*1 court this case disposition of disapproval approval nor indicates neither TANNER DEVELOPMENT COMPANY language contained al., Petitioners, et suggests appeals court of civil are not renewal commissions these Cearley v. Cear community property. See al., Robert B. FERGUSON et (Tex.1976). ley, Respondents.
No. B-6366. Supreme Court of Texas. 19, 1977. Oct. Rehearing Denied Dec. 1977. Executrix, GEE, Independent Ruth
Petitioner, READ, Jr., Independent P.
Thomas
Executor, Respondent.
No. B-6866.
Supreme Court of Texas.
Sept. 1977. Andress, Dallas, Jr., Richard
William S. Gainesville,
Stark, petitioner. Nobles, Decatur, A. Wayne
William A.
Melton, Dallas, respondent.
PER CURIAM. for writ of error is denied application notation, Reversible “Refused. No
with the interpret- not be
Error.” Our action should the conclusion of the Court approving
ed com- the trial court
of Civil may be error which
mitted fundamental assignment. 551 S.W.2d
reviewed without The discussion of fundamental necessary was not material or
error case.
disposition of this *2 Elkins, Searls, Smith,
Vinson, Connally & Harvin, Stallings and David T. Paul E. Houston, petitioners. for Beale, Houston, Burns, David F. & Sears respondents. 77Q DANIEL, The note in ad- Justice. interest, vance of the first seeking to recover statu- This is a suit $21,506.93. alleged to be thereaft- on a contract amounted to Interest tory penalties Robert B. Respondents, paid quarterly er was to be advance on Ltd., partnership, Twelve January, April, July the 20th day Ferguson, referred to as hereinafter October, year beginning of each calendar *3 Development brought against suit Tanner 20, 1974, January continuing July and until venture, joint asserting Company, Payments principal were de- 1977. by Ferguson to Tan- given note promissory period. this Thereafter no ferred convey- for the partial consideration ner pre- until after all paid interest was to be County in Harris ance ten acres of land of paid interest was credited to note. sought recovery of Ferguson was attorney’s fees usury penalties, interest and $2,800 Principal payments of were to be $290,000, an prayed and for in excess of October, paid day January, on the 20th a trustee’s sale of the injunction prohibiting April July, year begin- and of each calendar a counterclaim in Tanner filed property. 20, 1977, ning continuing on October and declaring that sought judgment which until November 1978. At that time the default; that a valid lien was in the note owing entire balance left due and by executed to a deed of trust pursuant paid. provided was to be The note property; on the and that Ferguson existed attorney’s placed fees if in the hands of an property and the the lien be foreclosed attorney for collection or if collected sold. through legal proceedings. Judgment before the court. Trial was \ Development Tanner rendered for The by Ferguson pro- note executed also holding court Company, the trial vided that interest would cease in the event was in default was not usurious but note prepayment that any and to have the Tanner was entitled and that prepaid applied unearned interest should be property. lien foreclosed as a upon principal. provided credit It that the maker the note would not be Appeals reversed of Civil Court personally payee liable thereon and that the It held that the contract rendered. usurious; Ferguson should recover or other holder of the note would look solely the amount of $202,865.74(figured as twice enforcement of the retained liens for $59,144.04, for) plus contracted the satisfaction of the debt in the event of already to be the figured which it default. of the note. the terms to Tanner under of the note reads: paragraph final also awarded of Civil The Court construed under “This note shall be in the sum of attorney’s fees Texas, the terms laws of the State judg- court’s $28,000 reversed the trial the as- made on this note have been Tanner. foreclosure ment sumption that all scheduled judgment of We reverse the provided, and when herein affirm the will be made Appeals and of Civil the Court prepayment princi- trial court. in the event of
