*1 Shropshire E. et ux. v. Commerce Farm Credit J. Company et al.
No. 4324. Decided June Rehearing May 16, Decided (30 W., Series, 282.) 2d (39S. Series, 11.) 2d *2 Johnson, appellant. Oxford, & & J. Baird and for M. Oxford Oxford Any stipulates greater interest than ten contract for for rate per per is and void as to the interest. cent annum usurious
Any payable annually for the interest is made contract interest where any stipulates greater per per which for a cent for rate than ten annum year is a usurious and void as to the interest term contract entire contract.
Where a contract for the loan of is for a term paid by any the interest be contracted to the borrower to the lender for year per during term, per one exceeds ten said cent annum the sum money loaned, year interest for said such is under the statute of being usurious for tainted with it vitiates the written contract interest. providing “payable annually”
A note that the interest is a contract pay succeeding year, to merely interest each and is not a “term contract” announcing paid. the rate to be
A notes, contract for interest evidenced set two sets one of each maturing annually annually. contract to
A providing maturing maturity, for the acceleration and the period all years, upon interest notes for full of ten default any interest, provides annual installment of for which face, cancellation of unearned is usurious on its and void toas the interest. usurious,
Where a contract any on its face is amount of col- usury, lected payer constitutes and the is entitled to recover double amount penalty. so collected as a
Constitution, 16, 11, greater art. sec. “All contracts for a rate of per per interest than ten cent annum shall be deemed usurious.” S., parties 4979, R. art. any agree “The may written contract stipulate for, any exceeding per rate of per interеst not ten cent annum on the amount of the contract.” S., R. any whatsoever, art. “All written contracts which
way directly indirectly preceding stipulating violate the article greater per per annum, rate of interest than ten cent shall be void and of no only.” effect for the amount or value the interest
It will be provision observed that the constitutional cited is a above limitation per on the amount of interest that shall be contracted for annum. Had the framers this constitution intended that the interest contracted per through for should not be rate than ten cent term, or life, they stated, of the contract would have so aid but to expressly limit the they Constitution so
very framed the contention per per. legally cent contracted for to ten can be rate of interest that year, yearly. annum, is, year, for ten cent provision passes Legislature in said constitutional And obedience to one S., tracks the Constitution the limitation art. R. parties quoted, contract in writ- year, article as above authorized said exceeding any ten annum on the ing rate of interest Legislature does not will observed that amount of the contract. It parties may say during contract in of said contract or that the the life figured writing exceeding of interest not when rate contract, they of interest that can but limit rate the entire year by inserting after nam- charged the words annum one Bulett, Kan., charged. ing the that can be Ramsdell v. rate Association, Pac., Interstate Loan Mathes v. $4,200
Appellants for the loan of to them submit that the contract *3 Company, as by appellee, when construed Commerce Farm Credit coupons $4,200 whole, is, original the ten in bond for said with that the each, attached, together five notes for sum of each the $252 $252 - bond, two, three, years payable one, and from the date of the four .five indеbtedness, given payment said to secure the of two trust deeds and the.papers show, and as a on their face so whole is a usurious appelee, Commerce Farm Credit knew further that the said and transaction the same the time it entered into the that at usurious purpose company said entered into the same with the contract and that collecting interest. As an evidence of intention of usurious and this. fact? provided trust deed as it was in the follows: provided payment in said That the rate of interest if of tlause, bond(s) in this shall be and the and assessments referred to taxes requiring jurisdiction thereof, finally having as court, construed annum; per per payment cent said of interest excess of ten on bonds in such shall excess over the above ten cent the holder of bonds such court, having annum; provided further, however, final that if such per annum shall declare such excess ten is. jurisdiction, of any event, non-usuriоus, then, ten cent and arid in that both such thereof, by assignments in this the taxes or mentioned excess reason of clause, paid by grantors shall be herein. quoted
Appellants language above in submit that insertion of part appellee, Commerce the deed of trust is an admission of on Company, contracting for interest in excess of Farm Credit that it was per cent, willing least to contract for interest ten or at that was . competent jurisdiction usurious» likely to be bé court of would held provides: therefore, shall if default Said deed of further. trust “Now upon-said payment of interest be made in the or installment of unpaid due, any remain any of sum shall bonds of them when and said
'403 bonds, option legal holder of said the same with —then charges hereby, secured shall interest and all other indebtedness and with- payable, application and on the said out notice become due and hereby them, em- or holders or the said trustеe is holder powered possession property said sell in to take same said County public proceeds F., of Hale at auction.” S. “The said applied sale shall be To of the indebt- follows —Second: hereby.” F., edness secured thereby? bond, $4,200
What indebtedness is secured and the coupons provision each, appears and the the second same in $252 thereby (cid:127)deed of trust and the indebtedness secured for five notes of $252 provision respective appear each. This in the deeds of trust n statement of facts authorize the holder bonds of said and notes or either note, coupon them default of the interest or interest coupons, being to mature all of the interest ten in number of each $252 ,and notes, being each, all to mature of the interest five number of $252 to sell the land this unearned and usurious make .and ques- title thereto. That the contract on its face usurious cannot be appellants, course, law, appellees but of under the .tione might provisions not' quoted have availed themselves last payment, trust deed in an effort right to enforce had to waive provisions they these evidencing but are referred to herein as intention part appellees charge on the and receive usurious interest at time the contract was entered into. appellees charge
But did and did receive usurious interest on August .$4,200 1, 1921, August 1, 1922, August from from August 1, 1923, having charged 1922 to and received for each of $504 $4,200, which is twelve original said .said *4 years. 195; loan for each Hall, W., of said Shear 235 v. S. al., W., Cain v. Bonner et 149 S. 704. Martin, Terrell, & Black, Williams F. Chas. L. Williams and A.
