Benson v. First Trust & Sav. Bank

• Decision Date: 09 July 1932
• Citation: 142 So. 887,105 Fla. 135
• Parties: BENSON v. FIRST TRUST & SAVINGS BANK.
• Court: Florida Supreme Court

142 So. 887

105 Fla. 135

BENSON v. FIRST TRUST & SAVINGS BANK.

Florida Supreme Court

July 9, 1932

En Banc.

On rehearing.

Decree modified.

For former opinion, see 134 So. 493.

TERRELL and BROWN, JJ., dissenting.

Appeal from Circuit Court, Dade County; Paul D. Barns, Judge.

COUNSEL

Shipp Evans & Kline, of Miami, for appellant.

B. R Cisco, of Miami, for appellee.

OPINION

WHITFIELD J.

The statutes provide that it shall be usury and unlawful to receive, charge, or take for any loan of money a rate of interest greater than 10 per cent. per annum by any device whatever whereby the debtor is required or obligated to pay a sum of money greater than the actual principal sum received, together with interest at the rate of 10 per cent. per annum; and that any person willfully violating such provision shall forfeit the entire interest so charged or contracted to be charged or reserved; and that, when said usurious interest is taken or reserved, or has been paid, the lender shall forfeit double the amount of interest so reserved, taken, or exacted; and that any one who shall willfully and knowingly charge or accept any sum of money greater than the sum of money loaned and an additional sum of money equal to 25 per cent. per annum upon the principal sum loaned, shall forfeit the entire sum, both the principal and interest, to the party charged such usurious interest, and shall be deemed guilty of a misdemeanor. Sections 6938, 6939, 6942, Compiled General Laws 1927 (Rev. Gen. St. 1920, §§ 4851, 4852, 4855).

The note and mortgage deed taken together constitute the loan contract. Both the note and the mortgage deed require the borrower to pay in three years $14,000, with interest at 8 per cent. per annum, payable semiannually; and that 'deferred principal and interest payments shall bear interest from maturity at ten per cent.' The mortgage deed also provides that, if any payment be not promptly made within 30 days after it is due,

--'the said aggregate sum mentioned in said promissory note(s) and this deed, or either, are not fully performed, complied with and abided by, the said aggregate sum mentioned in said promissory note(s) shall become due and payable forthwith or thereafter, at the option of the Trustee, as fully and completely as if the said aggregate sum of Fourteen thousand Dollars or such unpaid balance thereof was originally stipulated to be paid on such day of default or breach, anything in said promissory note(s) or in this deed to the contrary notwithstanding, and the equity or redemption of the Mortgagor(s) may thereupon be immediately foreclosed.'

Thus the loan contract makes the period of the loan three years or a less time, if the borrower defaults, and requires the payment of $14,000 with interest thereon at 8 per cent. per annum, and 10 per cent. interest on deferred payments, though the amount actually loaned was not over $11,500. Since the loan contract makes the principal due and payable thirty days after the borrower's default at the option of the trustee, upon suit for foreclosure the amounts recoverable should be determined as of the date of the foreclosure decree.

Under the terms of the note and mortgage dated December 17, 1926, the amounts that were charged in the note and mortgage deed are $14,000 principal and 8 per cent. per annum interest thereon, together with 10 per cent. interest on deferred interest payments, making approximately $3,168.28 interest, plus $14,000, the principal stated in the note, making an aggregate charged in the note of $17,168.28, from the date of the note to the date of the decree, April 19, 1929.

The sum of money loaned, not deducting the broker's commission of $465.28 which the chancellor held should be paid by the borrower, was $11,500, upon which interest at the rate of 25 per cent. per annum from December 17, 1926, to April 9, 1929, would approximately be $6,632.56, plus the principal loaned, $11,500, making a total of $18,132.56. At 10 per cent. per annum, the amount of interest on $11,500 to April 9, 1929, the date of decree, is approximately $2,655.80, which, plus the principal sum loaned, $11,500 equals $14,155. This shows that the amounts of principal and interest charged by the loan contract, in making the principal stated in the note $14,000 instead of $11,500, the amount loaned, is $17,168.28, or more than the amount loaned, plus 10 per cent. per annum thereon, viz. $14,155, to the date of the decree, but less than the amount loaned and 25 per cent. per annum thereon, viz. $18,132.56 to the date of the decree. The forfeiture therefore, under the statute, is of all the interest on the amount loaned.

