Dixon v. Sharp

• Decision Date: 04 April 1973
• Docket Number: No. 42730,42730
• Citation: 276 So.2d 817
• Parties: Paul L. DIXON and Ann C. Dixon, Petitioners, v. Frank H. SHARP, Respondent.
• Court: Florida Supreme Court

Page 817

276 So.2d 817

Paul L. DIXON and Ann C. Dixon, Petitioners, v. Frank H. SHARP, Respondent.

No. 42730.

Supreme Court of Florida.

April 4, 1973.

Rehearing Denied May 22, 1973.

Arthur L. Steed, of Steed & Collins, Orlando, for petitioners.

Stephen P. Kanar, of Fishback, Davis, Dominick & Simonet, Orlando, for respondent.

ROBERTS, Justice.

This cause is before this Court on conflict certiorari granted to review the decision of the District Court of Appeal, Fourth District in Dixon et al. v. Sharp reported at 265 So.2d 105 (Fla.App.1972) which purportedly conflicts with Stewart v. Nangle, 103 So.2d 649 (Fla.App.1958) and Chandler v. Kendrick, 108 Fla. 450, 146 So. 551 (1933). We have considered the cases cited for conflict and have determined that we have jurisdiction pursuant to Fla.Const. Art. V § 3(b)(3), F.S.A.

Respondent, Frank Sharp, who was the defendant below, entered into a contract to purchase certain property through a real estate firm in which petitioner, Paul Dixon, was a salesman. Sharp gave his check for $10,000 as a deposit on the purchase price, and immediately even without the transaction having been closed, authorized Dixon to list the property for resale at a higher price. Since Sharp could not cover the check and since the check for $10,000 could not be held by the real estate firm without depositing it, he requested Dixon to lend him $10,000 and explained that he was short on cash but had some money coming in on citrus futures. He requested that Dixon loan him the sum of $10,000 for sixty (60) days and as an inducement and of his own volition proposed to give Dixon the sum of $500 as a bonus and also agreed that if Dixon had to borrow the money he would pay the interest required to be paid. As further inducement, Sharp also promised that he would give Dixon a real estate salesman listings on various property and also told Dixon that the only way he could complete the contract for sale previously referred to would be to obtain the loan. Dixon declined advising that he had no such funds to lend, but suggested that he would make inquiry of his wife who owned certain Coca Cola stock. Mrs. Dixon at first expressed a lack of interest. However, because of Sharp's imploring and because of Sharp's many years of friendship with her husband, she agreed to pledge her stock at the bank in order to secure a loan of $10,000 to lend Sharp, whereupon Sharp suggested that instead of $500, he would pay a $700 bonus in addition to the interest required to be paid by the Dixons on the contemplated loan. After depositing the 209 shares of Coca Cola stock with College Park National Bank, and executing a note to said bank for $10,000 payable on demand with interest at the rate of eight percent, the Dixons received a cashier's check payable to them in the amount of $10,000. Before the loan to sharp was consummated, The Dixons suggested that they and Sharp obtain legal advice but Sharp announced that this would be unnecessary that he would simply sign the note, pay the bonus and interest equal to the interest payable by the Dixons to College Park National Bank. The sum of $10,000 was then given by the Dixons to Sharp who in their presence wrote, executed and delivered a promissory note for $10,700 at eight percent interest payable fifty-six (56) days later.

Following maturity of the note and upon Sharp's failure to pay, petitioners instituted suit for the face value of the note, together with interest and attorney's fees. Subsequently their complaint was amended to reduce the principal sum claimed from $10,700 to $10,000.

Answer was filed by respondent denying the various allegations of the complaint. Subsequently, Sharp filed an Amended Answer in which he admitted executing and delivering a promissory note to the Dixons and that he had failed to pay the note when it became due and which by affirmative defense charged usury and counterclaimed seeking cancellation of the obligation, both principal and interest.

Having heard testimony of all the witnesses and having considered the briefs filed, depositions taken, answers to interrogatories, all other pleadings filed, and argument of counsel, the trial court entered final judgment on September 18, 1970 for the Dixons and against Sharp, reciting,

'The court finds as to Count 1 the defendant failed to carry the burden of proving by competent evidence the allegations contained in the counterclaim and the court further finds that there is Insufficient evidence that plaintiffs were guilty of willfully and knowingly charging or accepting any sum of money greater than the sum of money loaned plus a sum in excess of 25 percent per annum and that there was no intent on the part of plaintiffs to take any advantage of the defendant, and that the plaintiffs had no intent to do anything illegal or corrupt and that therefore, there was no usury in this contract, under Florida Statute, 687.07 (F.S.A.).' (emphasis supplied)

Initially, the trial court found that the transaction here involved, in as far as the loan is concerned, was initiated by Sharp and it was solely and affirmatively his idea and it was Sharp's voluntary offer to pay the bonus amount of $700. It is noteworthy that no one was in distress nor necessitous when the note was made.

