Opposition — Financial Federal Savings & Loan Ass'n v. Burleigh House, Inc.

-———__

tu the

Supreme Cote Lao

. ate

Ginited States

OCTOBER TERM, 1976

CASE NO. 76-638

FINANCIAL FEDERAL SAVINGS & LOAN

ASSOCIATION,

Petitioner,

v8.

BURLEIGH HOUSE, INC.,

Respondent.

RESPONDENT'S BRIEF

JURISDICTION

LAPIDUS & HOLLANDER

Attorneys for Res nt

Suite 2222, First Federal Building

One S. E. Third Avenue

Miami, Florida 33131

Telephone: (305) 358-5690

MIAMI REVIEW — 371-4853 — 377-3721

TABLE OF CONTENTS

INTRODUCTION... C~—~—~SYS

STATEMENT OF THE CASE... ——s

SG

EE 14

CERTIFICATE OF MAILING 20000 15

II

TABLE OF CASES AND AUTHORITIES

Case Page

American Express Co. v. Levee,

252 U.S. 19, 19 S.Ct. 11, 68 L.Ed. 140 8

Bartow Growers Proc. Corp. v. Florida Gr. Proc.

Corp.,

Fla. 71 So.2d 165 ‘emma x

Carlton v. Fidelity & Deposit Company of Maryland,

Fla. 154 So. 317 _ Se ae ee NS 10

Corporate Group Service, Inc. v. Lymberis,

Fla. 146 So.2d 745 Tie Te ae 4

Erie Railroad v. Purdy,

185 U.S. 148, 22 S.Ct. 605, 46 L.Ed. 847 11

Florida Citrus Commission v. Owens,

Fla. App. 239 So.2d 840... 4

Gleason v. Dade County,

Fla. App. 174 So.2d 466 3, 10

Gorman v. Washington University,

316 U.S. 98, 62 S.Ct. 962, 86 L.Ed. 1300 9

Gotthilf v. Sills,

375 U.S. 79, 11 L.Ed.2d 159, 84 S.Ct. 187 ___ 9

Henderson v. Antonacci,

Fla. 62 So.2d 5 ; aerer etnialis 2

ill

TABLE OF CASES AND AUTHORITIES (cont.)

Case Page

Herndon v. Georgia,

295 U.S. 441, 55 S.Ct. 794, 79 L.Ed. 1530 __. 11

Hightower v. Bigoney,

8 5 5

In re Kionka’s Estate,

SET wail 5

Lindsley v. Natural Carbonic Gas Co.,

220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 377 12

Louisville & Nashville Railroad Company v.

W ood ford,

234 U.S. 546, 34 S.Ct. 739, 58 L.Ed. 1202 ___. 11

Matthews v. Huwe,

269 U.S. 262, 76 S.Ct. 108, 70 L.Ed. 266 _____... 9

Morrison v. Watson,

en 11

Mutual Life Insurance Company v. McGrew,

188 U.S. 291, 23 S.Ct. 375, 47 L.Ed. 480 ____. ‘ 11

Ocala Star-Banner Co. v. Wahl,

401 U.S. 295, 91 S.Ct. 628, 28 L.Ed.2d 57 ___ 5

Perez v. Campbell,

402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 222 __ 13

VI

TABLE OF CASES AND AUTHORITIES cont.)

Case Page

Randall v. Board of Commissioners,

201 U.S. 252, 43 S.Ct. 252, 67 L.Ed. 637 _____. 8

Spinney v. Winter Park Building & Loan Assn.,

xe its 12

State v. Furen,

ll", ae a 5

State v. Miami Coin Club,

a ED Siiectninhartstinisinesininientusicinnaesaidaiss ——_ 4

Street v. New York,

394 U.S. 576, 89 S.Ct. 1354, 22 L.Ed. 572 __.__. 11

Village of Belle Terre v. Boraas,

416 U.S. 1, 94 S.Ct. 1536, 39 L.Ed.2d 797 ____. 12

Williams v. Florida,

399 U.S. 78, 90 S.Ct. 1893, 26 L.Ed.2d 446 5

AUTHORITIES

Constitution of State of Florida, Art. V, §3(b) (1)_ 5

Constitution of State of Florida, Art. V, §4(b) 3

fi Ed eee eee 13

ULC, 0880 @) 13

v

TABLE OF CASES AND AUTHORITIES (cont.)

28: US.C., $1257

EE SS

Florida Appellate Rule 2.1(5) —

Florida Appellate Rule 3.7(f)(A) ..

