when
a contract is expressly prohibited by law, no
court of justice will entertain an action upon it,
or upon any asserted rights growing out of it.
And the reason is apparent; for to permit this
would be for the law to aid in its own undoing.
Says the Supreme Court of the United States in
President, etc., v. Owens, 2 Pet. 527 [7 L.Ed.
508]: "No court of justice can, in its nature, be
made the handmaid of iniquity. Courts are
instituted to carry into effect the laws of the
county. How can they become auxiliary to the
cosummation of violations of law? There can
be no civil right where there can be no legal
remedy, and there can be no legal remedy for
that which is itself illegal.’ And again the same
august tribunal, in Coppell v. Hall, 7 Wall. 542
[19 L.Ed. 244], says:
™ Whenever the illegality appears, whether the
evidence comes from one side or the other, the
disclosure is fatal to the case. No consent of the
defendant can neutralize its effect. A
stipulation in the most solemn form to waive
the objection would be tainted with the vice of
the original contract and void for the same
reasons.
"Where the contamination reaches it destroys.
The principle to be extracted from all the cases
is that the law will not lend its support to a
claim founded on its own violation."
‘In Escambia Land & Mfg. Co. v. Ferry Pass
Inspectors, etc., Association, 59 Fla. 239, 52
So. 715, 717, 138 Am.St.Rep. 121, it was said:
‘Courts will take notice of their own motion,
too, of illegal contracts which come before
them for adjudication, and will leave the
parties where they placed themselves.’ To like
effect is Stewart v. Stearns & Culver Lbr. Co.,
56 Fla. 570, 48 So. 19, 24 L.R.A. (N.S.) 649."
In Local No. 234, etc. v. Henley &
Beckwith, Inc., Fla.1953, 66 So.2d 818, 821,
the Supreme Court of Florida said:
'We reach this conclusion for the very evident
reason that an agreement that is violative of a
provision of a constitution ora valid statute, or
an agreement which cannot be performed
without violating such a constitutional or
statutory provision, is illegal and void. Lassiter
& Co. v. Taylor, 99 Fla. 819, 128 So. 14, 69
A.L.R. 689. And when a contract or agreement,
express or implied, is tainted with the vice of
such illegality, no alleged right founded upon
the contract or agreement can be enforced ina
court of justice. 12 Am.Jur., Contracts, secs.
Page 257Schaal v.
135 So. 2d 252 (Fla. A
160, 209. Where the parties to such an
agreement are in pari delicto the law will leave
them where it finds them; relief will be refused
in the courts because of the public interest.
Stewart v. Stearns and Culver Lumber Co., 56
Fla. 570, 48 So. 19, 24 L.R.A., N.S., 649;
Escambia Land & Mfg. Co. v. Ferry Pass
Inspectors & Shippers Ass'n, 59 Fla. 239, 52
So. 715, 138 Am.St.Rep. 121. For courts have no
right to ignore or set aside a public policy
established by the legislature or the people.
Indeed, there rests upon the courts the
affirmative duty of refusing to sustain that
which by the valid statutes of the jurisdiction,
or by the constitution, has been declared
repugnant to public policy.’ See also L. Maxcy,
Inc. v. Mayo, 103 Fla. 552, 139 So. 121; State ex
rel. Johnson v. Patterson, 67 Fla. 499, 65 So.
659; and Escambia Land & Mfg. Co. v. Ferry
Pass I. & S. Ass'n, 59 Fla. 239, 52 So. 715.
Pomeroy's Specific Performance of
Contracts, 3d Edition, p. 642, § 280, Illegal
Contracts Void, states:
‘An illegal contract is, as a rule, void--not
merely voidable--and can be the
Preview
Filing # 100163973 E-Filed 12/11/2019 03:19:48 PM IN THE 20™ CIRCUIT COURT IN AND FOR CHARLOTTE COUNTY, FLORIDA CASE #2017 CA 000181 IRIS BEAUGRAND, etc., Plaintiff/Counter-Defendant, v. BOB O’TOOLE’S MEMORANDUM IN SUPPORT OF HIS MOTION FOR ROBERT O’TOOLE, PARTIAL SUMMARY JUDGMENT Defendant/Counter-Plaintiff. / Iris Beaugrand has filed a lawsuit against Bob O’Toole to foreclose upon his homestead. She does this by way of an action for partition based upon a handwritten deed (that she wrote) that she induced him to sign. This deed, that purports to place her name on the title to his home, is unlawful. This is because she was the real estate agent representing Bob in his purchase of the property at a short sale that, under federal law, prohibited her from participating in the closing as a buyer. In prior testimony, she admits that this is so!. She also paid no money for this deed that she extracted from Bob. These are the undisputed, material facts that were developed during a trial between the parties that took place in Sarasota circuit court. These facts (as well | She testified that she knew the short sale regulations prohibited the transfer but that her broker told her it would be OK if she waited 90 days after the closing to do it. Yet she inexplicably had Bob sign the deed only 32 days after the closing. Motion for Partial Summary Judgment at 5-6, citing record material in support of these facts. Neither she nor her broker have proffered any legal basis for the proposition that a real estate agent (and her broker) can violate the anti-fraud provisions of the federal regulations applicable to short sales, by simply waiting 90 days (or any other period of time) after the closing.Beaugrand y. O'Toole Case #2017 CA 181 as others concerning the course of the dealings between the parties) are laid out in some detail in Bob’s motion seeking partial summary judgment. References to the source material for these facts is set forth in the motion. Based on these essential facts concerning Beaugrand’s attempt to foreclose on her ex-boyfriend’s homestead? Bob O’Toole has filed a motion for partial summary judgment which sets forth his arguments as to why, as a matter of law, (1) she cannot foreclose on his homestead (pages 7-8) in violation of the Florida Constitution; (2) she cannot enforce any rights under the quit claim deed in her favor that she illegally induced her client to execute (pages 8-10); and (3) she cannot claim rights to the property as a co-tenant because she did not contribute any consideration in exchange for the errant deed she procured(10-12). Given the undisputed facts germane to these three issues, Bob O’ Toole is entitled to judgment as a matter of law in his favor and against Iris Beaugrand on her claim to the partition and forced sale of his homestead, and in his favor and against her on his counterclaim to quiet title to the property*. The legal analysis in support of these arguments is well-briefed in the speaking motion now before this Court, and are summarized here: ? Bob was obliged to move into his present quarters on the occasion of his