Shaffran v. Holness
| Decision Date | 06 March 1957 |
| Citation | 93 So.2d 94 |
| Parties | Abraham SHAFFRAN, Appellant, v. J. E. HOLNESS, Jr., a/k/a Joseph E. Holness, Jr., and _____ Holness, his wife, if married, and Mildred S. Holness, a single woman, Appellees. |
| Court | Florida Supreme Court |
Ward & Ward, Simon & Hays, Miami, John E. Born and Warwick, Paul & Warwick, West Palm Beach, for appellant.
Farish & Farish, West Palm Beach, and Wm. A. McRae, Jr., Bartow, for appellees.
B. F. Paty, West Palm Beach, as amicus curiae.
Abraham Shaffran, the appellant, was the plaintiff in an action to foreclose a second mortgage on real property. The appellees, Joseph E. Holness, Jr. and Mildred S. Holness, were the defendants.
To the plaintiff's bill of complaint, the defendants filed an answer in which they denied making the mortgage and note and also alleged that:
'10. * * * the alleged note and mortgage * * * does not comply with chapter 687 of the Florida Statutes [F.S.A.] and is in violation of said chapter 687, Florida Statutes [F.S.A.], and as such is a void and usurious loan contract.
In due course the plaintiff filed a motion for summary final decree without supporting affidavits. The defendants then filed their motion for summary final decree, to which they attached affidavits executed by themselves and an affidavit executed by Joseph E. Holness, Sr., father of Joseph E. Holness Jr.
Depositions were taken of the defendants by the plaintiff and the defendants took the deposition of plaintiff and of A. Neil Sawyer, one of the partners of United Mortgage Company (not inc.). As will appear below, United Mortgage Company, mortgage brokers, arranged the making of the mortgage in question between the parties to this action. The mortgage company will be referred to herein as United.
Thereafter the parties entered into a stipulation providing:
* * *'
The chancellor entered a summary final decree finding the note and mortgage to be usurious in violation of F.S. Sections 687.03 and 687.07, F.S.A., declaring the mortgage and note to be null and void, and assessed penalties against the plaintiff. The plaintiff petitioned for rehearing which was denied. The chancellor then entered a final decree, affirming the summary final decree, except for correction as to a finding relating to the date of execution of the note and mortgage.
From the pleadings, the affidavits, the depositions and the exhibits attached to the depositions, which were before the chancellor when he entered his summary final decree and which are now before us, the following facts appear.
Defendant Joseph E. Holness, Jr. was in need of funds. He made this known to an 'associate friend', Harry Silett, who put him in touch with Murray Sawyer, a representative of United Mortgage Company and brother of A. Neil Sawyer, abovementioned. Holness, Jr. advised Murray Sawyer that he wanted to borrow $20,000 through a second mortgage on his home. United Mortgage Company knew plaintiff as one who made mortgage loans. It appears that they had arranged one or more loans with plaintiff prior to the one in controversy here. The mortgage company contacted plaintiff and with Murray Sawyer and Holness, Jr. plaintiff inspected the property proposed to be mortgaged. It does not appear that it was made known to Holness, Jr. that plaintiff was the prospective lender. Holness, Jr. stated he thought plaintiff was an appraiser for United. After looking at the property plaintiff advised United that he would only lend $15,000. Holness, Jr. accepted this figure.
The defendants executed a document wherein they engaged the services of United to secure for them a second mortgage loan in the sum of $15,000, payable at the rate of $500 per month, said monthly payments to include interest at 10% per annum. This document bears date December 5, 1954 and provides that defendants were to pay United the sum of $3,000, said sum to cover their services and all costs of the loan.
The defendants also executed a note and mortgage in accordance with the terms above set forth, both bearing date of December 5, 1954. A closing statement prepared by United dated December 13, 1954 was also signed by defendants.
Although defendants admit that the signatures on the above documents are theirs, in both their depositions and affidavits they contend that the documents were not completed when they signed them and that they signed them not on December 5, 1954 but on December 13, 1954. They insist that they visited the office of United together on only one occasion, December 13, 1954 the day the loan was closed, and that they signed no documents on any other occasion.
The loan was closed on December 13, 1954 at which time United gave defendants the sum of $11,881.43, which according to the closing statement was the sum of $15,000, less the sum of $3,000 mentioned in the agreement abovementioned and less the sum of $118.57 for additional hazard insurance on the mortgaged property.
Defendants say that they protested the deductions but were told by United that if they wanted the money the would have to take it with the above deductions being made. Defendants accepted the money.
Defendants say that they did not know plaintiff was the lender until they received a letter dated December 21, 1954 from United's attorney advising them to make their payments to plaintiff. They say they thought they were borrowing from United.
Defendants made a total of six (6) monthly payments in accordance with the mortgage. Some payments were delinquent when made. On one of these occasions, the attorney for United wrote defendants demanding payment on behalf of plaintiff.
It appears that plaintiff, through his attorney who represented him in the making of the loan, gave to United the sum of $15,000 by cashier's check dated December 14, 1954 and it follows that United had advanced the sums necessary to close the loan the previous day, December 13th.
After argument on the motions for summary final decree the chancellor entered such a decree, in which he stated that he found three questions to be answered: (1) did the note, mortgage and charges in connection therewith constitute a violation of F.S. Sec. 687.03, F.S.A. by charging more than 10% interest, or (2) did they constitute a violation of F.S. Sec. 687.07, F.S.A. by charging more than 25% interest and (3) was United Mortgage Company the agent of plaintiff?
The chancellor in answering question (1) found that plaintiff charged interest from December 5, 1954, the date on the note and mortgage, but that defendants did not receive the proceeds of the loan until the loan was closed eight days later, i. e. on December 13, 1954; that interest for these eight days amounted to $32,24, that this constituted a charge in excess of 10% per annum by the sum of $32.24 and therefore the transaction was usurious and in violation of F.S. Sec. 687.03, F.S.A.
It appears to us that the chancellor could properly dispose of this issue on motion for summary final decree because the facts necessary to determination of this question are not disputed and were in the record before the chancellor.
However, we must reverse the chancellor on this first question because we have previously decided the law to be contrary to his decision.
We find no basis in the record before the chancellor, and now before us, to show that the note was predated or the closing delayed with intent to charge interest to the defendants on money which they had not yet received so as to circumvent the usury statute. It is a necessary, wise, and common practice on the part of lenders, both institutional and individual, before proceeds of the loan are disbursed to require that the note and mortgage be executed and recorded and that some evidence, such as an attorney's opinion of title, be given to show that the mortgage enjoys the intended priority as a lien on the property involved. In such transactions an adjustment is usually made in the payment schedule so...
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