Davis, Hall, appellees. McMillan & for equity A bill in cannot be for maintained cancellation of usurious notes secured tendering deed of trust without the return of the loan. Bank, So., 469; Long Turner v. Co., 305; 28 W., v. Green 158 S. Pat 928; Wyman, W., Bank, v. 490; terson 170 N. Liles v. S. E., 107 Mon Palmer, 181; Atl., crief Short, W., v. 114 Carden 31 v. S. 246. susceptible A constructions, declaring two one it bad and declaring good, will, оne possible, it if receive the latter 27 construction. L., 207; p. Tiffany Bank, R. C. Ed., v. 21 L. usury, To accomplish constitute purpose. there must be an intent 208; L., p. 167; 7 R. C. Co., W., Swanson Realization v. 73 N. 2 Wyman, 929; W., Patterson v. Co., 170 N. Norris v. Belden 98 . 2 Texas, 18 404 years, ten is loan of for
Where contract made long parties annually, contract, and payable is a term so as the comply than the it cannot be made effective less thereto therewith term.. years, money made a term of a contract for loan
Where does exceed ten of interest thereon for the term and the rate per annum, usurious, regardless the fact that for is not loan years paid per cent for such of the term the interest exceeds ten some years. part years, ten the interest evi
Where loan is made for and loan, period payable *5 * * * period. prin- year during the first five loan cipal coupons a first note and six secured cent interest were County.” lien deed of trust on land in Hale coupons $4,200 and the dеed By note and the the terms of the stipulated and interest same, that both the securing it was trust maturity, whether matured from interest “after should bear note default, annum.” Both the rate of ten lapse of time or payment provided default made in the that if was and deed of trust note option due, at the of the then installment of when and all other indebtedness note, “the same with interest holders notice, pay- hereby shall, due and without become charges secured and empowered and sell the trustee to advertise able”, and the deed of trust purchaser. conveyance to the make thereof the land and separate secured a second lien notes for each were The five $252 pro- county, containing following land in Hale of trust on the deed trust, however, conveyance to secure the “This is in vision: aggregating promissory the sum of grantor’s notes of even date herewith payable speсified provided, and to the order $1,260 and due as therein * * * Company. If Farm the notes secured the Commerce Credit paid promptly, due, hereby are when or in case of and each of them terms, agreements covenants, in said first deed the breach of hereby trust, *6 promised discharge every annual installment of interest at should debtor plain dispute contract, that this on the maturity, it is too or before creditor, writings, at its on failure of the entitles the face interest, col- discharge installments of to enforce certain annual debtor to $4,200 amounting more than the debtor of a sum lection from the loan the rate of ten for the term of the interest thereon loaned with writings stipulations annum. This results from failure, election, term the whereby creditor’s shortens the such at the obligation. the debtor’s and increases the amount of loan proceeds misleading argument in error on the The for defendants right $4,200 term hypothеsis had the to retain that the borrower years. Thus, argued: “In borrower was entitled it is this case the of ten merely year years, years, money and not for one or five use the for ten paid, agreed be not for the use of the was to and the he separately, year considered but money each of the ten for one But, contract, during by term of the loan”. its use the whole clauses, deprives right the borrower of the means of the acceleration money beyond discharging annual an the date of default in retain longer so elects. A borrower is no installment of if the creditor obligated longer it, money after he is to no withhold entitled to use through mortgaged Compel sale of his his creditor can collection after property. way upheld by applying doctrine only contract can is sup- error, announced most text
invoked defendants writers ported by authority, as follows: abundant which Mr. Williston formulatеs provision pecuniary obligation default of the debtor
“The including payment indebtedness of either or interest the entire legal terms, sum interest to the for the full immediately payable, default, thereupon is not shall become time generally usurious, recovery legal though excess over interest is penal. Similarly, provision the maker that on default disallowed as higher obligation bear a rate of interest than the an shall thereafter excessive, rate, objectionable penal though it if the rate is principle applicable thus to these cases has been stated: not usurious. can the terms the contract avoid the ‘Wherever the debtor date, larger by smaller at an earlier sum larger additional, sum and the becomes a is not usurious but 1696; Usury, Contracts, penalty.’” sec. Webb on mere 3 Williston 545; Ch., Lloyd 134; Eng. 119, p. Long Storie, Hare, v. sec. Va., 681, Cornett, Scott, Pet., 226, Ed., 7 L. Ward E., 494, A., 550. 