judgment for, accelerated provided or pal, as herein 8, 1973, conveyed Tanner On November cause, any interest maturity from un- ten acres of approximately excess of the note which is in paid on this County. In consid- in Harris land improved by the permitted lawful rate maximum $6,000 as a in cash eration, Ferguson paid of Texas as con- laws of the State executed a down jurisdiction having courts by strued sum five-year period thereof, pur- for all be considered shall at nine $226,388.77 with interest principal, and so payment on annum, poses as (9V2%)per secured percent one-half the note.” credited to trust. and deed of lien by a vendor’s law, inmay any way, directly provision: The deed of trust contains this indirectly, provide greater for a rate of “In no event shall Grantor be required subject appropri- shall be to the use, pay, for the forbearance or deten- prescribed in this penalties ate Subtitle.” money tion of the evidenced the note hereby, secured more than the maximum Article provides 5069-1.06 in pertinent legal rate of interest allowed the laws part: Texas, right to demand “(1) for, Any person who contracts waived; such excess shall be and is hereby charges or receives interest which is any payment of an amount in excess of greater than the amount authorized rate shall be considered a mis- Subtitle, to the obligor shall forfeit take with the excess being applied to the twice the amount of contracted hereby; secured for, received, charged and reasonable provision every shall control other attorney fees fixed the court provision of the note and deed of trust.” penalty that there shall be no for a viola- *4 tion which results from an accidental and Ferguson paid year’s the first interest 12, ($21,506.93) in advance of bona fide error.” November Thereafter, agreed. paid as he on or A question presented by difficult about the due dates six quarterly payments note, Ferguson terms of the because the $5,376.73 a partial payment each and stipulated (9½%) rate of interest on the July $3,376.73, of 1975 in the sum of for a principal ($226,388.77) was legally $57,144.04.1 Ferguson total of When failed permitted within the maximum by law if pay in full the interest installment which spread over the five-year entire 20, 1975, July gave became due on Tanner but during year the first of the contract him an complete extension of time to payments exceeded 10% of the payment, but he failed to do so. Thereaft- principal. year The excess er, option Tanner exercised its under the provision by was due to the which both the unpaid note and deed of trust to declare the prepayment year’s of the first interest and immediately balance of the note due and quarterly pay- several advance interest gave Ferguson notice to year ments for the second were made dur- acceleration and date of foreclosure. 12, 1973, period of November Whereupon, Ferguson filed this suit. November Article 11 Section of the Texas Consti- Voluntary Payments tution, 8, 1960, as amended November au- thorized the Legislature to “define interest One of grounds for the trial court’s fix and maximum rates of interest.” Pur- decision,against Ferguson’s claim of usury Legislature suant thereto the defined inter- was its conclusion that of in- compensation est as “the allowed law for terest in advance was voluntary and hence the use or forbearance detention of mon- not usurious. point On this the trial court .,”2 ey following . . and enacted the rele- found that Ferguson who insisted statutes, vant effective on October 1967: upon prepayment of the first year’s interest “Article 5069-1.04. Limit on rate in advance and that the quarterly payments parties
“The years first three written contract be made as may agree to advance stipulate rate rather than of interest not exceeding ten so that he cent and his associates would contract; annum on the amount of the receive the advantage of earlier income tax and all other written contracts whatsoev- deductions. It found er, except those otherwise authorized not purchase have made the from Tanner 5069-1.01(a). 1. The Court of Civil included a later 2. Article This and all other stat- $2,000 non-accepted payment utory of an additional references are to Vernon’s Annotated $59,144.04 in its calculation of the total Texas Civil Statutes unless otherwise noted. paid. amount of interest
781 charged advance first provisions lawfully five-year these be over the without desig- payments being quarterly term, using employed by the method prin- than for advance interest rather Harris, nated Court in Nevels v. ben- that for tax cipal. admitted The lower courts end- on the was the one who insisted efits he up opposite ed results because in ad- being payable first they used different “true” sums of learning required after that Tanner vance making computations. the note in their $6,000 paid the time more than prin- The trial court held that the “true” concluded, and The trial closing. court face cipal sum of note was the stated insists, a vol amounted to Tanner $226,388.77. On this amount amount the con prepayment interest for untary that the rate annum of held 9½% Ferguson. its Tanner bases venience usurious be- five-year was not on the Vela v. Shack argument holding of yield the total not exceed the cause did lett, 1007 (Tex.Com.App.1929, charged amount that could have been in 45 adopted), and the rule stated
jdgmt
the maximum
rate.
