Page 1
664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
District Court of Appeal of Florida,
Fourth District.
John F. PIGNATO and Lorelei E. Pignato, his wife,
Appellants,
v.
GREAT WESTERN BANK, Appellee.
No. 94-0661.
Oct. 18, 1995.
Rehearing, Rehearing En Banc, and Certification of
Questions Denied Jan. 10, 1996.
In mortgagee's foreclosure action, mortgagors raised
affirmative defense of violation of Truth in Lending
Act (TILA) and sought to rescind transaction. The
Circuit Court, Palm Beach County, James T. Carlisle,
J., ruled against mortgagors and ordered foreclosure.
Mortgagors appealed. The District Court of Appeal,
Warner, J., held that intangible tax was excludable
from “finance charge” under TILA if mortgagee
itemized and disclosed intangible tax to mortgagors.
Affirmed.
West Headnotes
[1] Consumer Credit 92B 52
92B Consumer Credit
92BII Federal Regulation
92BII(B) Disclosure Requirements
92Bk52 k. Price, Balance, Rate, and
Charges in General. Most Cited Cases
Intangible tax paid by mortgagee to clerk of court to
record its mortgage is excludable from “finance
charge” that must be disclosed under TILA, if
mortgagee itemizes and discloses that tax to
customer. Truth in Lending Act, §§ 103(u), 106(a),
128, as amended, 15 U.S.C.A. §§ 1602(u), 1605(a),
1638; Truth in Lending Regulations, Regulation Z, §
226.4(a, e), 15 U.S.C.A. foll. § 1700; West's F.S.A.
§§ 199.135(1), 199.202, 199.282(5).
[2] Consumer Credit 92B 50
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
92B Consumer Credit
92BII Federal Regulation
92BII(B) Disclosure Requirements
92Bk50 k. In General. Most Cited Cases
Congress passed TILA to insure meaningful
disclosure of credit terms so that consumers could
determine reasonableness of lender's charge. Truth in
Lending Act, § 102 et seq., as amended, 15 U.S.C.A.
§ 1601 et seq.
[3] Administrative Law and Procedure 15A
413
15A Administrative Law and Procedure
15AIV Powers and Proceedings of
Administrative Agencies, Officers and Agents
15AIV(C) Rules and Regulations
15Ak412 Construction
15Ak413 k. Administrative
Construction. Most Cited Cases
Consumer Credit 92B 32
92B Consumer Credit
92BII Federal Regulation
92BII(A) In General
92Bk32 k. Truth in Lending, in General.
Most Cited Cases
Absent some obvious repugnance to TILA, regulation
promulgated by Federal Reserve Board under
expansive authority delegated to Board by Congress
should be accepted by courts, as should Board's
interpretation of its own regulations. Truth in
Lending Act, § 102 et seq., as amended, 15 U.S.C.A.
§ 1601 et seq.; Truth in Lending Regulations,
Regulation Z, § 226.1 et seq., 15 U.S.C.A. foll. §
1700.
[4] Consumer Credit 92B 52
92B Consumer Credit
92BII Federal Regulation
92BII(B) Disclosure Requirements
92Bk52 k. Price, Balance, Rate, and
Charges in General. Most Cited Cases

