124 Neb. 514 | Neb. | 1933
Lead Opinion
This is an action of replevin for a Plymouth sedan automobile. Under the writ, the Grand Island Finance Company, plaintiff, recovered possession from Dennis C. Fowler, defendant, claiming a special ownership through a chattel mortgage. W. B. Hayes, a dealer in automobiles, sold the sedan to defendant, accepted a used car in part payment, took from him for the remainder a 376-dollar note secured by a chattel mortgage on the car sold, payable to himself in 16 monthly instalments for $23.50 each, and assigned the paper to plaintiff. Defendant paid $94 on his debt, but later failed to pay an instalment when due, leaving unpaid $282. After the default, plaintiff, as authorized by the note and mortgage, elected to declare the unpaid debt due and seized the mortgaged chattel by replevin for the purpose of foreclosure.
The action was defended on the grounds that Hayes was the agent of plaintiff in the transactions resulting in the execution of the note and mortgage; that the real payee in those instruments was plaintiff instead of Hayes, its agent, the forms being devices to evade usury; that, the sum of the transactions was a loan; that the cash sale price of the 'Plymouth sedan was $550; that Hayes, acting for plaintiff, accepted in part payment a used car for $250 and exacted for the balance of $300 a note and mortgage for $376, which included unlawful interest at a rate exceeding 30 per cent, per annum; that the note and the mortgage were void under the forfeiture clause in the statute limiting the maximum rate of interest to 10 per cent, per annum, providing for issuance of licenses to members of a class of money-lenders and authorizing them to charge, in addition to such interest, a brokerage fee not exceeding one-tenth of the money actually lent — Comp. St. 1929, secs. 45-112 to 45-123; that by reason of the usury and the statutory penalty there
A jury was waived and the cause tried to the district court. There was a judgment against plaintiff, directing it to return the property or, if unable to do so, to pay defendant the adjudged value of $425 with legal interest from December 14, 1931, the date of the replevin, costs and damages of one cent for unlawful detention. Plaintiff appealed.
The parties seem to agree that the question .to be determined is the- nature of the business transacted— whether they entered into a contract of sale on credit for deferred payments or a contract for a loan to pay part of the cash purchase price, but they differ radically on the facts and the law that determine the issue.
Plaintiff’s expressed understanding of the transactions is that Hayes, a regular dealer in automobiles, sold the car in litigation to defendant on part credit, taking a note and a mortgage which permitted deferred payments in monthly instalments, and sold the paper for value to plaintiff, a corporation engaged in financing purchasers of automobiles on credit; that the cash price was less than the credit price, the former being $550 and the latter $626; that the transaction was fair, lawful and free from usury; that these issues were conclusively established in favor of plaintiff and that there is no competent evidence to the contrary; that defendant did not prove a defense to the action of replevin.
In defending the judgment for the return of the automobile taken from defendant by replevin, he was forced into the position that he entered into an unlawful contract with plaintiff to borrow from it $300 and to pay interest at a rate exceeding 30 per cent, per annum and thus acquired a 550-dollar Plymouth sedan for a used car valued at $250 and $94 in deferred payments, and that the forfeiture of plaintiff’s note and mortgage on account of usury was supported by the evidence and the law.
Defendant himself adduced evidence that the Grand Island Finance Company, plaintiff, since its organization, has been engaged principally in financing purchasers of. automobiles on time — buying their instalment notes. Hayes was a dealer in automobiles. Plaintiff was not licensed under the law permitting a class of money-lenders to charge a broker’s fee in addition to interest at the rate of 10 per cent, per annum. Plaintiff solicited business from Hayes and furnished him a printed schedule of rates used in discounting paper, and also forms for notes, chattel mortgages and other documents, but this was not material to defense of usury, if the original sale was valid. Commercial Credit Co. v. Tarwater, 215 Ala. 123. Testimony of defendant as a witness in his own behalf may be summarized in part as follows: He initiated the negotiations by going to Hayes’ place of business to trade a used Whippet car on another car and to get time for payment of the boot or the balance of the purchase price. The cash price for the Plyniouth sedan was $550 and
The judgment below is reversed, with directions to the district court to enter a judgment in favor of plaintiff and against defendant.
Reversed.
Dissenting Opinion
dissenting.
I have no criticism to make of the principles of law, as announced in the syllabus of the majority opinion. Some important facts are overlooked which, in my opinion, when fairly considered, require an affirmance of the judgment of the district court, instead of its reversal.
• This is a law action, in which the parties waived a jury and tried the cause to the court. Under such circumstances, the finding of the trial court has the same force and effect as the verdict of a jury. McCarter v. Cover, 122 Neb. 691, same case in 122 Neb. 833; Bliss v. Peters Nat. Bank, 122 Neb. 76; Cook v. Moats, 121 Neb. 769; National Cash Register Co. v. Chipman, 122 Neb. 866; Nebraska Nat. Bank v. Parsons, 115 Neb. 770. •We have further held that in an action at law, tried to the court without a jury, where there is sufficient evidence in support thereof, the finding of the court has the
The real controversy in this action was whether the promissory note, the basis of plaintiff’s action, was tainted with usury. The record reflects the following facts:
Defendant purchased from Hayes, an automobile dealer, an automobile for $550, trading in a used car for $250, and for the difference gave his promissory note for $376, payable in 16 instalments of $23.50 each. The first instalment was due in 6 days, the last instalment in 15 months and 6 days. The average time the instalments ran was 7.7 months. In other words, plaintiff, for the use of $300 for the term of 7.7 months, was paying $76, or at a rate of more than 39 per cent, per annum. Hayes was not able to finance transactions of this sort, and did not sell automobiles on time, except in form. He was the agent of the plaintiff, or at least had an arrangement with the plaintiff whereby he kept a supply of its blank mortgages, notes and forms, and made loans under such circumstances, making notes payable to himself, and immediately indorsing them to the plaintiff. In the instant case, before the deal was completed, Hayes, in the presence of defendant, called up plaintiff, to know precisely the amount for which the note would have to be drawn and the rate at which paid in instalments, and secured the information, which resulted in the giving of the note for $376. This note was made payable to Hayes, was immediately indorsed and transferred to the plaintiff. The evidence also shows that Hayes received from the plaintiff a commission out of the loan thus made, and was, therefore, the agent of plaintiff.
Section 45-105, Comp. St. 1929, with reference to usury, provides: “The acts and dealings of an agent in loaning money shall bind the principal, and in all cases where
In the case of State v. Central Purchasing Co., 118 Neb. 383, paraphrasing the language there used, it is said (p. 389) : “The courts in such a case as this are not bound by forms but will look beyond form to the real substance. Looking through the scheme of the plaintiff to acquire and retain an unlawful and usurious rate of interest for the use of its money, and discerning the real substance of its transactions, we are of the opinion that its transactions pictured in the evidence were not bona fide purchases of rights of action from its customers, but rather were loans of plaintiff to its customers. As such they were strongly infected with usury, were unlawful, and were contrary to the public policy of the state.”
The contract rate was unlawful and unconscionable. The judgment of the district court is right, and it should be affirmed.