having to leave the home the parties shared together for nearly nine years. He could not move back into the house where he used to live because, again at the insistence of Beaugrand, he had rented that property and at the time of the separation his other home was occupied by tenants. > The motion also advances a fourth, unrelated argument conceming the undisputed facts as to the contract between the parties and the breach of that contract by Beaugrand.Beaugrand y. O'Toole Case #2017 CA 181 1. The Homestead Rights Issue As set forth more fully in the motion, The Florida Constitution grants strong homestead protection to real property. Art. X, § 4(a), Fla. Const. This protection is liberally construed; "the Florida constitutional exemption of homesteads protects the homestead against every type of claim and judgment except those specifically mentioned in the constitutional provision itself[.]" Havoco of Am., Ltd. v. Hill, 790 So. 2d 1018, 1021 n.5 (Fla. 2001) (internal quotation omitted). Unsecured creditors (creditors such as Beaugrand and/or her mother who do not have a note secured by a mortgage to this property) are not included as an exception to the homestead exemption. Chames v. DeMayo, 972 So. 2d 850, 852 (Fla. 2007) (other citations omitted here). The purported “note” attached to the Beaugrand complaint (even if it were not a forgery) is insufficient as a matter of law to avoid the homestead protections because it is not a mortgage. See Chames v. DeMayo, at 854 (noting the difference between promissory notes, retainer agreements, and other unsecured instruments, versus mortgages). Beaugrand is unable to prove that the forced sale of Bob O’Toole’s home is permissible under the Florida Constitution, nor has she met the standing and vigorous pleading requirements in a foreclosure case. See, Russell v. Aurora Loan Services, 163 So.3d (Fla. 2"! DCA 2015); Fla.R.Civ.Pro. 1.115. 3|PageBeaugrand y. O'Toole Case #2017 CA 181 No pleadings concerning these issues were filed by Beaugrand in the Sarasota Circuit Court (which lacked subject matter jurisdiction over the foreclosure of a Charlotte County homestead), nor were these issues joined in that court so as to be properly adjudicated. O’Toole also did not (and could not) “waive” his constitutionally protected rights to homestead as Beaugrand has argued before this Court. (See, her Reply at 2, paragraph 4). 972 So.2d 854. 2. The Short Sale Issue At the time Bob purchased his home the property was subject to a federally-insured mortgage lien held by FEDERAL NATIONAL MORTGAGE ASSOCIATION and was under the jurisdiction of this Court by way of a pending foreclosure action. Federal National Mortgage Association v. Sennello, Case #2014 CA 2394 (Porter, J.)*.. Beaugrand acted as Bob’s real estate agent in the transaction and received a commission at closing. For this reason, by her own admission, she was legally prohibited from taking title to the property. This transaction (the closing was on December 18, 2015) was governed by the restrictions of the anti-fraud provisions of duly promulgated regulations of the Federal Housing Finance Agency (FHFA) and 12 U.S.C. Section 4642, + The Court may take judicial notice of these facts which are recounted at page 8, paragraph 13 of O’Toole’s Counterclaim. Beaugrand does not deny the allegations, saying she is “without knowledge” of them. 4|PageBeaugrand y. O'Toole Case #2017 CA 181 specifically the Anti-Fraud in Connection with Standard Short Sale/HAFA regulations which provide, in relevant part?: Neither the borrower nor purchaser will receive any funds or commissions from the sale of the subject mortgage property (emphasis supplied). Beaugrand, as the real estate agent and author of the original purchase and sale agreement, and representing the best interests of O’Toole as buyer in the transaction, was obliged to amend the agreement so as to remove her as a co- buyer of the property, as to do otherwise would be unlawful under federal law’. Despite these laws and regulations, on January 20, 2016, she prepared a hand-written quit claim deed of the homestead property, witnessed by her daughter, and instructed O’Toole to execute the deed (she recorded the deed, reproduced as Exhibit B to the Counterclaim, on January 22, 2016). Beaugrand, as a licensed real estate agent with a fiduciary obligation to act in the best interest of her client (Bob O’ Toole) testified that she knew that it was not legal for her to take title to the property, and she has presented no legal or factual argument that would make her actions lawful. Consequently, the deed she induced O’ Toole to sign was invalid as a fraud upon the lender, See, Johnson * The statement set forth in the foregoing entire paragraph of this motion are recounted at page 8, paragraph 14 of O’Toole’s Counterclaim. Beaugrand does not deny the statement in her Answer. 6 This paragraph is also set forth verbatim from the Counterclaim at page 9, paragraph 15, Beaugrand did not deny that this statement is true, instead stating, again that she was “without knowledge” of these things. 5|PageBeaugrand y. O'Toole Case #2017 CA 181 v. Dowell, 592 So.2d 1194 (Fla. 2d DCA 1992), and her attempt to assert rights to the property in violation of the law may not succeed in this Court. The deed Beaugrand unlawfully procured from Bob O’Toole is illegal and is void. Frye v. Taylor, 263 S02d. 835 (Fla. 4" DCA 1972)(note executed by the victim in furtherance of an unlawful “pyramid” scheme). As stated in Frye: The courts of this state should be loathe to lend their support to or give approval to any obligation which has an unlawful transaction as its genesis. 263 So.2d 840, quoted verbatim with approval in Ekonomou v. Glenn Wright Construction, 30 So3d 660 (Fla 4° DCA 2010)(scheme to defraud lenders in real estate transactions). This is part of a broad refusal by the courts of Florida to aid the enforcement of illegal contracts: The principle that courts will not enforce illegal contracts is well established. . . . [T]here can be no legal remedy for that which is itself illegal. Indeed, there rests upon the courts the affirmative duty of refusing to sustain that which by the valid laws of the state, statutory or organic, has been declared repugnant to public policy. To do otherwise would be for the law to aid in its own undoing. Gonzalez v. Trujillo, 179 So. 2d 896, 897-98 (Fla. 3d DCA 1965) (citations omitted); see also Harris v. Gonzalez, 789 So. 2d 405, 409 (Fla. 4th DCA 2001) (where a contract is void as violative of Florida law, it "confers no enforceable rights on appellants based upon it"); Schaal v. Race, 135 So. 2d 252, 256 (Fla. 2d DCA 1961) (""[W]hen a contract or agreement, express or implied, is tainted with 6|PageBeaugrand y. O'Toole Case #2017 CA 181 the vice of such illegality, no alleged right founded upon the contract or agreement can be enforced in a court of justice." (quoting Local No. 234, etc. v. Henley & Beckwith, Inc., 66 So. 2d 818, 821 (Fla. 1953))). 