*2 prepayment transaction called for AKIN, Before DEVANY and *3 payable Coppedges’ the note to Colonial. HOWELL, JJ. closing September on The occurred AKIN, Justice. company 1983. Colonial notified the title handling the transaction to withhold from Wendy Coppedge appeal Mark and from $9,100 proceeds the sale the sum of over summary judgment granted them principal plus balance ac- above Savings on their claim Colonial & appears crued interest. It that Colonial Loan Association to recover for usurious $9,100 upon premised its claim to the charged and received Colonial. Coppedges contention that the had violated Coppedges The contend that the trial court provision the due-on-sale in the deed of granting erred in Colonial’s motion for secured the note. trust that When summary judgment overruling and in Coppedges protested withholding, charged theirs because Colonial and re- title escrowed the Coppedg- ceived usurious interest from the Consequently, they argue they es. that 10, 1983, attorney rep- On November are statutory penalties entitled to and at- resenting Cop- Colonial sent a letter to the fees, torney as well as common-law dam- containing following language: pedges ages, agree as a matter of law. We You should consider this letter to be a Coppedges they entitled were to for in the demand letter back summary judgment on their claims for stat- $9,100.00 plus attorneys’ fees amount utory usury penalties and remand the costs, any. and court if Please be ad- proper cause for determination of attor- this demand letter is made in vised that ney’s fees to be awarded them. We do not require- statutory order to fulfill however, agree, they are also entitled filing mat- ments for of a lawsuit recovery usury
to common-law in addi- to our satisfaction. ter is not resolved statutory penalties. tion to the Conse- request, agent At Colonial’s the escrow quently, judg- we affirm the trial court’s $9,100 to On No- delivered the Colonial. ment as to their common-law cause of ac- 18, 1983, attorney Coppedges’ vember tion. attorney demanding wrote to Colonial’s Coppedges money The borrowed $9,100 charging cease ad- Colonial purchase in 1977 to a home. The threatening to file suit ditional interest note, promissory secured a deed of trust later, Eight persisted. if Colonial months home, provided on the for interest at the $9,100 July returned the annum, per payable in 359 rate 9.375% Cop- plus Coppedges. interest to the The stipu- monthly payments. parties The have pedges check and then filed this cashed the following figures: lated lawsuit. was, under the facts
The note in this case stipulated by parties, not usurious. contend, however, that Col- “charged and received” usurious onial the additional sum terest when it demanded $9,100 September and No- as interest and caused that amount vember of 1983 from the escrow be delivered to Colonial $9,100 company. If the at the title account interest, exception and no (1937). Thus, contained we hold usury applies, statute then Colonial re- $9,100 that Colonial demanded and (total ceived in usurious interest received from the constituted amount of interest received for 67 months statutory interest within the definition. —$54,692.77—less maximum amount Further, according parties’ fact sti- stipulated parties $48,749.00), pulations, — interest was usurious penalties and is $5,943.77. in the amount of permitted by law. question Our next is whether the We first must determine whether actions attorney of Colonial and its violated inwas fact interest. Interest is statutory proscription against charging compensation allowed law for the usurious interest. Under arti use, forbearance, money. detention of 5069-1.06, “charges” cle the term means
Tex.Rev.Civ.Stat.Ann. placing the unilateral act of on an account (Vernon 1971). Through attorney, its Colo an amount due as interest. See Windhorst nial demanded as “back interest” *4 Pipe v. Supply, Adcock and 547 S.W.2d
due as a result of Coppedges’ alleged 260, (Tex.1977). 261 The of the unilateral act can
breach due-on-sale clause in the deed debiting
of trust that be a of an amount due by secured their loan from or an act Colo Although
nial. constituting the label “back interest” is the lender a pay demand for controlling,
not ment, see County e.g., Gonzales Sav the inclusion of usurious inter
ings Freeman, & Loan Association v. 534 est in a statement of indebtedness sub 903, (Tex.1976),