An appeal was taken from that Final Judgment which resulted in a reversal and an opinion of the Fourth District Court of Appeal reported at 252 So.2d 805 (Fla.App.1971), wherein that Court remanded the cause to the trial court for determination as to whether the lenders had an intent to charge or receive excessive interest at the time of execution of the note. The opinion of the District Court declared that the trial court had construed the intent element of usury to require an intent to violate the statute rather than an intent to charge an amount of interest in excess of that prohibited by statute. However, the trial court clearly found that the Dixons did not have a corrupt intent to charge more than the legal rate of interest.

Pursuant to remand, a Final Judgment was entered by the trial court on December 27, 1971, in favor of Sharp, adjudging that pursant to Fla.Stat. 687.071, ¹ F.S.A., the subject promissory note was unenforceable. Therein the trial court expressly stated,

'The court construes the decision of the District Court of Appeal in this case to indicate that the requisite intent to establish the defense of usury can be determined from a Mathematical computation of the consequences of the agreement entered into between the parties.' (emphasis supplied)

Appeal from this judgment was taken by the Dixons and resulted in Affirmance without opinion by the District Court. Petition for certiorari was thereafter filed in this court on behalf of the Dixons.

The Four requisites of a usurious transaction are, (1) There must be a loan express or implied; (2) An understanding between the parties that the money lent shall be returned; (3) That for such a loan a greater rate of interest than is allowed by law shall be paid or agreed to be paid, as the case may be; and (4) There must exist a Corrupt intent to take more than the legal rate for the use of the money loaned. Stewart v. Nangle, 103 So.2d 649 (Fla.App.1958); Clark v. Grey, 101 Fla. 1058, 132 So. 832 (1931).

The instant cause involves only a dispute as to the fourth element of usury, an intent willfully and knowingly to take more than the legal rate of interest for the money borrowed.

Florida Courts recognize that usury is largely a matter of intent, and is not fully determined by the fact that the lender actually receives more than law permits, But is determined by existence of a corrupt purpose in the lender's mind to get more than legal interest for the money lent. Chandler v. Kendrick, 108 Fla. 450, 146 So. 551 (1933); Jones v. Hammock, 131 Fla. 321, 179 So. 674 (1938); Maule v. Eckis, 156 Fla. 790, 24 So.2d 576 (1946); Shaffran v. Holness, Fla., 93 So.2d 94; Stewart v. Nangle, 103 So.2d 649 (Fla.App.1958); Connecticut Mutual Life Insurance Co. v. Fisher, 165 So.2d 182 (Fla.App.1964). To work a forfeiture under the statute the principal must knowingly and willfully charge or accept more than the amount of interest prohibited. Chandler v. Kendrick, supra; Argintar v. Lydell, 132 Fla. 45, 180 So. 346 (1938).

Relative to the purpose of the usury statute and the definition of willfully and knowingly, this Court in Chandler v. Kendrick, supra, 146 So. at 552 succinctly states,

'The very purpose of statutes prohibiting usury is to bind the power of creditors over necessitous debtors and prevent them from extorting harsh and undue terms in the making of loans. Under the law and the decisions, usury is a matter largely of intent. It is not fully determined by the fact of whether the lender actually gets more than the law permits, but whether there was a purpose in his mind to get more than legal interest for the use of his money, and whether, by the terms of the transaction and the means employed to effect the loan, he may be its enforcement be enabled to get more than the legal rate. Benson v. First Trust & Savings Bank (105 Fla. 135, 134 So. 493), 142 So. 887 (145 So. 182); R.C.L. pp. 223, 224.'

'A thing is willfully done when it proceeds from a conscious motion of the will, intending the result which actually comes to pass. It must be designed or intentional, and may be malicious, though not neceearily so. 'Wilful' is sometimes used in the sense of intentional, as distinguished from 'accidental,' and, when used in a statute affixing a punishment to acts done willfully, it may be restricted to such acts as are done with an unlawful intent. Clark v. Grey, 101 Fla. 1058, 132 So. 832; United States v. Boyd, (C.C. (Ark.)) 45 F. 851, text 855; State v. Clark, 29 N.J.Law 96.'

He who alleges usury to avoid or to defeat an obligation to pay money must establish his charge by clear and satisfactory evidence. Wicker v. Trust Co. of Florida, 109 Fla. 411, 147 So. 586 (...