It found that
AmJur.,
178 at
Usury
Interest
§
upon
August
default
acceleration on
voluntarily
is not
if
that interest
1975,Tanner,
note,
cred-
by the
for his own
in advance
borrower
pre-paid
ited
in excess of
as a matter of
personal convenience and not
unpaid princi-
amount accrued to reduce the
A.L.
compulsion.
also 57
contractual
note,
due
pal
owing
balance
630, 670-71.
R.2d
*5
leaving
unpaid principal
a remainder of
in
Appeals
The Court of
cor
Civil
$206,778.74.
this
the sum of
It was for
Tanner’s contention on
rectly overruled
amount,
plus
August
10% interest after
point. Negotiations
parties may
the
attorney’s
and 10%
fees that the trial
ascertaining the
have some relevance in
Tanner,
judgment
court rendered
to be
purpose
parties
intent of the
dominant
only by sale
and with-
satisfied
of the land
interpreted
in the contract
embodied
any personal liability against Ferguson.
out
light
attending
circum
whole and
Appeals
The Court of Civil
held that the
governing
of the
rules of law
stances and
$204,881.84,
principal
“true”
the note was
presumed
are
to have in
parties
the
erroneously
because it
concluded that
the
Trust
obey.
Temple
Walker v.
tended
$21,506.93prepayment of interest “in reali-
Tex.
Company, 124
portion
principal
ty constituted
of the
However, once
terms
agreed
the
to be
which was not
advanced until it was
writing
reduced to
in the form
have been
20,1977.”
applied to the loan
alleged
beginning July
compulsory
the test
the
party Accordingly,
Appeals
Court of Civil
not concerned with which
usury is
$21,506.93
originated
alleged
“prepaid
the
inter-
might have
the
deducted
$226,388.77
provisions.
the
est” from
legal
its
“actual”
computed
maximum
of Interest
the Term
Spreading
Over
five-year period
for the
on the reduced
rate
of the Contract
$204,881.84.
On this re-
principal sum
principal sum the maximum
duced
their
the lower
based
Neither of
courts
payable
the term of
rate of
the
judgments on
effect of the first
$101,442.67.
figured
note was
to be
the
Instead both
excessive
alone.
of total
with its calculation
compares
the This
five-year
to the whole
term of
looked
on
payable
to be
compar-
tested the
interest contracted
Both
contract
note.
$5,077.75
$106,520.42,
or a total
total interest
in the
note as
by law.3
maximum allowed
the maximum amount that could more than the
note with
procedure and
forth
There are minor
3. The
calculations are set
pal sum the amount of prepayment of interest indicated, because Nevels As and other heretofore the trial cases where fees or commissions were de- court its properly spreading made calcula loans, ducted from cash “true” amounts tions and comparisons principal sum loans notes were reduced note, as stated on the of the treating face accordingly testing for usury.5 The prepaid payments as interest when so amount actually of cash received designated agreement by written borrower was held to be the princi- “true” parties. spread averaged When so pal. On point, facts of the present total rate of interest on the face of case are different. The transaction here equals its term precisely 9½ money not a loan of from which any per% annum. We have been cited no au fee, commission or interest was withheld none, thority, have found which would Rather, from payor. it was a sale of support the action Court of Civil real estate in which received a judicially declaring deed to ten acres of land in exchange for year’s prepayment princi of interest to be his cash down payment delivery pal deducting and then it to arrive at a promissory $226,- the sum of lower “true” sum. If it is proper 388.77. None of the consideration for Fer- judicially prepayment declare to be guson’s note was reserved Tanner or something from what the parties different by Ferguson returned to Tanner. Ferguson *6 greater called it in their there is had at all full use and times the benefit of support treating in the evidence as an prepaid the ten acres. Ferguson’s payment principal additional down was received and credited Tanner as reducing stipulated thus both the contrary It was note. the terms to treat equal pre- of the contract the the total interest in amounts. How payment year’s of the first interest in any ever, recognized by as the Court of Civil provided by other the manner than as note Appeals in a subsequent conflicting para and the deed of trust. graph opinion, payment of its initial “[t]he was applied called interest and was to be as We hold “true” sum that the of interest. . . the . intention of the note was face amount. If the its stated Nevels, compu- ed in supra, and as shown on 5. In the note was in the stated $6,400 years payable tation sheets. sum of in five at an inter annum, est rate of charged but the lender 8% quoted 779, page 4. As heretofore on supra, making $320 the borrower fee for paragraph final note of the that “in proceeds loan and from the cash deducted it of prepayment the event of of . . . the loan. This treated the actual loan as Court any interest on this note which is in excess $6,080 of determining charged that the interest permitted by the maximum lawful rate the usu- was not in the maximum excess of ry laws . be . . shall considered for all five-year term of note. See also Adle purposes principal, on and so cred- Co., son v. B. F. 124 Tex. 80 Dittmar type specific ited to the savings This is the note.” (1935). S.W.2d 939 approved was clause which in Nevels Harris, supra. Imperial Corp. v. also Corp., America v. Frenchman’s Creek 453 F.2d (5th 1972). 1338 Cir.