S.W.2d 906 the factual ba mitted to the debtor. Concrete Construc $9,100 sis for Colonial’s claim to the indi M.F.C., Inc., Supply, tion Inc. v. 636 sought cates that Colonial that sum as ad 475, (Tex.App. S.W.2d 477 n. 1 — Dallas compensation Coppedges’ ditional for the 1982, writ). Thus, the demand letter Moreover, money. use of its the fact that by sent attorney Colonial’s constituted a Coppedges repaid the loan before Colo “charge” by of interest Colonial. See Me $9,100 nial demanded and received the does 924, (Tex. cey Seggern, v. 927 change the nature of that sum as com 1980, Civ.App. n.r.e.). writ ref’d — Austin pensation demanded in connection with the Further, Colonial “received” usurious inter original real estate loan. The fact that a est when it collected the from the repaid ipso loan has been does not facto parties’ agent. Accordingly, escrow
preclude asserting charge a lender from a conclude that Colonialviolated article 5069- “back,” delinquent, for or interest under charging receiving 1.06 both usuri reject argu that loan. We also Colonial’s Coppedges. ous from the $9,100 charge ment that the was not inter Nevertheless, protection seeks por est to the extent Colonial used a statutory penalties from the under the first pay attorney’s tion of it to its fees. Had 5069-1.07(a), sentence of article which codi part demand letter identified Colonial’s spreading in fies the doctrine set forth fees, being attorney’s Harris, 190, 102 Nevels v. 129 Tex. S.W.2d might fact issue have been raised. How (1937). Development 1046 See Tanner Co. ever, unambiguously the letter identified 777, (Tex. Ferguson, the entire sum as “back interest” and stat 1977); see also Conte v. Greater Houston sought sum ed that additional would be Bank, (Tex.App.— costs, “attorneys’ fees and court n.r.e.). ref’d writ Houston Dist.] [14th actual use of the is any.” Colonial’s as follows: provides Article irrelevant, attempt and its belated to show (a) any agreement to loan On part demanded was to of the amount secured, in or in secured or to be whole attorney bring
pay fees does not it within lien, mortgage, security part, by a inter- in connection with
the “services rendered
est,
respect
in or
exception
or other interest
the loan”
statutes.
See Nevels v. 5069-1.- pur- The second sentence of article of the rate of interest for
tion 07(a) pays provides that when the borrower determining the loan is
pose of whether in end of the the loan full Texas applicable under all laws interest received for stated term and the amortizing, prorating, shall be made period the actual of the loan’s existence allocating, spreading, equal parts maximum, the lender exceeds the during period full stated term of the the excess to the borrower or must refund loan, any time con- all interest at principal excess owed credit the for, charged, or received from tracted provision This limits under the loan. Id. the loan. connection with borrower redemptive spreading effect of the doc- However, the loan is the event actually the borrower uses trine when prior to the end of full the borrower stated in period loan for a shorter than that term of the loan and the the full stated made, prepayment is the contract. When period received for the actual spread received is over the interest existence of the loan exceeds the actually during term which the borrower rate, maximum lawful the lender con- funds; the lender must had use for, tracting charging, all any excess interest to the refund or credit such interest shall borrow- refund statutory penalties. to avoid the borrower or shall er the amount the excess Coppedges repaid after 67 The the loan credit the amount the excess parties stipulated months’ actual use. owing amounts under the loan and legal amount of interest that the maximum penal- any shall not be could have received over that Colonial provided contracting ties law for $48,749.00. The total 67 months was *5 for, charging, or received, amount of interest that Colonial rate. excess the maximum lawful interest,” including “back ex- the . 5069-1.07(a) Tex.Rev.Civ.Stat.Ann art. $5,943.77. ceeded the maximum added). (Vernon By Supp.1986) (emphasis However, argues that it because 5069-1.07(a), legisla enacting article the excess,” the as the statute ... “refund[ed] adopted spreading
ture the doctrine with statutory subject to the requires, it is any respect to loans secured a lien on receiving usuri- charging penalties Thus, property. applies in real it disagree. interest. We ous spreads action. The doctrine “all statutory rule of con The cardinal for, any at time contracted legislature’s is to ascertain the struction charged, in connection or received” with give intent. and to effect to intent the the loan over the contractual term of Harvester Credit Knight v. International purpose determining for the wheth 382, (Tex.1982). A Corp., 627 S.W.2d 384 er it is usurious. Tex.Rev.Civ.Stat.Ann. reviewing limited to the literal court is not 509-1.07(a) (Vernon Supp.1986). used, must con meaning of the words The stated term of Colonial’s loan to implied as well as that sider that which is months. Coppedges was 359 When express. is v. Fox & which McCulloch for, total amount of interest contracted 918, Inc., (Tex.App. Jacobs, 921 Colonial, including charged, or received n.r.e.). 1985, As stated writ ref’d —Dallas dispute, spread is over the above, sentence of article 5069- the second is not period, the transaction