664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
“Finance charge” that must be disclosed under TILA
consists of more than payment of interest, but
includes all sums that borrower must pay, directly or
indirectly, to obtain credit. Truth in Lending Act, §§
103(u), 128, as amended, 15 U.S.C.A. §§ 1602(u),
1638; Truth in Lending Regulations, Regulation Z, §
226.4, 15 U.S.C.A. foll. § 1700.
[5] Consumer Credit 92B 32
92B Consumer Credit
92BII Federal Regulation
92BII(A) In General
92Bk32 k. Truth in Lending, in General.
Most Cited Cases
Creditors must strictly comply with TILA. Truth in
Lending Act, § 102 et seq., as amended, 15 U.S.C.A.
§ 1601 et seq.
[6] Consumer Credit 92B 61.1
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk61 Civil Liabilities and Penalties for
Violations
92Bk61.1 k. In General. Most Cited
Cases
Single violation of TILA gives rise to full liability for
statutory damages, which include actual damages
incurred by debtor plus civil penalty. Truth in
Lending Act, § 130(a)(1), (a)(2)(A)(i), as amended,
15 U.S.C.A. § 1640(a)(1), (a)(2)(A)(i).
[7] Consumer Credit 92B 60
92B Consumer Credit
92BII Federal Regulation
92BII(C) Effect of Violation of Regulations
92Bk60 k. In General; Validity of
Transactions. Most Cited Cases
Violation of TILA may permit borrower to rescind
loan transaction, including rescission of security
interest that creditor has in borrower's principal
dwelling. Truth in Lending Act, § 125(a), as
amended, 15 U.S.C.A. § 1635(a).
[8] Mortgages 266 90
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 2
266 Mortgages
266II Recording and Registration
266k90 k. Necessity as Between Parties to
Instrument. Most Cited Cases
Taxation 371 2218
371 Taxation
371III Property Taxes
371III(C) Liability of Private Persons and
Property in General
371k2218 k. Tax on Transfers and
Registration of Instruments. Most Cited Cases
(Formerly 371k105.5, 371k1051/2)
Mortgage upon real property is not enforceable in
court, nor can mortgage be recorded, until intangible
tax is paid and clerk of circuit court has noted its
payment on instrument or given other receipt for it.
West's F.S.A. § 199.282(5).
[9] Courts 106 97(6)
106 Courts
106II Establishment, Organization, and Procedure
106II(G) Rules of Decision
106k88 Previous Decisions as Controlling
or as Precedents
106k97 Decisions of United States
Courts as Authority in State Courts
106k97(6) k. Construction of State
Constitutions and Statutes. Most Cited Cases
District Court of Appeal was not bound by decision
of United States Court of Appeals for the Eleventh
Circuit, which concluded that Florida's intangible tax
could not be excluded from “finance charge” that
must be disclosed under TILA, since that decision
construed Florida law, not federal law. Truth in
Lending Act, §§ 103(u), 106(a), 128, as amended, 15
U.S.C.A. §§ 1602(u), 1605(a), 1638; Truth in
Lending Regulations, Regulation Z, § 226.4(a, e), 15
U.S.C.A. foll. § 1700; West's F.S.A. §§ 199.135(1),
199.202, 199.282(5).
[10] Courts 106 97(1)
106 Courts
106II Establishment, Organization, and Procedure

