436 S.W.2d 285 | Ark. | 1969
In the latter part of 1964, appellee John Shipp contacted appellants, a negro couple of Jonesboro, relative to making certain improvements on their home. The terms of the agreement are very much in dispute, but it is established that two separate contracts were entered into between Shipp and the Andrewses.
Three points are relied upon for reversal, but since we have concluded that the note was void because of usury, there is no need to discuss the other two contentions. The finding of usury is based upon the following facts:
Shipp testified that the first contract called for an expenditure of $2,250.00. lie also definitely stated tliat the second contract called for an expenditure of $1,250.00. The evidence established that the pay-off of the indebtedness due the bank amounted to $705.60.
“Well, of course, Mr. Shipp was talking to the Andrews about what was going to be done and I was interested, too, in what was going to be done as well since I was going to consider buying the paper from John Shipp so they was talking about what was going to be done in length, you know.”
When asked if he recalled the amount that was mentioned as the cost of the improvements, he replied:
“It was somewhere — it was $3,550.00, around $3,550.00. There was something said about $3,-550.00, then there was a question about a front door or something that they was talking about and I never did get that clear just what it was but there was $3,550.00 plus the pay off at the bank and I understood it was about- — around or between $600.00 and $700.00 owed to the bank. * * *
“I remember $3,550.00 and then I remember them mentioning something additional but I don’t know what that amounted to. * * *
“Yes, sir, Mr. Shipp and the Andrews talked about it and what I understood it was $3,500.00 for the repair on the house and then there was something else that they talked about afterwards.”
We do not agree that this testimony is sufficient to show that the amount agreed upon was other than as testified to by Shipp. In the first place, appellants and Shipp were apparently discussing various items that might be included in the agreement, no definite figure being established at that time. Of course, there is nothing definite about a front door — and the figure relative to the bank indebtedness mentioned by Martin was certainly incorrect. It will also be observed that Martin finally said that he understood “it was $3,500.00 for the repair on the house and then there was something else that they talked about afterwards.” This evidence falls far short of constituting proof that the second contract was for more than $1,250.00, or that the total on both contracts was more than $3,500.00. We are thus left with the figures relied upon by appellants to sustain the charge of usury, with no evidence in the record to contradict that contention. No effort was made to offer the second contract, nor was any reason given for its not being offered. This instrument, of course, would have clearly shown the amount agreed upon. The attorney who drew the note and mortgage testified that he prepared same in accordance with the two contracts handed him by Shipp, but he was never asked the amount set out in either agreement. There being no evidence that the contracts were for a greater amount than $3,-500.00, the note was usurious on its face, and it was incumbent upon Martin to show otherwise. This is the effect of the holding in Universal C.I.T. Credit Corporation v. Lackey, 228 Ark. 101, 305 S.W. 2d 858. In Jones v. Jones, 227 Ark. 836, 301 S.W. 2d 737, we held that the trier of the facts is justified in assuming, until convinced by proof to the contrary, that the difference between the principal of the loan and the face amount of the contract (note) represents interest on the debt.
We also point out that neither appellee, in either the pleadings or the proof, asserted that a mistake was made, and that an erroneous amount was sought because of inadvertent error.
Of course, even a holder in due course, i.e., one who takes an instrument for value, in good faith, and without notice of any defect, cannot rely upon this fact to defend against a claim of usury. If there is usury in the original instrument then the transfer of that, instrument to a third party does not eliminate the maker’s right to plead usury. Lyles v. Union Planters National Bank, 239 Ark. 738, 393 S.W. 2d 867. Actually, though not pertinent to this decision, it is doubtful that Martin could claim the status of a bona fide holder of the note, since he was really somewhat of a participant before the note and deed of trust were ever executed.
For the reasons stated herein, the decree is reversed.
It is so ordered.
The record is quite confusing as to the name of appellants. Frequently, it is termed “Andrews,” and about as frequently, termed “Andrew.” The two names were even used during their testimony.
Appellants denied signing a second contract.
Not the same attorney representing appellee in this litigation.
According to Martin’s bookkeeper, the Andrewses had only-paid $74.26 on the principal, although the Martin complaint set out that a total oí $720.00 had been paid on the note.
The attorney who prepared the instruments testified that this was the amount of the check that Martin paid to the bank