359-month 1.07(a) designed spread to restrict was under the first sentence of article where ing application cases doctrine’s However, 5069-1.07(a). Coppedges re- prior to the repays the loan the borrower event, in full
paid the loan Colonial stated term. In that end of the full 359 months. received in connec
end of the full stated term of of interest the amount period
Thus, comply spread with loan is over the required to tion Colonial was 5069-1.07(a) existence to determine loan’s actual of article
the second sentence legal maximum. exceeds the whether it penalties. statutory
to avoid
938 may usury penalties enforcement,
The lender avoid remedy legislation it for its any
refunds or regarded credits usurious amount. is as cumulative of the common- implies
The statute the “refund or remedy, law cause of action and unless the provision applies only
credit” expressly to interest statute impliedly negatives
that would otherwise solely Franklin, 411, be usurious latter. Juneman v. 67 Tex. prepayment. 562, (1887).
a result of the Repeal borrower’s S.W. of the com provision designed permit lend remedy by implication mon-law action and penalties
ers to only they avoid the when is requires repug disfavored and a clear
inadvertently have received usurious inter nance between the common-law and statu
est as a result of the in tory borrower’s actions causes of action. Thouvenin v. Rod
prepaying 468, (1859). rigues, otherwise non-usurious loan. 24 Tex. The com legislature
It is inconceivable that the in mon-law action to recover usurious interest provi paid
tended that the “refund or credit” was established in Texas in Bexar
sion be used bootstrap Building lenders as a & Loan Association v. Robin
escape
son,
statutory penalties
(1890).
whenever
78 Tex.
their though legislature own unilateral actions cause them to subsequently estab statutory
receive usurious interest. providing lished scheme for the recovery of usurious interest contracted Here, receipt Colonial’s of usurious inter- for, received, charged, legislature Coppedges’ pre- est did not result from the expressly necessarily neither declared nor payment; it solely arose from Colonial’s implied abrogate an intention to the com Coppedg- unilateral actions taken after remedy. mon-law We conclude that loan, viz., prepaid charging es statutory repeal action for did not receipt Thus, we hold that the common-law action established in Rob provision
the “refund or credit”
of article
inson.
Accord Commercial Credit
inapplicable
is
as a matter of
West,
Equipment Corp. v.
law and that Colonial is
(Tex.App.—Amarillo
1984,writ ref’d n.r.e.). remedy for its enforcement, that legislation is regarded as cumulative of the common-law cause of action and remedy, unless the statute expressly or impliedly negatives the latter. Juneman v. Franklin,
pedges are entitled to recover three times Co., City sas Insurance 102 S.W.2d amount, $17,831.31, Life plus reasonable (Tex.Civ.App. writ — Waco fees, attorney’s under article 5069-1.06. ref’d). permits recovery Article 5069-1.06 that, Finally, Coppedges argue in ad- three times the amount which remedy, they statutory dition to their are for, charged, total contracted damages entitled to recover under the com- maximum, i.e., legal received exceeds the usury. They action for further mon-law permitted three times the amount theory per- contend that the common-law common law. Tex.Rev.Civ.Stat.Ann. recovery the interest mits their of all (Vernon Supp.1986). 5069-1.06 These two Colonial, including they paid the interest independent, disagree remedies are and we maximum. We dis- within requires with to the extent that West West agree. to remedy the common-law “be viewed leg light present provisions of the of article
Initially, we note that when West, at 680. of action and a 5069-1.06.” See
islature creates a cause property to conveyances of their not made usury statutes did
Although the action, in the form of contracts for parties hold that we third
repeal the common-law securing the consent of to recover first are not entitled deed without Coppedges Colonial, It is well-es Colonial claimed were
damages theories. which under both party underlying is enti deed of trust aggrieved of the
tablished that violation loss, mortgage note. recovery Coppedge’s for the same only securing