664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
106II(G) Rules of Decision
106k88 Previous Decisions as Controlling
or as Precedents
106k97 Decisions of United States
Courts as Authority in State Courts
106k97(1) k. In General. Most Cited
Cases
Rulings of lower federal courts are not binding on
state courts, although they may be persuasive on
point of law.
[11] Courts 106 91(1)
106 Courts
106II Establishment, Organization, and Procedure
106II(G) Rules of Decision
106k88 Previous Decisions as Controlling
or as Precedents
106k91 Decisions of Higher Court or
Court of Last Resort
106k91(1) k. Highest Appellate
Court. Most Cited Cases
Courts 106 97(1)
106 Courts
106II Establishment, Organization, and Procedure
106II(G) Rules of Decision
106k88 Previous Decisions as Controlling
or as Precedents
106k97 Decisions of United States
Courts as Authority in State Courts
106k97(1) k. In General. Most Cited
Cases
Only decisions of United States Supreme Court are
binding on state courts of Florida.
[12] Consumer Credit 92B 52
92B Consumer Credit
92BII Federal Regulation
92BII(B) Disclosure Requirements
92Bk52 k. Price, Balance, Rate, and
Charges in General. Most Cited Cases
Revised commentary of Federal Reserve Board,
which specifically mentioned intangible tax as charge
excludable from “finance charge” that must be
disclosed under TILA, could be retroactively applied,
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 3
since it was apparent that revision was intended to
clarify the law and did not make substantive change
in policy. Truth in Lending Act, §§ 103(u), 106(a),
128, as amended, 15 U.S.C.A. §§ 1602(u), 1605(a),
1638; Truth in Lending Regulations, Regulation Z,
§§ 226.4, 226.4(a), (c)(7)(iii), 15 U.S.C.A. foll. §
1700.
*1012 James A. Bonfiglio of James A. Bonfiglio,
P.A., Boynton Beach, for appellants.
Steven Ellison of Broad and Cassell, West Palm
Beach, for appellee.
WARNER, Judge.
[1] To forestall the foreclosure of their home, the
appellants charged that in loaning money to them to
refinance their residence, the appellee (hereinafter
referred to as “the bank”) did not include the
intangible tax it paid to the Clerk of the Court to
record its mortgage as a “finance charge” required to
*1013 be disclosed under the Federal Truth in
Lending Act (TILA). 15 U.S.C.A. § 1601 et seq.
(West 1982 & Supp.1995). The appellants claimed
that this was a violation of TILA, which allowed
them to rescind the transaction. The trial court ruled
against the appellants and ordered foreclosure.
Subsequent to the judgment, the Eleventh Circuit
decided Rodash v. AIB Mortgage Co., 16 F.3d 1142
(11th Cir.1994), which supports the appellants'
argument.FN1 Disagreeing with Rodash, we hold that
the intangible tax may be excluded from the “finance
charge” under TILA, and we therefore affirm the
final judgment of foreclosure.
FN1. Within two weeks after the rendition
of the Rodash decision, the Florida
Legislature amended section 199.135,
Florida Statutes, to assure that the statutory
language would permit the exclusion of the
intangible tax from the TILA “finance
charge.” See Ch. 94-353, § 68, at 2572,
Laws of Fla. The bank has argued that we
should apply the amended statute
retroactively to this transaction, as it was
clearly the intent of the Legislature to clarify
existing law. Because we decide that the tax
was excludable under the then existing
statute and regulations, we need not reach

