Kay v. Amendola, 1667
| Decision Date | 24 March 1961 |
| Docket Number | No. 1667,1667 |
| Citation | 129 So.2d 170 |
| Parties | William H. KAY and W & E Kay Realty Company, an Ohio Corporation, Appellants, v. Thomas M. AMENDOLA, Appellee. |
| Court | Florida District Court of Appeals |
Hall, Hartwell & Douglass, Tallahassee, for appellants.
J. B. Patterson, Fort Lauderdale, for appellee.
Plaintiff-appellee filed a bill in equity in the Circuit Court of Broward County charging defendants-appellants with the exaction of criminally usurious interest in connection with a certain loan cloaked in the guise of a real estate option contract.
The Answer denied the charge, and as a result of a trial, a decree was entered in favor of plaintiff ordering the forfeiture of the entire principal and interest paid. The case is before this Court on appeal from the Final Decree.
From the record it can be deduced that the facts giving rise to this cause grew out of a divorce proceeding between plaintiff, Thomas Amendola, and his wife, Nina, during the summer of 1955, which proceeding was hotly and bitterly contested.
Plaintiff and his wife were the owners of a home in Fort Lauderdale as tenants by the entireties valued at $125,000, and which contained furnishings valued at over $10,000. Amendola, not wishing the home to be lost pursuant to what he suspected would be the decree of the Chancellor in the divorce case, devised the plan of allowing a relatively small mortgage on the property to go into default and have the house bid in at the foreclosure sale by a third party who would subsequently resell to plaintiff after the divorce.
Plaintiff was in the real estate business and apparently well-to-do, but most of his assets were not in liquid form and he, therefore, did not have the necessary capital available to finance this venture. He was finally able, however, to interest the defendant, William H. Kay, president and owner of nearly all of the stock of defendant, Kay Realty Company, in this plan, and on the day prior to the foreclosure sale, Kay arrived in Fort Lauderdale, Florida.
The parties, upon discussing the matter between them, agreed that Kay would bid at the sale up to the sum of $100,000 and if successful, execute an option to plaintiff to repurchase. Inasmuch as the divorce was not yet final, a direct loan to plaintiff would have been unavailing to divest the wife of her interest, and for the same reason, the option had to be given in the name of someone other than plaintiff.
The sale was held and the property bidin for the sum of $86,500 for the defendant, Kay Realty, by a Florida attorney and officer of the company, Welcom Watson. After the sale, the parties and their legal counsel then adjourned to the office of Mr. Watson, where the repurchase option was executed in favor of plaintiff's nephew, Thomas J. Rossetti, for a period of six months at a price broken down as follows:
Amount bid for real estate $86,500.00
10% interest on above 8,650.00
2% bonus on $86,500 1,730.00
Amount to be loaned on furniture 10,000.00
Travel to Florida by Defendant 245.00
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$107,125.00
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The sum for the furniture was included because Kay wanted it to go with the house and it had not been covered by the mortgage and title remained in Mr. and Mrs. Amendola. The $10,000 figure was later reduced to $5,000 when plaintiff's wife claimed and removed one half of it.
During the months following the mortgage foreclosure sale, plaintiff attempted to sell the house and the upkeep and yard work were paid for by defendants at plaintiff's request. During this interim period, defendant, Kay Realty Company, secured a $50,000 mortgage on the house to reduce the amount of the capital invested in the transaction. Finally, on the 23rd day of February, 1956, plaintiff ordered his nephew, Rossetti, the option holder, to assign the option to him and on the next day he reassigned it to a third party who exercised it for $118,500. Plaintiff then paid to defendant, Kay Realty Company, the amounts called for in the option contract as adjusted for the furniture, plus the following:
Property upkeep expenses $313.80
Interest on furniture advance 600.00
Interest on $50,000 mortgage
secured by Kay Realty 958.33
Closing costs on $50,000 mortgage 383.50
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$2,255.63
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for a total paid to defendants of $104,380.63. The plaintiff then brought this suit alleging usury.
Four points are raised by appellants, which are as follows:
First, that the Trial Court erred in refusing the defendants the right to interpose and prove the defense of unclean hands. This defense was sought to be raised by defendants' answer, but was struck by the Chancellor, presumably as having been insufficiently set forth; the right being given, however, to amend within ten days of the order.
The record shows that no such amendment was ever filed by defendants, therefore, the issue of unclean hands must be deemed to have been waived.
The second point raised was that the transaction involved here was not a loan and repayment but was simply a sale and purchase transaction. We do not agree. It is well settled in Florida that the law will look to the substance of the transaction rather than to the form to determine usury.
Our usury statutes show a clear legislative intent to prevent accomplishment of a usurious scheme by indirection, and the concealment of the needle of usury in a haystack of subterfuge will not avail to prevent its pricking the body of the law into action.
In the words of F.S. § 687.03, F.S.A., 'It shall be usury and unlawful for any person * * * to reserve, charge or take for any loan, or for any advance of money, * * * a rate of interest greater than ten per cent per annum, either directly or indirectly, by way of commission for advances, discounts, exchange, or by any contract, contrivance or device whatever * * *'.
The admitted facts considered together with the testimony and the exhibits all point toward this being a loan transaction. The parties at all times appear to have regarded this option transaction as a loan; all efforts being directed toward the period after the divorce of plaintiff from his wife when the property would be returned to him by exercise of the option. At no place in the record does it appear that plaintiff did not consider himself obligated to...
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