Florida Statutes, Chapter 665 (1969)

Ce

SS ee

Goenns (5) FS. (1969)

Page

3, 4,5

12

12

in the

Supreme Court

of the

GAnited States

OCTOBER TERM, 1976

CASE NO. 76-638

FINANCIAL FEDERAL SAVINGS & LOAN

ASSOCIATION,

Petitioner,

v8.

BURLEIGH HOUSE, INC.,

Respondent.

| RESPONDENT'S BRIEF

| JURISDICTION

| INTRODUCTION

Petition For Certiorari is sought to review a decision

of the Third District Court of Appeals of Florida. The

parties will be referred to as they appear in this Court.

Reference to Petitioner’s Appendix will be by the letter

“A”. Since the Florida statutes Petitioner claims invalid

were changed effective June, 1969 and this case only deals

2

with pre 1969 Florida law, the relevant Florida statutes

as they appeared in 1969 are set out in Respondent’s Ap-

pendix. Reference to Respondent’s Appendix will be by the

letters “AA”.

STATEMENT OF THE CASE

By an amended complaint filed in the Circuit Court

for the Eleventh Judicial Circuit, Petitioner was charged

with violating the usury laws of Florida by exacting

twenty-one percent interest on a loan of money (AA. 1-10).

It filed a motion to dismiss claiming the amended complaint

pled insufficient facts (AA. 10-11). No Constitutional ques-

tion was raised. It answered the complaint, admitting and

denying and raising the applicable statute of limitations

(AA. 12-14). No Constitutional question was raised. It

moved for summary judgment claiming immunity from

the usury law by virtue of a Florida exemption statute

(AA. 15). It supported its motion by a memorandum of

law outlining its argument (AA. 16-24). In neither the

motion nor the memorandum was a Constitutional question

raised. The case proceeded to trial on the amended com-

plaint and answer. After the trial, in oral argument to the

Judge, counsel for Petitioner opined that Florida’s exemp-

tion statute might be unconstitutional (A. 43-44). This was

the only mention of a Federal question in the state trial

court. Florida requires that absent fundamental error, a

Constitutional question, to be decided, must be first raised

in the trial court by pleadings Henderson v. Antonacci,

Fla, 62 So.2d 5.

No Constitutional question having been raised in the

trial court, none was decided by the trial Judge who found

that Petitioner had indeed violated Florida’s usury statute

and exacted over twenty percent interest (A. 24-32).

ee

Florida requires that in order to be raised on appeal,

absent fundamental error, a Constitutional question must

first be properly raised in the trial court Gleason v. Dade

County, Fla.App. 174 So.2d 466.

Petitioner filed its appeal to the Third District Court

of Appeals of Florida. There are two levels of appellate

courts in Florida, the Supreme Court and four District

} Soy of Appeal. Florida Appellate Rule 2.1(5) provides

“Appeals from trial courts may be taken di-

rectly to the Supreme Court, as a matter of right

. .. from final judgments or decrees passing di-

rectly upon the validity of a state statute or a

federal statute or treaty, or construing a controll-

ing provision of the Florida or federal Constitu-

tion...”

The District Courts of Appeal have jurisdiction of appeals

which may not be taken as a matter of right to the Su-

preme Court of Florida, Constitution of the State of Flor-

ida, Art. V, §4(b).

By appealing to the District Court of Appeal, rather

than the Supreme Court of Florida, the Constitutional ap-

pellate court, no review was sought of any Constitutional

point.

Petitioner filed assignments of error (AA, 25-30) and

a brief containing points to be argued on appeal (AA. 31-

32) as required by Florida Appellate Rule 3.7(f) (4).

Neither raised a Constitutional question. Florida appellate

4

procedure requires that judicial error of the lower court be

assigned and argued under separate points on appeal in an

appellate brief Florida Citrus Commission v. Owens, Fla.

App. 239 So.2d 840. Only at the conclusion of its brief and

in its reply brief did Petitioner mention any Constitutional

claim (A. 40-41). This was insufficient under Florida pro-

cedure to raise the point State v. Miami Coin Club, Fla. 88

So.2d 293.

The opinion of the District Court of Appeal, dated

November 12, 1974 of which review is here sought, plainly

did not pass upon any Constitutional question. None had

been presented to it.

By a petition for rehearing to the District Court of

Appeal, Petitioner first directly questioned the Constitu-

tionality of Florida’s exemption statute (A. 39). Under

Florida procedure no new ground or position may be as-

sumed in a petition for rehearing Corporate Group Service,

Inc. v. Lymberis, Fla. 146 So.2d 745. The petition was de-

nied January 9, 1975.

