140 S.W.2d 936 | Tex. App. | 1940
This is a usury suit. George P. Robertson and wife brought this suit against Connecticut General Life Insurance Company and Dallas Bank & Trust Company to cancel a debt and deed of trust lien on the ground that the contract provided for a usurious rate of interest and that the payments which had been made as interest were sufficient to discharge the principal debt. The Connecticut General Life Insurance Company reconvened and sought judgment for its debt with foreclosure of its lien. The undisputed facts and the material findings of the jury are as follows:
On October 15, 1909, Robertson and.wife executed to A. H. Kahler a note for $3,500, due in five years and secured by a first deed of trust lien on the land in question. The record does not disclose' the rate of interest borne by this note but it is asserted in the brief that it bore 8 per cent per
The jury, in answer to special issues, found that in the preparation of the loan contract of date October 22, 1919, and in the preparation of the loan contract of date September 22, 1924, the Dallas Trast
It may be that the 1914 contract, because of the “squeezing in” of the installment payments on the second lien note, making the whole thereof payable during the first two years of the contract, and the provision for acceleration of maturity in certain contingencies, was usurious under the holding of the Supreme Court in the cases of Shropshire v. Commerce Farm Credit Co., 120 Tex. 400, 30 S.W.2d 282, 39 S.W.2d 11, 84 A.L.R. 1269, and Dallas Trust & Savings Bank v. Brashear, Tex. Civ.App., 39 S.W.2d 148, Id., Tex.Com. App., 65 S.W.2d 288. See also Lincoln National Life Ins. Co. v. Anderson, 124 Tex. 556, 81 S.W.2d 1112, 1113. But if we should hold that contract, or either of the others that were executed prior to 1924, usurious, the debtors would not be entitled to have payments made by them as interest on said prior contracts credited to the principal of the note now held by Connecticut General Life Insurance Company, because all of such payments were made prior to the execution of this last note and none of them were made to the holder of the last note. The record discloses that all payments made on the 1909, 1914 and 1919 contracts were made to the National Life Insurance Company. About the date of the maturity of the 1919 note, the exact date not being definitely established, National Life Insurance Company, who had become the owner of said note and who had collected all interest payments thereon, reassigned said note to Dallas Trust & Savings Bank on November 1, 1924, and the debtors renewed said indebtedness by executing a new note, being the note here sued on, to Dallas Trust & Savings Bank for the full amount of the principal of the old debt, together with the $4,000 new money advanced to the debtors, and shortly thereafter said new note for $7,500 was assigned to Connecticut General Life Insurance Company, the present owner thereof. If we should assume that either of said prior contracts was usurious and that by reason thereof the debtors had the right, if they had so elected, to have had all payments made thereon as interest applied as a credit on the principal, such payments would not necessarily be so applied as a matter of law. In other words, when a debtor makes an interest payment on a usurious debt, he may desire to have the payment credited on the principal, or it may be to his interest to have it treated as an interest payment, so as to authorize him to recover double the amount thereof as a penalty. Consequently, it is now generally held that a debtor has the right to elect as to whether or not payments so made by him shall be applied as credits on the principal or treated as interest payments, so as to enable him to recover under the penalty statute. Vernon’s Ann. Civ. St. art. 5073; 42 Tex.Jur. 950; Adleson v. Dittmar Company, 124 Tex. 564, 80 S.W.2d 939; Temple Trust Co. v. Haney, Tex.Civ.App., 103 S.W.2d 1035; Hamilton v. Bill, Tex. Civ.App., 90 S.W.2d 929; Ingram v.
This leaves for consideration only the question as to whether or not the 1924 loan contract was usurious. Independent of the tax clause, said contract provided for the payment of interest at a rate of less than 10 per cent per annum, the lawful rate. The fact that it provided for acceleration of maturity in certain contingencies and for interest at the rate of 10 per cent per annum after maturity did not render it usurious. Lincoln National Life Ins. Co. v. Anderson, 124 Tex. 556, 80 S.W.2d 294, 81 S.W.2d 1112; Walker v. Temple Trust Co., 124 Tex. 575, 80 S.W.2d 935; Texas Farm Mortgage Co. v. Rowley, Tex.Civ.App., 98 S.W.2d 854, par. 1; Duvall v. Kansas City Life Ins. Co., Tex.Civ. App., 96 S.W.2d 793.
The tax clause above referred, to and contained in each of the loan contracts is as follows:
“The mortgagor hereby covenants with the mortgagee as follows: * * *
“That mortgagor will pay all taxes and assessments and premiums of insurance now due, or which may become due on said premises, or chargeable against said premises, or said bond, or upon the interest in said premises of the Mortgagee, or its successors and assigns, before the same shall become delinquent; or, if at any time, any law, either Federal or State, shall be enacted, imposing or authorizing the imposition of, any tax upon this mortgage, or upon said ‘bond’ or upon the principal or interest money secured by this instrument, by virtue of which the owner, for the time being, of the land above described, shall be authorized to pay any such tax upon said ‘bond’ or Mortgage, or the principal or interest of the debt secured, or upon either of them, and deduct the amount of such tax so paid from the debt hereby secured, or upon the rendering by any court of competent jurisdiction of a decision that the undertaking by the Mortgagor as herein provided to pay any such tax or taxes is illegal and inoperative, then or in any such event, the said principal sum hereby'secured, and all interest thereon to the date of payment thereof, shall, at the option of the holder of said ‘bond’ be and become immediately due and payable, anything in this Mortgage or said ‘bond’ contained to the contrary notwithstanding; provided, this condition of this agreement shall not be construed to incliide any personal tax when imposed against the owner of said ‘bond’ or Mortgage at the residence or domicile of such owner.”
