W. W. LAFFERTY, Appellant, v. A. E. M. DEVELOPERS AND BUILDERS COMPANY, Appellee.
No. 15055.
Court of Civil Appeals of Texas, San Antonio.
May 24, 1972.
Rehearing Denied July 12, 1972.
482 S.W.2d 279
BARROW, Chief Justice.
Under the provisions of
William T. Miller, San Antonio, for appellant.
Gilliland, McNeel & Garwood, San Antonio, for appellee.
Appellee brought this suit to recover from appellant under
Appellant, hereinafter referred to as Lafferty, asserts by eight assignments of error that the pleadings, depositions and affidavits filed herein raise material questions of fact which preclude a summary judgment. One point complains that the trial court erred in awarding appellee recovery for double the amount of usurious interest. The final point urges that the statute in question provides only for forfeiture of unpaid principal and does not permit recovery for repaid principal.
Despite voluminous pleadings and several long affidavits filed by and on behalf of appellant, the material facts are substantially undisputed. In February, 1970, appellee, a corporation headed by Jake Elliott as President, needed to borrow some money to discharge a lien of the Internal Revenue Service and release a judgment lien. Neither appellee nor Elliott was apparently able to negotiate a loan from a lending institution. Elliott was acquainted with Sam Ruffino, a closer at Commercial Abstract and Title Company, and through him negotiated the loan with Lafferty. There was no direct contact between Elliott and Lafferty, but all dealings of Lafferty and Elliott were with Ruffino. The corporation owned 22.67 acres of land, then being subdivided, which was subject to a first lien note payable to Lake Croft Beach Estates, Inc.
On February 26, 1970, appellee executed its real estate lien note payable to W. W. Lafferty in the principal sum of $7,500.00
Both Ruffino and Lafferty averred that the parties intended that $500.00 be paid to Lafferty as a fee for use of his credit and other services to appellee, rather than as interest. It is seen that Lafferty borrowed $7,500.00 from the Highland Park State Bank shortly before issuing his own check for $7,000.00 to Commercial Title on behalf of appellee. Accordingly, it is urged by Lafferty that the $500.00 retained by him should not be considered as interest.
A similar contention was considered by the Supreme Court in Greever v. Persky, 140 Tex. 64, 165 S.W.2d 709, 711 (1942). The Court held:
“An agent or a broker may lawfully charge a commission for his services in negotiating a loan with a third party, and such commission will not be taken into consideration in determining whether or not the loan is usurious, where it is done in good faith, and not as a mere cloak to avoid the usury law. But, in order to be valid it must appear that the loan was ultimately made with or passed on to a third party, and that the extra charge was made in good faith for so negotiating the loan.”
Further:
“The fact that the party has to pledge his credit or collateral with a third party in order to obtain the funds which he himself lends to the borrower does not authorize him to charge the commission in addition to the highest legal rate of interest.”
See also: Chagas v. Irvin, 458 S.W.2d 840 (Tex.Civ.App.—Fort Worth 1970, writ ref‘d n. r. e.); Sapphire Homes, Inc. v. Gilbert, 426 S.W.2d 278 (Tex.Civ.App.—Dallas 1968, writ ref‘d n. r. e.).
This rule squarely controls the situation before us. The loan was from Lafferty to appellee, and the fact that Lafferty borrowed the money on his own credit did not authorize him to charge a commission plus maximum interest for doing so. Nor is there any showing that Lafferty performed any other service on behalf of appellee or agreed to perform any certain service for appellee in the future so as to justify a fee for such service. Chagas v. Irvin, supra. The trial court properly considered the $500.00 retained by Lafferty as interest.
In addition to this $500.00, the note provides for 10 per cent interest on the principal of $7,500.00 with the note payable in equal monthly installments. Since the average loan balance would be much less than this principal sum, the note actually provides for interest in excess of 10 per cent per annum. The records show that in addition to the $500.00 discount retained by Lafferty, he was paid additional interest of $335.94 before the note was fully discharged on October 2, 1970. The total sum of $835.94 represents an interest charge in excess of 20 per cent per annum.
Lafferty urges by several points that material fact issues are raised as to whether appellee should be prohibited from recovery by reason of fraudulent representations, concealment or conduct of appellee‘s president, Elliott. Most of these complaints relate to the security given to protect the note. Lafferty urges that appellee violated
We fail to see how these alleged fraudulent misrepresentations could have harmed Lafferty. A Mortgagee‘s Policy of Title Insurance was issued by Commercial Abstract and Title Company guarantying to him that the note of February 26, 1970, executed by appellee was a valid and subsisting lien on the property mortgaged, subject only to the first lien held by Lake Croft Beach Estates, Inc. Furthermore, any misrepresentation or misunderstanding as to who was borrowing the money was fully ratified by Lafferty after receipt of the closing papers. Finally, it is seen that the note was fully discharged by appellee, and the lien securing same released by Lafferty. The amount paid Lafferty in discharge of the note was in full payment of his demand and no evidence is raised of a compromise settlement. The trial court properly granted summary judgment for appellee since the record demonstrated that usurious interest had been charged and received by Lafferty on this note.
Lafferty asserts by two points that the judgment of the trial court is improper in that it permits recovery by appellee of excessive penalties.
A more difficult question is presented by Lafferty‘s contention that Subdivision (2) of this statute does not authorize recovery of double the amount of interest as does Subdivision (1). This subdivision authorizes an additional penalty of forfeiture of all principal as well as interest and all other charges. By use of the phrase “additional penalty,” the Legislature obviously intended that this forfeiture would be in addition to the penalty provided for in Subdivision (1). Since the interest charged was in excess of 20 per cent, the trial court properly permitted recovery for double the amount of interest paid as well as all principal.
The judgment is affirmed.
ON MOTION FOR REHEARING.
Appellant asserts on motion for rehearing that we erred in affirming the judgment of the trial court which provided for forfeiture of the principal sum of the note since the interest charged was in excess of double the amount of interest allowed1 because
This contention was not raised in the trial court or in this Court prior to said motion for rehearing and, therefore, comes too late for consideration. Saldana v. Garcia, 155 Tex. 242, 285 S.W.2d 197 (1956); W. T. Burton Company, Inc. v. Keown Contracting Company, 353 S.W.2d 909 (Tex.Civ.App.—Beaumont 1962, writ ref‘d n. r. e.); Brewster v. Union State Bank, 347 S.W.2d 634 (Tex.Civ.App.—San Antonio 1961, no writ); Harris v. Cleveland, 294 S.W.2d 235 (Tex.Civ.App.—Galveston 1956, writ dism‘d); Aycock v. Travis County, 255 S.W.2d 910 (Tex.Civ.App.—Austin 1953, writ ref‘d). It necessarily follows that we express no opinion regarding the application of
The motion for rehearing is overruled.