49 L. R. n escaped quite followed, criti- doctrine, generally has riot This while theory should be the contract said of the cism. Mr. Sutherland - power prevent had it his increase upheld because debtor within payments: by promptly discharging his installment his- debt reasoning possibility that for want of “This overlooks the relief; very inabil avail himself of this this is the will be unable to debtor consequences, humane ity, distressing deemed its from which *7 * * * usury politic by against shield him. If the statutes to oppressive power over to extort terms at creditor’s the necessities period lending deserving legal check, why to the limit that restriction of period High credit? to commence at the end of that of rates of interest applied before, likely likely oppressive as more to- are as to be when Damages Ed.), 318, pp. (th 1 be assented to.” sec. 997- Sutherland on expression Appeals, opinion an in Court of Civil There is of the Seymour Opera Thurston, 18 in the House Texas case of W., 815-817, App., 417, 45 to the that аn acceleration Civ. S. effect though it in not a contract usurious “result clause does render would requiring money than pay maker of the the rate to more for use by that “the holder permit”, fixed and limited law for the reason would subsequent responsible” ought “the default of the note not to be held case. of the A of error refused in that maker.” writ previously Dugan Lewis, Supreme in had stated 79 Court A., 93, Rep., Texas, 249-254, W., 1024-1026, St. R. 23 Am. S. L. agreed judge a. court conclusion of the that that with the trial money sum of in a deed of trust the effect that whole thereby might payable, the lender’s- secured at once due and at be declared coupons, pay con “is to be on failure to note or its interest except penalty upon canceling strued as the- which will not be enforced contract usurious.” unearned interest notes and that does not make the it upon pressed great that argument earnestness the court with by Mr. in casеs made rule formulated the decisions these two have length property in time that a rule of Texas such a Williston departed properly cannot now from. possibility Dugan v. in the involved in
There is no contract that the whole sum Lewis. deed of trust contained a clause While might by be declared at the lien deed trust secured of the option note, due, lender, yet the deed of once at provided secured, specifically failure to trust the debtor’s “making to result note installment interest was option The court com- holder”. note become due at pletely disposed a correct held: do not think of the case when it “We interest due- amount of construction of the will make principal calculated- upon on the shall have accrued collectible it than note; or in up in the other rate named the date of collection meaning words, proper interest comes unaсcrued within stipulation.” Texas, 254, 1024-1026, A., 93, L. R. Rep., Having correctly 23 Am. St. so construed the words of the writings court, wholly unnecessary before the it was for the court declare what would have been the writings containing effect of having signification. greater weight words a different given No should be language by opinion to the relied on defendants error from the Dugan any expression given opinion v. Lewis than should great judges upon composing any question then necessary the court purpose be decided. It would subserve no useful to discuss the effect given which should be to this refusal court’s of a writ of error in the Seymour Opera plain House argu- case for the reason that it is too application ment that no action this court on mere writ error subsequent express question can ever override a decision of the same in an Supreme Court. year Within a from the date of refusal Court of Seymour Opera case, writ of error in the Lubbock, House Parks v. W., 464, was determined Appeals, Galveston Court of Civil opinion by an the eminent Williams. The record now in this Justice *8 court shows that the case v. of Parks Lubbock was tried on a written agreement containing following stipulation: of counsel the agreed “It is in this case that the sum of was the consideration and true $693.12 money amount of Mortgage advanced the Co. Trust Jarvis-Conklin Henry 1, 1889, to Fields November and for which note of that date given by Henry Mary company of was Fields and Fields $825 to said By note, and which is in promised now sued on- this case”. the its makers pay twenty-five “eight dollars, money to hundred and lawful of the cent, States, per per United with interest thereon at the rate annum, of six payable semi-annually days May on the first of and November in each year, according to the tenor and effect of the interest notes even of date herewith and hereto attached. This note is to draw interest from date per principal the rate of twelve annum if either or interest unpaid days option legal holder, remain ten after due. At of the unpaid after of said remain days, interest notes due and the whole principal immediately and pay- interest be declared due and question squarely presented able”. The for decision in Parks v. Lubbock increasing payable was whether the clause the amount on conditions of pay default the debtor to lawful interest installments rendered the above Appeals recited note usurious. The Galveston Court of Civil in decreeing the note free of declared:
“If 12 cent interest for five is calculated on the amount by Fields, received the sum such amount interest will exceednthe sum principal coupons. proves of the note and the This there is cent, agreement pay no absolute than more 12 which rate was however, stipu note, allowable at the time this contract made. The was
409 cent, upon payment in lates case of default $825 the contract. This or interest in accordance with power comply by paying in the his contract less- left debtor’s upon obligation sum it. The received lawful stipula only additional could from his Such amount arise default. universally penalty imposing as tions are almost construed to enforce Association, prompt payment being only, as not v. usurious. Crider 1047; Texas, Dugan Lewis, 35 S. A., W., 1024, Rep., Eng. 12 L. Am. St. R. Am. & Law, p. 994, Lubbock, Enc. and cases cited.” Parks v.
