Mrs. M. Schweinert, a widow, exhibited her bill of complaint in the Circuit Court for Dade County against the Richter Jewelry Co., Inc., a Florida Corporation, to have cancelled a certain contract for a $2500.00 loan, alleged to be usurious to the extent of more than 25 per cent. per annum, and require the defendant to surrender and deliver the collateral security described in said contract and which consisted of a certain diamond and platinum bracelet of an alleged value of $15,000.00.
There was no objection to the sufficiency of the bill, by way of demurrer or motion to dismiss, or otherwise. The defendant filed an answer in which it was denied that the loan was usurious. It was admitted that the loan was for $2500.00 at 10 per cent for six months, but alleged that the plaintiff agreed to pay J.A. Richter, Secretary of the defendant corporation, $300.00 for his services in getting the money from the bank on his personal credit for the corporation *Page 210 to make the loan, which $300.00 was to be paid in four equal monthly installments, in addition to the monthly installments of interest, all of which commission installments had been paid, and that the defendant Jewelry Company had not received any part of said sum of $300.00 for its own use; that the plaintiff had paid to the defendant $95.80 on January 22, 1933, and a similar sum on February 22nd, March 22nd, and April 22nd; that each of said payments represented $75.00 of the $300.00 which the plaintiff had agreed to pay J.A. Richter and $20.80 of said amount represented the monthly interest due at the rate of 10 per cent; that out of the four payments thus made by the plaintiff to the defendant each month for four months, $75.00 per month was credited to the account of J.A. Richter, a salaried employee of the defendant, on account of compensation for services rendered and that the remainder was interest due by the plaintiff to the defendant as above cited.
The answer embraced a counter claim in which it was alleged that the loan was originally made for a period of thirty days and was renewed from time to time until May 22d 1933, when it was renewed for thirty days, and that all interest under the loan had been paid at the rate of 10 per cent. per annum with the exception of that due on May 22nd; that an accounting be had to ascertain the amount due to the defendant on its said contract and that the court order the plaintiff to pay the same and in default thereof that the personal property described in said contract be ordered sold to the highest bidder for cash and the proceeds applied to the costs and expenses of the suit and the remainder of the payment of the amount found to be due to the defendant on its contract.
The plaintiff filed a replication to the answer in which it *Page 211 was alleged that the defendant Company had retained $95.80 out of the $2500.00 so that the amount paid to plaintiff on December 22d 1932, was $2404.20, and took issue with many of the allegations of fact in the answer.
The contract which the plaintiff signed and which was attached as an exhibit to the bill was dated December 22, 1932, and pledged the said diamond bracelet as security for a thirty day loan of $2500.00, and there was endorsed on the contract memorandum of interest payments each month from January 22nd to May 22d 1933. Then followed an endorsement in these words: "Commission paid up to date." This was followed by an endorsement similar to those which preceded it, reading as follows: "Interest paid to June 22d 1933, interest amount $20.83." However, the preceding notation of interest payments did not give any amounts. It might be noted at this point that Section 6943 C.F.L. requires lenders of money upon security, immediately upon payments being made thereon to give the borrower a receipt, properly dated, which receipt shall state the amount paid and for what such payment is made, and refusal upon demand to comply with this section results in a forfeiture to the borrower of the entire interest paid.
The testimony in this case was taken before the chancellor in person who found in favor of the plaintiff and rendered a decree accordingly.
The plaintiff, Mrs. Schweinert, testified that she did not agree to pay Mr. Richter any commission; that all of these payments which she agreed to make and did make were payments made to the corporation for interest. But Richter testified that Mr. Lieberman, the President of the Bank, required him to endorse the corporation's notes before the bank would make the loan to his corporation, and that Mrs. Schweinert agreed to pay him the $300.00 for this *Page 212 service in order to get the loan through. Leiberman was not called as a witness.
