This is an appeal from a final decree finding usury to exist in a certain note and mortgage, the renewal and the extension thereof, and applying the statutory penalty to the lender by ordering the note and mortgage, the renewal and extension thereof cancelled of record.
In response to a newspaper advertisement, Mrs. Jesse Sewell Jones, on July 21, 1927, loaned to Warren Hammock *Page 334 and Julia R. Hammock the sum of $4,750.00 taking therefor their note in the sum of $5,000.00, due in three years, bearing interest at the rate of 8%, secured by a mortgage of even date on the following described premises:
"The South Half of the Southeast Quarter of the Southwest Quarter of the Southeast Quarter of Section 5, Township 30 South, Range 15 East."
The record does not show any extension or renewal of this note and mortgage at the end of that three year period. However, on July 1, 1931, complainants gave Mrs. Jesse Sewell Jones a new note for $5,000.00, due in three years, bearing interest at the rate of 8%, secured by a mortgage on the same property, in satisfaction of the note and mortgage of July 21, 1927. Simultaneously therewith complainants deeded 43/100 of an acre of said mortgaged property to McKeithen and Ulmer, taking back a second mortgage thereon to secure the purchase price, which mortgage was placed in escrow for the benefit of Mrs. Jesse Sewell Jones, so that all payments made by McKeithen and Ulmer on said mortgage would be paid to Mrs. Sewell Jones.
Having later defaulted in payment of the purchase price, McKeithen and Ulmer deeded the 43/100 of an acre of the mortgaged property back to complainants.
Thereafter Mrs. Jesse Sewell Jones entered into a contract with complainants whereby the due date on the note and mortgage executed July 1, 1931, was extended for five years from March 1, 1933. The consideration for said contract was the written assignment to Mrs. Jesse Sewell Jones of the income from a lease of even date of 43/100 of an acre of mortgaged premises to the Gulf Refining Co., said rent to be applied in payment of interest on the principal obligation owed by complainants to Mrs. Jones. *Page 335
Payments of rent by the Gulf Refining Co. under the assignment of rent agreement continued until the latter part of January or the first part of February of 1935.
On February 20, 1935, complainants filed their bill of complaint against Mrs. Jesse Sewell Jones, Jesse Sewell Jones and the Gulf Refining Co., asking for an accounting; and praying that the court credit on said note and mortgage the sum of $6,979.76, being double the amount of the bonus and interest collected and reserved; that the court cancel said note and mortgage and each renewal and extension thereof; and that the court enter judgment in favor of complainants for the sum of $1,763.60, being the difference between the amount to be credited on said note and mortgage because of usury penalties, and the sum of $4,750.00 actually loaned.
The amended bill of complaint filed May 22, 1935, in addition to the foregoing, also prayed that the Gulf Refining Co. be enjoined from paying any further sums of money to Mrs. Jesse Sewell Jones; and that the contract theretofore made providing for the assignment to Mrs. Jesse Sewell Jones of rent paid by the Gulf Refining Co. be cancelled.
Mrs. Jesse Sewell Jones and Jesse Sewell Jones answered the bill of complaint, denying the material allegations thereof, and asserting in defense to the allegations of the bill that in making the loan Mrs. Jesse Sewell Jones acted on advice of counsel that the loan would not be usurious; that the transaction of July 1, 1931, amounted to a novation; that defendants were ready and willing to accept payment of the principal of the mortgage; and that Jesse Sewell Jones had no interest in the note or mortgage and prayed that he be discharged from the suit. *Page 336
The amended answer set up the defense that the alleged cause of action did not accrue within two years prior to the filing of the bill of complaint.
Testimony was taken before Hon. T. Frank Hobson, Circuit Judge, by Hon. B.E. Satterfield, Official Court Reporter.
Final hearing was had before Hon. John U. Bird, Circuit Judge, who found that Mrs. Jesse Sewell Jones knowingly and intentionally charged complainant $250.00 bonus and 8% interest upon the sum of $5,000.00 for the use of $4,750.00 for three years, which is more than the law permitted said sum to earn; that it is possible she did not know the bonus plus 8% interest violated the law, or what the law was, yet the law charges her with knowledge of the statute; that the sum retained and the interest contracted for exceeded the 10% allowed by law is a simple matter of calculation; that though the facts may make the remedy seem harsh, yet the law is plain and mandatory; that the equities are with the complainants; that the interest paid by complainants to Mrs. Jesse Sewell Jones together with the sum of $250.00 retained as bonus, when doubled as required by statute, more than equals the sum of $4,750.00 loaned; that there is no element of estoppel or laches proven by defendants.
