*1 P.2d 503 Bethke, L. Leonard BETHKE and Deon Plaintiffs-Appellants, ASSOCIATION,
IDAHO SAVINGS LOAN & corporation, Defendant-Respondent.
No. 10345. McDougall, Whittier & R. John Supreme Court Idaho. Black, Pocatello, appellants. for Dec. 1969. Faucher, Boise, Terrell, Dennis Green, J. Gasser, Pocatello, Service respond- & ent.
McQUADE, Justice. (cid:127)Leonard Bethke, Bethke and Deon plain tiffs-appellants, commenced this action on 27, 1965, December charging that the re spondent Savings and Loan Associa charged tion interest in excess of the then rate of annum1 on a note 8% appellants executed favor re spondent February note $12,000, payable for a period by monthly of 240 months $92.31, installments of payment first be made on or before 1962. It June 6.9%, carried a stated interest rate charged twenty total interest over the year term of the note was to be (which, curiously enough, was less $3.44 respond the amount called ent’s statement). amortization In addition interest, respondent to this nominal appellants additional interest on account,” a “construction loan and the re spondent $12,000 withheld from the as a “service” fee. This 10% charge prior to service was withheld performance (although services supervisory number services sort were, rendered), later and it was respondent’s policy to deduct such regard automatically without per whether services formed or not. found,
The trial court mat- a factual ter, fee was (1948). has This section § I.C. 27-1905 is now The law tlie time 10%. recodified; governs, since amended Cen contract Union Kahn, in 5A 28-22- § now found I.C. tral Ins. Life Co. v. and the maximum rate of interest *2 actually legitimate fee, but was Co., a Easton v. Butterfield Live Stock prepaid interest, “the was because same Idaho 279 P. as follows: prior regardless deducted to and wheth of determining ‘In in- whether usurious were, performed.” in er services charged terest has been un- or collected however, concluded, The lower court also per- it particular der a contract not is that, as the law of Idaho announced under portion only missible to consider a of in Corp. Rock Hotel Idamont is, test Did under term. The the lender Company3 charged total over interest profit charge his contract or receive not usu entire term of the loan was his the maxi- investment in excess of appellants rious. The attack this determi period for the full of loan? rate mum Corp. nation urging that Rock has, otherwise, usury; he is not.’ If there one, or distinguishable case is from this A.L.R., page (See cases 82 annotation of determine used therein to 1214.) the nominal interest “margin” “ * * * ques appears There no be “hidden” interest within which $53,000 payable tion that the interest on chargesmight be incurred without running pro mortgage herein as the note and is incorrect. .afoul per figured vided and the rate of 8 at facts, Corp. pertinent itsOn computed per correctly cent annum was practically v. Idamont Company Hotel full amounted in 'indistinguishable It this from case. law ex term of 120 Under the months. provided volved a and mortgage note which isting was the contract per payments equal for 120 of $653.42 might lawfully parties contract year -month period. over a ten The payment ed for not to ex interest $53,000 loan was per per annum. ceed the cent sum 10 8%, nominal than interest less was 10% 2% * * * Simple computation discloses then the maximum inter rate of per interest at 10 rather cent chargeable. est that case borrowers per the total cent would increase however, $51,145, received term amount of interest same lenders as withheld “commissions $24,210.40, one-fourth of membership alleged that fees.” It was by $6,052.60, or latter pay was an advanced interest this yardstick margin be used as brought it interest ment and that total determine whether the interest was over the and that maximum 10% per usurious or exceeded sum of held, This Court was therefore usurious. cent annum.” usury. however, fol that was not reasoning to reach lowing used This, then, “Eagle is the Rock formula” conclusion: the maximum allow- difference between able rate interest and the nominal interest “The which this court has announced rule numerator, rate, as a over the nominal respect with to the manner
and followed rate, denominator, as the times- determining whether usurious money properly chargeable charged collected stated has been charged 2.Respondent appeal advance, has no when it is certain taken enough money finding not will and -we need the debtor has may, expense opinion. without the trouble not reach apt billing. analogy merely periodic An be noted that because later lawyer's practice charged advance, charging a when fee is a service begins be he and kind of services to retainer before work on the number only potential performed contin- case. necessarily gent, it does follow usury. Many 3. a cover for the fee is mortgage in a trans- involved the services predicted probably with be v. Idamont Hotel action could accuracy reasonably supra could P.2d at fair n. without breach of the “hidden” term the entire interest over equation present law. equaling the amount note, product extra, be as follows: money which could *3 - = 6.9%) (8% $1,618.82 1.1% 6.9% 6.9% private activity primary of with the max- resulting margin additional This they substantially more imum attainable confidence is