664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
the question of retroactivity of the statutory
amendment.
Overview of Truth in Lending
[2][3][4] In 1968 Congress passed TILA to insure
meaningful disclosure of credit terms so that
consumers could determine the reasonableness of a
lender's charge. E.g., Johnson v. McCrackin-Sturman
Ford, Inc., 527 F.2d 257 (3d Cir.1975). In order to
implement TILA, Congress delegated expansive
authority to the Federal Reserve Board which
promulgated Regulation Z (“Reg. Z”). Reg. Z, 12
C.F.R. Pt. 226 (1994). Absent some obvious
repugnance to the statute, Reg. Z should be accepted
by the courts, as should the Board's interpretation of
its own regulations. Anderson Bros. Ford v.
Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 2274,
68 L.Ed.2d 783 (1981). The TILA statutes and
regulations require the lender to provide the
consumer with information regarding the cost of
extending credit. This includes a disclosure statement
which includes the amount to be financed; the annual
percentage rate on the loan; the method of
determining the finance charge and the balance upon
which the finance charge will be imposed; the
amount of the finance charge; the number of
payments, due dates or periods scheduled to repay the
indebtedness; and the total of payments due over the
life of the loan. See15 U.S.C.A. §§ 1638, 1602(u). In
simple terms, the “finance charge” within the
definition of TILA consists of more than the payment
of interest. It includes all sums that the borrower
must pay, directly or indirectly, to obtain credit. See
Reg. Z, 12 C.F.R. § 226.4. However, certain
payments are permitted to be excluded from the
finance charge as will be discussed later.
TILA permits the borrower to rescind a loan
transaction until midnight of the third business day
following delivery of all of the disclosure materials
or the completion of the transaction, whichever
occurs last. 15 U.S.C.A. § 1635(a); Reg. Z, 12 C.F.R.
§ 226.23(a). The right to rescind may extend up to
three years if the required notice or material
disclosures are not delivered. Rodash, 16 F.3d at
1145; Reg. Z, 12 C.F.R. § 226.23(a)(3).
[5][6][7] Creditors must strictly comply with TILA.
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 4
Rodash, 16 F.3d at 1144;In re Porter, 961 F.2d 1066,
1078 (3d Cir.1992). A single violation of TILA gives
rise to full liability for statutory damages, which
include actual damages incurred by the debtor plus a
civil penalty. 15 U.S.C.A. § 1640(a)(1)-(2)(A)(i).
Moreover, a violation may permit a borrower to
rescind a loan transaction, including a rescission of
the security interest the creditor has in the borrower's
principal dwelling. 15 U.S.C.A. § 1635(a).
The Facts
In 1991, the appellants executed a variable interest
rate mortgage loan note in favor of the bank. In
compliance with TILA, the bank prepared various
disclosure statements of credit terms and the lender's
charges for loaning the money. The bank disclosed
and charged the appellants $532 intangible tax at
closing and included this tax in the “amount
financed” but excluded the tax from the “finance
charge.” The appellants contend that the intangible
tax should have been included in the “finance
charge,” and that due to its exclusion from the
“finance charge,” both the *1014 “amount financed”
and “Finance Charge” are misstated by $532.
After the appellants defaulted in 1993, the bank filed
suit to foreclose on the mortgage. The appellants then
raised affirmative defenses to the foreclosure,
including the TILA disclosure violation for which
they demanded recoupment and rescission of the loan
and mortgage. Ultimately, the trial court ruled against
all of their affirmative defenses and ordered
foreclosure of the mortgage. It is from that final
judgment this appeal is taken.
Rodash v. AIB Mortgage Co.
Subsequent to the trial court's order, but before the
case was heard in this court, the Eleventh Circuit
addressed in Rodash whether the inclusion of the
Florida intangible tax in the “amount financed” while
excluding it from the “finance charge” is a material
violation of TILA. The court first noted that TILA
defined “finance charge” as “the sum of all charges,
payable directly or indirectly by the person to whom
the credit is extended, and imposed directly or
indirectly by the creditor as an incident to the