The court thereupon decreed that the mortgage of July 20, 1927, with each renewal and extension thereof was usurious; that complainants have paid to Mrs. Jesse Sewell Jones and the latter has charged, reserved and collected from complainants as interest and bonus on the aforesaid usurious mortgage, renewal and extension thereof, between July 20, 1927, and February 7, 1935, the sum of $3,256.80; that Mrs. Jesse Sewell Jones forfeit to complainants double said amount or the sum of $6,513.60; that the assignment of rent by complainants to Mrs. Jesse Sewell Jones *Page 337 of February 21, 1933, is void for want of valid consideration, and because based upon usurious consideration; that the renewal mortgage of July 1, 1931, and the extension agreement of February 21, 1933, are each cancelled and set aside; that the Gulf Refining Co. is permanently enjoined from paying to defendants, Jesse Sewell Jones or Mrs. Jesse Sewell Jones, any sums of money under the assignment of rent agreement of February 21, 1933; that any rents held by the Gulf Refining Co. by virtue of a temporary restraining order heretofore issued are the property of complainants, and the Gulf Refining Co. is hereby authorized to disburse the same to complainants or their solicitor of record.
From the final decree Mrs. Jesse Sewell Jones and Jesse Sewell Jones took an appeal, assigning fourteen errors.
Complainants cross-assigned as error the failure of the court to enter a money judgment in their favor against Mrs. Jesse Sewell Jones.
It is contended by appellants that there was not sufficient proof that they, the lenders, willfully violated the usury laws of the State of Florida.
"There are four requisites of a usurious transaction: `(1) There must be a loan, express or implied; (2) an understanding between the parties that the money lent shall be returned; (3) that for such loan a greater rate of interest than is allowed by law shall be paid or agreed to be paid as the case may be; and (4) there must exist a corrupt intent to take more than the legal rate for the use of the money loaned.'" Clark v. Gray, 101 Fla. 1058, 132 So. 832, quoting from Ector v. Osborne, 179 N.C. 667,103 S.E. 388, 13 A.L.R. 1207.
It was admitted by Mrs. Jesse Sewell Jones that she entered into a contract to lend complainants money; that she knew that she took complainants' note and mortgage for $5,000.00 for a three year loan, bearing interest at the rate *Page 338 of 8%, and actually loaned complainants only $4,750.00, reserving $250.00 as bonus. It is a simple matter of calculation to ascertain that the interest reserved by way of bonus and that actually paid was in excess of 10% per annum for the three year period. Mrs. Jones knew what the terms of the contract were, and she may be presumed to know what interest rate per annum was reserved and paid for the three year period.
There were no circumstances in this case similar to those in the case of Chandler v. Kendrick, 108 Fla. 450, 146 So. 551, so that the rule laid down there might be invoked here. The lender, Mrs. Jones, had her attorneys draw up the papers, and she admitted that she had an education above the average, which is quite different from the facts existing in the case of Chandler v. Kendrick, supra, where the borrower, a man skilled in financial matters, drew up the papers for the lender, an ignorant backwoodsman, in such manner that the contract called for interest in excess of 10% per annum.
"A thing is willfully done when it proceeds from a conscious motion of the will, intending the result which actually comes to pass. It must be designed or intentional, and may be malicious, though not necessarily so. `Willful' is sometimes used in the sense of intentional as distinguished from `accidental,' and when used in a statute affixing a punishment to acts done willfully, it may be restricted to such acts as are done with unlawful intent." Chandler v. Kendrick, 108 Fla. 450, 146 So. 551.
The provision of the statute, Sec. 6939 C.G.L., requiring that Sec. 6938 be willfully violated before the penalty can be enforced, contemplates that the lender must know that the interest and bonus that is being reserved and contracted to be paid in excess of 10% per annum; but it does not contemplate that the lender must know that charging and reserving *Page 339 interest and bonus in excess of 10% per annum is a violation of the usury laws of the State. If a lender could be permitted to say that he knew he was charging in excess of 10% interest, but didn't know that by doing so he was violating the law, it would open the doors to great fraud to be perpetrated by lenders upon borrowers. Ignorance of the law is no excuse when the lender is charged with violating the usury statutes of this State. Neither is acting on advise of counsel, that the transaction is not usurious, a valid excuse on the part of the lender. See Carr v. Cole, 119 Fla. 260, 161 So. 392. There is ample evidence in the record to show that the lender knew the facts of the transaction, and it is immaterial whether she knew the law on the subject or not.
The second question presented is whether it is incumbent on borrowers to prove that the usury statutes of the State were willfully violated.