allowable interest comply $1,200 plus as it has theretofore sum with the law the deducted of fairly expected be announced, the amount can which was thereafter, they will in case. The be of the stated interest this to announced entangled litigation. not become in figures by in that case used this Court desirability providing private “(b) The of should, therefore, control result in this possible with stable counsel so far judgment should * * case and the court’s lower * reasoning. bases of compel- upheld. appellants argue The encouraging “(c) desirability The of “Eagle lingly, processes private remedial settlement of inadequate for decision formula” an basis par- minimizing the incentives offer their own formula in its stead. to try to secure a different ties from disagree We with that contention. judge a different decision than has been appellants urge adopt given by judges The us the same or other is, argue, which they past. a more accurate for computing device effective interest “2. In furtherance of fair efficient is, they say, rates. the formula which adjudication— accounting in accepted used “(a) desirability, point The of practice. While true the litigants, expediting view of of precision, strive for appellants’ argu- litigation minimizing its costs ignores important ment two considerations sparing necessity relitigating them the of legislative are purpose behind the laws every every proposition relevant case. of which we acutely must be aware in the “(b) need, The point from the of view of performance of function the final judicial system, facilitating of interpreters they state, of the law of indeed, dispatch of the sheer which we construe and business— the beneficial impossibility reexamining de of novo policies underlying the doctrine of stare every proposition every relevant case. decisis. hardly Although seems “(c) at this date it The discouraging of need a rush necessary litigation on the further elaborate of whenever there is change decisis, will discuss personnel doctrine of stare we of on the bench. briefly principles order “(d) desirability, The point from the underlay today may be clear. our decision view of litigants, fairness Henry late M. Hart set Professor securing a uniformity reasonable of de- catalogue the considerations out a concise cision throughout judicial system,, general thought support both at given time and from one- practice prior holdings: of adherence to another. private ordering— “1 furtherance of “(e) The desirability of promoting gen- desirability enabling people “(a) The impersonality uine of decision mini- plan stage their affairs at mizing the elements personal dis- indebtedness, county, facilitating operation funded old cretion, and of new, should not be and created disturbed professional criticism. check day. good late No would according respect propriety “(f) The decision, accomplished overruling that judges. predecessor to the conclusions of result but much evil and confusion ex- disappointing “(g) injustice that decision was therefrom. Whether stage pectations fairly generated at not, right public policy and sound activity. private primary principles demand that now adhere we public “3. confidence furtherance of it, regard question as a sealed — n judiciary book, longer open public which is no *4 7 desirability maximizing the “(a) The of scrutiny.” decisions, impor- acceptability and of unreasoning This is not course a rule popular profes- tance to this end acquiescence. incorrect will not follow We impersonality (1) sional confidence there, merely they decisions because reasoned (2) of decisions and their cases, rule, to by “the stand decided foundation, by the as manifested both adjudications, to maintain contem former respect to them successor accorded plates blindly following more than some staying judges power. their adjudication, manifestly wrong.”8 former necessity, considering “(b) The should, nonetheless, be We be most careful amorphous upon nature limits overruling consider such fore we judicial power and the usual absence announced in the the one political an effective check ballot years thirty for over which has lasted box, judges subject dis upon contractual which unnumbered cipline obligation and the restraint of an may relationships and property be founded. upon prior to build law in a fashion early Court, As was said profes which can Bown, withstand test of leading Walling case of v. 5 sional criticism.” seems conceded “[i]t In the course of decisions we have where the beneficial results to be obtained consistently attempted impor these to serve departure from the construction purposes.6 And, tant ne recognizing interpretation placed by court of cessity pri aof stable environment for upon last resort a constitutional or particularly vate planning, we been have statutory provision greatly exceed will not relating concerned not to unsettle the law likely the disastrous and evil effects property matters of and commercial courts refuse to therefrom, flow should 9 transactions. Thus said in the case we reopen questions.” such of Scott v. Gossett: risk, unsettling the Before we court, “The decision relationships former have countless
having
upon by
people,
been acted
Eagle-
been entered into
reliance on
adjusted
who have
the business matters
rule
holding,
should examine that
we
Hart,
Sacks,
(1926) ;
24,
5. H. M.
Jr. and A. M.
24 P.
Robinson
868
Legal
Ga.App.
Process:
Basic Problems
v. Colonial Discount
274,
106
Making
Application
Law,
Monday
(1962);
v.
587-588
S.E.2d 824
126
(Cambridge
1958).
Millsaps,
295,
tentative ed.
197 Tenn.
271 S.W.2d
(1954).
g.
Gossett,
329,
6. E.
Scott v.
66 Idaho
(1945) ;
Cranston,
45, 64,
Higer
Hansen,
State v.
v.