Petitioner then sought certiorari to the Supreme Court

of Florida, a diseretionary writ, based upon conflict with

other opinions. Florida Appellate Rule 2.1( 5) (b) provides:

“Appeals from district courts of appeal may be

taken to the Supreme Court as a matter of right

only from decisions initially passing upon the

validity of a state statute, a federal statute or

treaty, or initially construing a controlling yuove-

sion of the Florida or federal Constitution. . .

The term “initially passing upon the validity of a state

statute” means in a given proceeding that the validity of a

statute was first called into question in the District Court

of Appeal, as where the case is one of original jurisdiction

in the District Court of Appeal or where fundamental error

is first there raised. It does not mean that the case must be

one of first impression State v. Furen, Fla. 118 So.2d 6,

In re Kionka’s Estate, Fla. 121 So.2d 644 concurring opin-

ion adopted in Hightower v. Bigoney, Fla. 156 So.2d 501.

The Supreme Court of Florida, by the Constitution of

Florida, Art. V, §3(b)(1) and Florida Appellate Rule

2.1(5) is the Court of last resort of Florida for cases pass-

ing upon the Constitutionality of a state statute. An appeal

is there afforded as a matter of right.’

Petitioner did not appeal as a matter of right from the

Third District Court of Appeal to the Supreme Court of

Florida. It filed a petition for certiorari based upon de-

cisional conflict. The Supreme Court found no decisional

conflict and discharged the Writ of Certiorari. It never as-

sumed jurisdiction.

Ten months after the District Court rendered its de-

cision Petitioner sought review by this Court.

'In all Florida cases where this Court has directed writ of cer-

tiorari to decisions of the District Courts of Appeal of Florida, Peti-

tioners had attempted an appeal, as a matter of right to the Supreme

Court of Florida Ocala Star-Banner Co. v. Wahl, 401 U.S. 295, 91 S.Ct.

628, 28 L. Ed. 2d 57, Williams v. Florida, 399 U.S. 78, 90 S.Ct. 1893,

26 L. Ed. 2d 446.

ARGUMENT

CERTIORARI WILL NOT LIE SINCE THE

JUDGMENT SOUGHT REVIEW WAS NOT

RENDERED BY THE HIGHEST COURT OF

A STATE IN WHICH A DECISION COULD

BE HAD.

II

CERTIORARI WILL NOT LIE SINCE THE

CONSTITUTIONALITY OF THE STATUTE

WAS NOT DRAWN INTO QUESTION IN THE

TRIAL COURT, THE APPELLATE COURT OR

MENTIONED IN THE DECISION SOUGHT

REVIEW.

Ill

CERTIORARI WILL NOT LIE, NO SPECIAL

AND IMPORTANT REASONS EXIST FOR

GRANTING THE WRIT.

———

7

CERTIORARI WILL NOT LIE SINCE THE

JUDGMENT SOUGHT REVIEW WAS NOT

RENDERED BY THE HIGHEST COURT OF

A STATE IN WHICH A DECISION COULD

BE HAD.

28 U.S.C. $1257 vests jurisdiction in the Supreme

Court of the United States to review by certiorari:

“Final judgments or decrees rendered by the

highest court of a State in which a decision

could be had... .”

28 U.S.C. §2101 requires a petition for writ of certiorari

to be filed within ninety days of the judgment of that

court.

Florida’s highest court is the Supreme Court of Flor-

ida to which, in cases where the validity of a state statute

is passed upon or the federal Constitution construed, an

appeal is afforded as a matter of right. The Supreme Court

of Florida also has discretionary jurisdiction to review by

certiorari cases involving decisional conflicts. This Court

has, by 28 U.S.C. $1257, jurisdiction to review by certio-

rari decisions of the highest court of a State:

“. . . Where the validity of a State statute is

drawn into question on the grounds of its being

repugnant to the Constitution, treaties or laws

of the United States. . .”

The highest court of Florida, in this instance, is the Su-

preme Court of Florida.

8

Petitioner did not appeal to the Supreme Court of

Florida. It sought discretionary certiorari based on deci-

sional conflict (A. 3-12, A. 37-38). The Supreme Court of

Florida held it had no jurisdiction to review by certiorari

since there was no decisional conflict (A. 3-7). Under Flor-

ida practice an appeal improvidently taken may be treated

as a petition for certiorari, but a petition for certiorari

improvidently taken may not be treated as an appeal Bar-

tow Growers Proc. Corp. v. Florida Gr. Proc. Corp., Fla.

71 So.2d 165.

Not having appealed to the Supreme Court of Florida,

the highest court of that State, Petitioner cannot here

obtain certiorari to review a decision of an intermediate

state court.

