Smetal Corp. v. Family Loan Co.

• Decision Date: 26 March 1935
• Citation: 161 So. 438,119 Fla. 497
• Parties: SMETAL CORPORATION v. FAMILY LOAN CO. et al.
• Court: Florida Supreme Court

161 So. 438

119 Fla. 497

SMETAL CORPORATION v. FAMILY LOAN CO. et al.

Florida Supreme Court, Division B.

March 26, 1935

Rehearing Denied June 3, 1935.

Suit by the Smetal Corporation against the Family Loan Company and W C. Chadwick. From an order dissolving a portion of an injunctive order theretofore granted against second-named defendant, complainant appeals, and first-named defendant files cross-assignments of error.

Affirmed. Appeal from Circuit Court, Dade County; Paul D Barns, Judge.

COUNSEL

Shutts & Bowen and Charles A. Carroll, all of Miami, for appellant.

M. S Salomon and A. M. Reder, both of Miami, for appellees.

OPINION

BUFORD Justice.

Smetal Corporation was a corporation organized and existing under the laws of the state of Florida, and Family Loan Company was a corporation organized and existing under the laws of the state of Florida, each having its office and principal place of business in Dade county, Fla.

On April 16, 1934, Smetal Corporation exhibited its bill of complaint in the circuit court of Dade county against Family Loan Company. Smetal Corporation will hereinafter be referred to as complainant, and Family Loan Company as defendant.

The bill of complaint alleged the facts above set forth, and, further, that defendant corporation was then a licensee under the provisions of chapter 10177, Laws Florida 1925. It alleged that at all times prior to January 19, 1934, and since the organization of the two corporations, W. C. Chadwick, Fred S. Meyer, and A. M. Reder were officers and directors of both corporations; that on July 29, 1931, defendant made a loan to complainant of $865.70 and charged interest thereon at the rate of 12 per cent. per annum; that on October 16, 1931, complainant paid to defendant $22.80 as interest on the loan and paid and discharged the principal of the loan; that on October 16, 1931, the defendant made a loan to complainant in the sum of $2,120.24 upon which the defendant charged and received, and the plaintiff paid, interest at the rate of 12 per cent. per annum. That for the purpose of securing the payment of the last-named money the complainant on October 16, 1931, through its directors at a formal meeting, purported to authorize the officers of the plaintiff corporation to mortgage two certain parcels of real estate owned by the plaintiff and described in the bill of complaint, and also purported to authorize the pledging and delivering to the defendant of certain mortgage bonds in the principal amount of $6,000 then owned by plaintiff and secured by mortgages or deeds of trust on certain premises sometimes described as 'The Two Coral Construction Houses,' and certain other bonds described in the bill of complaint. Copies of the minutes of this meeting of the board were attached to the bill of complaint.

It is further alleged that directors of plaintiff corporation purported to authorize the making of a contract with Chadwick by which he should manage the numerous properties owned by complainant so long as the loan should remain unpaid. That pursuant thereto a certain contract was entered into between the corporation by its officers and directors and the defendant Chadwick substantially in accordance with the corporate authorization. Copy of that contract is attached to the bill of complaint. That Chadwick took charge of the properties and at all times since continued to manage and operate the same. That at the time of filing bill of complaint he had in his hands a sum of money belonging to the complainant in excess of the amount of $300; the exact amount being to complainant unknown. That the mortgage was made, executed, and delivered in accordance with the action of the board of directors above referred to, but that the mortgage was a deed absolute in form dated October 11, 1931, and recorded in the public records of Dade county. Photostatic copies are attached to and made a part of the bill of complaint. That on December 31, 1931, plaintiff paid to defendant $54 as interest on the loan at the rate of 12 per cent. per annum up to that date, and on February 28, 1932, plaintiff paid defendant the sum of $42.40 constituting interest on the loan at rate of 12 per cent. from December 31, 1931. That on February 28, 1932, defendant made a loan to the plaintiff in the sum of $2,581.32, and out of the proceeds of the loan discharged the prior loan of $2,120.24. That although the loan of October 16, 1931, has been paid, defendant has failed and refused to redeliver to plaintiff the pledged bonds and has failed and refused to satisfy the mortgages as required by law.

