Cooper v. Rothman

• Decision Date: 20 February 1912
• Parties: COOPER v. ROTHMAN et al.
• Court: Florida Supreme Court

57 So. 985

63 Fla. 394

COOPER v. ROTHMAN et al.

Florida Supreme Court

February 20, 1912

Appeal from Circuit Court, Hillsborough County; F. M. Robles, Judge.

Bills by L. J. Cooper against J. Rothman and others. Bills were consolidated. Decree for defendants, and complainant appeals. Affirmed.

Syllabus by the Court

SYLLABUS

Where C. loaned to R. and four others $5,000 at 8 per cent interest evidenced by a note for that amount due 90 days after the date of said note (viz., on the 1st of July, 1907) secured by a mortgage on real estate, which money was borrowed from C. for the purpose of going into a real estate speculation, and it was agreed at the time of said loan that C., in addition to the 8 per cent. interest, should have one-third interest in the profits, and where it appears that on the 1st of October, 1907, when said note fell due, R. and his associates were unable to pay the note, and as a consideration for a 90-day extension they gave C. three notes aggregating $1,500, payable in 6, 9, and 12 months, and it was agreed that these three notes were to satisfy C.'s claim for profits, when at that time there were no profits the transaction is usurious under the statute of Florida.

Where there is a note for $5,000, bearing 8 per cent. interest, and three $500 notes which represent a usurious consideration all involved in the same foreclosure proceedings, there is no error committed by the circuit judge in applying payments which were made on the $5,000 note, and in refusing to allow interest on the principal debt of $5,000.

COUNSEL J. W. Frazier, J. C. Reynolds, Parkhill & Jackson, and J. T. G. Crawford, for appellant.

F. M. Simonton, for appellees.

OPINION

HOCKER, J.

On the 14th day of February, 1910, appellant filed two bills in the circuit court of Hillsborough county to foreclose two mortgages on real estate executed by appellees to him. One to foreclose a mortgage dated October 1, 1907, to secure the payment of three notes for $500, each dated the same day of the mortgage and due, respectively, 6, 9, and 12 months after date. The second bill, which was an amended one, to foreclose a mortgage on real estate given to secure the payment of a promissory note for $5,000, due 90 days after date. The note and mortgage are dated the 1st day of July, 1907. The two suits were consolidated by consent and were heard and disposed of by one decree.

The answer to the bills set up, in substance, the defendants in the suits borrowed $5,000 from the complainant on July 1 1907, for the purpose of buying on speculation a certain tract of land, and that it was agreed that if appellant would lend them $5,000 to make a cash payment on the land they would give him 8 per cent. interest on the $5,000 and one-third of the profits they expected to make from the speculation, and that he would extend the time of payment of the $5,000 note in furtherance of the speculation. That when the $5,000 note matured, appellees were not able to pay it, and appellant exacted of them, as a condition of extension of the time of payment, that his expected profits should be fixed at $1,500 evidenced by the three notes referred to. That this was the sole consideration of the said three notes and the mortgage given to secure it, and that the whole transaction was thereby rendered usurious. Replications were filed or waived by consent, and the cases were referred to a master to take the testimony. Upon the hearing the circuit judge decreed that the transaction was usurious under our statute; that the three $500 notes and the mortgage to secure the same were void; and that complainant recover only the principal of the $5,000, less the payments which had been made to complainant, and attorney's fees. Complainant appealed from this decree and by assignments of error questions this decree.

It is clear from the testimony that a short time previous to the 1st day of July, 1907, J. Rothman, Samuel Borchardt, D. M. Woodward, and C. C. Woodward had undertaken to buy for speculative purposes from A. P. Stuckey a tract of land containing a little over 200 hundred acres, situated in Hillsborough county, Fla. The price demanded was $15,000, to be paid in installments. The first payment was to be $5,000. C. C. Woodward, representing himself and his associates, approached the appellant for a $5,000 loan to make the cash payment.