Petitioner cites Randall v. Board of Commissioners,

201 U.S. 252, 43 S.Ct. 252, 67 L.Ed. 637 and American

Express Co. v. Levee, 252 U.S. 19, 19 S.Ct. 11, 68 L.Ed. 140

in support of its contention that the writ will lie. Neither

is applicable. Randall involved certiorari to the Indiana

Appellate Court. The Supreme Court of Indiana had only

discretionary jurisdiction which it declined to exercise.

American Express involved certiorari to the Louisiana

Court of Appeal rather than the Louisiana Supreme Court.

Mr. Justice Holmes there pointed out:

“But under the Constitution of the State jurisdic-

tion of the Supreme Court is discretionary, Arti-

cle VII, Section II, and although it was necessary

for the Petitioner to invoke that jurisdiction to

make it certain that the case could go no farther,

when the jurisdiction was declined the Court of

9

Appeal was shown to be the highest Court of the

State in which a decision could be had .. .”

Here jurisdiction of the Supreme Court of Florida was

not discretionary, but of right. Petitioner failed to invoke

it by filing an appeal. More applicable is Matthews v. Huwe,

269 U.S. 262, 76 S.Ct. 108, 70 L.Ed. 266 where review was

afforded to the Supreme Court of Ohio by both writ of error

and writ of certiorari. Petitioner there filed a writ of error

which was denied but did not file a petition for writ of certi-

orari. This Court held that petitioner had failed to exhaust

all of its remedies for review by the Supreme Court of Ohio

and declined to exercise jurisdiction. Also Gorman v. Wash-

ington University, 316 U.S. 98, 62 S.Ct. 962, 86 L.Ed. 1300

where Missouri permitted appeal to a division of the Su-

preme Court of Missouri in non-Constitutional cases but

permitted appeal to the Court en banc in cases challenging

the Constitutionality of a State statute. Petitioner had

appealed to a division of the Court but had not requested

a hearing en banc. This Court refused to exercise juris-

diction since Petitioner had failed to exhaust its State

appellate remedies, the division Court was not the highest

Court of the State. Finally Gotthilf v. Sills, 375 U.S. 79,

11 L.Ed.2d 159, 84 S.Ct. 187, a New York case where peti-

tioner appealed to the Appellate Division and then at-

tempted appeal unsuccessfully to the Court of Appeals. The

order appealed was interlocutory. New York practice re-

quired permission from the Appellate Division to appeal

an interlocutory order. This Court, declining to exercise

jurisdiction held:

“The petitioner at no time applied to the Appel-

late Division for such permission. It therefore

appears that the Appeilate Division, First Judi-

10

cial Department, was not the last state court jn

which a decision of that [constitutional] question

could be had...”

Here Petitioner did not appeal to the Supreme Court of

Florida either from the order of the tria] Judge or from

the decision of the Third District Court of Appeal. It had,

under Florida law, a right of appeal to that Court on Con-

stitutional questions. It failed to exercise that right.

Certiorari will not lie.

Il

CERTIORARI WILL NOT LIE SINCE THE

CONSTITUTIONALITY OF THE STATUTE

WAS NOT DRAWN INTO QUESTION IN THE

TRIAL COURT, THE APPELLATE COURT OR

MENTIONED IN THE DECISION SOUGHT

REVIEW.

Florida practice requires that, absent fundamental

error, before a Florida appellate court will pass upon a

Constitutional issue, it must have first have been properly

raised in the trial court Carlton v. Fidelity & Deposit Com-

pany of Maryland, Fla. 154 So. 317, Gleason v. Dade Coun-

ty, Fla. App. 174 So.2d 466. Even fundamental error must

be briefed and argued. Petitioner did not challenge the val- .

idity of the statute here challenged in the trial court nor,

until its petition for rehearing, in the Third District Court

of Appeals. The decision here sought review reflects no

Constitutional challenge nor does it pass upon any Consti-

tutional point.

11

Where, though a requirement of state practice, the

point arising under the Constitution of the United States

is not properly drawn into question in the trial court, this

_ Court will not grant Certiorari Morrison v. Watson, 154

U.S. 1111, 14 S.Ct. 995, Erie Railroad v. Purdy, 185 U.S.

148, 22 S.Ct. 605, 46 L.Ed. 847, Mutual Life Insurance

Company v. McGrew, 188 U.S. 291, 23 S.Ct. 375, 47 L.Ed.

480, Louisville & Nashville Railroad Company v. Wood-

ford, 234 U.S. 546, 34 S.Ct. 739, 58 L.Ed. 1202. Where,

though obliquely raised in the trial court it is not argued

to the appeals court by proper assignment of error and

brief, certiorari will not lie Herndon v. Georgia, 295 U.S.

