Spinney v. Winter Park Bldg. & Loan Ass'n

• Decision Date: 23 July 1935
• Court: Florida Supreme Court
• Parties: SPINNEY et ux. v. WINTER PARK BUILDING & LOAN ASS'N et al.

162 So. 899

120 Fla. 453

SPINNEY et ux. v. WINTER PARK BUILDING & LOAN ASS'N et al.

Florida Supreme Court

July 23, 1935

Rehearing Denied Aug. 28, 1935.

En Banc.

Suit by the Winter Park Building & Loan Association against Annie Ruby Johnson and husband, A. W. Spinney, Bertha E. Spinney and A. W. Spinney, as executor of the estate of E. H. Bryant deceased. From an order striking the amended answer of A. W Spinney, Bertha E. Spinney, and A. W. Spinney, as executor of the estate of E. H. Bryant, deceased, they appeal.

Affirmed. Appeal from Circuit Court, Orange County; Frank A. Smith, judge.

COUNSEL

George P. Garrett, of Orlando, for appellants.

C. O. Andrews & Son, of Orlando, for appellees.

OPINION

BUFORD Justice.

The appeal in this case brings for review an order striking the amended answer of the defendants A. W. Spinney and Bertha E. Spinney, his wife, and A. W. Spinney, as executor of the estate of E. H. Bryant, deceased, in a suit instituted by Winter Park Building & Loan Association, a Florida corporation organized under the statutes of Florida pertaining to the organization, powers, and duties of building and loan associations in this state, against Annie Ruby Johnson and her husband, Curtis Edwin Johnson, and the above-named defendants.

The bill of complaint sufficiently alleged that the complainant was a building and loan association organized under the laws of Florida and exercising all the rights and privileges granted such corporations; that on February 15, 1927, the defendants Annie Ruby Johnson and her husband, Curtis Edwin Johnson, subscribed for 35 shares of class B of the capital stock of the complainant of the par value of $100 per share; that on the same date, and after the issuance of said stock, the Johnsons borrowed from complainant $3,500, and to evidence the indebtedness they jointly executed and delivered to complainant their promissory note in the principal sum of $3,500, which note provided that it should bear interest at three-fourths of 1 per cent. per month. The defendants agreed to pay the complainant monthly dues in the sum of $35 and all fines due or assessed against said 35 shares of capital stock, and that the monthly payments of such dues on such stock should continue until the dues paid and the dividends credited to such stock should make same worth $100 per share, at which time the principal of the said loan should mature. Copy of said note was attached to the bill of complaint and made a part thereof. That in order to secure the payment of the loan with the interest, the dues, and fines on said stock, the stock was assigned by an instrument in writing to the complainant in accordance with the by-laws of the complaint. That it was thereby provided that in case default should be made in the payment of any interest thereon or any part thereof or any payment of the monthly dues upon the stock, then complainant would have the right to cancel the stock and apply the withdrawal value thereof at that time upon the loan. But on the said date, that is February 15, 1927, in order to further secure the said $3,500 advanced by plaintiff on the said 35 shares of stock of the building and loan association, the defendants Annie Ruby Johnson and her husband, Curtis Edwin Johnson, made and executed to the complainant their mortgage deed whereby they pledged certain lands described in the bill of complaint located in Orange county, Fla., and therein and thereby did agree to make the payments as above outlined. It was provided that in case of default in the payments the entire sum secured and unpaid should be accelerated.

It is further alleged that on February 21, 1927, the mortgage was duly filed and recorded in Mortgage Book 116, page 219, Public Records of Orange county, Fla. Certified copy of the mortgage was attached to the bill of complaint and made a part thereof.

It is alleged that in accordance with the by-laws of the complainant and in the performance of the contract above referred to it was necessary for Annie Ruby Johnson and her husband, Curtis Edwin Johnson, to pay to the complainant the sum of $35 per month as dues on the stock and the further sum of $26.25 as interest on the loan. The note and mortgage provided that the mortgage indebtedness should be fully paid and discharged when the amount of dues and dividends credited to the said stock should amount to a sum equal to $100 each on the said 35 shares of stock subscribed for. It is alleged that certain fines accrued because of defaults.

