146 S.W.2d 492 | Tex. App. | 1940
Lead Opinion
Associate Justice STOKES of this court has written an opinion in this case with which the Chief Justice and the writer of this opinion do not agree. The following opinion, therefore, becomes the majority opinion and controls the disposition of the cause in this court.
This is the second time this cause has been before this court. The opinion in the first appeal will be found in Temple Trust Co. v. Stubbs,
It appears that on February 10, 1925 the Temple Trust Company made a loan to the appellee Roger Q. Stubbs, purporting to be in the sum of $2,200. As evidence of such indebtedness the appellee, joined by his wife, executed eight notes aggregating the sum of $2,200 in favor of the Temple Trust Company, and, in order to secure the payment of such notes, also executed a deed of trust upon 3.41 acres of land in Lubbock County, Texas. Four of the notes were for $150 each and three for $200 each, due respectively March 1, 1926 to March 1, 1932. There was also one note in the sum of $1,000 due March 1, 1935. All of the notes provided for interest at the rate of 7% per annum from date, payable semiannually. The record is conclusive that the appellees actually received only $1,980 in the transaction, which was $220 less than the aggregate sum indicated in the eight notes. For want of a better name, for the purpose of this opinion, we shall designate this $220 as "bonus", as have the parties to this appeal. The loan transaction was in the former appeal declared usurious and no contention to the contrary is made in the present appeal.
The $150 notes and the $200 notes were sold by the Temple Trust Company to parties not interested in this suit, and such notes were paid to such owners in full, both principal and interest as provided therein. The $1,000 note was sold to the appellant, Cora L. Hance, February 20, 1925. The appellant thereafter collected from the appellees the sum of $527.92 as interest on such note.
Some time prior to 1936 (the record not disclosing the date of the filing of the *494 original petition) appellee Roger Q. Stubbs, joined by his wife, filed this suit against the Temple Trust Company and Cora L. Hance, alleging that the loan transaction was usurious and asking to recover and have credited upon the note held by Cora L. Hance all interest which had been paid upon the entire series of notes. Upon the former trial the trial court rendered judgment crediting the note held by Mrs. Hance with all of the interest paid by the appellee on the entire series of notes thereby extinguishing the appellant's note. The case was appealed to this court where it was held the action of the court below in crediting Mrs. Hance's note with the amount of interest paid to the holders of other notes was error. The holding was affirmed by the Commission of Appeals as above indicated.
Upon a retrial of the case before the court without a jury judgment was rendered December 21, 1939 in favor of Mrs. Hance and against the appellees, Roger Q. Stubbs and wife, for the sum of $357.67 with foreclosure of the deed of trust upon the 3.41 acres of land in Lubbock County, Texas. In arriving at the sum due, the trial court deducted from the $1,000 note the $220 bonus retained by the Temple Trust Company when the original loan was made and also the $527.92 interest paid by the appellees to the appellant, which left a balance of $252.08, to which latter amount was added legal interest and 10% attorneys' fees, making the total of $357.67.
The principal contention of the appellant in this court is that the trial court erred in deducting from her note the full amount of the bonus in the sum of $220, or any part thereof, which amount was retained by the Temple Trust Company when the loan was made. The action of the court in allowing a credit upon the appellant's note for the $527.92 interest which she had collected is not seriously contested by the appellant, and, indeed, could not be. It is the well-established law in this State that the owner of the principal note in a usurious loan transaction is properly chargeable with collecting usurious interest when the same is paid to him upon the principal note while in his hands. Hamilton et al. v. Bill et al., Tex. Civ. App.
The minority opinion of this court, with which we cannot agree, is to the effect that all of the $220 bonus in the original transaction should be charged against the $1,000 note held by the appellant. In such opinion Justice Stokes relies chiefly upon the case of Temple Trust Company v. Stobaugh, Tex. Civ. App.