3. Lack of Consideration Issue The facts are undisputed that Beaugrand tendered no consideration for the unlawful deed she procured from Bob O’Toole. The facts are also undisputed that the parties had an agreement in the nature of a joint venture whereby they would each contribute a proportionate share of the costs of acquisition and management of the property, in accordance with their contributions’. Where, as in this case, a party such as Beaugrand does not acquire an interest in property by the payment of consideration for that interest, she is not regarded as holding title as a joint tenant, and she does not become a full one-half owner. Waldeck v. Marks, 328 So.2d 490 (Fla. 3d DCA 1976). In Waldeck, because Mr. Marks did not invest in the property by paying any consideration to acquire an interest in the property, “the trial court was in error in considering the parties as joint tenants at the beginning of this litigation.” 328 So.2d 493. 7 Counterclaim of O’Toole at 15, paragraph 62, admitted as true in Beaugrand’s Answer to the Counterclaim. See also, paragraph 47 of the Counterclaim as to the existence of the joint venture and the Answer thereto which does not deny the allegation. 7|PageBeaugrand y. O'Toole Case #2017 CA 181 Instead, the court found that the interests of the parties were through a partnership or joint venture, by which their respective equities in the underlying property was determined by their respective investments in it. 328 So.2d 494. So too, in this case, because she did not acquire any interest in the property as a joint tenant (because it was unlawful for her to do so and because she tendered no consideration for the deed she procured from Bob O’ Toole) Beaugrand cannot assert a right to force the sale of it by way of partition. The most that she can recover is her contribution to the expenses to maintain the property®. Actions for partition are based in equity and are governed by Chapter 64, Florida Statutes. Marks v. Stein, 160 So.3d 502, 506 (Fla. 2d 2015), citing Schroeder v. Lawhon, 922 So.2d 285, 292 (Fla. 2d DCA 2006). §64.051 provides that the “court shall adjudge the rights and interests of the parties” and, where “the rights and interests of a plaintiff are established” the court “may order partition to be made” and order that “the interest of the plaintiffs, and such of the defendants as have established their interests to be allotted to them.” As stated in the motion before this Court, in this case the cause for the forced sale of Bob O’Toole’s homestead as part of a “partition action” is a lost 5 In her complaint she asks for “an accounting of the income, profits and expenses of the property”. Complaint at 2 (““Wherefore” clause). O’Toole has also asked for an accounting and there is no reason that the Court should not grant that relief as to both parties. 8|PageBeaugrand y. O'Toole Case #2017 CA 181 one for Beaugrand, as a matter of law under the undisputed facts of the case’, and as a matter of common decency. The Court must enter judgment against her on her claims for partition, and grant his Counterclaim to quiet title to the property. The Court should also grant both parties’ request for an accounting and enter judgment accordingly. I DO HEREBY CERTIFY that a true and correct copy of the foregoing (with attached annotations) was caused to be served by electronic mail on December 11, 2019, upon Steele T. Williams, Esquire, STEELE T WILLIAMS, PA, attorney for plaintiff, Pineapple Place, 1381 McAnsh Square, Sarasota, Florida, 34236, SteeleTWilliams@Comeast.Net; and that this filing meets the requirements of Florida Rule of Appellate Procedure 9.100(1). Respectfully submitted, BRET SHAWN CLARK, PA PO BOX 1133 Englewood, Florida 34295 Tel: (941) 404-4704 BretClark@WebNetLawyer.Com [Bret Clark Bret Clark, Esquire FB #384038 Attorney for Robert O’Toole NOTE: THIS MEMORADNUM WITH THE ATTACHED ANNOTATIONS HAVE BEEN PROVIDED TO THE PRESIDING JUDGE PRIOR TO THE HEARING, IN ACCORDANCE WITH HER STANDING REQUIREMENTS. ° The “recommended judgment” on this issue entered by the Sarasota Circuit Court is not, according to the judge who signed it, binding on this court, nor did that Court have subject matter jurisdiction concerning the homestead property, as all but conceded by Beaugrand in that court and the appellate court. It therefore is not res judicata on these issues, and has no issue or claim preclusion effect. 9|PageFrye v. Taylor, 263 So.2d 935 (Fla. App. 1972) Page 835 263 So.2d 835 Blue Sky L. Rep. P 71,020 Thomas W. FRYE, Appellant, ve Norman W. TAYLOR, Appellee. No. 73-952. District Court of Appeal of Florida, Fourth District. March 9, 1972. Page 836 J. Russell Hornsby and Dale E. Anstine, of Law Offices of J. Russell Hornsby, Orlando, for appellant. No appearance for appellee. MAGER, Judge. Defendant appeals a final judgment entered in favor of the plaintiff on a suit to enforce a promissory note. Defendant executed the note to secure a loan of $2,500.00 made by the plaintiff to enable defendant to purchase a directorship in Koscot Interplanetary, Inc. Defendant contends that the note in question is void and unenforceable since it was given in consideration of participation in a transaction declared to be a lottery under Section 849.091, Florida Statutes, F.S.A. In addition, defendant counterclaimed for the return of $2,000.00 previously paid for the obtaining of a supervisor position in Koscot alleging that such payment was in violation of Chapter 517, Florida Securities Law. ' From our review of the evidence in the record we are of the opinion that the transaction in question unmistakably and as clearly as the proverbial ‘nose on the face’ constitutes a lottery within the spirit and letter of F.S. Section 849.091, F.S.A. and that the note sued upon for participation in such illegal transaction is void and unenforceable. M. “1 Lippincott Mortgage Investment Co. v. Childress, Fla.App.1967, 204 So.2d 919. The evidence in the record reflects an ingenious scheme of ‘pyramid franchising’ agreements embracing multi-level membership recruitments with the payment of finder's fees for membership recruitment and ‘advancement’ within the various levels of such plan. The evidence further demonstrates that the motivating factor inducing persons to become participants was not the sale of cosmetics but rather the receipt of a fee or commission through a chain process of securing membership. F.S. Section 849.091, F.S.A., sets forth the type of ‘pyramid club' or ‘chain letter’ which constitutes a lottery: "849.091 Chain letters, pyramid clubs, etc., declared a lottery; prohibited; penalties.