It is alleged that the transaction of October 16, 1931, was in violation of chapter 10177, Laws 1925, in the following respects:

The amount of the loan was in excess of the amount which the licensee was permitted to lend to the complainant.

Defendant corporation thereby permitted the plaintiff to owe to defendant corporation at one time the sum of more than $300 for principal.

That the defendant therein and thereby charged and received and was paid interest on said loan at a rate in excess of that permitted by the act referred to, and, as it is alleged, upon other grounds appearing from the provisions of the act.

That except as is alleged in the bill of complaint, there has been no other authorization by the board of directors except that shown by Exhibit 1 above referred to, authorizing the officers of the complainant to pledge said bonds or mortgage the premises to secure the payment of any of the loans mentioned in the bill other than that loan of October 16, 1931.

It is then alleged that at various times thereafter until September 1, 1933, certain amounts were paid by the complainant to the defendant as interest, and certain amounts were paid on the principal, and that on September 1, 1933, the defendant corporation made a loan to the complainant in the sum of $2,051.48, and out of the proceeds of this loan complainant paid the balance of the loan of December 22, 1932, on which last-named date, December 22, 1932, a loan of $2,551.48 has been made, and from the proceeds the balance of previous loan had been discharged. That the loan of September 1, 1933, was evidenced by a promissory note of which complainant corporation through its vice president, W. C. Chadwick, was the maker, and which note was payable on demand of the order of the defendant corporation. That the rate of interest charged and contracted for by defendant on such loan and expressly provided for in said note was 2 per cent. per month, amounting to 24 per cent. per annum. Said note on its face referred to certain 'collateral,' and there was attached thereto an Exhibit A on which was listed as security for the payment of said note the mortgage bonds and the deeds of conveyance above mentioned and described, which had been delivered to defendant on October 16, 1931. Copy of that note is attached to the bill and made a part thereof.

It is then alleged that the defendant continues to hold the bonds and to hold title to the lands referred to in the bill of complaint which had been conveyed to it as security, although, as is alleged in the bill, the said loan of $2,551.48 is void and not enforceable or collectible by the laws of Florida, and is a loan made in violation of the laws of Florida.

Again, the bill alleges that the defendant in connection with making the loans above referred to did not comply with the provisions of chapter 10177 supra. The bill then alleges that all loans above referred to were void and unenforceable.

Section 18 of the bill alleges as follows:

'At the time of the making of such loans, the officers and directors of the plaintiff corporation (who, as aforesaid were likewise officers and directors of the defendant corporation) were the owners or representatives of certain business interests known and sometimes referred to as 'the Meyer-Kiser Interests.' During such times the stock of the plaintiff corporation was held by the Meyer-Kiser interests. Thereafter, as a receiver appointed in the State of Indiana, and as such in the capacity of a representative of the creditors of the defunct Meyer-Kiser Bank of Indianapolis, an Indiana State banking corporation, one Thomas E. Garvin became and is the holder of the stock of the plaintiff corporation which is now entirely divested and apart from said Meyer-Kiser interests. Thereafter at the request of said receiver, Thomas E. Garvin, all the officers and directors of said corporation who took part in the negotiating of said loans from the defendant corporation resigned as such officers and directors of said corporation on January 19, 1934, and have been succeeded by the said Thomas E. Garvin as President and director thereof and by other officers and directors not connected with or representing the said Meyer-Kiser interests. That the interest of said former officers and directors of the plaintiff corporation, by reason of their being officers and directors of the defendant corporation which made the loans in question, including the last described loan of September 1, 1933, is adverse and antagonistic to the persons now interested in the plaintiff corporation.'

Section 20 of the bill alleges as follows:

'That said promissory note purporting to evidence the loan of September 1, 1933, is negotiable in form. The said mortgage bonds which the defendant corporation holds under the claim that the same are security for the payment of said loan of September 1, 1933, likewise are negotiable in form and have not yet matured. The premises to which the defendant corporation holds title under a claim that the same are security for said loan are held by deeds which appear on their face to be absolute. It is essential to the protection of the rights of ...