Woodgate Development Corp. v. Hamilton Inv. Trust, 50027
| Decision Date | 09 June 1977 |
| Docket Number | No. 50027,50027 |
| Citation | 351 So.2d 14 |
| Parties | WOODGATE DEVELOPMENT CORPORATION, a Florida corporation, R. F. Donaldson, Individually, and Terry C. Nelson, Individually, Petitioners, v. HAMILTON INVESTMENT TRUST, a Massachusetts Business Trust, Respondent. |
| Court | Florida Supreme Court |
Carl R. Pennington, Jr., and Everett P. Anderson of Pennington, Wilkinson & Sauls, Tallahassee, for petitioners.
Hugh M. Taylor and W. Robert Olive, Jr., of Bryant, Dickens, Franson & Miller, Tallahassee, for respondent.
Richard L. Lapidus of Lapidus & Hollander, Miami, for Sailboat Key, Inc., amicus curiae.
By petition for writ of certiorari we have for review an order of the Second Judicial Circuit Court in and for Leon County, initially, and directly passing on the validity of Section 687.11(4), Florida Statutes. We have jurisdiction pursuant to Article V, Section 3(b)(3), Florida Constitution. We reverse.
Petitioner Woodgate Development Corporation executed a note to Commonwealth Corporation, secured by a development and construction mortgage. Commonwealth was subsequently placed in federal receivership, and the mortgage was transferred to the respondent, Hamilton Investment Trust. Respondent, as plaintiff, instituted an action for deficiency judgment after a foreclosure sale of the mortgaged property failed to produce sufficient funds to satisfy the mortgage debt. By way of affirmative defense and counterclaim, petitioners pleaded that the interest on the note was usurious. Respondent argued that by virtue of Section 687.11(4), Florida Statutes, all interest limitations on loans to corporate borrowers in excess of $500,000 were effectively removed. Petitioners argued that, so construed, the statute would violate Article III, Section 6 of the Florida Constitution. 1 The Circuit Court adopted the construction urged by respondent and struck the pleadings.
We need not reach the constitutional question raised above, for this matter can be resolved by an historical analysis of the applicable statutes.
Petitioners take the position that Section 687.11(4), Florida Statutes, was intended to remedy an inconsistency between permissible rates payable by an individual as maker, as contrasted to a person secondarily liable on loans in excess of $500,000. We agree.
In 1965, Chapter 687 provided in pertinent part as follows: Section 687.02, Florida Statutes, defined usurious contracts and provided that any contract, other than that of a corporation, for interest at a higher rate than 10 percent per annum was usurious, and any contract involving a corporation for interest at a higher rate than 15 percent per annum was usurious. Section 687.03, Florida Statutes, defined unlawful rates of usury and provided that it was usurious for any person to charge to take for any loan, except from a corporation, a rate of interest greater than 10 percent per annum. It further provided that transactions with a corporation shall be usurious and unlawful if for a rate of interest greater than 15 percent per annum. Section 687.04, Florida Statutes, provided that any person willfully violating the provisions of Section 687.03 should forfeit the entire interest contracted to be charged and should forfeit double the amount of the interest taken or reserved. Section 687.07, Florida Statutes, provided for forfeiture of principal and interest when the interest charged exceeded 25 percent. Section 687.11, Florida Statutes, enacted by Ch. 65-299, provided, in part:
(1) No individual secondarily liable as endorser, guarantor, surety, or otherwise on any corporate obligation shall be required, in any proceeding for collection of interest in the courts of this state, to pay any interest in excess of 10 percent per annum, and any interest claimed therein against such individual in excess of 10 percent per annum shall be forfeited; and no corporation, in any such proceeding in the courts of this state where the interest is proven to exceed 15 percent per annum, shall be required to pay any interest, and in such event all interest shall be forfeited.
(2) All laws or parts of laws in conflict herewith and all other statutory penalties for usury applicable to loans to corporations are hereby repealed.
The 1967 Legislature did not amend the law. Therefore, Sections 687.02, 687.03, 687.04, 687.07, and 687.11 were reenacted as the official law of the state in accordance with Section 11.2421, Florida Statutes.
In 1969, the legislature enacted Section 687.071, Florida Statutes, which repealed Section 687.07, Florida Statutes. Section 687.07 had previously provided for the unenforceability of the debt where the interest rate exceeded 25 percent. The new statute provided different penalties for loans exceeding 25 percent. Sections 687.02, 687.03, 687.04, and 687.11 were carried forward from the official 1967 statutes and reenacted into the official 1969 statutes.
The 1970 Legislature carried forward all sections of 687 previously enacted, except that it made a small and insignificant amendment to Section 687.03.
In 1973 Section 687.02 was amended to provide that an individual could be charged up to 15 percent interest per annum on any loan exceeding $500,000. Section 687.11 still provided that:
No individual secondarily liable as endorser, guarantor, surety, or otherwise on any corporate obligation shall be required, in any proceeding for collection of interest in the courts of this state, to pay any interest in excess of 10 percent per annum, and any interest claimed therein against such individual in excess of 10 percent per annum shall be forfeited . . ..
Thus, in 1973, the laws of this state regarding usury contained inconsistent provisions. The law as it then stood provided that with regard to loans in excess of $500,000 an individual as maker could pay up to 15 percent interest and an individual secondarily liable was limited to 10 percent interest.
In 1974, Sections 687.02 and 687.04 were carried forward into the 1975 statutes unchanged. Section 687.03 was amended in several small and insignificant ways not germane to this discussion. It was at this time that Section 687.11 was amended by adding: "(4) The provisions of this section shall not apply to obligations which exceed $500,000." Respondent argues that this amendment was intended to remove all interest limitations on loans to corporate borrowers in excess of $500,000. However, Sections 687.02, 687.03, and 687.04 do now and always have provided penalties for the charging of interest in excess of certain rates.
The courts presume that statutes are passed with knowledge of prior existing statutes and that the legislature does not...
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