tled to one exist. remedies alternative even when closing, Colonial At the time (Tex. 541, 551 George, 671 S.W.2d Vick the amount company as to the title structed 1983), on other Antonio rev’d App. — San mortgage. In addi- off the owing pay (Tex.1984). The
grounds, tion, instructed the title Colonial sought Coppedges have damages that the $9,100, sum of which hold in escrow the of action are the under alternative causes interest on the appears additional to be loss, viz., the usurious inter result of one resulting from the violations charged by Colonial. est and received trust in the deed of provisions contractual Thus, un they are entitled to satisfaction parties to third governing the transfers or article 5069- der either the common law securing prior approval of Col- without 1.06, but not both. company set that sum The title onial. Accordingly, judgment we affirm the clos- in order to effect aside escrow rendered to the extent that it the trial court thereafter, sent a Colonial ing. Shortly on their Coppedges judgment asking for an ex- Coppedges letter to usury, action for common-law cause of prior transfers viola- planation of the their claim for reverse and render as to In that letter deed of trust. tion of the usury penalties in the sum statutory demand for the based Colonial made $5,943.77), $17,831.31 (3 plus reasonable X record does not violations. The upon those 434. Be- attorney’s fees. Tex.R.Civ.P. Coppedges responded to indicate attorney’s fees have not cause reasonable later, se- Colonial that letter. Some weeks determined, remand this case to been the title cured the escrowed reason- trial court for determination of eight months after company. More than attorney’s due the un- able fees $9,100, closing, refunded the article 5069-1.06. der thereon, Cop- together filed Thereupon, pedges. J., DEVANY, dissenting files a usury. par- The suit
opinion.. summary judg- motions ties filed cross Justice, DEVANY, dissenting. granted Summary judgment ment. judgment. I would affirm Colonial. respectfully
I dissent. stipulations are fol- appel- Important in the Wendy Coppedge,
Mark T. and lowing facts:
lants, from Colonial Sav- borrowed on or about De-
ings and Loan Association mortgage payments over the full 21,1977, secured a deed of trust *7 cember inter- in total have resulted months would undisputed is that the their home. It on $173,497.97 compared with the of est mortgage payments their Coppedges made have that could legal maximum for 359 months at an timely. The loan was of the rate of for at 10% contracted been. repaid in in- to interest rate of be 9.375% add the $187,857.70. If were to we They had had of each. $727.21 stallments a sum $173,497.97, have we would at the for 67 months the use of the loan maximum less than the that was resulting closing their home of the of time $187,857.70. terest of They instruct- parties. to third from a sale follows: provides as Article closing handling the to ed the title se- agreement to loan or any loan On in full. mortgage to Colonial pay off the secured, in or whole or to be during cured further indicates record lien, security inter- mortgage, by a part, had mortgage life of the
940
est, or in or respect payment. other interest to contrary, language On the
any property, in real determina- that the “lender ... shall refund” the ex- of pur-
tion of the rate interest for the cess to borrower and “shall not be”
pose determining of whether the loan is subjected penalties to in the event of applicable
usurious under all Texas laws prepayment does not indicate that for- by amortizing, shall made prorating, be requirement mer precedent is a condition allocating, spreading, in equal parts the latter. during period of the full stated term court, opinion In a recent of this we loan, any all interest at time con- stated: for, charged, tracted or received from Moore and Caravan seek to enforce the the borrower in connection with the loan. statute; must, penal provisions of the However, in the event the loan is therefore, penal consider the statute as by full the borrower to the end of purpose construing for the of it. Board the full stated term of the loan and the Insurance Commissioners v. Great period interest received for the actual Co., Southern Insurance 150 Tex. Life the existence of the loan exceeds the 258, 803, (1951). 239 S.W.2d 809 In Tex rate, maximum lawful the lender con- as, penal strictly statute must be con tracting for, charging, receiving all imposing penalty. strued such interest shall to the bor- refund Agey Liberty Pipe v. American Line rower the amount the excess or shall Co., 379, 972, 141 Tex. credit the amount of the excess (1943). provides A penal statute which owing amounts under the loan and shall ties for excessive interest rates should be subject any penalties not be way give in such construed as to provided by contracting for, law for legislative lender “the benefit of the charging, interest in excess against imposing penalties doubt im the maximum rate. lawful posed PJM, by the statute.” Inc. v. Wal TEX.REV.CIY.STAT.ANN. 5069-1.