In the instant case the sum of $1,980, the amount of money actually advanced to the borrower, is but 90% of the $2,200 aggregate sum of the eight original notes. In the absence of any note designated as bonus or any express agreement as to its payment, we think under the circumstances of this case it follows that the original parties impliedly agreed that each of the eight notes should bear its respective portion of the bonus. The face value of each of the notes therefore represented only 90% principal and the balance was, in effect, interest, which under the provisions of article 5071, R.C.S. of 1925, was a void obligation. Palmetto Lumber Co. et al. v. Gibbs et al.,
We have no quarrel with the theory advanced in the Stobaugh case that such bonus is not fully paid to the holder of the whole series until all of the principal of the notes is paid to him. Such theory is apparently based upon the doctrine that the borrower is entitled to have the bonus payments applied to the principal of the obligation and so long as the opportunity is open to have it so applied the law will appropriate it to that purpose. However, the theory that the law automatically makes such appropriation is criticized by Judge Smedley of the Commission of Appeals in Adleson et ux. v. B. F. Dittmar Co.,
As we construe the Murfee case, supra, it supports in principle our holding in this cause. In that case the loan contract was identical, in effect, with that of the instant case. In the Murfee case $4,950 was advanced to the borrower upon ten notes aggregating $5,500. Thus the money advanced was but 90% of the aggregate face value of the ten notes. The Farmers State Bank of Temple became the owner of the tenth note of the series in the sum of $1,700. The nine prior notes totaling $3,800 were held by other parties who received in full the principal and interest payments thereon as they became due. The borrower, J. E. Murfee, sought to charge the bank with payments of interest received by the owners of the first nine notes. Upon a certified question from this court, as indicated in the opinion of the Commission of Appeals, it was held that the usurious interest received by the transferees of the first nine notes should not be applied to the principal of the tenth note purchased by the bank, which bank had received none of such payments. If our theory in the instant case is correct, the holders of the first nine notes in the Murfee case received $380 of the $550 bonus or excess interest paid upon their notes. Although such fact was not in so many words recited by this court in its certificate in such cause a careful analysis of the opinion of the Commission of Appeals will reveal that such fact actually existed. Therefore, the issue as to the receipt of the $380 fictitious principal by the holders of the first nine notes was at least inferentially before the Supreme Court in that decision. With such fact evident in such cause our court of last resort made no distinction between the money received as interest as such on the first nine notes and that received as *496 inflated principal which, in effect, amounted only to interest. If such a distinction exists, as urged by our associate, the Commission of Appeals might well have so announced in the Murfee case and thus charged the bank's note with the $380 received by the holders of the other notes in the series. Its failure to do so under the circumstances of that case, we think, affords authority for our holding in the instant case.
Under the record here presented we think that $60 of the so-called aggregate principal in the first four $150 notes, together with $60 of the so-called aggregate principal of the three $200 notes, constituted the proportionate share of such notes in the bonus originally deducted by the lender, which bonus or interest has heretofore been received by parties other than the appellant. We are further of the opinion that the remaining unpaid portion of the bonus in the sum of $100 constitutes a void obligation and may be justly deducted from the claim of the appellant.
The judgment of the trial court is reformed so as to deduct from the appellant's note only $100 of the $220 bonus and the further sum of $527.92 representing interest paid to the appellant, which leaves a balance due appellant on March 1, 1935 in the sum of $372.08; that to the latter sum shall be added interest thereon at 6% per annum from March 1, 1935 until December 21, 1939, the date of the trial court's judgment, making a total of $479.34; that to such latter amount shall be added $47.93 as attorneys' fees, making a total due on December 21, 1939 in the sum of $527.27; that the latter amount shall bear interest at 6% per annum from December 21, 1939 until paid; and that as so reformed the judgment of the trial court is affirmed.
Reformed and affirmed.
JACKSON, C. J., concurring.
Dissenting Opinion
As revealed by the opinion in this case, handed down today by the majority of the court, I am not in accord with the disposition of the appeal which they make nor with the conclusions reached and expressed by them concerning the law which I deem applicable to the issues presented by the briefs. It is my opinion that the judgment of the trial court was correct and should be affirmed. The principles of law which, in my judgment, control the issues involved, in my opinion, are wholly at variance with the conclusions reached by the majority and I shall, as briefly as possible, express my views concerning those which I deem most pertinent.
It seems that the contentions made by the parties in this appeal were not involved in the former appeal. The opinions of this court and the Supreme Court on the former appeal seem to deal only with the interest that was paid as such by the appellees, that is, the seven per cent. provided in the notes as interest, and not with the $220 that was retained by the Temple Trust Company as a bonus when the loan was made. The record now before us contains only the amended pleadings upon which the case was last tried. It is likely, therefore, that the present issue concerning the so-called bonus was first injected into the case upon the last trial.