783 with, begin applied had its com- To it was held in 1930 Civil that Court of practice usury long does not result from the comparisons putations not to exceed sum, charging year’s would have been one inter- its result highest year at the one est lawful rate the trial court. same as maturity. advance of Bothwell Farmers’ Co., & Bank Trust 120 & Merchants’ State Conflicting “Spreading’’ Authorities on Tex. 30 289 See also question is not usurious the note in While Co., Shropshire v. Commerce Farm Credit Nevels, “spreading” doctrine under the (1930), 282 30 S.W.2d which is, event, Ferguson argues that day. on the same This rule was decided Trust Co. usurious Commerce govern present pre- case if (1940), 531 Ramp, Tex. 138 S.W.2d 135 interest were payment of the lower courts declined follow. however, sanction, does not involved. It Ramp proposition pay- stands for the overlapping quar- advance the additional percent interest ment of more than ten made for the second terly payments one effective term of an year the first twelve months year during usurious, though extended loan is even remains to whether question note. The total interest for the whole quarterly payments inter- these advance yield did not exceed the rate and amount of spread over the may est 1974 Thus, it conflicts authorized law. five-year note. subsequent years of Nevels. the forerunner of the Nevels the dec- It must be conceded concept written in a Commission of was not ade of 1930 Court Appeals opinion adopted this Court writings entirely consistent in its Co., Tex. Adleson v. B. F. Dittmar law. These decisions phase usury (1935). In that case $6000 practice charging predated the modern monthly install- in 60 long-term in addition to the constant points ments, including at 9.48% an- rate,6 popular tax recently num, charged plus a “commission” $240.00 long- estate on investment in real sheltered note was executed. when the lender principal payments which defer term notes regarded as addi- The “commission” was require only paid during interest to be interest, interest in which meant that tional years impor- of the note.7 More early (including the com- first front-end tantly, conflicting were our cases written mission) been collected at had penalties were usury before extended to A suit annum. rate 13.48% for,” entire amount “interest contracted the lender after third against was filed *7 by whether or not it was “received” Upon theory year. Yet, in first
payee.8
year,
case since 1940
in the first
interest was received
has been called
to
upon
which our Court
contended that
the statute
lender
issue,
principles
(then
find
point
years)
resolve the
at
we
two
barred recov-
limitations
charged
earlier cases
are
since
usurious interest was
ery,
enunciated
which
no
prior
two
to
present
years
task.
received within the
helpful in the
“point”
charge equal
to
were twice the amount
usuri-
a fee or
to
individuals
6. A
denotes
loan,
percent
the lender. See re-
of the
amount
ous
“received”
one
interest
penalty
usually
pealed
a “front-end”
Extension of
collected as
5073.
Article
for,”
judicially
“front-end
treated as
interest.”
whether or not
contracted
to
“interest
substantially
larger
paid,
amount
could
Graham,
Prepaid
See
The
Interest Deduction
alleged
7.
long-term
to be usurious.
*8
paraphrase
almost
a much earlier
of
statement
Co.,
Green
Conservative Loan
153 Ark.
Johnston,
308,
this
in
Court Mills v.