--The organization of any chain letter club, pyramid club, or other group organized or brought together under any plan or device, whereby fees or dues or anything of material value to be paid or given by members thereof are to be Page 837 paid or given to any other member thereof, which plan or device includes any provision For the increase in such membership through a chain process of new members securing other new members and thereby advancing themselves in the group to a position where such members in turn receive fees, dues or things of material value from other members, is hereby declared to be a lottery, and whoever shall participate in any such lottery by becoming a member of, or affiliating with, any such group or organization or who shall solicit any person for membership or affiliation in any such group or organization shall be guilty of a felony, and upon conviction thereof shall be punished by a fine of not less than one hundred dollars, nor more than five thousand dollars, or by imprisonment in the county jail for a period of not more than two years or inFrye v. Taylor, 263 So.2d 935 (Fla. App. 1972) the state penitentiary not less than one year nor more than ten years.’ (Emphasis added.) It is difficult to discern any distinctive difference between the scheme giving rise to the debt in question and the prohibited chain letter or pyramid transaction set forth in Section 849.091. The transaction in the case sub judice is ingenious because its survival is dependent upon a combination of operative simplicity, financial complexity and the basic human desire to 'make a fast buck’. It is a lesson in psychological motivation and character study the likes of which would bring an envious smile on the face of P. T. Barnum. Under the Koscot 'plan’ there are four basic levels of participation: beauty advisor (retailer); coordinator (retail manager); supervisor (wholesaler); and director (wholesale manager). Each position requires an investment to be made by the participant. In the case of a person ascending to the supervisor level, it is necessary to pay Koscot $2,000.00; in the case of a person ascending to the highest level of director it was necessary to pay Koscot $2,500.00. The person ‘sponsoring’ a participant for the supervisor or director level receives a 'finder's fee’. In the case of a Supervisor sponsoring another person to Become a supervisor a $500.00 finder's fee would be paid; in the case of a Director sponsoring a person to Become a supervisor he would receive a $750.00 fee. In the case where a director sponsored an individual to Move from supervisor to a Director position the director would receive a $2,500.00 fee. Under this latter circumstance, however, the supervisor Could not move up to the director position and the director would not receive his $2,500.00 fee for sponsoring such individual Unless the supervisor found someone to replace himself. Thus, it can be seen how movement occurs at the various levels and how this chain process initiates and continues on ad infinitum. This process, particularly recruitment and replacement, is perhaps most clearly illustrated in Koscot's ‘Directors Training -2- Manual’ which was admitted into evidence before the trial court: "This is the strength of our marketing plan. Before any Supervisor can reach the highest position in the field, he must fill his shoes with another Supervisor. This means the number of Supervisors you sponsor into the program can never decrease, but the number of Directors you have will be continually increasing.” In the case sub judice plaintiff was formerly a supervisor in Koscot having ascended to a directorship position prior to the time of the transaction in question. As a director plaintiff had ‘sponsored’ defendant as a supervisor for which transaction defendant Paid Koscot $2,000.00, with plaintiff receiving a $750.00 finder's fee. Subsequently plaintiff, as a director, sponsored defendant to be elevated from his supervisorship position to director position. It was this latter transaction that gave rise to the $2,500.00 loan, execution of the promissory note and this litigation. Defendant testified, inter alia, that he agreed to become a director and to pay Koscot $2,500.00 if plaintiff would loan him that amount. Page 838 Accordingly, defendant secured a cashier's check payable to Koscot and both plaintiff and defendant took this check to Koscot's office; whereupon Koscot immediately issued a cashier's check to plaintiff as his 'finder's fee’ which check, in turn, plaintiff gave to defendant as the substance of the loan transaction. As heretofore mentioned, it was necessary for defendant as supervisor to find a replacement for himself. The record reflects that such a replacement was found so as to perpetuate the chain member-recruiting and pyramid franchising process. It is interesting to note that the monies which form the substance of the loan traveled a full circle going from defendant to Koscot, from Koscot to plaintiff and from plaintiff back to defendant.Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972) Although there is some reference to the sale and transfer of cosmetic products which supposedly is the business in which Koscot is engaged, the evidence indelibly indicates a pyramid franchising scheme possessing all of the requisite features and characteristics so as to bring it within the proscription of F.S. Section 849.091, F.S.A. A sampling of the testimony of the parties and random references to the Directors Training Manual illustrates the true nature of this invidious operation. Quoting from page 21 of the Directors Training Manual, which embodies the 'sales pitch’ to recruit participants: ‘As a Director, you sponsor 1 Supervisor in the program. Now help your Supervisor become a success. See that he is thoroughly trained make certain he understands the program, and help him sponsor other distributors. ‘As soon as he is ready, he will sponsor another Supervisor to replace him, and he will become a Director. ‘Now you have 1 Director and Still 1 Supervisor, don't you? Work with your new Supervisor and see that he understands the program and becomes a success. Once he is properly