466-467. Supreme granted Court of error in Parks v. writ Lubbock judgment Appeals
reversed the judg- Court of Civil and rendered decreeing Explicitly recognizing ment to be note usurious. authorities which were in line with rule at common law “seem be practically upholding legality stipulation” unanimous of such as note, that contained in this Court decided that Texas changed statutory had quoting statute the common law rule. After compensation definition “the allowed law fixed parties to a contract use of forbearance detention money”, Gaines, parti- court in the of Chief who had Justice cipated Dugan Seymour Opera v. Lewis and House Thurston, money declared that “the detention arises in a case when a debt has become due and debtor withholds its a new without giving right contract follows, therefore, him a to do It so. that what penalty would have been deemed under rule is common law statute; made upon interest under agreed our and if the rate for the cent, maturity detention after exceed the debt * * * per annum the usurious and void as to interest. con- purpose clusion adding to be resisted that there was a the words accepted purpose detention definition of and that *9 to meet the case beyond the debtor detain where should the owed stipulated period forbearance, the provide promise of and so to that a рay an additional interest, sum for such detention should be deemed merely damages by way penalty prompt performance of to secure a Texas, 637, 638, the contract.” W., 92 322-333. principle controlling question usury the decision in again Parks v. Lubbock was announced in Investment Grymes, Texas, 613-615, W., 94 860-861, W., 778, 63 S. S. 64 where question present parties the said: court “The is this: Did the embrace principal in 120 the notes for use of debt a sum the original produce debt would at 10 annum the time payor money?” Holding of the note had the use of the the 120 notes usurious, Grymes the court case differentiated the case from the Crider ' 597, 1047, as one before Texas, follows: “In the now
in 89 charge imposes upon payor a the manner of court case, money. By in the contract the other he more time than he had So, only vice in the contract now paid for the time it was used”. impose is clauses on the debtors under consideration that the aсceleration charge, of the maximum a enforceable at the creditor’s excess permitted cor Gaines dissented not on the in this state. Chief Justice major respect principle but to the construction rectness ity regards application payments. opinion Grymes’ contract beyond statu- stating the most that a rate
After rule under authorities regarded tory paid only maturity to be a to be limits on loan after penalty, aas Mr. Sutherland adds in a footnote: compensation defining “A law statute interest as ‘the allowed or parties or fixed contract for the use forbearance detention a or Lubbock, money’ changes rule”, citing Parks p. (4th Ed.) Damages Sutherland on Ruling Law, 33, p. it is in 27 Case sec. 232: Likewise stated agreed of interest not forbidden “Where borrower has rate stipulated by law, that, making but his not has in the event of interest, specified, higher obligation time shall bear a rate speсific execution, either its or that some from default or from the date of for, paid in sum shall be addition to the and interest contracted regarded penalty generally the increased is as a and not rate within * * * compensa- defining laws. under a interest as But statute parties use tion allowed law fixed a contract for the money, deemed forbearance or would have been detention penalty at common is made and a law maturity legal is after at a in excess of' rate usurious.” rate Page, giving general treating clauses Mr. after rule acceleration having provide penalties for like those before us as other effect than to non-payment, adds: maturity,
“Under for a rate of interest after some statutes exceeding legal rate, usury. is reached in Texas under is This result statutory as a sum allowed for the detention definition of interest money. statutes interest after In former allowed some states which under passed maturity legal rate, have since been excess of the statutes Page specifically forbidding making them usurious.” such contracts and Contracts, section 465. made governs our decision1is A clear statement of the law which Ruling Law, pages in these words: Case at section usury, an excess of “To constitute of course essential that n the loan or forbearance. maximum exacted in consideration of' prescribed by Though By statute. an maximum this meant excess requisite excess authority contrary, seem that an there is to the it does not *10 contrary any a is usurious payable On the when' be event. any by