Shaffran v. Holness

• Decision Date: 19 March 1958
• Docket Number: No. 44,44
• Citation: 102 So.2d 35
• Parties: Abraham SHAFFRAN, Appellant, v. J. E. HOLNESS, Jr., also known as Joseph E. Holness, Jr., and _____ Holness, his wife, if married, and Mildred S. Holness, a single woman, Appellees.
• Court: Florida District Court of Appeals

Page 35

102 So.2d 35

Abraham SHAFFRAN, Appellant, v. J. E. HOLNESS, Jr., also known as Joseph E. Holness, Jr., and _____ Holness, his wife, if married, and Mildred S. Holness, a single woman, Appellees.

No. 44.

District Court of Appeal of Florida, Second District.

March 19, 1958.

Rehearing Denied April 25, 1958.

Seymour J. Simon, Miami, and Paty, Downey & Daves, West Palm Beach, for appellant.

Holland, Bevis, McRae & Smith, Bartow, and Farish & Farish, West Palm Beach, for appellees.

PER CURIAM.

This was a mortgage foreclosure action in which the defense of usury interposed by the mortgagors in their counterclaim was sustained by the chancellor.

Appellant, who was the plaintiff in the lower court, sought foreclosure of a second mortgage; defendants answered denying all material allegations of the complaint and averred that the note secured by said mortgage was usurious and in violation of the usury laws.

Plaintiff and defendants moved for summary final decree and the court entered such decree for defendants. Final decree was thereafter entered; an appeal to the Supreme Court resulted in a reversal. See Shaffran v. Holness, Fla., 93 So.2d 94.

After the cause was remanded, the defendants filed an amended answer and counterclaim, setting up usury and alleging that defendants had been solicited to borrow money by an agent of plaintiff and that defendants, in the office of plaintiff's agent, had signed certain blank documents, including a mortgage and a note, which were later filled in by plaintiff's agent; that plaintiff by and through his agent had exacted a bonus, which together with interest in the note, commissions, discount, agents and other fees, amounted to an unlawful rate of interest. Defendants prayed that the mortgage and note be declared null and void, and that they have such other and further relief provided by law.

Plaintiff answered the counterclaim and denied that he had wilfully and knowingly exacted usurious interest as alleged, denied that the agent was his agent in the transaction, and averred that said agent was defendant's agent; that any sums collected by any person in the matter were done without his authority or knowledge, and that he never claimed more than 10% interest as provided by the note and mortgage.

Upon a trial of the issues the court entered a final decree for defendants, finding that United Mortgage Company was agent for plaintiff and that the commission received by them was chargeable to plaintiff as interest. The note and mortgage were cancelled by the decree and a judgment was entered for defendants as a penalty under the usury statutes.

For defendants and counterclaimants to prevail on their counterclaim charging usury and which prayed that the mortgage be cancelled, it was necessary for them to prove that United Mortgage Company, hereinafter referred to as United, was the agent of plaintiff, said agency being the basis of their counterclaim. The proof otherwise showed that defendants executed the note and mortgage, that plaintiff was the holder and owner thereof, and that the payments under the note were in default.

There was received in evidence a loan application and brokerage contract, by the terms of which defendants engaged United to act for them in procuring a second mortgage loan and agreed to pay United a certain sum for such services and the costs incident to the loan. While defendants contended that the printed form document was not completed when they executed it, they admitted they signed it. The printed portion thereof is clear and unambiguous in its meaning, and made United the agent of defendants. Shaffran v. Holness, supra; compare all Florida Surety Co. v. Coker, Fla., 88 So.2d 508. Other evidence upon the question of whether United was the agent of plaintiff or of defendants is summarized as follows.

Plaintiff was a resident of Miami Beach, and had lived in this country about four years, on a permanent visa, having been a citizen of Canada. The first he knew that the mortgage in question was available was when Neil Sawyer, an employee of United, of Miami, whom he had known about a month, called him about it. Sawyer's brother, Murray, who was also connected with United, then took him up to West Palm Beach, where they met the defendant J. E. Holness, Jr. After looking at the property, plaintiff told this defendant he would get in touch with defendant's broker, meaning United and Neil Sawyer. They wanted to get a $20,000 second mortgage on the property-he was advised that the first mortgage was about $35,000-but when they contacted him again he told them he would go $15,000. Subsequently he was informed that Holness would accept $15,000, whereupon plaintiff instructed them to deliver all papers to his lawyer, Seymour Simon, of Miami. Simon instructed plaintiff several days later to bring him a check for $15,000. United insisted on a cashier's check. Simon delivered the note to plaintiff right away, and subsequently others papers including the mortgage and title insurance policy.