trained, He will replace Himself and He will become a Director. Now you have Two Directors and 1 Supervisor to work with. ‘Continue to help the Supervisor you always have, and make him a success. If it takes you an entire month to advance each Supervisor to Director, you will earn over $33,000 a year! But again, get serious about this! Work with your Supervisor full-time! Advance one Supervisor to Director each week in your organization and you will earn over $143,000 a year! And as a Director you sponsored only 1 man. ‘Now let us show you the greatest financial opportunity that KOScot has to offer--the 2% Dividend that Directors earn from the Directors they have sponsored! "As a Director, suppose you sponsor only 5 Supervisors into the program, and then you work with these to make them successful. ‘If it takes you a full month to advance each Supervisor to a Director, then at the end of 1 month, you will have 5 Directors and 5 replacement Supervisors. ‘At this rate you will gain 5 new Directors per month, or 60 per year. In 2 years, then, you will have 120 trained Directors with women managers running their retail organizations. "Suppose the average monthly volume of each of your Directors is only $5,000. You are receiving a 2% Dividend, and 2% Of $5,000 is $100 a month for each Director. $100 times 120 Directors is $12,000 a month or $144,000 a year in dividends you can be earning in 2 years’ time!’ (Certain diagrams and reference numbers omitted.) The Training Manual dwells at great lengths on various techniques for recruiting Page 839 prospects. One such ‘Helpful Hint' to be followed by a recruiter is: "DON'T GO INTO DETAILS. Never explain the program to a prospect before bringing him to an Opportunity Meeting. Do not mention Kosmetics or give any particulars, as many people will prejudge the program and decide it is not for them before they see the presentation.’ (Emphasis ours.) Under a section of the Manual entitled ‘Persuasion Techniques’ for recruitment the following reference to the signing up of a prospect is further illustrative of the shadowy aspects of this operation: ‘Contract! This is another stop sign in our language. Everyone is afraid of a contract. That is why we have none in KOScot. We use application forms and agreement pads.Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972) ‘No one wants to sign anything either. Ask a prospect to sign a contract and you have just asked him to read all the small print that you can't always explain well enough to him. It is much better to have him okay the agreement.’ The following testimony of plaintiff on direct examination by defendant's counsel is indeed illuminating: 'Q Okay. Now, was it necessary to go from a supervisor to a director that the supervisor going to director replace himself as a supervisor or recruit another supervisor? ‘A Yes. I would say yes. 'Q And is this--there is Helen B. Thompson here. Is this the supervisor who replaced Mr. Frye? ‘A She was, yes, supervisor. And I used her to replace and bring Mr. Frye up as director. 'Q So you recruited her rather than Mr. Frye? ‘A No. Mr. Frye was the man. 'Q Are you saying that you did not get Mrs. Thompson to replace Mr. Frye? ‘A Oh, yes, I did that. ‘Q You found Mrs. Thompson. Is that correct? ‘A I did, that is right. She was a supervisor and used her to bring Mr. Frye in as a Director. 'Q This was a requirement of Koscot, wasn't it? ‘A That's right. ‘Q Were you in the wholesale or retail end of the Koscot business, Mr. Taylor? ‘A I went in the retail end of it as a supervisor, and I wasn't interested in retail; and I went to director and wholesale of it. 'Q Okay. Now, does the word wholesale have any particular meaning in the parlance of Koscot lingo? ‘A I don't know what you mean. 'Q Well, what do you mean by the term wholesale? ‘A Go out and recruit people and bring them in the program.’ One witness who was not a party testified: 'Q When you were a director of Koscot what was your primary endeavor, what did you do for Koscot as a director? ‘A I did everything that I could to recruit people to bring in as directors.’ (Emphasis ours.) Schemes similar in purpose and operation have received judicial scrutiny and were held to be violative of the law. M. Lippincott Mortgage Investment Co. v. Childress, supra; Florida Discount Centers, Inc. v. Page 840 Antinori, Fla.App.1969, 226 So.2d 693, affd Fla.1970, 232 So.2d 17. See also Bond v. Koscot Interplanetary, Inc., Fla.App.1971, 246 So.2d 631. In Bond y. Koscot, supra, this court had occasion to review the Koscot operation in the context of whether the allegations in plaintiff's complaint against Koscot were sufficient to establish a cause of action. We observed in part: ',.. If the plaintiffs are able to prove that the method and alleged scheme as described in their complaint constitutes a pyramid or lottery as prohibited by Section 849.091, the contract embodying such scheme or plan would be unenforceable and void. ...'Frye v. Taylor, 263 So.2d 935 (Fla. App. 1972) In our opinion the record in the case sub judice is more than sufficient to prove that the transaction giving rise to the promissory note in question constitutes a lottery as prohibited by F.S. Section 849.091, F.S.A. Since the note in question was given in consideration of participation in an illegal transaction the obligation evidenced thereby is a nullity and is of no legal effect. M. Lippincott Mortgage Investment Co. v. Childress, supra. Tt would be contrary to reason and public policy to enforce such contracts. The rationale for not enforcing these agreements and for leaving the parties where the court finds them is based upon the broad ground that 'no court will allow itself to be used where its judgment will consummate an act forbidden by law and upon the policy of discouraging illegal and corrupt agreements by refusing all judicial aid to the parties thereto’. 