Ellis Nat. Bank of Tallahassee v. Davis, GG-397

Decision Date28 April 1978
Docket NumberNo. GG-397,GG-397
Citation359 So.2d 466
PartiesELLIS NATIONAL BANK OF TALLAHASSEE, a National Banking Corporation, Appellant, v. Perry L. DAVIS and Burma L. Davis, his wife, Appellee.
CourtFlorida District Court of Appeals

James C. Truett of Madigan, Parker, Gatlin, Truett, Swedmark & Skelding, Tallahassee, for appellant.

Charles J. Franson of Bryant, Franson, Miller, Olive, Brant & Ryan, Jacksonville, for appellee.

BOYER, Judge.

Ellis National Bank of Tallahassee (Bank) who was plaintiff in the trial court, appeals a final judgment in favor of appellee Davis and his wife (Davis) which has its genesis in a suit commenced by the Bank on a promissory note from Davis to the Bank.

The note was prepared by Mr. Davis, the Vice-President of a bank located in Jacksonville, executed by him and Mrs. Davis, and forwarded to the Bank in Tallahassee in March of 1973. The note secured a loan in the sum of $75,000 and was to be paid in annual installments of $7,500 each, interest to be paid quarterly. The space provided in the note for insertion of the rate of interest was left blank and the evidence from all witnesses who testified on the point was to the effect that there was no agreement between Davis and the Bank as to the rate of interest to be charged. Interest was billed quarterly by the Bank and paid by Davis. The rate charged was initially 71/2 per cent per annum, then 93/4 per cent per annum and then finally 10%. In late 1975 the Bank decided that the stock which it held as security for the note had so decreased in value that a demand for additional security was made. Davis refused and the Bank accelerated payment on the note. The Bank sued seeking to have a sale of the security whereupon Davis answered alleging usury as an affirmative defense and counterclaiming against the Bank for damages in an amount equal to twice the amount of interest paid in accordance with Title XII, Section 86 U.S.C.A. In due course the trial court entered a pre-trial order setting forth the following issues to be determined: (1) When the plaintiff Bank made its demand for additional collateral on September 25, 1975, did it, in good faith, believe that prospective payment of the note or performance of defendant's obligations were impaired? (2) Was there an agreement between the plaintiff and the defendants as to the interest rate which would be charged upon the note which was given by the defendants to the plaintiff, and if so what was the interest rate? (3) Did the fact that the Bank calculated the interest for a period of time using a 360 day factor applied to 365 days constitute usury when the interest rate during those periods of time was 10%? (4) Do the provisions of F.S. 687.01 "In all cases where interest shall accrue without a special contract for the rate thereof, the rate shall be 6% per annum, but parties may contract for a lesser or greater rate by contract in writing" preclude submission to the jury of issue number two or was this provision waived by the conduct of the parties? The jury found for Davis as to the first issue viz: That the Bank's demand for additional collateral was not in good faith and the trial judge directed a verdict in favor of Davis as to the second and fourth issues thereby determining that there was no agreement between Davis and the Bank as to the interest rate to be charged and that F.S. 687.01 required as a matter of law that the interest accrue at the rate of 6 per cent per annum. As to the third issue relating to usury the parties stipulated that the Bank calculated the interest using a 360 day factor in accordance with Rowlett's Tables while charging Davis the maximum interest rate of 10 per cent; that the Bank knew that the factor was being used and that it would produce more interest than would be produced by applying the maximum legal rate to a calendar year of 365 days; and that other banks in Florida customarily used the 360 day factor developed by use of Rowlett's Tables when the maximum 10 per cent interest rate was being charged to borrowers. After considering the stipulation and arguments the court found for Davis as to the third issue and that the Bank had collected a usurious interest rate from September 28, 1973 through June 25, 1974. The court thereupon ordered that Davis pay the principal balance on the note without paying any interest, that Davis be awarded $815.72, the difference between the amount of interest charged and collected by the Bank over and above the statutory rate of 6 per cent; that Davis be paid the sum of $11,158.32, the penalty prescribed by Title XII, Section 86, U.S.C.A. for interest paid by Davis from September 28, 1973 through June 25, 1974; and that Davis be paid the sum of $15,160.28, the penalty for the amount of interest paid by Davis from June 25, 1974 through the date of trial.

Although, because of our treatment of appellant's second point which will be hereafter discussed, it is not necessary that we address its first point, we nevertheless note that we agree with the learned trial judge that F.S. 687.01 fixes the interest rate on the subject note at 6 per cent per annum since the evidence is clear that the parties did not contract for a lesser or greater rate.