It was decided by this Court in the cases of Tucker v. Fouts,73 Fla. 1215, 76 So. 130; McCullough v. Hill, 105 Fla. 680,133 So. 846; Phillips v. Lindsay, 102 Fla. 835, 136 So. 666, that a defendant setting up the defense of usury had the burden of proof, which is the burden of proving the four essential elements heretofore set out in this opinion. The same rule also applies where a complainant is relying upon usury to maintain his bill of complaint. We think this burden was successfully met by complainants in the instant case. The Chancellor so found and we are unwilling to disturb that finding.
The third and sixth questions presented relate to the same proposition and will be disposed of together. They raise the question as to whether the renewal note and mortgage given July 1, 1931, amounted to a novation so as to purge the contract of usury; and whether the extension, by *Page 340 sealed instrument, of the due date of said renewal for five years from March 1, 1933, purged the contract of usury.
"Where a usurious contract is renewed by the giving of a substituted contract, the usury follows into and becomes a part of that contract making it subject to the defense of usury to the same extent as was the original obligation. Such a renewal is regarded as a shift or device through which the lender seeks to collect his usury, and the courts are active to frustrate the attempt." 27 R.C.L. 250, Sec. 54, and cases cited.
Section 6938 C.G.L. provides that "any contract, contrivance or device whatever, whereby the debtor is required or obligated to pay a sum of money greater than the actual principal sum received, together with interest at the rate of ten per cent." is unlawful and usury.
By the original contract between the parties, the borrowers were obligated to pay to the lenders the sum of $5,000.00 at the end of a three year period, and pay 8% interest on that amount during that period of time, whereas the borrowers only received and had the use of $4,750.00. This clearly violated the statute, Sec. 6938, C.G.L., and the contract was usurious. Then on July 1, 1931, a renewal note and mortgage were made for the same amount, to-wit, $5,000.00, bearing the same rate of interest, to-wit, 8%, and payable in three years.
"Though the security for a debt is tainted with usury it may be purged by the abandonment of the usurious contract and the execution of a new obligation for the amount of the actual debt free from the usury of the old and bearing only legal interest. If the lender will expurge the usury, and borrower voluntarily assents to repay the sum loaned with law interest, it is an act of justice forbidden by no principle of public policy, which constitutes a good consideration for a new contract." 27 R.C.L. 251, Sec. 55. *Page 341
See also DeWolf v. Johnson, 102 Wheat. 367, 6 L. Ed. 343, and Clark v. Gray, 101 Fla. 1058, 132 So. 832.
However, there was in the renewal note and mortgage no reduction in the amount of principal to conform with the amount of money actually received by the borrowers, nor was any effort made to repay to the borrowers the amount reserved as bonus at the inception of the contract. Consequently, the fictitious sum of $5,000.00, having contributed towards rendering the first contract usurious, carried with it the stigma of usury into the second or renewal contract, rendering that contract also usurious. The extension of the due date of the renewal contract for five years from March 1, 1933, was, for the same reason, also usurious.
The fourth question presented is whether the statute of limitations has barred complainants from setting up usury in this transaction.
The statute of limitations does not begin to run on usury until the maturity of the contract. It operates in the same manner as it does on an installment contract or a running account. Hagan v. Neeb, 105 Fla. 297, 140 So. 916. The last payment of interest on this contract having been made in January or February of the same year in which the bill of complaint was filed, the statute of limitations had not barred complainants from setting up usury in the transaction.
It is also contended that the principle of estoppel precludes the borrowers from setting up usury.
The Chancellor below found that there was no element of estoppel in the case to prevent complainants from asserting that there was usury in the contract. We agree with that conclusion of the Chancellor.
It is contended by the appellees that the Chancellor erred in failing to enter a money judgment in favor of the borrowers for the difference between double the amount of the *Page 342 interest paid and reserved and the amount of money actually loaned, when double the amount of the interest paid and reserved exceeded the sum of money actually loaned.
The Chancellor found that complainants had paid as interest to Mrs. Jones the sum of $3,256.80, which being doubled, amounted to $6,513.60. The Chancellor further found that the actual amount of money lent to complainants by Mrs. Jones was the sum of $4,750.00. If the latter sum is deducted from the former, it will leave a balance due to the borrowers of $1,763.60. The Chancellor, after ordering the cancellation of the note and mortgage together with the renewal and extension thereof, failed to enter a money judgment in favor of the borrowers for the difference between double the amount of the interest actually paid and the amount of money actually lent. In failing to enter a money judgment in favor of the borrowers for this difference, the Chancellor below erred. See Maxwell v. Smith, 119 Fla. 389,161 So. 566.
ELLIS, C.J., concurs.