664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
extension of credit.” 15 U.S.C.A. § 1605(a); Reg. Z,
12 C.F.R. § 226.4(a). It includes charges imposed on
the consumer by someone other than the creditor in
certain circumstances. Therefore, the court concluded
that the intangible tax was a “finance charge” unless
excludable under one of the exceptions in the
regulations. Those exceptions are as follows:
(1) “A tax imposed by a state ... on the credit
transaction that is payable by the consumer (even if
the tax is collected by the creditor)” when the
charge is imposed on the consumer by someone
other than the creditor. F.R.B. Commentary on 12
C.F.R. § 226.4(a), Comment 3, reprinted in 12
C.F.R. pt. 226, Supp. I;
(2) “[c]harges for filing or recording security
agreements, mortgages, ... and similar documents.”
F.R.B. Commentary on 12 C.F.R. § 226.4(e),
Comment 12, reprinted in 12 C.F.R. Pt. 226, Supp.
I; and
(3) “[t]axes and fees prescribed by law that actually
are or will be paid to public officials for ...
perfecting ... a security interest.” 12 C.F.R. §
226.4(e)(1).
Rodash, 16 F.3d at 1148. The intangible tax did not
fall under the first exception, according to the court,
because the tax is imposed on the creditor, not the
consumer, for holding the note which is an intangible
asset. As the intangible tax is not a recording fee, the
court determined that the second exclusion did not
apply. Finally, the court concluded that the third
exclusion did not apply because the purpose of the
intangible tax was most likely revenue enhancement
and not perfection of a security interest, which
pertains to the proper recordation of the instrument.
Id. at 1148-49.
Analysis
With all due respect to the Eleventh Circuit, we
believe that its reasoning is flawed with respect to its
interpretation of the last exclusion as applied to the
Florida intangible tax. In fact, we believe that the
Eleventh Circuit's reasoning is contrary to the
Commentary to Reg. Z when considered in light of
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 5
other taxes in Florida which are excludable. The
Commentary provides:
4(e) Certain security interest charges.
1. Examples. Examples of charges excludable from
the finance charge under § 226.4(e)(1) include:
Charges for filing or recording security agreements,
mortgages, continuation statements, termination
statements, and similar documents.
Stamps evidencing payment of taxes on property if
the stamps are required to file a security agreement
on the property.
Only sums actually paid to public officials are
excludable under § 226.4(e)(1).
Reg. Z, 12 C.F.R. Pt. 226, Supp. I, § 226.4, cmt. 4(e)-
1 (1994) (Official Staff Interpretations of Regulation
Z).
The example of documentary stamps on security
agreements is instructive and should have informed
the analysis of the Eleventh Circuit. In Florida, a
documentary stamp tax is an excise tax on documents
which must be affixed prior to recordation. § 201.01,
Fla.Stat. (1993). The Clerk of the Circuit Court in the
various counties collects the tax upon documents
which must be recorded, but does so as an agent for
the Florida Department*1015 of Revenue, which
administers the tax. § 201.11(2), Fla.Stat. (1993).
Documentary taxes thus form part of the general
revenue of the state of Florida. Even though the
purpose of the stamp tax is revenue enhancement, the
Commentary to Reg. Z permits exclusion of the
stamp tax from the “finance charge” because it is
necessary to pay the tax in order to record, and thus
perfect, the mortgage. Reg. Z, 12 C.F.R. Pt. 226,
Supp. I, § 226.4, cmt. 4(e)-1 (1994).
[8] In the same manner, the intangible tax is required
to be paid at the time of the recording. § 199.135(1),
Fla.Stat. (1993). Further, a mortgage upon real
property situated in Florida is not enforceable in a
Florida court nor can a mortgage be recorded until
the intangible tax is paid, and the Clerk of the Circuit