17 Am.Jur.2d, Contracts, § 216. The legislature has made its intent abundantly clear in the enactment of Section 849.091 by prohibiting chain latter transactions and pyramid clubs and subjecting participants upon conviction to criminal sanctions. The courts of this state should be loathe to lend their support to or give approval to any obligation which has an unlawful transaction as its genesis. The enforcement of any written instrument arising out of such proscribed transactions would serve only to encourage further shadowy ventures and would be repugnant to sound morality and civic honesty. A recognition, however, of the illegality of the transaction will hopefully deter others from entering into like illegal contracts. With respect to the defendant's counterclaim seeking to recover from the plaintiff $2,000.00 which defendant paid for a supervisorship it is our opinion that that transaction, as evidenced by the "Distributor Application and Agreement’, falls within the broad definition of ‘security’ as set forth in F.S. Section 517.02(1), F.S.A. A more detailed discussion of the basis for this determination is set forth in Florida Discount Centers, Inc. v. Antinori, supra, and in State ex rel. Healy v. Consumer Business System, Ine., Ore.App.1971, 482 P.2d 549. Contra Koscot Interplanetary, Inc. v. King, Tex.Civ.App.1970, 452 S.W.2d 531. Suffice it for us to say that the ‘agreement’ or contract reflecting plaintiff's sale and defendant's purchase of a supervisorship position in Koscot constitutes an ‘interest in or under a profit-sharing or participation agreement or scheme’ within the meaning of Section 517.02(1), F.S.A. Since the sale of the security in question was not shown to be in compliance with the provisions of Chapter 517, under the provisions of F.S. Section 517.21(1), F.S.A., such sale is declared ‘voidable at the election of the purchaser’. The record in the case sub judice reflects that the defendant complied with the prerequisites for seeking the remedies under Section 517.21. It is not necessary that the person having made the sale be shown to be a ‘director, officer or agent’ of the seller to render him liable to the purchaser for the full amount paid by the purchaser. This section declares that Every sale in violation of the chapter is voidable and 'the person making such sale’ shall be ‘jointly and Page 841 severally liable to the purchaser’. The evidence clearly shows that the sale of the supervisorship was effectuated by the plaintiff and that the plaintiff received a fee for such sale. Section 517.21 reflects a broad legislative policy against unlawful security sales by making all persons involved in such sales civilly responsible regardless of whether such person is actually acting for the seller or is himself making the sale. The legislative intent embodied within the provisions of Chapter 517 and F.S. Section 849.091, F.S.A., can and should be given meaning and purpose by a judicial finding that the type of financialFrye v. Taylor, 263 So.2d 835 (Fla. App. activity involved in the case sub judice is within the proscription of such laws. It is our opinion, therefore, that the trial court failed to give proper legal effect to the evidence before it. Accordingly, the final judgment is reversed with directions to enter judgment in favor of the defendant on plaintiffs claim and on _ defendant's counterclaim. CROSS and OWEN, JJ., concur. 1 It should be noted that the plaintiff-appellee has not favored us with a brief and consequently we do not have the benefit of his intentions in this matter. As the Supreme Court of Florida observed in Griffith v. Shamrock Village, Fla.1957, 94 So.2d 854, 858: '. . . Briefs of the parties are of great assistance to this Court. If such were not true there would be no cause for allowing them to be filed. Failure to file a brief frequently reacts to the detriment of a party.’ -6-onomou v. Glenn Wright, & Dey. ine, 36 So.3d 669 (Fla. App. 2010) 30 So.3d 660 Nicholas EKONOMOU, Appellant, v. GLENN WRIGHT CONSTRUCTION & DEVELOPMENT, INC., Appellee. No. 4D09-438. District Court of Appeal of Florida, Fourth District. March 17, 2010. Rehearing Denied April 16, 2010. Manuel J. Mari of Manuel J. Mari, P.A., Miami, for appellant. Perry M. Adair and Lilliana M. Farinas- Sabogal of Becker & Poliakoff, P.A., Coral Gables, for appellee. MAY, J. The plaintiff appeals the dismissal with prejudice of his second amended complaint for breach of contract. He argues the trial court erred in dismissing the second amended complaint with prejudice and without leave to amend. We disagree and affirm. In the second amended complaint, the plaintiff alleged that he had entered into an oral agreement with the defendant developer. The agreement called for the plaintiff to execute contracts for the purchase of real properties from the developer so that the developer could obtain construction loans for those properties. The plaintiff would tender a deposit to the developer, but that deposit would be returned with interest upon the actual sale of the properties to another buyer. The plaintiff would not be required to close on the properties. The developer moved to dismiss the second amended complaint because it alleged an illegal purpose. The trial court agreed and “1 dismissed the complaint with prejudice. The plaintiff now appeals. We have de novo review of dismissal orders. Kreizinger v. Schlesinger, 925 So.2d 431, 432 (Fla. 4th DCA 2006). We have reviewed the second amended complaint and are in accord with the trial court. "The courts of this state should be loathe sic to lend their support to or give approval to any obligation which has an unlawful transaction as its genesis." Frye v. Taylor, 263 So.2d 835, 840 (Fla. 4th DCA 1972). The second amended complaint here described a scheme to defraud lenders by providing fake contracts for the sale of property to influence lenders to [30 So.3d 661] loan money to the developer. Neither the trial court nor we will condone such fraud. Affirmed. HAZOURI and DAMOORGIAN, concur. JJ,Schaal v. Page 252 135 So.2d 252 Peter SCHAAL, d/b/a Orlando Advertising Co., Appellant, v. Charlie RACE, Appellee. No. 2482. District Court of Appeal of Florida, Second District. Dec. 8, 1961. Page 253 Robert G. Murrell, Robert Petree, Sam E. Murrell & Sons, Orlando, for appellant. Harvey Crittenden, Crittenden & Crittenden, Winter Haven, for appellee. ALLEN, Acting Chief Judge. Appellant seeks review of a final order entered by the court below dismissing his amended complaint with prejudice. Appellee was defendant below. Plaintiff filed his original complaint for damages arising out of defendant's refusal to pay for advertising services under an oral contract rendered defendant in connection with his political campaign for Commissioner of Agriculture. Defendant moved to dismiss on the ground that the agreement sought to be enforced is illegal and unenforceable under Chapter 99, F.S.A., and does not state a cause of action for which relief can be granted. Plaintiff moved for summary judgment supported by his own affidavit setting forth essentially the facts alleged in the original complaint. Defendant's motion to dismiss the original complaint was granted with leave to amend, the lower court reserving its ruling on plaintiff's motion for summary