The receipt purported to show the payments made by Mrs. Schweinert, but her receipts did not show the date of the payments and the amounts, except the last entry thereon, as above noted, but all of the money appears to have been collected by the corporation and went into the corporation's accounts. But Richter testified that he got his $300.00 and that the corporation got the balance of the payments. The corporation books were not brought in to show to whom the money was credited. Richter testified that the plaintiff came to him on the day before the loan was closed and applied for a loan of $3500.00 upon the diamond bracelet as security. After some conversation he told her that the corporation did not have that amount of money but that if she would give him a little time and come back next day he would let her know what he could do for her. Then Richter went to see Mr. Leiberman at the Mercantile Bank who told him that he would let him have $3000.00 if he would personally endorse the corporation's note. The next morning he went over to the bank and got the $3000.00 on the Jewelry Company's note endorsed by himself personally, and put it in the safe and had it there when Mrs. Schweinert, accompanied by a gentleman, came in and that she finally agreed to take a loan of $25,000.00 at 10 per cent., and agreed to pay Richter for his services $300 as his commission. It was understood that while they usually made thirty day loans, this loan could run for six months. That he paid Mrs. Schweinert $2500.00 in money and she gave him the bracelet and it was agreed that the commission should be paid in four monthly payments of $75.00 each which were to be paid when she came in to pay the monthly interest payments to the corporation. So *Page 213 Richter's testimony shows that the money was borrowed from the bank before there was any mention made to Mrs. Schweinert of any charge for Richter's services.
It thus appears that the plaintiff made a prima facie case when she proved that a sum of money was exacted and paid to the defendant corporation by the plaintiff, by way of interest or commission, or both, in an amount considerably greater than 25 per cent. per annum on the sum loaned. By way of confession and avoidance the defendant pleaded a loan of credit by J.A. Richter personally and a promise by the borrower to pay him as a commission therefor the said sum of $300.00, so that all the corporation exacted or received was the 10 per cent. interest.
The testimony is in conflict on this question as to whether or not the plaintiff, appellee here, ever agreed to pay Richter for his services in connection with this loan, but the Chancellor, who heard the witnesses testify in person, found in favor of the plaintiff, and the case might well be affirmed on that ground. But as I view it, the decision of the court below was correct, even if Mrs. Schweinert did agree to pay Richter this $300.00 commission.
It is not disputed that J.A. Richter, who charged and was paid the commission, was the Secretary of, and a stockholder, in the lender corporation, the Richter Jewelry Co., Inc. He alone acted for the corporation in making this loan. The chancellor in his decree expressly found that "J.A. Richter, the Secretary of the defendant corporation, was acting solely as the agent of the defendant, Richter Jewelry Co., Inc., in negotiating and consummating the loan complained of." There is ample evidence to sustain this finding of fact. Indeed, the evidence shows that Richter was not only a stockholder and officer, but also that he *Page 214 was in active control and management of the business of the lender corporation. (Trans. 71-72; 123-124; 133.)
The language of Section 6942, C.G.L., is as follows:
"Any person, association or persons, firm or corporation, or the agent, officer or other representative of any person, association of persons, firm or corporation lending money in this State who shall willfully and knowingly charge or accept any sum of money greater than the sum of money loaned, and an additional sum of money equal to twenty-five per cent. per annum upon the principal sum loaned, by any contract, contrivance or device whatever, directly or indirectly, by way of commissions, discount, exchange, interest, pretended sale of any article, assignment of salary or wages, inspection fees or other fees or otherwise, or for forbearing to enforce the collection of such moneys or otherwise, shall forfeit the entire sum, both the principal and interest, to the party charged such usurious interest, and shall be deemed guilty of a misdemeanor, and on conviction, be fined not more than one hundred dollars, or be imprisoned in the county jail not more than ninety days, or both, in the discretion of the court."
This statute, as I understand it, prohibits an officer of a corporation, when putting through a loan for the corporation, from charging the borrower any sum for his personal services, which, added to the interest charged by the corporation, would make the total amount charged the borrower equal or exceed 25 per cent. per annum. The prohibition of the statute extends to "any * * * corporation, or the agent, officer or other representative of any * * * corporation."
So, under the facts of this case, Richter's commission, if he was entitled to any, was chargeable to the lender and not to the borrower. As a general rule, "no man can serve *Page 215 two masters," and that rule must certainly obtain as to officers of money-lending corporations under the language of this statute. Richter obtained and put through a profitable loan for his corporation. If he assisted it to make the loan by indorsing the corporation's note to the bank, so that it could get the money to make the loan, he was furthering the interests of his corporation and he should have looked to the corporation for his compensation. It appears to have been amply solvent, with a stock worth $70,000, and few debts. The note to the bank was signed in the name of the corporation by J.A. Richter as secretary, which indicates that he had authority to borrow money for the corporation. As an officer and stockholder, personal interest should have impelled him to help his corporation, which was in the habit of making loans on jewelry, to make this loan, which was a jewelry-secured loan. If the officers of lending corporations are to be permitted, on any pretext, to charge commissions for loan made by corporations in such sums as to make the interest on the loan together with the commissions, exceed 25 per cent, without falling within the penalty of this statute, it would be a very easy matter to practically nullify the statute. To reverse this decree would be to set a most dangerous precedent.