get law- contingency lender more than the there is which the apparent duty it is that it becomes the ful so rate whether necessary, declare, or it is a case in which it is of the court to so whether considered, jury Usury, the does not the should find facts. it question gets depend actually the whether the lender more than not; purpose legal his there a rate interest or but on was whether money, whether, legal mind to make more than interest for the use of transaction, by loan, he the terms and the means used to effect the may, get legal its than the rate.” enabled to more enforcement Supreme vigorously The of Florida soundness of Court assaield the prevailing rule, American and held usurious because it provided permitted by than rate statute for “forbearance maturity. debt”, enforce the collection Maxwell debt’s after Improvement 468, Company, Fla., 425, Loan and Jacksonville So., 267, 268. 255, Brown, Tenn., 249,
In Richardson v. 9 Baxt. Supreme questions Court of Tennessee asked answered as follows:
“What can it difference make in the essence transaction agreed paid period the excessive rate shall be rather one than equally compensation another? Is it not demanded the lender is, money? certainly. creditor for the use his We think it most might party pay- fact that himself relieve from this day agreed ment bill upon due, only prevents at the falling for its being him; other against contracts from enforced if he but cause pay, failed to then the interest contracted the rate becomes due paid agreement, virtue of the as interest for the continued use money, requirements contrary and is to the of the law.” of North Court Carolina refuted the contention that pronounced contract cannot be until been usurious excessive interest had collected, when it said: question question usury depend upon
“But the does not whether actually gets legal lender more than rate interest or If not. so it could were never be determined whether was there paid until locking was back. This stable would be depends after upon the horse was stolen. But there whether purpose legal in the mind оf lender make more than money, whether, by use of terms of transaction and may by means used effect loan he its enforcement be enabled get so, more rate. If Miller the transaction is usurious.” Co., E., 484-487, C., 618, Life Insurance 118 N. Am. Rep., St. suggested Dugan
Within about three after v: the doctrine Seymour Opera definitely rejected Lewis House v. had Thurston been *11 412 Lubbock, Supreme
by in in of Parks v. Court its decision the case in statutory of interest re-enacted article 3097 of definition continued in the Revised Revised Statutes of 1895. This definition was respectively. 1925, in articles 4973 and 5069 Statutes of and of 1911 previously Legislature to have the effect must have intended the statute So, by wording unchanged. Supreme leaving its declared in Court property, follow, disturbing fixed follows the rule instead rule we thirty times declared in Texas over and three law established respect usury public policy in revisions of as the of the state 944; Texas, 239, W., Cargill West, v. 77 S. statutes. Pearson v. 97 A., Texas, 1015, W., 13, R. Kountze, 400, W., L. 86 S. 24 22 S. 25 contrary Commission, proper holding we deem it In view of highest say though to deduct in advance the that it logically principal part term of a loan for rate of interest on the borrowed, principal is or interest on the entire to collect which semi-annually, highest quarterly at monthly or rate yet year’s expiration, year, other less advance of the intervals in practices Texas, by as elsewhere these have been validated the decisions adjudge States, long them to be the United too for this court to now 560; Texas, Exchange Bank, Martin v. Miner Paris 53 usurious. v. 1035; 167, W., Bank, App., Webb Mortgage Land Civ. S. 5 Texas 23 19; Building (Texas App.), Geisberg v. v. Mutual Pahde Civ. S. par. W., 478, syllabus, (Texas App.), 4 of and Loan Assn. Civ. Complete February 1901, Writs wherein writ of error was refused 27; Grymes, Texas, Table, page of Error Investment 778; (Texas W., 860, Com. S. Vela v. S. Shacklett 1008; Tyler Usury, Loans, App.), (2d) 1007, 12 W. on Pawns & S. 227; Contracts, pp. 155, 156; 326, pp. 225, L., Page on 27 R. C. sec. sec. 471. supersede delivered the Commis-
This will that herеtofore Having judgment entered the Commis- sion. vacated the heretofore judg- recommendation, rehearing sion’s is overruled and motion for reversing judgments ment will be entered of the district court Appeals plaintiffs adjudging in error recover of Court of Civil Company, error, Farm the sum of defendant Commerce Credit $2,030.60 of six with interest from date at rate annum.
