Fishburne v. Hartsfield Loan & Savings Co.

38 Ga. App. 784 | Ga. Ct. App. | 1928

Stephens, J.

(After stating the foregoing facts.) The act of 1920, supra, provides as follows: “Every person, copartnership, and corporation licensed hereunder may loan any sum of money not exceeding in amount the sum of three hundred dollars ($300) and may charge, contract for, and receive thereon interest at á rate not to exceed three and one-half (3%%) per centum per month. Interest shall not be payable in advance or compounded and shall be computed on unpaid balances. In addition to the interest herein provided for, no further or other charge, or amount whatsoever for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for, or received, except the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing or recording in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter. If interest or charges in excess of those permitted by this act shall be charged, contracted for, or received, the contract of loan shall be null and void and the licensee shall have no right to collect or receive any principal, interest, or charges whatsoever. No person shall owe any licensee, as such, at any time more than three hundred dollars ($300) for principal.”

The contract expressly provides that if any installment of “either principal or interest” is not paid promptly when due, interest is collectible “on the total unpaid balance” at the rate of 3y2 per cent, per month “for the length of time such installment or installments remain unpaid past maturity.” As the contract here provides that if any installment of “either principal or interest” is not paid when due, additional interest is collectible on the “total unpaid balance” for the period during which “such installment” remains unpaid, the “total unpaid balance” necessarily refers to the principal and interest past due and unpaid. The agreement to pay interest upon this unpaid balance is an agreement to pay interest upon interest, and is therefore an agreement compounding the interest, which, under the express provisions of the act of 1920, supra, is prohibited. The act, after prohibiting the compounding of interest, provides that “if interest or charges in excess of those permitted by this act shall be charged, contracted for, or received, the contract of loan shall be null and void and the licensee'shall have no right to collect or receive any principal, interest, or charges whatsoever.” This provision of the contract, compounding the interest, is an agreement to pay interest in excess of that permitted by the act, and therefore, under the terms of the act, renders the entire contract void and unenforceable, and prevents the collection of the principal and interest and all charges whatsoever evidenced by the contract.

The provision in the contract that the “total interest and charges shall in no event exceed sy2% per month” is a limitation only upon the amount of the charges contracted for. It merely reduces the contract to one in which the total amount collectible shall not exceed 3y2 per cent, per month, and does not eliminate from the contract any agreement to pay a specific charge, as, for instance, an agreement to pay compound interest, or a charge for service, brokerage, commission, etc.

Whether the provision in the contract to pay attorney’s fees is such a charge as will, under the provisions of the act of 1920, supra, render the contract void and unenforceable, the provision whereby the obligors agree to pay “all costs of collecting, . . securing, or attempting to collect or secure” the indebtedness evidenced by the contract, “including twenty (20%) per centum attorney’s fees,” provides for the payment of expenses and costs other than, and in addition to attorney’s fees. A charge for collecting or securing the indebtedness which is other than a charge for attorney’s fees is a charge in addition to interest and the costs of filing and recording the contract, and is a charge expressly prohibited by the act of 1920, supra, and its presence in the contract, by the express terms of the act, renders the contract void and unenforceable, and the indebtedness, including the principal and interest and all charges evidenced thereby, uncollectible.

The contract sued on being void and unenforceable, the judgment of the municipal court, sustaining the demurrer, which was affirmed by the appellate division of that court, was not error. The judgment of the appellate division being correct, the judge of the superior court erred in sustaining the certiorari. See, in this connection, Jobson v. Masters, 32 Ga. App. 60 (122 S. E. 724).

Judgment reversed.

J enlcins, P. J., and Bell, J., concur.