#### MAXWELL v. SMITH ,et ux.

Supreme Court of Florida, Division B.

May 18, 1935.

Rehearing Denied J.une 5, 1935.

Marion M. Brooks, of Miami, for appellant.

George C. Simpson, of Miami, for appellees.

ELLIS, Presiding Justice;

The appellant, Maxwell, appealed from a final decree entered by the judge of the circuit court for Dade county, Hon. Paul D. Barns presiding, on July 12, 1934, in a certain foreclosure proceeding in which Maxwell was complainant and the appellees, Fred G. Smith and his wife, Elsie N. Smith, were defendants.

The defense interposed by the defendants-mortgagors was that the transaction culminating in the execution of the note for $4,000-' and the mortgage upon certain land in Miami was tainted with usury, in that the actual amount of money loaned was $3,600; that a note was executed for $4,000, dated June 21, 1927, bearing 8 per cent, interest per an-num from date, and that from December 21, 1927, to and including April 2, 1932, the defendants have paid to complainant $1,600 by way of interest; that adding to that sum the amount of $400 reserved by the complainant the defendants had been required to pay-$2,000 interest for the use of $3,600 for a period of four years and nine months and eleven days. In addition to that sum, the complainant desired to credit the defendants on-their alleged indebtedness an account which the defendant has against complainant amounting to $87.84 according to complainant’s admissions in- the bill of complaint, but which account amounts to $91.50 according to defendants’ contention.

Testimony was taken by a special master who was directed to report the testimony and his findings. The master reported that he found that the defendants had failed to- establish their defense of usury and that there was due from the defendants to the'complainant the sum of $4,746 principal and interest upon which defendants were entitled to a credit of $87.84.

Exceptions were taken to the masters report and findings that the complainant had proved all the material allegations of the bill; that the defendants had failed to establish the defense of usury; and that there was a debt due by defendants to complainant of the amount stated. It was also contended that the findings of the master were contrary to the evidence. The exceptions to the report were made June 4, 1934, and on the 28th day of that month the circuit judge sustained the exceptions and on July 12, 1934, entered the final decree from which the appeal was taken.

The chancellor found the equities to be with the defendants; that the money actually advanced was $3,600; and that the plaintiff reserved and exacted a usurious sum of $2,000 which the chancellor by his order doubled and forfeited and declared a balance of $400 due to the defendants from the complainant. The decree ordered the mortgage to be canceled.

The question here arises upon the facts disclosed -by the evidence. The complainant amended the bill after answer filed in which he alleged that prior to the date of the mort*567gage Smith was indebted to Maxwell in tbe sum of $1,797, evidenced by two notes, one for tbe sum of $797 made by Arthur S. Mey-erson and indorsed by defendant and one for $1,000 made by Harry Dubler and indorsed by ,tbe defendant; that défendant was also indebted to complainant prior to tbe execution of tbe mortgage in tbe sum of $3,000 secured by a mortgage on real estate; that Smith, desiring to secure a “construction loan,” requested tbe complainant to take a mortgage for $4,000 on the property described in the bill and release the mortgage for $3,-000. It was alleged that complainant agreed to accept that proposition provided defendant would agree to allow complainant to apply $400 on tbe Meyerson note for $797 and $600 on other obligations of the defendant due or to become due; that such agreement was carried out.

The defendant answered that amendment by averring that be did transfer the notes to complainant, but denied that the notes constituted any obligation of the defendant or that the complainant had ever made 'any demand on the defendant for payment of them and denied that either note was an’indebtedness of his.

Thus the transaction was submitted to the court upon the testimony offered by the parties. If the transaction was as simple as the complainant contended, that is that $400 of the alleged $4,000 indebtedness were to have been- used by defendant to pay the complainant a pre-existing- debt or to be applied on such a debt, which would have relieved the 'transaction of all suspicion of usury, it could have been clearly established by a receipt to the defendant for that amount and a written statement that the money should, be so applied. But that frank, open, and ingenuous way of transacting the business the complainant evaded, and to all appearances retained the $400 as well as the total of the alleged indebtedness of $1,797 against the defendant upon the notes- on which the complainant now asserts that the defendant was liable.

Instead of establishing at the time of the transaction the true character of the agreement, as the complainant alleges it to have been, he proceeds to foreclose the mortgage, makes no allegation in the original bill as to' the -true character of the transaction, as he' now asserts it to be, and waited until the de-; fendant answered and four months after the; original bill was filed to explain by amendment to the bill how the $400 were, applied and why.

The court now is called upon to unravel the intricate web of alleged verbal agreements and understandings supposed to have existed between the parties at the. time and administer law. and equity between them'., ■

The chancellor’s findings and his decree thereon are amply sustained by the evidence in the case. There is nothing existing in the record on which it may be said that he clearly erred in his conclusions. In fact, we are of the opinion that his findings and decree ■were just and equitable and ,in accord with the evident true nature and character of the transaction.

Such being the situation, the court, pursuant tó a long line of decisions, should refuse to disturb'the decree. See Fulton v. Clewiston, 100 Fla. 257, 129 So. 773; Sandlin v. Hunter Co., 70 Fla. 514, 70 So. 553; Hill v. Beacham, 79 Fla. 430, 85 So. 147; Farrell v. Forest Inv. Co., 73 Fla. 191, 74 So. 216, 1 A. L. R. 25; Smith v. O’Brien, 75 Fla. 252, 78 So. 13; Coogan v. Burley, 92 Fla. 899, 110 So. 529; Woodruff v. Lantana Finance Corporation, 102 Fla. 950, 136 So. 712; Turnipseed v. Brown, 102 Fla. 542, 136 So. 343.

The method used by the complainant to exact from the defendants a sum of money amounting to a compensation greater than 10 per cent, per annum upon the sum actually loaned was a scheme, device, or contrivance whereby the inhibitions of the statute were sought ,to be evaded. See sections 6938 and 6939, Comp. Gen. Laws 1927.

The chancellor correctly applied the rule of law defined by the statutes to the facts 'as he found them to exist. The decree should therefore be affirmed.

Affirmed.

TERRELL and BUFORD, JJ., concur.

WHITFIELD, C. J., and BROWN, J., concur in the opinion and judgment.

DAVIS, J., dissents.

DAVIS, Justice

(dissenting).

My view is that the special master correctly decided this case on the law and the facts and that the chancellor, erred in sustaining exceptions to the master’s report recommending a decree for complainant.