There was a boom in real estate at the time, and C. C. Woodward and his associates were confident they could dispose of the land if they could secure it in a very short time at a large profit. The whole scheme was laid before appellant, and a loan of $5,000 was solicited of him. Appellant agreed to lend them the $5,000 at 8 per cent. interest, and in addition he was to receive one-third of the profits of the venture. The money was loaned, and the note for $5,000 dated July 1, 1907, due 90 days from date with 8 per cent. interest and the mortgage which is sought to be foreclosed were executed and delivered. When the 90-day note fell due, the rosy expectations of the speculators had not been realized on the land they had contracted to buy from Stuckey, paying him the $5,000 borrowed from appellant. The latter insisted on the payment of the note, The makers were unable to pay. In this situation, the following agreement was made between the parties:

'This agreement made and entered into on this the first day of July, A. D. 1907, by and between J. Rothman, D. M. Woodward, C. C. Woodward and Samuel Borchardt, parties of the first part, and L. J. Cooper, party of the second part, witnesseth that:

'Whereas the parties of the first part have obtained from one A. P. Stuckey, a contract of sale to the hereinafter described real estate whereby the said parties of the first part are to pay for said real estate the sum of fifteen thousand dollars ($15,000.00), five thousand dollars ($5,000.00) of which has been paid and

'Whereas the party of the second part advanced to the parties of the first part the said sum of five thousand dollars ($5,000.00), to be repaid in ninety days from the date hereof with interest at the rate of eight per cent. (8%) per annum, and whereas the said L. J. Cooper was to have an undivided one-third interest in all profits accruing to the parties hereto from the purchase and sale of the said hereinafter described real estate, and whereas it is agreed between the parties hereto that said L. J. Cooper's profits shall be estimated at fifteen hundred dollars ($1,500.00), the parties of the first part agreeing to give the said L. J. Cooper their three promissory notes dated the first day of October, 1907, for five hundred dollars ($500.00) each, said notes to be payable six, nine and twelve months respectively from the date thereof and to bear no interest and,

'Whereas the said L. J. Cooper agrees in consideration of the payment of the said fifteen hundred dollars ($1,500.00) to release all his interest in and to the profits arising from the purchase and sale of the hereinafter described real estate; in order to further secure the payment of the said five thousand dollars ($5,000.00) advanced by the said L. J. Cooper and the fifteen hundred dollars ($1,500.00) as liquidated profits, the parties of the first part hereby assign and set over unto the party of the second part, the said L. J. Cooper, his heirs and assigns all the right, title and interest in and to the said agreement or contract of sale made and entered into on the 29th day of June, A. D. 1907, between A. P. Stuckey, party of the first part, and the parties of the first part hereto, as parties of the second part, it being understood that the party of the second part hereto is not to assign or transfer said contract unless it becomes necessary to assign or transfer the same in default of payment by the parties of the first part of the sums hereinbefore mentioned together with the interest thereon.

'It is further agreed that any extension of the time of payment of any of the said obligations shall be within the discretion of the party of the second part.

'It is further understood and agreed that the party of the second part upon the full payment of the said five thousand dollars ($5,000.00) and fifteen hundred dollars ($1,500.00) together with interest on said five thousand dollars ($5,000.00) shall reassign to the parties of the first part of the contract hereby assigned and return to said parties of the first part any other collateral held by the party of the second part to secure the payment of the said sums hereinbefore mentioned and interest thereon, said lands being situate in the county of Hillsborough and state of Florida and more particularly described as follows: Lot three (3) of Hunt's subdivision of the northeast quarter of the northeast quarter of section fifteen (15), township twenty-nine (29), south, range nineteen (19) east, containing twelve and 18/100 acres more or less, according to plat recorded in Plat Book One (1) on page ninety-three (93) of the Public Records of said county; the east half of the southwest quarter of the southeast quarter of section ten (10) township twenty-nine (29) south, range nineteen (19) east; the west half of the southwest quarter of the southeast quarter of section ten (10) township twenty-nine (29) south of range nineteen (19) east, S. 1/2 of N.E. 1/4 and N. 1/2 of S.E. 1/4 Sec. ten (10) township twenty-nine (29) south range fifteen (15) east.

'In witness whereof the parties hereto have subscribed their names and affixed their seals the date aforesaid.

'J. Rothman. [Seal.]

'D. M. Woodward. [Seal.]

'Samuel Borchardt. [Seal.]

'C. C. Woodward. [Seal.]

'-------- [Seal.]'

This agreement bears date July 1, 1907; but it is clear from the evidence, and from the wording of the instrument...