As $2,500 was taken or reserved as a bonus when the loan note was made for $14,000 instead of $11,500, the actual sum loaned, and as this amount so taken or reserved made the contract to pay $14,000 with 8 per cent. per annum, interest thereon, usurious, the statute provides that the lender 'shall forfeit double the amount of the interest so reserved, taken or exacted.' The lender also was paid $85 of usurious interest, so double that amount is also forfeited to the borrower. This makes the lender forfeit to the borrower twice the amount reserved, viz. $2,500 or $5,000, and twice $85.00 interest collected, to be deducted from the $11,500 loaned, in addition to the interest on the amount loaned which is made usurious by the $2,500 bonus retained when the note for $14,000 instead of for $11,500 was exacted. The decree, therefore, should be for $11,500 less $5,000 and less $170, which is $6,330, and a reasonable attorney fee having reference to the amount of the decree.

Reversed for appropriate proceedings.

BUFORD, C.J., and ELLIS and DAVIS, JJ., concur.

DISSENTING

TERRELL J. (dissenting).

On December 17, 1926, appellant executed her promissory note to appellee in the sum of $14,000, due three years from date, with interest at 8 per cent. per annum, payable semiannually. Appellant secured this note with a mortgage of the same date which provided for the appointment of a receiver or trustee to take charge of the mortgaged property in the event of foreclosure, and among other specifications, embraced an acceleration compact as follows:

'If any of said sums of money herein referred to be not promptly and fully paid within thirty days next after the same severally become due and payable, or if each and every, the stipulations, agreements, conditions, and covenants of said promissory note(s) and this deed, or either, are not duly performed, complied with and abided by, the said aggregate sum mentioned in said promissory note(s) shall become due and payable forthwith or thereafter, at the option of the Trustee, as fully and completely as if the said aggregate sum of ----- Dollars or such unpaid balance thereof was originally stipulated to be paid on such day of default or breach, anything in said promissory note(s) or in this deed to the contrary notwithstanding, and the equity of redemption of the Mortgagor(s) may thereupon be immediately foreclosed by said Trustee.'

April 6, 1928, one year, three months, and twenty days after the mortgage was given, no interest having been paid except the sum of $85 on the first interest installment, and the mortgaged premises having been permitted to sell for state, county, and other taxes, appellee as complainant below, pursuant to the acceleration compact, filed its bill to foreclose the mortgage. The bill to foreclose demanded payment of the principal in full and interest from date of the execution of the mortgage to the date of foreclosure at 8 per cent. less the $85 paid on the first interest installment.

To the bill to foreclose, appellant, as defendant below, entered her answer, in which she admitted the execution of the note and mortgage, but, as a defense to their payment, she alleged that neither the said note or mortgage created a legal or binding obligation against her because they were in violation of the statutes of this state prohibiting usury.

We are therefore confronted with the question of whether or not the note and mortgage brouhgt in question are condemned by our statutes prohibiting usury, the same, in so far as applicable to this case, being section 4855, Rev. Gen. St. 1920 (section 6942, Comp. Gen. Laws 1927), and is as follows:

'Any person, association of persons, firm or corporation, or the agent, officer or other representative of any person, association of persons, firm or corporation lending money in this State who shall wilfuly and knowingly charge or accept any sum of money greater than the sum of money loaned, and an additional sum of money equal to twenty-five per cent. per annum upon the principal sum loaned, by any contract, contrivance or device whatever, directly or indirectly, by way of commissions, discount, exchange, interest, pretended sale of any article, assignment of salary or wages, inspection fees or other fees or otherwise, or for forbearing to enforce the collection of such moneys or otherwise, shall forfeit the entire sum, both the principal and interest, to the party charged such usurious interest, and shall be deemed guilty of a misdemeanor, and on conviction, be fined not more than one hundred dollars, or be imprisoned in the county jail not more than ninety days, or both, in the discretion of the court.'

The record discloses that the defendant actually received for her note and mortgage the sum of $11,034.72, that the sum of $2,500 was charged her as a bonus, and that the sum of $465.28 was paid a broker to secure the loan. By the exercise of its option to invoke the acceleration compact, the complainant seeks by its suit to foreclose to require the defendant to pay the accrued interest on $14,000, the face of the note, for one year, three...