judgment. The amended complaint set forth basically the same allegations as the original except that specific references to a political campaign were deleted. Defendant moved to dismiss the amended complaint. “1 In its final order the lower court dismissed the amended complaint with prejudice stating as its reasons therefor that the alleged agreement set forth in the original complaint was clearly in violation of Chapter 99, F.S.A., and that the amended complaint was essentially the same as the original except that it eliminated reference to services to be furnished plaintiff by defendant as a candidate for Commissioner of Agriculture. The court, referring to the original complaint, the court's order dismissing same and plaintiff's affidavit in support of motion for summary judgment, found that the amended complaint is fictitious, a sham, and molded for the sole purpose of staying in court. The court's order further stated: 'The purpose of pleading is to determine in the suit the real question on controversy. To accomplish this purpose the law favors liberality in amendments to pleadings. This liberality does not mean that a pleader at his convenience may insert or remove an essential element in a suit on a contract, which element materially affects the enforceability of the contract.’ The plaintiff below has assigned as error the granting of the motion to dismiss the original complaint and also the dismissal of the amended complaint. We shall consider first the decision of the lower court in dismissing the amended complaint as a sham since it was apparent from the record that the amended complaint deleted from the original complaint all references to an election, which showed in the original complaint an illegal contract. Not only did the court have before it the original complaint which showed the true facts in connection with the subject matter of the complaint, but the plaintiff had also filed an affidavit in aid of his motion for summary judgment which Page 254Schaal v. set forth the same facts that were included in the original complaint, although the court did not rule on the motion for summary judgment. In 21 R.C.L., Pleadings, § 17, p. 452, it is stated: ‘** * And so ina case where a denial is contrary to an admission, the admission must prevail, and the denial should be stricken out as sham or irrelevant.’ See Hayward v. Grant, 13 Minn. 165, 97 Am.Dec. 228. The Florida Supreme Court in Rhea v. Hackney, 117 Fla. 62, 157 So. 190, 193, said: ‘A plea is considered ‘sham’ when it is palpably or inherently false, and from the plain or conceded facts in the case, must have been known to the party interposing it to be untrue. Pleading a matter known by the party to be ‘false’ for the purpose of delay or other unworthy object, has always been considered a very culpable abuse against justice, and at common law was subject to censure and summary setting aside with costs. 1 Chitty on Pleading (7th Ed.) p. 541; 2 Bouvier’s Law Dictionary, p. 680. ‘In most jurisdictions a sham pleading may, in a proper case, be struck out on motion. The power is not derived from statute but is inherent in the court. Its exercise is not objectionable as infringing the right of trial by jury, for the right of a defendant to a jury trial depends upon there being a real issue to be tried. The court has power to determine as a matter of judicial cognizance whether there is such an issue, and whether an ostensible issue is in reality fictitious and sham, though the court does not have power to try the issue if there is one in truth as well as in form. eee eee -2- ‘A ‘sham’ plea is one good on its face but absolutely false in fact. A 'frivolous' plea is one which on its face plainly sets up no defense, although it may be true in fact. One is as objectionable as the other in frustrating the orderly administration of justice. * * * Hence it is a judicial prerogative inherent in a court to strike out pleadings that are either sham or frivolous. * * * In the case of Meadows v. Edwards, Fla.1955, 82 So.2d 733, 735, the Supreme Court, in an opinion by Justice Barns, stated: "In order to justify the striking of a pleading for being sham or false it must be so undoubtedly false as not to be subject to a genuine issue of fact. The motion should be tested by the same standards as a motion for a summary judgment in the following respects. Such procedure is a method for promptly disposing of actions in which there is no genuine issue as to any material fact and the term ‘genuine issue’ is not meant to be necessarily confined to a pleading or paper issue. To use the language of Judge Cardozo, later Justice, made in reference to the law applicable to motions for summary judgment, 6 Moore's Federal Practice 2d 2028, to the effect that the very object of a motion for judgment because of sham pleadings 'is to separate what is formal or pretended in denial or averment from what is genuine or substantial, so that only the latter may subject a suitor to the burden of trial.' * * et We hold that the lower court was justified in dismissing the amended complaint as a sham in view of the record in the case then before him. When questioned by the court, the attorney for the appellant-plaintiff answered frankly that it would serve no purpose to overrule the lower court on dismissing the amended complaint as the data eliminated Page 255Schaal v. from the original complaint would necessarily be brought out ina trial of the case and that the real question with which they were concerned was whether or not the court erred in dismissing the original complaint because the indebtedness incurred violated the corrupt practice provisions of Florida's election code. The circuit Court of Hillsborough County upheld the constitutionality of Chapter 99, F.S.A., in the case of Smith v. Ervin. The Supreme Court in Smith v. Ervin, Fla.1953, 64 So.2d 166, 168, quoted copiously from the opinion and decision of the late Circuit Judge Henry C. Tillman, who was the lower court judge, as follows: ‘The learned Chancellor who heard and decided this case wrote an able opinion. Pertinent portions of the opinion are: "This case involves the constitutionality of a part of what has come to be known as The Election Code, which was enacted as Chapter 26870, the laws of Florida 1951, the codification of which is Section 99.061, which is a section dealing with contributions to candidates, expenditure of campaign funds, and the filing of reports in relation thereto. Subsections (4)(a) and (7) of Section 99.161 are as follows: "(4) Campaign Treasurer in Charge of Funds: Time Limit.