- Inc., Advertising, ter Clark 07(a) (Vernon added). Supp.1986) (emphasis 282, (Tex.App. writ — Dallas stipulated by parties It is further n.r.e.). ref ’d that the 67 months of the existence of the Corp., Moore v. Motor Credit White loan was to a maximum interest (Tex.App. — Dallas $48,749.00, charge of whereas the actual writ). paid, before the collection of the opinion majority lays I am of the that the $9,100 Colonial, $45,592.77. was There- some stress on the fact that Colonial did fore, if the additional is classified as eight the refund for months. If not make interest, it resulted total interest which unreasonable, period time were such $5,943.77. exceeded the lawful rate Ac- delay making the refund unreasonable cordingly, quoted under lan- the above change does not the test mandated statute, guage obligat- clearly statute which establishes ed to refund Indeed, if not usurious. the re- loan was penalties usury. of the law for avoid only within four fund had been made However, instead, refunded the months, changed result would this have $9,100 plus entire interest on that sum for suspect majority? I reached of months it held the number forthcoming had been within a the refund Applying the test in the statute for deter- majority would have few weeks usurious, I
mining whether the loan was result. If unreason- reached a different usurious,
would hold that the loan was majority, I troubles the direct ableness timely
and that Colonial’s failure to refund *8 Cop- to the fact that $9,100 their attention make it Coppedges did not refunded an amount that was 5069-1.07(a) pedges were
so. Article does not condition required by the more than was usury prompt of on re- determination quoted they received
payment pre- of above statute and of the excess the event $9,100 a rate of inter- on the entire refund. Coloni- rower and exacts
terest generous Coppedges est, clearly put
al has with the legislature been intended to a correcting the error. Some considera- stop practice. But the rate where given
tion-must be to the failure of the legally of interest is correct and the loan requested expla- to furnish the off, closing paid an error is made at but the transfers in violation of nation about corrected, legislature, my and then I the deed of trust. further note that the give opinion never intended to a windfall they waited until had received majority to one sits advocated who the inflated refund and interest thereon back and contributes to the error. filing ques- I
before their law suit. have judgment I affirm the of the trial would they lay log tion as to whether behind court. giving requested explanations. not typical usury do not have a case before
We mortgage paid A in full. There
us. was principal mortgage no left. The com-
was mistakenly
pany company directed the title
to hold incorrect back However been, might impose penalty have majority
advocated is not within the purview legislature. of Moore v. White and the The CITY OF SAN ANTONIO Corp., 470.
Motor Credit City of San Antonio’s Firemen’s and further should made. One observation be Commission, Policemen’s Civil Service paid The loan was in full at the time of Appellants, $9,100 closing. The amount of was held in
escrow the title because of alleged prior deed of trust violations and RIOJAS, Appellee. Jo-Ann paid
was not to Colonial for some time No. 04-86-00168-CV. apparently after that. Since Colonial deter-
mined that the sum of was errone- Texas, Appeals Court ously proceeds withheld from the San Antonio. paid Coppedges, should have been Dec. 1986. say one could the amount withheld course, Rehearing not in fact if it Denied Jan. 1987.
was interest. Of interest, not
was statute would sup- it. apply theory
not This can be
ported by the fact that the loaned, money the use since longer majority existed. The treats interest, on what as usurious
principal? original If it is interest on the loan, treated
real estate then it must be ap- test
under article and the
plied. payment If it is not a for the use
money, majority since the concedes closing,
loan was at then it is not and, therefore, theory under either
it cannot called usurious interest. Re- be use, penal-
gardless theory what
ty imposed by majority punishment is a complex world of is unrealistic made and cor-
commerce where an error is advantage If one of a bor-
rected. takes