(1922);
7«5
regarded
involved ten-
is
as usurious if
Ramp
in Brashear.
a
the first
nounced
with
notes which
multiple
years,
loan
year,
requires
or first few
it
the
year
into
an additional 2½%
“squeezed”
payment
greater
interest at
of
than
being
of
payments “instead
annual
rate,
though
four
legal
even
interest calcu-
loan,
year period
the ten
spread over
period
entire
loan
lated over the
years
in
this made
first four
excess
and
statutory
does not exceed the
limit. The
This was
percent per
10
annum.”
held
of
holding
effect
such
of
is to label
in
the stated
any
usurious
loan
discount,
fees,
plus any
rate
Ramp
Brashear
cases have not
and
points,
charges
other front-end
that
or
point
on
as often as the
followed
been
are judicially determined to be interest
of
contrary result reached in
Nevels line
year
exceed the lawful rate for the first
most recent
cases. One
cases
spreading
even though
the front-end
loan for
was
Ramp
testing
usury
follow
charges
the term of
Hockley
Co. v.
over
the loan results
Investment
Southwestern
Inc., 511
in an
rate
Delinting,
&
overall interest
below the
County Seed
(Tex.Civ.App.1974, writ ref’d n. r. e.
limit.
question
spreading
724
No
as to the
curiam,
(Tex.
136
per
with
charges over
front-end
the life of a loan
1974)).
The Court
held the
of Civil
case,
presented by
is
the facts in this
and
case
in that
to be usurious because
application
our
action on
for writ of
than 10%
annum
more
interpreted
error is
to be
not
as an ex-
part
year
the first
pression
opinion on
question.”
year
easily
of the note. Just as
the second
We
purposely
have
refrained from mak-
the court could have found the note to be
ing any
in this opinion
distinctions
between
spreading
usurious
concept
parties
judi-
stipulated by
Nevels,
undisputed
because it
interest,
cially
declared
between interest
annual interest rate over the entire term of
in advance and front-end interest. Techni-
the loan was
annum.
In elect-
10.798%
cal and economic differences exist. How-
Ramp,
to follow
the Court observed
ever,
use,
compensation
for the
forms of
“a loan
is considered
contract
forbearance or detention of the
years
first few
if for
debt have
treated alike
applying
been
than
requires
of more
the law-
long
for such a
of time
period
laws
rate,
though
ful
even
the interest calculated
that it would
create more confusion if
the entire
does not
loan
exceed
they
were now treated
different
statutory
limit.”
manner.
“In the course of its problem by the apparently recognized that a loan contract appeals civil held Study Usury Implications Monning, Law of of Front- Convenience—A the Texas 11. See Advance, Usury, also, Note, (1968). 233 29 SW 22 SW L.J. and Interest End Interest Weaver, Usury Municipal (1975); Texas Texas: Problems of Interest: Bonds 748 L.J. Laws, Usury Entire 54 Texas L.Rev. Spreading Period Interest Over Loan, (1974); writings 1137-41 Loi- Citation these 12 Houston L.Rev. agreement seaux, Usury not an of our in Commercial indication Problems Some (1971); except specifi- stated therein Lending, conclusions L.Rev. Texas cally opinion. Williams, set Past to forth in Punitive Current Pearce *9 when, Sixty-Fourth Legislature 2, support on June of this view.13 hand, On the other 1975, 351, it enacted House Bill relevant argues that if the Nevels doctrine which is now portion already applicable codified as Article was to all forms of inter- advance, 5069-1.07(a) paid and reads as est in follows: then there was no need for the new statute. any event, under “(a) any agreement On loan or to loan the points presented appeal in this we secured, secured or to be in whole or in required are not to determine whether Arti- lien, part, aby mortgage, security inter- 5069-1.07(a) considered, cle should be est, or other interest in or with respect to we decide the case regard without to Arti- any property, interest in real determina- 5069-1.07(a). cle We simply observe in pur- tion of the rate of interest for the passing that the statute did in adopt fact pose determining whether the loan is the Nevels doctrine of spreading all interest all applicable Texas laws over the whole term of loans secured by amortizing, shall be made prorating, property, real whether it be “interest in allocating, spreading, equal parts in advance,” interest,” “front-end or a mixture during period of the full stated term of both. loan, all interest at time con- for, charged, tracted or received from the indicated, As heretofore long before borrower in connection with the loan. the Ferguson-Tanner contract was executed However, in the event the loan is 1973, this Court had adopted the Nevels prior full the borrower to the end of testing doctrine