ON MOTION FOR REHEARING. adjudged Court Near end of the term was last and statutes of Texas contract was usurious under the Constitution per annum, provided compensation which in excess of ten money. Shrop- detention of collectible at creditor’s for the (2d) Texas, Co., 400, 30 W. Commerce shire v. Farm Credit (2d) Deming Giddens, 30 W. Co. Investment vigorously judgment been The correctness of the court’s has assailed supported arguments by rehearing in motions for elaborate numerous parties. losing amici curiae as counsel for Most careful well rehearing re-consideration convinces the court that the motions for should respects in all be overruled. distinguished
The two cases cannot be in so far as material are facts again only Shropshire shall therefore concerned write case. we principal grounds rehearing sought are: *12 language writing evidencing First: The the of the contract between parties fairly susceptible being the of a construction under which con- upheld valid, duty give tract can be it is the of the court to that con- contract, departs to struction and failure to do so from the sound Dugan Lewis, rule in of construction which followed v. 79 Texas 246, 1024, A., 14 S. L. R. though language writings Even
Second: of the forbade other interpretation give option than that same undertook to the creditor to compel principal the debtor to together of loan an with in of amount excess ten cent annum for the term the debtor was money, usurious; entitled to the still the loan was not because thе debtor power had it principal his within to avoid of more than the legal by promptly every meeting promised payment. interest Though adjudged
Third: usurious, the contract be the creditor had collected, not received or paid, any debtor had not usurious interest nor per annum, rate of hence penalty creditor never became for a liable of double the amount of such interest. briefly compel
We will state the reasons us to which refuse to sustain grounds each rehearing, deeming of these in the motion for it neces- sary greatly to extend the heretofore filed. recognizes duty validity
The court determining its of the con- apply accepted tract here universally involved to rule declared 860, Texas, 613, Investment Co. Grymes, 614, 861, W., 778, following in the words: question “To determine the of in a contract it must be tried statutory use, limitation of 10 annum for the forbearance year; detention of the for one if сontracted rate, usury, exceeds that it constitutes no matter in what form the contract expressed. give contract, The court must to if the terms of the fairly susceptible it, legal, of that make construction will it but it has right depart expressed to from the terms in which it is make * * * parties what the have made unlawful.
“If the parties transaction was such as to render the intention of the doubtful, adopt the court would that construction attribute which would a legal intention, adopt any them but we can not method for solu- question by of this must arrive at a result from
tion we different contract, impossible shown because to conceive of the that parties' having an intention use certain forms contract that would they produce a result from that which embodied in the contract- different actually made.” parties language
:If these contained no other than between that'if default was made installment interest the of the nоte “with interest” should be collectible the creditor’s susceptible meaning language fairly then such would be of the Dugan Lewis, So, unearned interest was to abated. 249-254, W., 1024, R., language deed 93, 12 L. A. trust, explicit coupled note, made the contract words of the sus- ceptible interpretation unearned not collectible. interest was parties negative positive language But here have clear and used any portion the abatement of interest secured unearned scond lien deed of trust. second lien deed of trust secured five each, august 1, 1921, interest notes of when the loan was dated $252 made, August 1, August 1, maturing respectively August 1, 1922, 1923, 1, language August August this deed 1926. The authorizing trust, adjudge fairly susceptible asked which we are representing abatement some the second lien notes unearned *13 stipulates: paid promptly hereby “If the notes and each of them are not secured * * * hereby due secured shall becomе due-
when then all of said notes trustee, payable holder; and his successor and at the election of the the prescribed substitute, may premises in first sell said after notice therefor, trust, good of deed execute and sufficient deed deliver proceeds sale, applied be as follows: First: and receive the of which shall expense sale, including compensation making to the trus- To the of such thereby; tee; payment Third: To To the amount secured Second: the of any delinquent interest, taxes, attorney’s fees other sum of balance, any, trust, if and the due under the terms of said first deed of paid assigns.” grantors, to the his or their heirs or shall plainer English the holder language could declare that what no receive, option, if installment interest note of the notes was to at his maturity, paid by at was secured lien of trust was not second deed least: at by unpaid lien deed of trust First: secured the second *14 hence, being a of that con- construction harshness—not the inevitable struction af stipulation indulged. the actual to be Had the —:was
stipulation upon maturity, it made clear that an acceleration of the whole interest be to collectible without reference to it had was whether earned, question been a different would have been before the court.” In question our this latter is this the one we have determined in stipulation For, upon case. we a have clear matur- that acceleration of the ity, by despite trust, all of the interest secured lien the second deed of payable. unearned, fact that much it be shall due and The stipulation attempts plainly present give right a the creditor of action interest, judicial or -under enforceable trustee’s sale fore-