664 So.2d 1011, 20 Fla. L. Weekly D2338
(Cite as: 664 So.2d 1011)
Court “has noted its payment on the instrument or
given other receipt for it.” § 199.282(5), Fla.Stat.
(1993). Just like the documentary stamp tax, the
intangible tax is collected by the Clerk of the Circuit
Court but administered by the Department of
Revenue and becomes part of the general revenue
fund of the state. § 199.202, Fla.Stat. (1993). The
practical effect of the imposition of the intangible tax
and the documentary stamp tax on the participants to
the mortgage transaction is identical. They are merely
two more taxes collected by the government.
Moreover, under Florida law, the two taxes are
treated similarly for purposes of computation of
usury interest. See Brannen v. Southeast Beach State
Bank, 365 So.2d 422, 422 (Fla. 1st DCA 1978).
The Eleventh Circuit cited no authority for its
determination that the purpose of the intangible tax
precluded its exclusion from the finance charge under
12 C.F.R. section 226.4(e)(1). We cannot find any
authority for this reasoning in the regulations. The
only requirements of the regulations are that the tax is
(1) prescribed by law; (2) paid to a public official; (3)
for perfecting a security interest. Reg. Z, 12 C.F.R. §
226.4(e)(1). In both the case of the stamp tax and the
intangible tax, each must be paid to perfect the
mortgage. Without payment, the mortgage will not be
recorded and the security interest will not be
perfected. See§ 199.282(5), Fla.Stat. (1993). It makes
no sense to consider one tax as excludable and the
other one as part of the finance charge when both
meet the same test.
[9][10][11] In addition, the bank has supplied as
supplemental authority an opinion of the Attorney
General of Florida from 1972 determining that the
intangible tax was a “recording tax.” It states in
pertinent part:
On January 13, 1970, the Cabinet of the State of
Florida, sitting as the Department of Revenue, by
resolution construed the tax on notes, bonds, or
other obligations for payment of money which are
secured by mortgage, deed of trust, or other liens
upon real property in Florida to be a recordation
tax. While the tax in question is included in the
intangible tax chapter of the statutes, the nature of
a tax is determined by its operation and practical
effect rather than by the name applied to it by the
© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 6
legislature. United States v. Lee, (Fla.1943), 13
So.2d 919. Thus, the tax in question may be
considered a recordation tax if that is its operation
and effect even though denominated an intangible
tax.
Op.Att'y.Gen.Fla. 072-374 (1972). Thus, the Rodash
court's interpretation of our intangible tax law is
directly contrary to the interpretation of the state
officers who are bound to enforce it. We do not
consider ourselves bound by the Eleventh Circuit's
decision, because it construes Florida law, not
Federal law. The rulings of lower federal courts are
not binding on state courts, although they may be
persuasive on a point of law. State v. Dwyer, 332
So.2d 333, 335 (Fla.1976). Only decisions of the
United States Supreme Court are binding on the state
courts of Florida. Board of County Comm'rs v.
Dexterhouse, 348 So.2d 916, 918 (Fla. 2d DCA
1977), aff'd,364 So.2d 449 (Fla.1978). While in
Wylie v. Investment Management and Research Inc.,
629 So.2d 898, 900 (Fla. 4th DCA 1993), we
indicated that according unusual weight to a decision
on an issue rendered by a federal circuit in which the
state is located is an appropriate method for deciding
federal questions where there is no Supreme Court
authority, nothing in Wylie indicates that we are duty
bound to follow a federal circuit precedent,
particularly when it construes Florida law.
*1016[12] Although we have analyzed the applicable
statutes and Commentary of the Federal Reserve
Board as they appeared in the Rodash opinion, the
bank has brought to our attention revisions to the
Official Commentary which support our view. The
revisions were effective April 1, 1995. The Board
views them as clarifying its previous Commentary,
stating:
[The revised commentary] applies and interprets the
requirements of Regulation Z. The revisions clarify
regulatory provisions and provide further guidance
on issues of general interest....
Reg. Z, 60 Fed.Reg. 16,771, 16,771 (1995) (emphasis
supplied). The revisions specifically mention
intangible taxes as an excludable charge. See id. at
16,777 (§ 226.4, cmt. 4(a)-7(iii) (formerly cmt. 4(a)-
6) & § 226.4, cmt. 4(e)-1(i) (“Examples are charges
 Page 7

664 So.2d 1011, 20 Fla. L. Weekly D2338

(Cite as: 664 So.2d 1011)

or other fees required for filing or recording securing

agreements ... and similar documents, and intangible
property or other taxes imposed by the state solely on
the creditor and payable by the consumer (if the tax
must be paid to record a security agreement).”)).
Based on our foregoing discussion of the Federal
Reserve Board's original Commentary to Reg. Z, it is
apparent to us that the Federal Reserve Board's
revision was intended to clarify the law, and the
revision does not make a substantive change in
policy. Consequently, the revised Commentary may
be retroactively applied. See Pope v. Shalala, 998
F.2d 473, 482-83 (7th Cir.1993). We therefore also
apply the revised Commentary to Reg. Z and hold
that the intangible tax is excludable from the finance
charge under TILA if the creditor itemizes and
discloses the intangible tax to the customer. Reg. Z,
12 C.F.R. § 226.4(e).

We have reviewed the other claimed violations of

TILA raised by appellant and find no error.
Therefore, we affirm the final judgment of the trial
court.

DELL and PARIENTE, JJ., concur.

Fla.App. 4 Dist.,1995.
Pignato v. Great Western Bank
664 So.2d 1011, 20 Fla. L. Weekly D2338

END OF DOCUMENT

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