67 Idaho
(1938)
561,
(1946) ;
411,
Re
v.
Idaho
Speer,
be calculated.
computed
a declin
When interest
scheme,
leg
statutory
odds with the
ing
computation
balance the
becomes more
course,
change
any
may,
islature
difficult,
meaning
but
of the word
throughout
it.
be noted that
It should
change,
“interest” does not
is still
frequent
stat
revisions of
price
money
lent
a ratio
stated as
Ida
utes made since
meaning
to 100. Because the
of “interest”
Company
decided in
mont Hotel
certain,
mathematically
is so
mathema
legisla
attempt
there has been no
long
ticians
since
and accountants have
ture to
an alternative formula
substitute
established tables
and formulas
in that case.
one announced
correctly
universally
recognized as
do,
Holding,
there
as we
stating the actual amount
good
depart
no
the normal
reason
rate,
chargeable
any
any period,
that, there
principle of stare decisis and
any
and for
fore,
the formula
Rock case
declining
number of
installments
one,
is the correct
we must affirm
balance amortization. The amounts and
computations
judgment
court
rates of interest which
be derived
*6
below based on
formula.
by simple
amorti
calculations from these
respondent.
Affirmed.
zation tables
the use of
formulas
Costs
these
comport
all,
exactly with
account
what we
SCOGGIN,
MARTIN and
D.
con-
JJ.,
not,
ant or
understand
be interest. This
cur.
court, nearly
years
ten
before
blundered
Eagle
into the
v. Idamont
DONALDSON,
in
(concurring
Justice
Company,
Hotel
P.2d 242
59 Idaho
result).
(1938),
upon by
formula relied
ma
For the reasons set out in the dissent-
jority, declared that
these tables were
ing opinion,
amount
I believe
face
figures
correct soures for
which should
computing
of a note should not be used in
usury
be used in
cases. United States
if,
it is
interest
as matter of
more
Lanzarotti,
Building & Loan Ass’n v.
actually
“In-
than the amount
loaned.
I
I cannot however with dissent distinguish- Rock case is For the reasons set out above I concur opinion able. language used in the majority’s result. Idaho, case, in that page P.2d, pages indicates that 245-246
the court considered the trial court’s McFADDEN, (dissent- Chief Justice finding charges the extra were not ing)- actually interest irrelevant as a matter of majority opinion equates the facts clearly quite law. The court said instant case with those even it were it was not usurious Rock Corp. v. Idamont Hotel bring because it did not the total amount 413, 85 (1938), P.2d 242 and concludes sum excess of practically indistinguish- the facts are lawfully interest which could able disagree with case. I charged on the loan. conclusion. I represent As read this seems to spe- instant case the trial court in Eagle Rock on the cifically found qttestion. would, I overrule prefer question. that case on this I would “IV authority this court cited follow executed, “At the time the note was by the dissent and use the actual and not defendant, by means of check No. 12699 merely the face amount of a loan to com- payable plaintiff, Leonard L. pute interest and I follow the Bethke, and endorsed Leonard L. case, United Building States & Loan Ass’n *7 Bethke, proceeds of received from the supra, and the use tables and formulas $1,200.00. sum of This the profession accounting the to make that designated by amount was defendant as computation. fee service and deducted the was from arguments which the majority make principal prior any amount service respecting in favor Eagle the Rock being performed by defendant. case, years old, which is over 30 and the probable banking reliance of the fraterni “V are, however, ty on it persuasive. most But, separate “The Court that majority as the finds points we should out fee merely service have received “not follow incorrect been decisions be they cause It defendant association ser- impossible, are there.” is not whether however, performed vices had and been not to delete for Rock part company this fee was jurisprudence, mula from pro while policy tecting relationships the time made to was plaintiffs. entered into in reliance that mistaken decision. would follow I well reasoned “VI opinion Appeals Court of of Ken tucky “Defendant, Mutual Life Ins. Co. of New through agents, and its Bryant, Ky. York v. did in fact inspections S.W.2d make numerous (1943), and property A.L.R. overrule during American Falls sociation, that such was shown in did ob- process of construction to the Idamont the statement rendered from mate- tain lien waivers seventeen Appellants Company time. rialmen, Hotel at the and contractors laborers any urge, evidence do not nor is there of loan funds made disbursements they did re- laborers, tending show, not contractors materialmen the Mountain States ceive stock in plantiffs. That for benefit Building & Association Loan obtaining lien inspections, these waivers membership paid. fee On were made of funds disbursements mortgage discloses the other hand the by the office of defendant Pocatello Mountain 530 shares of stock corporation. Association Building Loan States & security pledged for was as collateral “VII mortgage. appear It does not from $1,200.00 “The fee not service was improper the record were that the justified and, fee purposes deductions named nor was additional interest.” considered must be amounts However, Corp. Rock v. Ida- payments as additional Co., supra, the court mont Hotel stated and above the contracted amount at 59 P.2d 245: mortgage.” 