Plaintiff never had any interest in United, never engaged them to do anything for him, or paid them any money to do anything for him. Around the time of this transaction he purchased two other mortgages through United, which have been paid, and which were also handled through Simon, his attorney. He did not know what the arrangement was between Holness and United. He received no portion of the brokerage commission, or any other sums from United in connection with this transaction. He employed Simon to foreclose the mortgage and agreed to pay him a reasonable fee for his services. He bought mortgage from different brokers, which he required to be handled through Simon. He did not say anything to Holness, except that when Holness asked him what he had to say about it, he told him he would get in touch with Holness' broker.

He stated he knew James A. Baccus, that he was the lawyer for United. When Holness was behind in his payments, he called United, and evidently Baccus wrote Holness. There is more risk on second mortgages, and they offered him ten per cent interest. He did not recall hearing anyone tell the Holnesses that he was the person from whom they were going to borrow the money. He camp up to West Palm Beach with Neil Sawyer and Baccus at the time he gave his deposition and, because he is not supposed to drive, he called Baccus to pick him up when he came up for the trial. United had first called him, about a month before this transaction, trying to sell him mortgages. They saw his name on a recorded mortgage. He told them he would drop in, like he went to other brokers. They offer him a mortgage and take him and show him the house.

Simon testified that he had known plaintiff, his client, for three years. His first knowledge of the transaction was when he was employed by plaintiff to close the second mortgage. The commitment letter was delivered to him by Baccus. He made an objection to a general exception of restrictions in the letter to Baccus, and also required a mechanic's lien affidavit. He closed the transaction at his office and received certain papers, which he delivered to plaintiff. He never had any connection with United, or represented them. His representation in any dealings that ever involved them had been in representing independent investors. Holness' payments were repeatedly delinquent, and he wrote him letters at plaintiff's request; he was representing plaintiff throughout the transaction. He received a fee in the case, by check from United. He handled the three loand about which plaintiff testified.

Murray Sawyer managed the West Palm Beach office of United, and stated that United 'is a broker for the individual to try to help them to secure a mortgage on their property.' It is a partnership composed of his brother and his sister-in-law, with the main office in Miami. People came into his office requesting mortgages, 'that I should possibly help them out and try to secure in reference to getting someone for them to get a mortgage.' After meeting Holness, he contacted the Miami office, giving details, and then called Holness from Miami to tell him he was bringing a prospective investor to look at his property. He brought up plaintiff, whom he introduced as a prospective purchaser. Plaintiff remarked, after they had gone through the property, 'I will let my broker know for you.' In explaining his answer, he stated that plaintiff said 'He would let his broker know * * *. Mr. Shaffran said he would let Mr. Holness know about it. In other words, he would speak to the United Mortgage Company and let them know whether he would give the sufficient money, the amount he requested for the mortgage. * * * The question I answered, sir, is that Mr. Shaffran would let the United Mortgage Company know. The United Mortgage Company is not his broker. He would lend money to Mr. Shaffran * * *. United Mortgage Company was Mr. Shaffran's agent for him to obtain the funds. * * * I meant to say that Mr. Shaffran would let the United Mortgage Company know whether he would lend the money for Mr. Holness. * * * When Mr. Shaffran left, he said he would let the United Mortgage Company know.' The papers were prepared in Miami and he brought them up to his office. Then he had the defendants come to his office where he went over the matter with them, and they executed the note, mortgage and brokerage agreement, which were completely filled out. He told the defendant they were mortgage brokers.

Mrs. Sawyer testified that United were mortgage brokers whose duties were to obtain loans on behalf of borrowers. Plaintiff was not paid any part of the monies which he handed over to United. United had never been engaged by plaintiff to act for him in any capacity; they were engaged by the defendants. Plaintiff had never paid them any money for any service. Plaintiff knew nothing about any disbursements she made from her trust account; he only knew that they were agents...