of for usury by spreading the full term of the loan and the judicially determined interest over the en interest received for the actual tire term of the contract. We hold that the the existence of the loan exceeds the same rule applied should be to stipulated rate, maximum lawful the lender con- present When, 1967, interest in the case. for, tracting charging, receiving the Legislature extended the usury penal such interest shall refund to the borrower ties to interest for” “contracted the amount of the excess or shall credit (Article entire 5069-1.06), term of a note the amount against the excess seems reasonable that it intended for owing amounts under the loan and shall the contract to be tested for subject not be of the penalties compensation basis of the charged for the for, contracting law for entire term which the borrower had receiving charging, interest in excess use, detention or princi forbearance of the of the maximum lawful rate.” pal debt. Since contract in question Tanner does not contend While that this provided Ferguson, the payor, with the full applied retroactively, statute should be use of the represented consideration by the argue that as to loans secured real does actual face amount of (the ten Legislature merely codified the estate land) acres of for the entire term of the applied law as existing contract, Nevels line of usury penalties since are now legislative history applied cases. There is some to the entire we are corn- 26, 1, Leg., p. legislative history. proponent explained 12. Acts 64th Ch. No. A to a September effective 1975. Tanner makes no doing by Senate Committee: we are “[W]hat statute, contention that effective subse- provision the interest amortization in the first question, quent just to the contract is retroactive codifying existing what law is.” exceptions in 4 under the discussed A.L.R.2d Development Minutes of the Economic Com- does it contend that the Senate, 944-948. Neither Leg., p. (March 10, mittee of the 64th interpreted provision para new should be 1975). Analysis Bill attached in the House previously with the enacted Articles materia states that it “would limit rates and 1.06, dealing with the same sub- 5069-1.04 points to a maximum of ‘‘What the Bill 10%.” ject matter. Do,’’ Proposes (Second Leg. H.B. 64th 19, 1975). Printing, Official House Feb. Monning, supra, 13. See 29 SW L.J. pages 763-64 for a discussion of the 749 and *10 money the that advance interest from which the lender had pelled hold deducted be present ($21,506.93), the note should the prepaid under thus re- the contract. $204,881.84 entire term of of spread sulting principal over the in a true manifestly would be unfair do otherwise and a of ten yield percent To total more than law existed when unjust the as it annum the five Ferguson-Tanner was exe- contract the term Ferguson of the note. contends that opinion, beyond In it would cuted. our principal our to so the failure reduce the the Legislature intent of the obvious will a hold the contract usurious serve as to impose of Article 5069-1.06 enactment precedent the for same result where loans solely upon proof that penalties severe its money are involved. the payments exceeded
one this case involves no loan of limit, Since statutory the where over effective money, opinion distinguishes our the payments the principal nature from debt a loan of not, aggregate, in excess of the were money, necessity we doubt the of disclaim hold, by law. We there- amount authorized precedent testing money as for fore, was not question that the note loans which interest or from other front- end have been by deducted opinion This is limited contracts cover- lender returned the lender. or To make by 5069-1.06(1), wherein the ed Article stat- clear, however, abundantly we reiterate principal ed rate interest on the debt that in cash loan transactions from which does not exceed 10% annum where- interest, fees, the lender deducts commis (contracted and judi- for consideration sions other charges, or front-end determined) use, for cially detention for- actually amount of dollars or re received principal debt is a sum no bearance of tained the borrower is held to be the would greater pro- than such debt “true” principal. such cases the amount annum the full time duce 10% according is reduced has use payor that the debt inly testing usury. for Nevels v. Har (such land) as which is consideration ris, (1937), S.W.2d 1046 represented by debt. Insofar rule in opin our statement of this our Trust Commerce Co. ion October Ramp, supra, opinion, is in conflict with this Likewise, conflicting it is overruled. opinion, As stated in our the transaction holding Appeals of the Court of Civil in the present money case was not a loan of Hockley Investment fee, Southwestern Co. from which commission or interest Inc., supra, County Delinting, Seed & Rather, from payor. withheld disapproved. was a real in which Ferguson sale of estate a deed to ten acres of received land. judgment Accordingly, Court $226,388.77 vendor’s lien note was given judg- Civil is reversed and partial payment for ten acres trial court is affirmed. ment deeded to him Tanner. None of land Ferguson’s the consideration for note was J.,