---- "(a) No contribution or expenditure of money or other thing of value, nor obligation therefor, shall be made, received, or incurred, directly or indirectly, in furtherance of the candidacy of any candidate for political office in the State of Florida except through the duly appointed campaign treasurer or deputy campaign treasurers of the candidate. nee eee "(7) Written Authorization of Expenditure Required.---- "No expenses shall be incurred by any candidate for election or nomination to political office, or by any person, corporation, or association in his behalf, or in furtherance or aid of his candidacy, unless prior to the incurring of the expense a written order shall be made in and upon the form prescribed, and signed by the campaign treasurer of the candidate authorizing the expenditure, and no money shall be withdrawn or paid by any campaign depository from any campaign fund account except upon the presentation of the written order, so signed, accompanied by the certificate of the person claiming the payment, which certificate shall state that the amount named in the order, or such part thereof as may be claimed, naming the amount claimed, is justly due and owing to the claimant, that the order truly states all of the purposes for which the indebtedness was incurred, and that no person other than the claimant is interested, directly or indirectly, in the payment of the claim, and unless an order for payment in and upon the form prescribed, and signed by the campaign treasurer or deputy treasurer, is presented to the campaign depository; provided that any such authorization may be issued by the campaign treasurer to the candidate for traveling expenses still to be incurred. The order authorizing such expenditure, the certificate and the order for payment shall be on the same piece of paper.’ "This statute provides a penalty amounting to a misdemeanor for violation of Section 99.161 by an individual, and which reads as follows, in Section 104.27: 104.27 Penalties for violation of § 99.161.---- ™() Any person who knowingly violates the provisions of § 99.161 shall be deemed guilty of a misdemeanor and subject to a fine of not more than oneSchaal v. 135 So. 2d 252 (Fla. A Page 256 thousand dollars or to imprisonment for not more than six months.’ oa eee “Otherwise, how could the elector ever tell who was behind this candidate or that; and the Legislature chose the only way by which the contributions to campaigns could be policed and become the knowledge of any man who would take the trouble to go to the state agency where the reports are assembled. There would be little use in the balance of the act prohibiting the contributions from race track owners, dog track owners, public utilities, and other interests considered undesirable proponents of a candidate in Florida unless the Legislature devised a way by which it could be ascertained by the people as to who were supporting and putting up the money for the candidate." The Supreme Court in Citizens' Bank & Trust Co. v. Mabry, 102 Fla. 1084, 136 So. 714, 717, said: ‘In Lassiter & Co. v. Taylor, 99 Fla. 819, 128 So. 14, 19, 69 A.L.R. 689, in an opinion written by Mr. Commissioner Davis, this court said, quoting with approval from Berka v. Woodward, 125 Cal. 119, 57 P. 777, 45 L.R.A. 420, 73 Am.St.Rep. 31: "This, then, is the undoubted rule, that, when a contract is expressly prohibited by law, no court of justice will entertain an action upon it, or upon any asserted rights growing out of it. And the reason is apparent; for to permit this would be for the law to aid in its own undoing. Says the Supreme Court of the United States in President, etc., v. Owens, 2 Pet. 527 [7 L.Ed. 508]: "No court of justice can, in its nature, be made the handmaid of iniquity. Courts are instituted to carry into effect the laws of the county. How can they become auxiliary to the cosummation of violations of law? There can be no civil right where there can be no legal remedy, and there can be no legal remedy for that which is itself illegal.’ And again the same august tribunal, in Coppell v. Hall, 7 Wall. 542 [19 L.Ed. 244], says: ™ Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original contract and void for the same reasons. "Where the contamination reaches it destroys. The principle to be extracted from all the cases is that the law will not lend its support to a claim founded on its own violation." ‘In Escambia Land & Mfg. Co. v. Ferry Pass Inspectors, etc., Association, 59 Fla. 239, 52 So. 715, 717, 138 Am.St.Rep. 121, it was said: ‘Courts will take notice of their own motion, too, of illegal contracts which come before them for adjudication, and will leave the parties where they placed themselves.’ To like effect is Stewart v. Stearns & Culver Lbr. Co., 56 Fla. 570, 48 So. 19, 24 L.R.A. (N.S.) 649." In Local No. 234, etc. v. Henley & Beckwith, Inc., Fla.1953, 66 So.2d 818, 821, the Supreme Court of Florida said: 'We reach this conclusion for the very evident reason that an agreement that is violative of a provision of a constitution ora valid statute, or an agreement which cannot be performed without violating such a constitutional or statutory provision, is illegal and void. Lassiter & Co. v. Taylor, 99 Fla. 819, 128 So. 14, 69 A.L.R. 689. And when a contract or agreement, express or implied, is tainted with the vice of such illegality, no alleged right founded upon the contract or agreement can be enforced ina court of justice. 12 Am.Jur., Contracts, secs. Page 257Schaal v. 135 So. 2d 252 (Fla. A 160, 209. Where the parties to such an agreement are in pari delicto the law will leave them where it finds them; relief will be refused in the courts because of the public interest. Stewart v. Stearns and Culver Lumber Co., 56 Fla. 570, 48 So. 19, 24 L.R.A., N.S., 649; Escambia Land & Mfg. Co. v. Ferry Pass Inspectors & Shippers Ass'n, 59 Fla. 239, 52 So. 715, 138 Am.St.Rep. 121. For courts have no right to ignore or set aside a public policy established by the legislature or the people. Indeed, there rests upon the courts the affirmative duty of refusing to sustain that which by the valid statutes of the jurisdiction, or by the constitution, has been declared repugnant to public policy.’ See also L. Maxcy, Inc. v. Mayo, 103 Fla. 552, 139 So. 121; State ex rel. Johnson v. Patterson, 67 Fla. 499, 65 So. 659; and Escambia Land & Mfg. Co. v. Ferry Pass I. & S. Ass'n, 59 Fla. 239, 52 So. 715. Pomeroy's Specific Performance of Contracts, 3d Edition, p. 642, § 280, Illegal Contracts Void, states: ‘An illegal contract is, as a rule, void--not merely voidable--and can be the