But, as I see it, this cannot be done. The tendency of our own decisions is against it. See Owens v. State, 63 Fla. 26, 34,58 So. 125, 128; Tucker v. Fouts, 73 Fla. 1215, 76 So. 130; Wilson v. Conner, 106 Fla. 6, 142 So. 606; Graham v. Fitts, 53 Fla. 1046, 43 So. 512; McCullough v. Hill, 105 Fla. 680, 133 So. 846. See also France v. Munro, 115 N.W. 577, 19 L.R.A. N.S. 391, and note.
I do not think Wicker v. Trust Co., 109 Fla. 411, 147 So. 586, or Mason v. Cunningham, 149 So. 331, 111 Fla. 200, *Page 216 are in conflict with what has been above said. On the other hand, a recent Florida case quite closely in point is Hopkins v. Otto,160 So. 203. In that case, the commission was paid to an employe in the lender's office, which, with the interest reserved, rendered the loan usurious. The chancellor was affirmed. See also the recent Mississippi case of Gully v. Gulf Coast Industrial Co., 151 So. 754, where the broker was the regularly employed agent of the lender, but the borrower signed an application for the loan authorizing the broker to act as his agent: Held, that, under the facts of that case, in spite of this stipulation in the application, the exaction of a commission by the broker from the borrower operated to render the transaction usurious. The earlier case of Allen v. Granada Bank, 160 Miss. 419, 133 So. 648, which tends to support appellant's contention, is discussed and differentiated but not overruled.
The agent cannot, under our statute, be the employed agent of the lender and at the same time make a profit for himself by exacting a bonus or commission from the borrower, if the commission, together with the interest, exceeds the legal limit and amounts to usury. Our statute reaches the acts of the lender's agent as well as those of the lender himself. This renders many of the decisions from other states inapplicable here.
There is considerable respectable authority upholding the rule that a loan is not rendered usurious by the fact that the borrower pays the lender's agent, as compensation for services rendered to the borrower, a sum which, added to the interest, exceeds the legal rate, provided that the services for which thelender's agent is compensated are not such as the lender ought tohave performed or paid for, and the compensation is not shared or agreed to be shared with the lender. See 27 R.C.L. 237, and cases cited. But *Page 217 the case for the Richter Jewelry Co., Inc., does not measure up to the proviso. If, as it is claimed, the said corporation was short of cash at the time and found it necessary, in order to make this loan to appellee, to borrow some money at the bank, and the bank required its officer in charge of its business to personally indorse the note (which, by the way, was for a larger amount than the loan) before it would lend the corporation the money, this so-called "service" on the part of the corporation's officer, if to be paid for at all, should properly have been paid for by the corporation, which was acting through him, and thereby was enabled to make an advantageous and well-secured loan at 10 per cent. The corporation acting through Richter, got the money on the note and loaned it out on an acceptably secured mortgage. It was not any business of the borrower to pay for any expense incurred by the corporation in obtaining this money from the bank. To charge the borrower for this, in my opinion, rendered the transaction usurious. "A lender will not be permitted to cloak usurious exactions beneath charges for pretended services to the borrower."
In 66 C.J., at page 224, it is said:
"Where a general agent of a creditor, being entrusted with full powers and general authority for the management and administration of the creditor's business and affairs, exacts from a debtor the payment of a bonus or commission for or in connection with the making of a contract of loan or forbearance, the transaction is usurious if such exaction causes the lawful rate of interest to be exceeded, even though it is made without the actual knowledge or authority of the creditor, the case standing upon exactly the same footing as if the exaction were made by the creditor himself." *Page 218
See also France v. Munro, 115 N.W. 577, 19 L.R.A. (N.S.) 391 and note.
Perhaps the statute should have been written in such a way as to require a party who goes into equity to obtain relief against a usurious lender, where the usury amounts to 25 per cent. or more, to offer to do equity by paying the lender the principal sum received by the borrower, less the usurious charges already paid, but the statute plainly says that where such large exactions are made the lender forfeits the entire sum, both principal and interest, and the courts have no authority to set aside the legislative policy in this regard.