for all this Spencer, App., 124, W., 285, v. 177 Mo. 163 S. 286. closure. Swanson expressly The authorized the enactment of our statute Constitution usury. defining providing penalties for Section article interest and adopted August 11, The 1891. Constitution of 1876 and amendment question Appeals Supreme precise Civil and the on which the Court of stipulation Parks Lubbock a in a writ Court differed in v. was whether requiring payment be an amount in excess of what would ten contract provided highest interest, rate of for the continued conventional stattues, stipulation was, maturity our a detention of under after penalty provision a for interest. The Court for was unlawful rehearing, Appeals adopted strenuously urged on view, still Civil merely imposing penalty stipulation regarded as that must prompt obligation pay payment: enforce because the debtor’s W., contingent 50 S. amount was on his own default. unlawful adopted consistently since adhered to the Court and has contrary view, necessitating regarding language as statute maturity pay, obligated after conclusion whatеver debtor was principal, nothing borrowed obligation, of his in addition for save discharging money, contingency debt and no other than his default in his paid due, when the debt and if was to the detention of highest yielded rate. Parks excess of the amount to be conventional W., 322, 323; Lubbock, Texas, 637, 638, 51 Investment Com v. S. pany Texas, 613-615, W., 860, Grymes, App.), It (Texas Co. v. Com. follows Shear Hall 195-198. Shropshire interpretation imposing under contract as our compensa liability, at creditor’s the debtors enforceable permissible tion excess of the maximum for the detention of money, borrowed such contract was usurious. validity payment the fact that contract derives no from
promised compensation, highest conventional which exceeded the allowable interest, contingent election to demand such exces- creditor’s stipulates compensation. more inter- sive The fact that involving contingency risk est than the law allows on a you contract. treat the accelera- and lawful interest condemns the Once permissible obligating tion debtors to conven- clause more invalidity interest, stipulating penalty, tional instead of New contract is inevitable. This results the rule declared from Appeals York as follows: Court in words interest, provide “If the contract for the of the loan with events, enough all if in addition to the it to render it usurious provide upon a excessive interest contin- for the gency. beyond legal advantage inter- A even for a chance Y., illegal.” DeLauny, 4 est is N. Leavitt *15 English supporting may Among and American decisions this conclusion 45; Young, Vesey, Wright, & White v. 3 Barn. be cited: Barnard 361; Cress., 276; Nicholas, Leigh (Va.) 357, Cleveland Smith v. Draper, Paige (N. Y.) Vredenburgh, Loder & Browne v. Y., N. rehearing though the
The final contention of the motion for is that per per usury, yet greater contract exacts interest than ten cent annum paid by has been the debtors or received the creditor. The contention premise pre- years. on the rests that the term of the loan was ten. operation mise falls under the contract that pay any debtor’s failure to of certain interest installments should entitle principal usury. the creditor to collect the sum loaned with The neces- sary adjudge result of the successful maintenance of this suit the con- non-payment By stipula- tract usurious was future interest. contract, loan, tions of the term the at the creditor’s does beyond discharging any not extend date of default installment of term, interest. For the reduced which must be looked to in deter- now mining question promised paid, much of how interest was the debt- promised actually paid ors greater per interest at a rate than ten cent per stipulations contract, annum. Under the the creditor was enti- money paid tled to retain as interest for two at the rate of twelve per рer stipulations, cent annum. Under those the creditor was further entitled to the sum loaned and additional at a interest rate per per circumstances, excess of twelve cent annum. such Under surely actually paid creditor has greater collected and the debtor has inter- per per annum, est than ten cent and the creditor became for the liable statutory penalty, judgment for which was entered in this court. Appeals
The Galveston Court Civil decided that double collected under a contract tainted with was collectible under article 3106 of the Revised Statutes of and the Court Building Savings denied writ of error. American & Asso- v. Daugherty, App., 430, W., 131, ciation 27 Texas Civ. greater conclusion in this case rate of actually paid by cent annum was the debtors and received the cred- unnecessary changes itors renders it for us to determine whether subse- quently require wording made in the of the statute a different decision from that of the court at Galveston. provide appropriate
In obedience to the behest of the Constitution to penalties prevent greater contracts for a rate of interest than ten per annum, Legislature has declared that all written contracts may any way, whatsoever directly indirectly, provide greater rate of interest than ten usurious and annum shall be void, person paying and that the such “receive rate of interest corporation double the person, amount such interest from the firm or *16 Constitution; receiving Article section articles same.” statutory provisions, R. Under these constitutional of a illegality takes the form is the same whether the contract for stipulation stipulation interest, becoming usurious interest for lawful original in that through term of the loan and increase reduction debtor, other the creditor’s or no be exacted default; cоntingency the contract is in the debtor’s or whether annum for interest in excess of form specific provide usury. term. Both contracts judgment the Constitution Since entered herein enforces statutes, rehearing the motion for must be and is overruled. sitting.
Associate Pearson not Justice Bag Burlap Ewing Boyd, Southern & Judge.
