Matlack Properties v. Citizens, Inc. & Southern Nat. Bank

• Decision Date: 13 June 1935
• Citation: 162 So. 148,120 Fla. 77
• Parties: MATLACK PROPERTIES, Inc. v. CITIZENS & SOUTHERN NAT. BANK.
• Court: Florida Supreme Court

162 So. 148

120 Fla. 77

MATLACK PROPERTIES, Inc. v. CITIZENS & SOUTHERN NAT. BANK.

Florida Supreme Court

June 13, 1935

Rehearing Denied June 27, 1935.

Suit by the Citizens & Southern National Bank, as administrator of the estate of John L. Slater, deceased, against the Matlack Properties, Incorporated, to foreclose a mortgage. From a final decree of foreclosure, defendant appeals.

Affirmed.

BROWN J., dissenting. Appeal from Circuit Court, Dade County; Worth W Trammell, judge.

COUNSEL

Ross Williams and J. K. Williams, both of Miami, for appellant.

Copeland & Therrel, of Miami Beach, for appellee.

OPINION

DAVIS Justice.

The appellant in this case was a Florida corporation organized under section 4049, Rev. Gen. St. 1920 et seq., brought forward as section 5978 et seq., Comp. Gen. Laws 1927. When sued in a mortgage foreclosure proceeding, it attempted to defend on the ground of usury. The defense of usury, having been appropriately asserted, was overruled by the chancellor. From the final decree of foreclosure the appellant corporation has appealed. Hence the main proposition required to be decided by this court upon the facts adduced, and upon the pleadings interposed in the court below, is whether or not a Florida corporation organized under the Florida statutes as they existed prior to the enactment of chapter 10096, Acts of 1925, can interpose and stand on the defense of usury, in a suit brought against it wherein it is made to appear beyond controversy that the mortgage sued on does embrace a charge of interest in excess of the ordinarily allowed contract interest rate of 10 per cent. fixed by the Florida usury laws. Section 6936-6945, Comp. Gen. Laws, sections 4849-4858, Rev. Gen. St.

Before July 15, 1925, the effective date of chapter 10096, the law regulating the organization, and affairs generally, of ordinary corporations for profit, investment companies, and foreign corporations, and miscellaneous provisions with respect to corporations generally, were those brought down as sections 4045 to 4120 of the Revised General Statutes and 5967 to 6051 of the Compiled General Laws, excluding from the Compiled General Laws those statutes enacted after July 15, 1925, and before the adoption of the Compiled General Laws. By section 63 of chapter 10096, brought down as section 6588 in the Compiled General Laws, all these old statutes were expressly continued in force and effect only as to corporations incorporated previous to July 15, 1925, with the exception of certain statutes with respect to (1) the borrowing of money at any rate of interest as would induce the loan; (2) stock in corporations being regarded as personal estate; (3) investment companies; (4) foreign corporations, and miscellaneous matters; (5) eminent domain; (6) estoppel of corporations to interpose defenses to certain actions; (7) misnomer of corporations; and (8) the right of corporations to sue their members. ^[1]

Section 5970, Comp. Gen. Laws, section 4048, Rev. Gen. St., expressly provides that 'all' corporations of this state shall have the right to borrow such sums of money at 'such' rates of interest, and upon such terms as the company or its board of directors shall authorize or agree upon and may deem necessary or expedient, etc., for authorized corporate purposes. This statute has been on the books since 1903, having been first enacted as chapter 5219, session laws of that year. So the inquiry suggested by this statute consequently is whether or not the phrase 'at such rates of interest, and upon such terms as the company or its board of directors shall authorize or agree upon,' etc., as used in the enactment just mentioned, confers upon Florida corporations chartered prior to 1925, the legal right to become contractually bound by an agreement for a secured or unsecured loan of money to it at a rate of interest which, if the borrower were a natural, and not an artificial, person, would be deemed and held usurious under the laws of this state forbidding the exaction of usury.

The common law of England, as adopted and approved in the United States, has never forbidden the exaction of usury on loans of money as a matter of general law irrespective of statute. So the subject is one entirely of statutory regulation and prohibition, despite the observation found in the Scriptures (15th Psalm, verses 1 and 6) that only those shall abide in the Lord's tabernacle 'that putteth not out his money to usury, nor taketh reward against the innocent.' See 27 R. C. L. par. 1, p. 203.