McGEE, notes his dissent. by Fergu- Tanner or returned reserved son to had full use Tanner. J., JOHNSON, concurs in the result. purchased by of the ten acres benefit Furthermore, the note provided the note. FOR ON MOTION REHEARING personally lia- Ferguson would not be money sum of thereon and Respondent pay ble rehearing In motion payee solely to the liens have look Ferguson insists we should treat- ten acres satisfaction principal of the vendor’s lien note ed the Clearly, though in the event of default. this trans- ($226,388.77)as it had been loan distinguishable 20, 1975, action is from a loan of August letter of written by *11 judicial- there no reason money, and to trust, Trustee under deed of Julian long of the ly Moss, Jr., reduce note so M. stated: may “You obtain the of the Ferguson had use land and for- pay exact necessary off amount calling principal during bearance my office between 8:30 a. p. m. and 5:00 m. entire term note. Monday Friday.” Ferguson through testi-
fied
he called Moss for such informa-
tion;
town;
that Moss was out of
and that
“Charged”
Alternative Points on Interest
Ferguson
any pay
never
received
off
Fergu
his
rehearing,
motion for
amount from
Moss
Tanner. The first
son
first time calls our
for the
attention
time Tanner associates calculated the bal-
his
points
alternative
Court
Civil
due on
September 1,
ance
the note was on
“charged,”
on
were
1975, at which time unearned interest was
disposed
not
that Court. While cross-
credited to the
points
this Court would have
been
note. This
done
arriving
was also
at the
properly urged
it is
procedure,
better
$206,778.74
sum of
as the balance due on
and
these
may
we
now consider
rule on
the note when Tanner first filed its coun-
points rather than remand the case
judicial
terclaim for
debt
foreclosure on
Appeals. Taggart
Tag
Civil
v.
Court of
December
(Tex.1977); McKelvy
gart,
The alternative
of the stat
usurious,
contract is
Tanner
the loan
not
ute.
Pipe
Windhorst v. Adcock
and Supply,
“charged” Ferguson
its
dur-
(Tex.1977).
actions
amounted from the distinguishable are Both
est. letters to case. The of this
facts to a claim Tanner refer
on behalf balance," and unpaid principal the “full balance,” respectively. full
“the they nor the Neither
(Emphasis supplied.) face *12 of the full demand
notice Rather, the use the note.
amount im- in the letters “principal balance”
term something than the for less a demand
plies construe of the note. We face amount
full whatever balance referring to letters as applying after due on the terms of credits under the
payments of the terms was note. One shall be credit-
unearned is that what Tanner principal,
ed dollar arriving
did Ferguson. Tan- demanded of Since
amount nor sued for neither demanded
ner percent per annum in excess ten forbearance, agree we period of court that the conclusion of trial Ferguson any inter- charge not
Tanner did permitted in excess of the amount
est Therefore, Ferguson’s alternative
law. “charging” are overruled.
points rehearing for
Accordingly motion
overruled. Petitioner, SLAUGHTER,
Johnie L. et STATE SCHOOL
ABILENE
al., Respondents.
No. B-6567. Robinson, Hanna, Burke & Chappell, Supreme Court Texas. Burke, Jr., Weeks, Moore, L. W. W. John 26, 1977. Oct. Abilene, petitioner. Perry, William S. Hill, Gen., M. Ken- Atty.
John L.
David
dall,
Gen.,
Sparks,
Attys.
Asst.
Jr. and Jack
Austin,
respondents.
notes
sum on
Perspective
of Real Estate
Viewed from
instance,
penalties sought
For
Transactions,
29
L.J. 412
SW
nearly
much as the
in this case amount
original
price
purchase
for the land.
1, 1967,
effective date of
Prior to October
5069-1.06(1), usury penalties on loans
Article
784
disagreed.
the suit. The Commission
It
percent
10
per annum from the time the
averaged the full amount of
borrower had the use of the money until
9
charged over the entire
term
the note
it is repaid, it is not usurious.”
and concluded that a usurious rate of
Nevels was followed on this point more
per
charged throughout
11.268% annum was
recently
Imperial
Corp. of America v.
term,
including
years
the two
immedi-
Frenchman’s
Corp.,
Creek