Upon the question of whether or not the trial court erred in crediting upon the $1,000 note held by appellant the entire $220 retained by Temple Trust Company as a bonus, it may be observed that in testing the contract for usury, the real principal of the loan is not necessarily the amount specified in the face of the notes, but the amount actually received by the borrower from the lender. Adleson v. Dittmar Co.,
In considering a similar question the Supreme Court of California in Haines v. Commercial Mortgage Co.,
Sec. 5198 of the Revised Statutes of the United States, 12 U.S.C.A. §§ 86, 94, is very similar to our usury statute, Art. 5073, and in Gunter v. Merchant, 213 S.W. 604, 607, Judge Sadler, speaking for Section B of the Commission of Appeals, said: "Under this statute the Supreme Court of the United States has uniformly held, and our Supreme Court has followed it, that the reservation by a banking corporation of the interest at the time of making a loan is not such a payment as will sustain a suit to recover the penalty, unless the note given has been paid. In determining the question of limitation as applying to recovery for penalty, the Supreme Court of the United States, and of our state, held that where usurious interest has been held out in the original transaction, and is incorporated into the note, the period of limitation for the recovery of the penalty does not begin to run until the actual payment of the note."
It is obvious that this holding could not have been made except upon the theory that the usurious interest held out in the original transaction was relegated to the last portion of the indebtedness. These authorities clearly locate the bonus in such a transaction as merely an addition to the real principal of the indebtedness which cannot be collected if resisted by the payor, but which, other than tainting the transaction with usury, gives the payor no right of recovery of the bonus until the actual or real principal and that portion of the note represented by the bonus or a portion of it have been paid.
In the case of Temple Trust Co. v. Stobaugh, Tex. Civ. App.
The question again came before the same court in the case of Temple Trust Co. v. Haney,
The principle that the bonus is carried over to the last portion of the indebtedness has its foundation in the doctrine of locus penitentiae expressed by the learned Justice Stayton in delivering the opinion for the Supreme Court in Stout et al. v. Ennis Nat. Bank,
See also Stevens v. Lincoln, 7 Metc., Mass., 525, 528; Citizens' Nat'l. Bank v. Froman's Assignee,
Thus it will be seen that our Supreme Court has held that where money is paid on usurious contracts containing amounts retained as bonus without an appropriation by the parties of the payment to the usurious interest or bonus, the law will appropriate the payment to that part of the demand which is legal; for neither the party making nor receiving the payment would be presumed to have intended that it should be appropriated to the payment of usurious interest. There is nothing in the record in the instant case to indicate that an appropriation was made by either appellant or appellee or any other party to the transaction of any payment made by appellee to the bonus or any part thereof. All payments made on the note in suit were for the seven per cent interest specifically provided as such in the note and all other payments made were of the principal and seven per cent interest specifically provided in the other notes of the series. While it is true that the transaction consisted of eight separate notes, and they were assigned to different parties and the former notes paid to those who held them by assignment from the Temple Trust Company, yet I can discern no difference in so far as the rule of law is concerned from what the effect would have been if the entire transaction had been included in one note and remained in the hands of the original payee until an amount had been paid thereon equal to that which has been paid on the series of notes by appellee in this case. Although the notes were assigned to separate parties, the entire series and the deed of trust executed to secure *499
them constituted but a single transaction and appellant cannot assume the role of an innocent purchaser. Her position in the transaction is not different in any respect from that of the Temple Trust Company. She stands in its shoes and her rights and liabilities are governed by the same rules of law as its rights and liabilities would have been if it had remained the owner of the entire indebtedness. Gilder v. Hearne,
The parties to the loan transaction specified in the contract that $150 should be paid on the principal each year during the first four years. The effect of the holding of the majority is to change that portion of the contract and appropriate only $135 of these payments to the principal. This results in an arbitrary appropriation of a portion paid upon the legitimate principal of the loan to the usurious interest or bonus which constitutes the illegal and void portion. This is exactly what the Supreme Court said in the Stout case, supra, the law will not do.
In consonance with what I deem to be sound principles of law and, in keeping with my interpretation of the holdings of our own courts, as well as eminent tribunals of other jurisdictions, I cannot but adhere to the conclusions here expressed and respectfully enter my dissent to the disposition made of the appeal, and the conclusions of law upon the issues presented in the briefs, as expressed in the opinion handed down by the majority in this case.