We agree with appellants that under the above quoted provision of the contracts, the debtors were obligated to pay all taxes that might be assessed in this state against the note or bond at any place other than the residence or domicile of the owner thereof. We also agree with appellants that under the law a foreign corporation may establish a tax situs in this state at a place other than its residence or domicile, at which place its notes may be assessed for taxes. Kansas City Life Ins. Co. v. Duvall, 129 Tex. 287, 104 S.W. 2d 11, par. 2; Texas Farm Mortgage Co. v. Rowley, Tex.Civ.App., 98 S.W.2d 854; Hall v. Miller, 102 Tex. 289, 115 S.W. 1168; Duvall v. Kansas City Life Ins. Co., Tex. Civ.App., 96 S.W.2d 793, 797; Great Southern Life Ins. Co. v. City of Austin, 112 Tex. 1, 11, 12, 243 S.W. 778, 781, pars. 12 and 13, and authorities there cited. It was possible therefore for the creditor to have created a situation whereby the debtors could have been required to pay
County
Rate of City Rate
Dallas State Per
Year County Rate Hundred
1924 75 86 $2.43
1925 77 76 2.47
1926 65 70 2.47
1927 67 82 2.46
1928 64 82 2.45
1929 68 88 2.43
•1930 69 92 2.43
1931 74 90 2.43
1932 69 81 2.43
1933 77 79 2.43
1934 77 76 2.43
No taxes were ever assessed against the note in question. Under the above rate, if the notes had been assessed at their full face value, the taxes would have exceeded the equivalent of 3 per cent per an-num and the contract would therefore have been usurious; but it cannot be presumed, .as a matter of law, that the notes would have been so assessed at their full face value. While Revised Statutes, art. 7174, contemplates that all property shall be assessed for taxes “at its true and full value,” as a matter of fact this is not always done. Lively v. Missouri K. & T. Ry. Co., 102 Tex. 545, 120 S.W. 852. In fact, the evidence in this case shows that during some of the years in question, property was assessed in the city of Dallas at much less than its true value, and it has been held that an assessment at less than the full value, when uniformly applied, is valid. City of El Paso v. Howze, Tex. Civ.App., 248 S.W. 99, par. 4, writ refused, and authorities there cited. There was no showing as to the basis of valuation of property for tax purposes in the city and county of Dallas prior to the year 1931. During the years 1931-34, inclusive, the basis for assessment for city purposes in the city of Dallas was 45 per cent of the value of the property. There was no showing as to the basis of assessment for county and state purposes for any of the years in question. Therefore, it was not conclusively established by the evidence that under the prevailing standards of valuation and the prevailing rates fixed by the city, county and state, for the years in question, the taxes which might have been levied against the note by the city and county of Dallas and state of Texas would have equalled or exceeded 3 per cent per annum. We certified to the Supreme Court certain questions of law involved in this case, and that court, in connection with the matter here under consideration, made the following statement; “However, the indebtedness- bore only 7 per cent interest per annum. It certainly cannot be said that on its face it was unlawful. Norris v. Land Mortgage Co., supra [98 Tex. 176, 82 S.W. 500]. In order to show that it contained potentialities which would make it usurious, certainly it was incumbent on debtors to prove facts showing that under its terms the interest rate, by reason of tax levies, would at some time during the contractual life of the bond exceed 10 per cent. Without laying down any definite' rule in this respect, we will say that, in our opinion, the burden would be upon the debtors to prove that under prevailing standards of valuation fixed from year to year, and under prevailing rate or rates fixed from year to year, the taxes which might be levied against the bond, when added to the interest contracted for, would cause the amount exacted to exceed the legal rate of 10 per cent per annum upon the amount of the bond unpaid. If and when this fact be established then the con-' tract is to be regarded as usurious from' beginning; but until such fact be established it cannot be said as a matter of law ■ that the contract was usurious. In this particular it is peculiarly within the province of the Court of Civil Appeals to first determine the status and effect of the facts as proven in the case.” See Robertson v. Connecticut General Life Ins. Co., Tex. Com.App., 137 S.W.2d 760, 765.
The appellants therefore failed to show that the contract was usurious. Since appellants failed to so establish that such contract was usurious, the trial court properly entered judgment for the creditor for the amount of the note with interest and attorney’s fees.
Appellants suggest that, even though we should be correct in holding that the,trial court, in the state of the record, properly entered judgment for appellees, we should reverse and remand the cause for a new trial, because the appellants tried the case under a misapprehension of the law, believing that they had a right to assume that the note, if assessed for taxes at all, would be assessed at its full value, and that in reliance on such belief, they failed to prove the prevailing standards of valuation at which property was assessed for taxes for the county of Dallas and state of Texas during the years in question. They assert' that upon another trial, they will be able to make such proof. The rule seems to be, however, that we are not authorized to reverse and remand an error-less judgment in order that the case may be more fully developed upon another trial. 3 Tex.Jur. 1143; Harris v. Shafer, 86 Tex. 314, 24 S.W. 263; National Life Co. v. McKelvey, 131 Tex. 81, 113 S.W.2d 160.
The judgment of the trial court is affirmed.