422— added.) “It urged by appellants (Emphasis thus P.2d at exactions, sum of deductions my signifi- that there is conclusion attempted disguise constitute a the instant case cant distinction between used to shield the transaction Idamont Corp. v. and the usury. Of $795 trial court case in here the Hotel Co. charged to The court commissions. principal found found: interest, Eagle Rock whereas “ in disbursing rep- Corp. ‘That Court determined Supreme funds case the resenting proceeds deduc- improper of the loan made “that were $1855 * * by the mortgagee mortgagor, tions In the paid from the $397.50 was deducted Eastern Idaho case the was not Loan & Company $53,000.00 Trust determine commis- base amount sion, properly paid to that could D. of interest W. commission, $1,200.00 Stowell Here, as a pay- computed. said request ments from the were first be deducted note, Hotel Company, portion and no of said face amount sums sum for mortgagee were received determine the order to thereof,’ ap- employee computation *8 pellants usurious. assert to be
“The record does not disclose any objection method of my that the was ever made to the It is conclusion deduction payment or in the computation employed of these commis- sions until to be con- the time of the suit if it is to fore- case is incorrect * * * compute the allow- close. nothing There is the strued as basis of the anything record to indicate other than the face able recognizing the that withheld properly commission was loan without may properly against appellants and fees” credited “service It is well paid chargeable to the Eastern Idaho & to the borrower. Loan commissions, bonuses, Trust or ser- Company and D. W. settled that Stowell. to be There are not $1,060 paid that the item a lender is evidence vice fees charge was a per made to cover 2 as additional considered are for membership performed by cent the lender stock of services reasonable Building Mountain and are States & Loan As- benefit borrower’s 418 justified. Altherr v. Wilshire As for method of computing the max- 59, interest, Corp., Ariz. P.2d
Mortgage
104
448
imum
the court said:
(1968); Peoples
859
Nat’l Bank of Wash.
“It
computation
is a mode of
Seattle,
v.
National Bank of Commerce
complain of,
defendants cannot
to de-
682,
(1966);
69
420 P.2d
Wash.2d
208
principal
duct
the bonuses from the
Guyer
Franklin
Charlotte
& Assoc. v.
$20,000
4,
as of the date of November
690,
Factors,
Cal.App.2d
Cal.Rptr.
211
27
1884, and
calculate the interest on
Trucks,
(1963);
575
Sinclair v. Mack
remainder, $18,500, at
rate
10
Inc.,
(Tex.Civ.App.1962);
“The maximum could charged on a loan of NIELSEN, Plaintiff-Appellant, Lou Jean ** * per rate of 10 at the lawful annum, per cent would be $228.58 NIELSEN, Christian E. Defendant- Thus, period. three-year for the Respondent. ($2700 reserving a ‘bonus’ of $414.18 No. 10379. in- $2285.82) adding thereto minus Supreme Court Idaho. per per terest at 6 annum for cent Dec. three-year period principal amount on the ‘re- sought lender has serve, charge or take’ interest $900.18, which is more per cent annum [on $2285.82].”
57 So.2d 33-34. reaching
There are several other cases O’Sullivan,
same result. Holcombe v. ; (D.C.Mun.App.1952)
A.2d Mindlin v.
Davis, ; (Fla. 1954) Castle So.2d 789 Weil,
berry Ark. S.W.
(1920) Penziner Am. Fin. v. West Cal.App.2d 501 (Cal.App.
1933).
If the Eagle is considered Rock case using the face of the
(without any first deducting amount de-
termined to be interest), would be con-
trary to the rule the other followed in Moreover,
states. again it should be noted Rock case the court there
found the controversial items did not con-
stitute portion thus that
opinion devoted computing the max-
imum interest would be dicta. This portion
latter Rock case recognized
should be what it is.
amI opinion this instant
action should be reversed remanded
to the trial court for reconsideration findings conclusions of law particular, findings decree. fact are when the trial inconsistent recognized
court Finding VI that
respondent perform did services which appellant,
inured the benefit but
did not make determination services, only finding
value of such
service fee
be considered'
was to
interest;”
as “additional
notes
Washington,
Industrial Bank
Inc. v.
lender,
repay
borrower
was
33,
Page,
U.S.App.D.C.
F.2d 938
$20,000 principal,
interest.
(1957); Rosen v.
& Loan
Columbia Sav.
The usurious character of the trans-
Ass’n,
29 Misc.2d