The question was not raised in the court below, but it is contended here by the appellant that the bill was fatally defective because it did not contain an offer to do equity. In other words, it is contended that the complainant had no right to pray for the cancellation of the loan contract and the return of the collateral without first offering to return to the defendant corporation the money actually received from the corporation on the loan less the usurious payments made, provided it be found that there was any usury. Appellant cites the case of Robbins v. Blanc, 105 Fla. 625, 142 So. 223, but that case does not, in the writer's opinion, support the appellant's contention. On the other hand, it supports the contention of the appellee. In that case Mr. Justice DAVIS, speaking for the Court, had this to say:
"To support a bill for redemption from a mortgage, it is only necessary that complainant offer to pay all amounts legally due on the debt secured, in order to sustain such bill. If by reason of violation of the usury laws a part of the amount lent has become forfeited or otherwise not recoverable in law, it is wholly unessential to enable complainant to obtain relief, that he offer to pay amounts which *Page 219 under the law are not payable by him or recoverable from him. To hold otherwise would permit the usury laws to be defeated and frustrated in their object, by the simple device of the usurer in exacting a deed in lieu of a mortgage to secure and make certain the payment of amounts which would otherwise be forfeited, or be rendered not recoverable from the borrower.
"When it is once established that a mortgage exists, the equitable right of redemption attaches to the transaction as an inseparable incident. The right to redeem is an incident to every mortgage, or deed which is in law to be regarded as a mortgage, because given to secure the payment of money, and such right of redemption belongs to the mortgagor and those claiming under him. This right cannot be extinguished except by due process of law. Stovall v. Stokes, 94 Fla. 717, 115 Sou. Rep. 828; Quinn Plumbing Co., Inc., v. New Miami Shores Corp., 100 Fla. 413,129 Sou. Rep. 690, 73 A.L.R. 600.
"He who seeks equity must do equity, so it is an essential part of a bill to redeem a mortgage that it offer in express terms to pay the amount due, with costs. Horn v. Indianapolis Nat. Bk.,125 Ind. 381, 25 N.E. 558, 21 A.S.R. 231, note 9 L.R.A. 676. But when the bill does this, it is sufficient and it is not necessary that the complainant allege his willingness or ability to pay more than under the law he is legally and justly liable to pay, according to the nature of the transaction.
"The case at bar is not controlled by what was said in Taylor v. Rawlins, 10 Fla. 621, 106 Sou. Rep. 424, since no indebtedness can become judicially collectible against a borrower by a lender in excess of what is permissible to be collected under the usury laws, where it appears that usury has been exacted on the original loan or in suit. This is *Page 220 true regardless of the form or device by which the debt is secured, evidenced or to be established. Therefore the borrower in a case like the present is under no legal or equitable obligation to return the full amount of the money he has obtained from the lender, where it is made to appear that the transaction in its inception was tainted with usury. In such cases the borrower is only under the obligation to offer to repay the lender what, if anything, the usury statutes preserve to him as a legally recoverable demand judicially enforceable on the lender's behalf in a court of equity."
See also Family Loan Corporation v. Smetal Corporation,119 Fla. 497, 161 So. 438. In that case Mr. Justice BUFORD cites the case of Clark v. Smith, 13 Pet. 195, 10 L. Ed. 123, wherein it was said:
"When the Legislature declares certain instruments illegal and void, there is inherent in the courts of equity a jurisdiction to order them to be delivered up, and thereby give effect to the policy of the Legislature."
If, as our statute provides, where more than 25 per cent. per annum is exacted, the entire sum of both principal and interest is forfeited, no element of validity remains in the contract. The effect of such a loan contract is to make it wholly void and subject to cancellation by a court of equity. Furthermore, the statute makes the lending of money on such terms a criminal offense and a contract of that nature is therefore void as against the public policy of the state as established by its Legislature. Therefore when a suit is brought by the borrower to cancel such a contract and require the surrender of the security, there is no legal or equitable duty resting upon the borrower to offer to return any part of the money loaned. It must be conceded that this statute is a harsh and rigorous statute, but the *Page 221 Legislature was dealing with a harsh and sometimes unscrupulous business, the exaction of more than 25 per cent. per annum for the lending of money, and evidently resorted to these measures to protect unfortunate and necessitous borrowers.
It would seem that this case might well be affirmed on the well known ground that where the evidence is in conflict the decree of the chancellor will be upheld. But it also seems to me that, even if the appellant's testimony be taken as true, the decree should be affirmed for the above reasons.
Affirmed.
ELLIS, P.J., and BUFORD, and DAVIS, J.J., concur.
WHITFIELD, C.J., and TERRELL, J., dissent.