Case ID: misc2d_71/html/0964-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Chemical Bank, Appellant, v. Lorenzo F. Padilla, Respondent.
    Supreme Court, Appellate Term, First Department,
    October 5, 1972.
    
      Cravath, Swaine $ Moore (Philip P. Berelson of counsel), for appellant. William J. Lake for respondent. Nathaniel R. J ones and Charles E. Carter for NAACP, amicus curiae, John Referovich, Jr., for New York State Bankers Association, dmicus curiae.
    
   Per Curiam.

Defendant’s tender on prepayment was below the minimum payment computed by. the method set forth in section 108 (subd. 4, par. [e]) of the Banking Law. The contention that Such method is violative of the general usury statutes (General Obligations Law, § 5-501, implemented by Banking Law, § 14-a), fails to take account of the fact that "those statutes explicitly state “ except as otherwise provided by law”. Section 108 of the Banking Law, which deals with rates of interest chargeable by banks and trust companies, is one of several such statutory exceptions. Subdivision 4 (par. [b]) provides that a bank or trust company which operates a personal loan department may take interest of 6% per annum of the face amount in advance as a discount, and subdivision 4 (par. [é]) sets forth the prepayment formula for such a loan repayable in installments.

The formula charges the prepaying borrower with earned interest in proportion to the larger amounts of principal outstanding in each installment period up to time of prepayment and credits him with unearned interest in proportion to the declining amounts of principal in the remaining installments. That this is the clear legislative intent is confirmed by its inclusion as the method for computing credit upon anticipation of payments ” on retail installment sales of motor vehicles (Personal Property Law, § 305). ¡Since there is a rational basis to the exception from the general usury statutes accorded banks and trust companies and to the formula provided for prepayment, the choice is a matter for the Legislature.

In view of defendant’s persistent refusal to pay the amount computed in accordance with the prepayment formula of section 108 (subd. 4, par. [e]) and his consequent default on the noté, the bank is entitled to recover the amount provided in the note in the event of default and suit.

The judgment and order should be modified by increasing the recovery to $2,848.55, with interest from June 13, 1972 and¿ as modified, affirmed, with $10 costs to appellant.

Concur — Markowitz, J. P., Gold and Streit, JJ.

Judgment and order modified, etc.