Fogg v. Southeast Bank, N.A.

• Decision Date: 17 July 1985
• Docket Number: No. 84-1885,84-1885
• Court: Florida District Court of Appeals
• Parties: 10 Fla. L. Weekly 1746 E.C. FOGG, III, Appellant, v. SOUTHEAST BANK, N.A., a national banking association, Appellee.

Page 1352

473 So.2d 1352

10 Fla. L. Weekly 1746

E.C. FOGG, III, Appellant, v. SOUTHEAST BANK, N.A., a national banking association, Appellee.

No. 84-1885.

District Court of Appeal of Florida,

Fourth District.

July 17, 1985.

Rehearing Denied Sept. 5, 1985.

Edna L. Caruso of Edna L. Caruso, P.A., West Palm Beach, and Alan T. Dimond and Lawrence S. Gordon of Greenberg, Traurig, Askew, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, for appellant.

D. Culver Smith, III, and Vance E. Salter of Steel, Hector, Davis, Burns & Middleton, Palm Beach, for appellee.

HERSEY, Chief Judge.

Appellant, E.C. Fogg, III, appeals from a summary final judgment determining that the mortgage executed by him and in the process of foreclosure in this action is not subject to the forfeiture provisions of the balloon mortgage statute because of an exception added to the statute after the date of execution of the mortgage.

The promissory note and mortgage were executed on April 29, 1981. The note, in the original principal amount of $2,250,000, provided for principal payments of $200,000 each on May 1, 1982, and May 1, 1983, respectively, with quarterly payments of interest at a variable rate and with the balance of principal together with accrued interest due on May 1, 1984. Although the mortgage instrument purported to create a first priority position, it was eventually determined to be third in line behind two preexisting liens, so that it was not in fact a first mortgage. Because it did not have on its face the balloon mortgage legend required by the statute, the mortgage was in violation on the date of execution.

In 1983 the balloon mortgage statute, section 697.05(2)(a), Florida Statutes, was amended to exempt from its operation mortgages securing extensions of credit in excess of $500,000. Ch. 83-267, § 13, 7 Fla.Sess. Law Serv. 3107, 3119 (1983). Section 14 of the act stated that the amendment was to take effect upon becoming a law except that sections 6 and 7, dealing with information reports of certain corporations and amending section 199.062, Florida Statutes, were to operate from January 1, 1983, to July 1, 1983 (section 6), and July 1, 1983, and thereafter (section 7).

Generally, statutes operate only prospectively as they might otherwise impinge upon vested rights or create new liabilities. On the other hand, statutes relating to remedies or procedure and including forfeitures operate retrospectively in the sense that all pending proceedings, including matters on appeal, are determined under the law in effect at the time of decision rather than that in effect when the cause of action arose or some earlier time. In either event, whether the statutory change is substantive or procedural, a clear statement of legislative intent may, under appropriate circumstances, determine whether the amendment is to have retroactive effect.

The trial court, in holding that the amendatory act applied to this case, relied on Tel Service Co. v. General Capital Corporation, 227 So.2d 667 (Fla.1969). In that case the act in question, section 687.11, Florida Statutes (1965), required the forfeiture of usurious interest charged a corporation. The act stated that it should take effect upon becoming law. The Florida Supreme Court said that an action based on the usury statutes is only an enforceable penalty and not a substantive right. "Accordingly, such penalty or forfeiture possesses no immunity against statutory repeal or modification and the enactment of legislation to this effect abates such penalty or forfeiture pro tanto even during the pendency of an appeal from a final judgment predicated on such statutory penalties or forfeiture." 227 So.2d at 671 (citations omitted). And in O'Neil v. Lorain National Bank, 369 So.2d 378 (Fla. 1st DCA 1979), the court likened the balloon mortgage statute, which provides for forfeiture of interest if violated, to the similar provision in the usury statute. See also Rothermel v. Florida Parole and Probation Commission, 441 So.2d 663, 664 (Fla. 1st DCA 1983) ("statutes which do not alter contractual or vested rights but relate only to remedies or procedure are not within the general rule against retrospective operation and, absent a saving clause, all pending proceedings are affected.")

The Tel Service case was cited with approval for the following holding: "The usury law to be applied by a court is the law in effect at the time the court renders it [sic] decision unless the act itself provides otherwise." U.P.C., Inc. v. Intercontinental Bank, 410 So.2d 554, 555 (Fla. 3d DCA 1982).

Appellant argues on the other hand that since only one section was given an earlier effective date, the legislature intended the remainder of the act to have prospective effect, citing Thayer v. State, 335 So.2d 815 (Fla.1976), for support. In that case, the Florida Supreme Court considered the issue of whether a statute exempting certain restaurants from its provisions applied to restaurant licenses issued prior to the effective date of the statute. The court said:

It is, of course, a general principle of statutory construction that the mention of one thing implies the exclusion of another; expressio unius est exclusio alterius.

....

The rule is stated succinctly in 30 Fla.Jur., Statutes, § 151, as follows:

"A statute operates prospectively unless the intent that it operate retrospectively is clearly expressed. Indeed, an act should never be construed retrospectively unless this was clearly the intention of the legislature. This is especially so where the effect of giving it a retroactive operation would be to interfere with an existing contract, destroy a vested right, or create a new liability in connection with a past transaction. The presumption is that it was intended to operate prospectively, unless its language requires that it be given a retroactive operation. The basis for retrospective interpretation must be unequivocal and leave no doubt as to the legislative intent."

335 So.2d at 817-18. See also Homeowners Emergency Life Protection Committee v. Lynn, 541 F.2d 814, 817 (9th Cir.1976) ("In accordance with the customary rule of statutory construction, expressio unius est exclusio alterius, this would indicate that in expressly making only one section retroactive, Congress intended all other sections to be operative only from the effective date of the Act"); State, Department of Revenue v. Zuckerman-Vernon Corporation, 354 So.2d 353, 358 (Fla.1977) ("The 1977 Legislature's inclusion of an effective date of July 1, 1977, in Ch. 77-281 effectively rebuts any argument that retroactive application of the law was intended"); Anderson v. Anderson, 468 So.2d 528, 530 (Fla. 3d DCA 1985) ("even a clear legislative expression of retroactivity will be ignored by the courts if the statute impairs vested rights, creates new obligations, or imposes new penalties").

In a case involving a statute with a savings clause, Sailboat Apartment Corp. v. Chase Manhattan Mortgage and Realty Trust, 363 So.2d 564 (Fla. 3d DCA 1978), appellant executed a note in favor of appellee in March 1974. In June 1974, and then again in 1977, the usury statute (section 687.03, Florida Statutes) was amended. The appellate court held that since the action was based on the usury statute, appellant had no vested substantive right but only an enforceable penalty. Therefore, the penalty could be repealed or modified at any time before the proceedings became final. However, section 687.03(2)(b), Florida Statutes (1977), specifically stated that the act shall only apply to loans made subsequent to the effective date...