District May 16, No. 5921. Decided (38 W., Series, 565.) 2d Crooker, Freeman, John H. Fulbright, B. & W. Bates Crooker relator. notes less than the term the denced loan, payable annually being term the balance the interest for the authorizing results from deed trust notes, holder, foreclose in the declare all due and on default them, particularly no exer securing more is this true when lien option Co., Realization has made. cise to mature been Swanson v. 165; 869; Co., E., W., Mortgage Winne, Metz N. v. 33 S. v. 73 Green 223; 213; Hart, W., S. Loan Co. Pac., Eldred v. 113 Cissna v. 79 792; Gawley, Pac., Gawley, Cases 151 Co. v. 1907 Anno. Cissna Loan 197; 722; Co., Pacific, D, p. v. Trust 165 Clement v. Garland Union 13; 247; Co., W., Johnson, Pac., v. Loan Investment 201 Green 1037; 183; Pаc., Pac., Roberts, Lyons, v. Investment 218 Co. 218 Co. v. 246; 237; Lewis, Assn., Dugan W., v. Shear S. 79 Crider v. 1005; Bank, W., Sey Hall, W., S. Co. v. S. Federal Thurston, Opera mour House curiae, following: Templeton, Briefs, as amici were filed Brooks, Streetman, Logue Brown, Andrews, Mobley, Napier Sam- & & Pollard, uels, Foster, McGee, Turney, Burgess, & & Culwell Brown Tarver, Elliott, Smith, Wozencraft, Byron A. W. R. G. W. K. Frank Phillips Phillips. Maco Stewart & opinion court. GREENWOOD delivered the Mr. Justice Appeals, appears Civil As from of the Court of following pleadings and evidence facts: disclosed $4,200 plaintiffs wife) (Shropshire sum of “The borrowed the Company, defendants, Farm from one Commerce Credit $4,200, bond) company (or for the sum of executed their note the said ** *” payable To secure after date. $252, plaintiffs coupons, each sum of “the executed for the 10 interest represented which, seen, loan payable annually, interest on the it will equal pay- per cent; ‘squeezed five the additional into ” payable ments,’ “by separate notes, each $252, each one secured
Notes
notes secured shall become then all of said due holder; trustee, successor, payable, his at the election of the prescribed premises, said after notice as in first deed of substitute sell trust, good and execute and deliver and sufficient deed therefor and proceeds of sale.” receive the Shropshire paid $1,015 discharge installments and wife two maturing each first on the note secured the second lien deed for $252 coupons discharge $4,200 and in the first of trust two note. Afterwards, Shropshire and wife instituted this suit to have the loan paid by adjudged to recover the amount them as usurious and double interest. Shropshire judgment The district court rendered take wife Appeals nothing by their suit. The Court of Civil at Amarillo affirmed Supreme error, Court, judgment. 266 S. 612. On writ Appeals opinion by an Section A of the Commission of to the effect judgments usurious, that the loan reversed the of the district court Appeals, Shropshire and Court of Civil awarded and wife double the they paid amount had interest on loan. On rehearing, case from the motion for was withdrawn Commission of Appeals argued and was before the Court. ques- appears single that the From the above statement of the case it is usurious under tion for our determination is whether provides Constitution and statutes in of a annum, higher at the creditor’s rate of interest than discharging on no other condition than the default of debtor Regardless interest. of results in annual installments of the event
All of the notes unpaid all; portion and, merely Second: The not less than thereof per coupons at annum- portion at the earned interest of the least 6% trust; unpaid portion and, Third: the first lien deed of secured principal $4,200. of of the maturing Shropshire paid first lien notes and second wife plain Giving and' August 1, to the August 1922, effect 1, unambiguous language trust, second lien deed on their default pay August 1, they to the second lien interest installment were due loan, longer if entitled to withhold the Credit demanded payment, obligated pay immediately $4,200 but to the loan were for' principal August 1, 1921, August 1, only from to not sum of $4,200, per August 1, 1921, with at annum from 12% August 1, 1923, company which the contract undertook to authorize retain, $1,008, being aggregate but also an additional amount of plus unpaid each, three second lien notes at least the $252 $252, equalling per third first lien note of such amount cent interest year Simply stated, the third loan. the contract have we certainly grant declared usurious is one which undertakes to the creditor option, contingent default, an alone on the debtor’s to collect interest at per the rate of cent annum for first and second of a loan, and at rate year, of 24 annum for the third year, the final at the creditor’s election. adopt interpretation The rule given the court will parties meaning applied to terms of a doubtful cannot For, meaning this case. as stated Mr. Williston: “If con- plain, parties prove tract is contrary the acts cannot a construction plain meaning.” Contracts, p. 2 Williston sec. Our conclusion is that the words of this contract are so clear that parties meaning upon must have understood them as the debtor’s default note, a second lien installment the debtor towas become liable, at the creditor’s for the loan, compensation detention thereof a rate far in excess of annum. Abatement of unearned interest embodied in only sanctioned, the second lien notes is not but is forbidden terms of the contract. Speaking Dugan Lewis, supra, argument Judge Nelson Phillips word, rehearing behalf of the motion for stated: “In necessarily view plainly of the court was that such a did not purpose exact, maturity, evidence a on the acceleration of the the whole regardless not; amount of the interest of whether it had-been earned or