It is further alleged that the sum of $1,375.27 was paid and that there was an unpaid balance of $2,124.73 which, because of the acceleration clause, became due and payable; that there was a sum of $627.20 delinquent interest due and the sum of $84.80 fine due; and that the mortgage was subject to foreclosure for the entire amount as well as for all costs and attorney's fees and for moneys advanced for expenses incurred in procuring abstract.

It is further alleged that A. W. Spinney and his wife, Bertha E. Spinney, and A. W. Spinney, as executor of the last will and testament of E. H. Bryant, deceased, were made defendants in this suit because they claimed to have some interest in the property conveyed by the mortgage being foreclosed.

There was no allegation in the bill of complaint that the defendants A. W. Spinney and Bertha E. Spinney, his wife, or A. W. Spinney, as executor of the last will and testament of E. H. Bryant, deceased, had incurred any personal liability for the payment of the debt constituting the basis of the cause of action.

Decree pro confesso was entered against the Johnsons.

The Spinneys filed their joint and several answers. The pertinent part of the answer is as follows:

'17. Further answering said bill of complaint, said answering defendants:

'Defendants A. W. Spinney and Bertha E. Spinney, his wife, purchased the property here sought to be foreclosed upon after the making of the mortgage herein described.

'18. A. W. Spinney as Executor of the Last Will and testament of E. H. Bryant, deceased, acquired the fee simple title to said property from A. W. Spinney and Bertha E. Spinney, his wife, but did not assume the payment of said mortgage.

'19. With reference to said loan, said three defendants did not receive any stock in the Winter Park Building and Loan Association or any rights therein nor have they ever acquired any such stock or rights. The Winter Park Building and Loan Association has not even recognized said three defendants as stockholders or sent them any notices or paid them any dividends to the knowledge of said three defendants, or accounted to them for any sums or demanded any accounting or any sums of them prior to the institution of this suit. Nor has plaintiff prior to the institution of this suit made any demand of any character upon any of said three defendants nor have said defendants or either of them ever refused any demand made by the plaintiff. Said three defendants have never had, any of them, any transaction regarding said loan with said plaintiff or made any agreement or contract with plaintiff.

'20. The alleged debt due by Annie Ruby Johnson and Curtis Edwin Johnson to plaintiff and the alleged mortgage lien are in fact and in truth wholly void and of no effect because of gross usury exceeding 25% in the transaction and loan involved in said alleged debt and purported to be secured by said alleged mortgage. Said usury consists in this: Said plaintiff frankly recognized that said loan is usurious under C. G. L. §§ 6937, 6938 and possibly section 6942, but seeks to shelter this unlawful transaction behind the provisions of C. G. L. § 6167 relating to loans on stock in building and loan associations by the building and loan association whose stock is involved. Yet, so it is that the loan in this instance was not made in accordance with the binding provision of C. G. L. § 6165 or in accordance with an agreement in writing for the payment of a premium as provided by C. G. L. § 6165. Said loan was only colorably made against the stock of said building and loan association because said stock was not at said date, nor has it ever at any time since, been issued and delivered. The true purpose of said loan on the part of said borrowers was to secure a $3,500.00 loan on the security of the mortgaged premises. In order to secure same they were obliged by plaintiff to agree to purchase said stock of said plaintiff. The requirement by plaintiff of said borrowers that they purchase said stock was imposed upon the borrowers solely to enable the plaintiff to charge the borrowers usurious interest. The plaintiff did charge the borrowers usurious interest, as for instance, by providing that interest at 9% per annum should continue to accrue until the entire $3,500.00 loan was paid in full although payments made by the borrowers denominated 'dues' and amounting to $35.00 a month were credited in truth and in fact to the principal of said debt. Thus the plaintiff claims $26.25 a month as interest even now though the plaintiff's bill acknowledged payment of

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