The court below held, and we approve its holding, to the effect that under section 5970, Comp. Gen. Laws, section 4048, Rev. Gen. St., a Florida corporation chartered prior to chapter 10096, Acts 1925 (The 1925 General Corporation Act) is authorized to enter into a valid contract to borrow money at such rates of interest, and upon such terms, as the company or its board of directors shall authorize or agree upon, irrespective of the limitations on interest rates and devices for excessive interest exactions set forth in the general usury laws of Florida hereinbefore cited. ^[2]

A special provision of the General Corporation Act of 1925 (section 60 of chapter 10096), section 6586, Comp. Gen. Laws, is that: 'No corporation shall interpose the defense of usury in any action in any court in this State.' This provision has been observed, but not heretofore construed, by this court in the following cases: Fuller, Inc., v. Frank F. Jonsberg, Inc., 107 Fla. 330, 144 So. 653, 145 So. 67; E. O. Painter Fertilizer Co. v. Foss, 107 Fla. 464, 145 So. 253; Deauville Casino Corp. v. Miami Beach Furnished Homes Corp., 112 Fla. 55, 150 So. 226.

It is the contention of the appellant in this case that the effect of the abovequoted 1925 provision of the statutes is to inhibit all corporations organized under the new act from pleading usury, but to leave usury as an available defense to all corporations organized prior to the effective date of chapter 10096, supra.

The statutory provision when applicable is held to mean any position or attitude in an action in which a corporation seeks to avoid its own contract by showing that it is usurious, and is not confined to the case of a corporation filing such defense when made a party defendant to an action. Merchants Exchange Nat. Bank v. Commercial Warehouse Co., 49 N.Y. 635, text 641; Bramhall v. Atlantic Nat. Bank, 36 N. J. Law, 243, 244; Rosa v. Butterfield, 33 N.Y. 665, text 667. The purpose of an express provision such as section 60 of chapter 10096, Acts 1925, is to protect investors making loans of money to corporations by purchasing their negotiable paper or bonds, whether at discount or at par. Lembeck v. Jarvis Terminal Cold Storage Co., 70 N. J. Eq. 757, 64 A. 126, affirming 69 N. J. Eq. 450, 60 A. 955; Southern Life Ins. & Trust Co. v. Packer, 17 N.Y. 51.

While the provisions of the 1925 General Corporation Act apply particularly to corporations deriving their charters under that act alone, and this embraces section 60 of chapter 10096, supra, as well as other provisions thereof, it does not follow that a corporation deriving its corporate charter under the laws of this state applicable prior to the 1925 General Corporation Act may not, as in this case, become liable on a contract made according to section 5970, Comp. Gen. Laws, section 4048, Rev. Gen. St., for repayment of money borrowed at such rates of interest as the corporation or its board of directors shall have authorized, whether the rate of interest agreed on be made directly, or indirectly, in excess of the rate that would be usurious on the part of an individual.

Section 60 of chapter 10096, Acts 1925 (section 6586, Comp. Gen. Laws), is in pari materia with section 5970, Comp. Gen. Laws, section 4048, Rev. Gen. St., although section 6586, Comp. gen. Laws, supra, is broader in terms than the act of 1903. The 1903 act is the law applicable to transactions had by corporations incorporated under the law prior to the act of 1925, and where its authority is not exceeded by a corporation in its engagements to pay interest at a rate in excess of what the company or its board of directors have authorized or agreed upon as necessary or expedient, the courts have no right to refuse to give the corporation's contract legal effect as contemplated by the law, nor to void it as an obligation entitled to the law's protection.

Affirmed.

WHITFIELD, C.J., and ELLIS, TERRELL, and BUFORD, JJ., concur.

BROWN J., dissents.

DISSENTING

BROWN, Justice (dissenting).

The General Corporation Law of 1925, chapter 10096, in its first section, now appearing as section 6527, Comp. Gen. Laws expressly provides that its provision shall apply to corporations incorporated or consolidated or reincorporated thereunder, and to 'no other corporations.' Section 60 of that act, now section 6586, Comp. Gen. Laws, provides that: 'No corporation shall interpose the defense of usury in...