As to appellant's second point, viz: That the trial court erred in finding that the interest rate charged Davis by the Bank from September 28, 1973 to June 25, 1974 was usurious by virtue of computation at the maximum legal rate of 10 per cent on the basis of a 360 day year rather than the actual calendar year of 365 days, there appears to be a division of authority in other jurisdictions and no reported Florida case has apparently addressed the issue.

The parties agreed during oral argument before this court and stipulated before the trial court that we are not here concerned with "spreading": That the issue is whether the interest during the period that interest was being charged by the Bank at the rate of 10 per cent exceeded the maximum legal rate allowed by F.S. 687.03. As above stated the parties also stipulated that the Bank knowingly charged, during the subject period, interest at the rate of 10 per cent based upon a 360 day year and knew that such computation would produce more interest than would be produced by applying the maximum legal rate to a calendar year of 365 days. We are not, therefore, here involved with a case of inadvertance, oversight or mistake and the simplest of mathematics reveals that 10 per cent of a given sum results in a greater per diem rate if computed on a basis of a 360 day year than if computed on the basis of a 365 day year. Appellant urges that the difference is "de minimis" or not material. However we note that F.S. 687.03 affords no leeway. It provides, in material part: "It shall be usury and unlawful * * * to reserve, charge or take for any loan * * * except upon an obligation of a corporation, a rate of interest greater than 10 per cent per annum, either directly or indirectly, * * * ".

In American Timber and Trading Company v. The First National Bank of Oregon, 511 F.2d 980 (1975) the United States Court of Appeals of the Ninth Circuit had occasion to consider a factually similar case involving Oregon law. Although that court carefully and specifically limited its construction to Oregon law we are of the view that its rationale is applicable in Florida. We are particularly impressed with the following statements contained in that opinion:

" * * * The bank contends that the use of a 365/365 method creates difficult computations and, therefore, for reasons of convenience the banking community considers it proper to use the simpler 365/360 method. The district court noted that the legislative intent in enacting usury laws is to protect borrowers from paying excessive interest. The court felt the act should be construed with regard to its net effect upon the borrower rather than upon the bookkeeping burden, custom, or convenience of the lender. The court noted that the bank used the 365/365 method to compute interest it paid to its depositors. Moreover, the court doubted whether the practice could obtain legitimacy by long and heavy borrowing would the question ever arise. Therefore, it concluded that it could not be said that the Legislative Assembly has acquiesced in a practical construction of the law at odds with the plain meaning of its words. Again, we agree with the district court's ruling.

" * * * Any claim by the banking industry that ease of calculation is justification for exacting higher interest is of dubious validity in this age of computer technology." (511 F.2d at pages 983 and 984)

Although factually dissimilar, and involving a different specific issue, our holding sub judice is, we believe, supported by the philosophy of Dixon v. Sharp, 276 So.2d 817 (Fla.1973). We are here also in line with Attorney General Opinion 075-269 wherein the Attorney General of the State of Florida opined affirmatively to the query "Is it a violation of Chapter 687, F.S. (Interest and Usury), for a lender to calculate interest on a 360-day year, where an individual is charged the maximum rate of 10% interest?"

We accordingly affirm the trial court as to the points raised by appellant.

Davis cross assigned as error the amount of the money judgment as fixed by the trial court. We find that point to merit our attention.

F.S. 687.04 provides:

"Any person, or any agent, officer or...

To continue reading

Request your trial
8 cases
  • Voitier v. First Nat. Bank of Commerce, Civ. A. No. 80-3397.
    • United States
    • U.S. District Court — Eastern District of Louisiana
    • May 22, 1981
    ... ... Hayden Stone, Inc., 90 Wash.2d 680, 586 P.2d 830, 836 (1978); Ellis National Bank of Tallahassee v. Davis, 359 So.2d 466, 468-69 (Fla. App.), ... ...
  • THC Financial Corp. v. Managed Inv. Corp.
    • United States
    • Hawaii Supreme Court
    • April 15, 1982
    ... ... v. First National Bank of Oregon, 511 F.2d 980 (9th Cir. 1974), cert ... 437, 549 S.W.2d 474 (1977); Ellis National Bank of Tallahassee v. Davis, 359 So.2d ... ...
  • Abramowitz v. Barnett Bank of West Orlando
    • United States
    • Florida District Court of Appeals
    • February 4, 1981
    ... ... 742, 50 L.Ed.2d 754 (1977); Mindlin v. Davis, 74 So.2d 789 (1954). However "bogus" charges for services ... Ellis National Bank of Tallahassee v. Davis, 359 So.2d 466 (Fla ... ...
  • Phillips v. Ostrer
    • United States
    • Florida District Court of Appeals
    • August 10, 1982
    ... ... Maddox, 60 So.2d 158 (Fla.1952); Ellis National Bank of Tallahassee v. Davis, 359 So.2d ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT