The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1899-02-22
THE lNSTALLMENT PLAN.
Of Purchasing Property Given q Backsct
BY the Civil Court 81 Appeals.
A DECISION RENDERED AGAINST PLAINTIFF
A Peculiar Method Of Ccmputinx
Interest Makes the Contract
Illegal.

The court OF civil appeals at Galveston
at its last sitting handed down an opinion
In the case OF the Galveston and Houston
Investment company against NJ. L. Grymes
that may afiect hundreds Of building and
loan contracts now In existence throughout
the State. II Is o matter that will at least
interest every man who is paying for
home under the building and loan plan.
The Galveston and Houston Investment
company is an organization that has its
domicie at Houston. In May, 1893, II en-
tered into written contract with Grymes
10 sell him lot IN Houston Tor s2i6o and
TO erect on 1t q residence according to
plans which Grymes architect should pre-
sent. when the cost OF tho building was
aseertained the investment company
agreed TO sell and to convey to Grymes the
house and lot for q sum equal TO tho price
Of the lot and the contract price of the
house, including architects fees When
the conveyance was made Grymes paid
10 per cent in cash, the balance unpaid
amounting TO s4alS, TO this sum was ad-
| ded 55 per cent thereof, the contract stat
ing that 1t represented the interest on
! said deferred payments and all costs.
trouble and expense incurred in the cree
ton of said house and the risk during the
same. To secure this sum OF money the
purchaser executed l20 notes OF equal
monthly PAYMENTS, each bearing ~ per
4 cent interest after maturity. Grymes PAID
the nineteen notes first falling due anu
then sold tho property to T. e, byrne. who
assumed those unpaid He paid nineteen
Of them and then defauted in the payment
of tho others, whereupon the ihVesthen.
company caused tho property 10 be sold
by trustee and bought II In Tor SlooV, cteu
iting the unpaid notes for that sum, They
then brought suit In the district court OF
Ealris county to recover the balance OF
tho notes alleged to amount to S25ss
Byrne pleaded general denial and Grymef
set IN the defense OF usury. The cour'
instructed tho jury that the contract wa'
usurious and directed that O verdict fo'
plaintiff against Grymes be brought IN iol
, Ss4o instead OF s2S44, which was tn
amount sued for.
!. The evidence showed that the 30 pc
} cent added by the Investment company u
the contract price of the house and 10
, was intended as being 10 per cent interes
. for ten years. The question before tn
court was. therefore whether or not tn
. IS per cent amounted TO more than inter
, est legally chargeable. The contention Q
J. the investment company was that the III
r terest lawfully chargoable was merely no
: ded to the principal and the whole divide
v into miscellaneous. The court says III III
$ terest be calculated at 10 per cent on IN
original principal for one year and II one
tenth of such principal be deducted frol
It, and interest at 10 per cent upon u
remainder be calculated for the secon
:. wear and one-tenth OF such remainder
le again deducted and interest calculate
upon this new remainder for the TIL
ID wear and so on through the ten years, d
Of Quoting one-tenth Of the principal AZ pa
each year. the sum of the interest oharg'
p FOR all tho years, will be found TO amou
n 10 IS per cent of the original principal
contract of this kind would doubtless
;, Legitimate. but the contract in question
a. very different The debtor was required
r paw part of the principal every month. al
by adding into the notes tho whole amou
no OF the interest calculated az due az for 81
le nual payments, was required to pay II
IN terest on part OF the principal which won
already have been paid. Since this had Ct
., effect of exacting more than 10 per &c
n. interest on the debt forborne the CO.
tract was clearly Illegal"
ho Accordingly tho judgment OF the 10"
or court Us affirmed. The opinion Hjoy Ass
g ciate Justice Williams