441, 55 S.Ct. 794, 79 L.Ed. 1530. Where plainly the appel-

late court did not pass upon the Constitutional point, cer-

tiorari will not lie Street v. New York, 394 U.S. 576, 89

S.Ct. 1354, 22 L.Ed. 572.

Under any test, here certiorari will not lie.

Ill

CERTIORARI WILL NOT LIE, NO SPECIAL

AND IMPORTANT REASONS EXIST FOR

GRANTING THE WRIT.

There are no special and important reasons for grant-

ing a writ of certiorari in this case. There is no federal

question to be here decided.

The Florida exemption statute, the application of

which Petitioner claims violated its rights guaranteed by

the Fourteenth Amendment to the United States Constitu-

tion, was no longer applicable after June of 1969. Florida’s

12

statute of limitations for usury was two years (A. 16-23).

No other states, it is claimed, have similar statutes. No

issue of future application is raised.

The exemption statute in 1969, §665.161 F.S. exempt-

ed building and loan associations from the State usury laws.

It was economic legislation not affecting fundamental

rights, not Constitutionally suspect and only subject to

question as to reasonability of the State classification

Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct.

337, 55 L.Ed. 377, Village of Belle Terre v. Boraas, 416

U.S. 1, 94 S.Ct. 1536, 39 L.Ed.2d 797.

Building and Loan Associations created by Chapter

665 of the Florida Statutes were stock associations pri-

marily limited to making loans to their own stockholders

$665.01 F.S. Only when there was not sufficient demand

for loans from stockholders could loans be made to out-

siders §665.21(5) F.S. The maximum interest rate which

could be charged was required to be set out in the by-laws

adopted by the members who would borrow the money

$665.18 F.S. In describing the building and loan exemp-

tion the Supreme Court of Florida in Spinney v. Winter

Park Building & Loan Assn., Fla.-162 So. 889 held:

« _. And so it is that one subscribed for stock

for the very purpose of being eligible to become

a borrower from the fund which he helps to cre-

ate by the payment of his stock subscription. The

stockholder of the building and loan association

is recipient pro tanto of such benefits as may

accrue from the contract which he executes with

with the association as well as from the contracts

which all other stockholders execute with the asso-

13

ciation. This being so the Legislature has lifted

the ban of usury to such an extent as to allow the

stockholders to contract more liberally between

themselves .. .”

Federal Savings and Loan Associations are not stock asso-

ciations and could not convert to stock associations until

June 30, 1976 12 U.S.C. §1725(j) (1). They were not lim-

ited to loans to members 12 U.S.C. §1464(c). They were

not limited in the interest they could charge by their by-

laws. Interest rates are not set by the Home Loan Bank

Board. Members did not receive the benefits of higher

profits.

A rational basis existed in 1969 for the classification.

No federal question was involved.

Even if no rational basis existed, in this case no fed-

eral question is involved. The Florida Court in the decision

sought review held the statute means what it says, only

building and loan associations are exempt, not savings and

loan associations. This Court must accept the state court

interpretation of the State statute Perez v. Campbell, 402

U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 222. If Petitioner is

correct the statute is unconstitutional, a total nullity Perez

v. Campbell, (Supra). The statute is an exemption statute.

If the exemption statute is void all associations building

and loan as well as savings and logn are subject to Flor-

ida’s usury act. Petitioner has no standing to here claim

error, for if the statute is void or the statute is viable, it

is still subject to Florida’s usury act.

No special and important reasons exist for granting

Writ of Certiorari.

14

CONCLUSION

Petitioner does not seek certiorari to the highest Court

of Florida in which a decision could be had. The petition

was not filed within ninety days of the rendition of the

decision sought review. Petitioner did not raise the Consti-

tutional point timely under state practice. The opinion

sought review clearly does not pass upon the validity of

a state statute, No federal question is present. No compel-

ling reason exists of granting the Writ sought.

Respectfully submitted,

LAPIDUS & HOLLANDER

Attorneys for Respondent

Suite 2222, First Federal Building

One S.E. Third Avenue

Miami, Florida 33131

Telephone: (305) 358-5690

15

CERTIFICATE OF MAILING

I HEREBY CERTIFY that a true and correct copy

_ of the foregoing was mailed to SAM DANIELS, Esq,

Attorney for Petitioner, 1414 duPont Building, Miami,

Florida, 33131, and ROBERT ORSECK, Esq., Podhurst,

Orseck & Parks, P.A., Attorneys for Petitioner, 1201 City

National Bank Building, 25 West Flagler Street, Miami,

Florida 33130, this !__ day of Nevember, 1976,