Case Name: Mark T. and Wendy COPPEDGE, Appellants, v. COLONIAL SAVINGS & LOAN ASSOCIATION, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1986-12-03
Citations: 721 S.W.2d 933
Docket Number: of back interest after borrowers had repaid loan. The 192nd District Court, Dallas County, Harlan Martin, J., granted summary judgment in favor of lender. Borrowers appealed. The Court of Appeals, Akin, J., held that: (1) money demanded by lender as back interest as result of alleged breach of due-on-sale clause was interest; (2) lender was subject to statutory penalties for charging usurious interest after repayment of loan; and (3) borrowers were not entitled to damages for common-law usury in addition to statutory usury penalties
Parties: Mark T. and Wendy COPPEDGE, Appellants, v. COLONIAL SAVINGS & LOAN ASSOCIATION, Appellee.
Judges: Before AKIN, DEVANY and HOWELL, JJ.
Reporter: South Western Reporter Second Series
Volume: 721
Pages: 933–941

Head Matter:
Mark T. and Wendy COPPEDGE, Appellants, v. COLONIAL SAVINGS & LOAN ASSOCIATION, Appellee.
No. 05-86-00039-CV.
Court of Appeals of Texas, Dallas.
Dec. 3, 1986.
Rehearing Denied Dec. 31, 1986.
Joseph G. Churalea, Dallas, for appellants.
C. Victor Anderson, Jr., Carvan E. Adkins, Tim G. Sralla, Fort Worth, for appel-lee.
Before AKIN, DEVANY and HOWELL, JJ.

Opinion:
AKIN, Justice.
Mark and Wendy Coppedge appeal from a summary judgment granted against them on their claim against Colonial Savings & Loan Association to recover for usurious interest charged and received by Colonial. The Coppedges contend that the trial court erred in granting Colonial's motion for summary judgment and in overruling theirs because Colonial charged and received usurious interest from the Coppedg-es. Consequently, they argue that they are entitled to statutory penalties and attorney fees, as well as common-law damages, as a matter of law. We agree with the Coppedges that they were entitled to summary judgment on their claims for statutory usury penalties and remand the cause for determination of proper attorney's fees to be awarded them. We do not agree, however, that they are also entitled to common-law recovery for usury in addition to the statutory penalties. Consequently, we affirm the trial court's judgment as to their common-law cause of action.
The Coppedges borrowed money from Colonial in 1977 to purchase a home. The promissory note, secured by a deed of trust on the home, provided for interest at the rate of 9.375% per annum, payable in 359 monthly payments. The parties have stipulated to the following figures:
During 1983, the Coppedges contracted to sell their house to a third party. The transaction called for the prepayment of the Coppedges' note payable to Colonial. The closing occurred on September 30, 1983. Colonial notified the title company handling the transaction to withhold from the sale proceeds the sum of $9,100 over and above the principal balance plus accrued interest. It appears that Colonial premised its claim to the $9,100 upon a contention that the Coppedges had violated the due-on-sale provision in the deed of trust that secured the note. When the Coppedges protested the withholding, the title company escrowed the $9,100.
On November 10, 1983, an attorney representing Colonial sent a letter to the Cop-pedges containing the following language:
You should consider this letter to be a demand letter for back interest in the amount of $9,100.00 plus attorneys' fees and court costs, if any. Please be advised that this demand letter is made in order to fulfill the statutory requirements for filing of a lawsuit if this matter is not resolved to our satisfaction.
At Colonial's request, the escrow agent delivered the $9,100 to Colonial. On November 18, 1983, the Coppedges' attorney wrote to Colonial's attorney demanding that Colonial cease charging the $9,100 additional interest and threatening to file suit if Colonial persisted. Eight months later, in July 1984, Colonial returned the $9,100 plus interest to the Coppedges. The Cop-pedges cashed the check and then filed this lawsuit.
The note in this case was, under the facts stipulated by the parties, not usurious. The Coppedges contend, however, that Colonial "charged and received" usurious interest when it demanded the additional sum of $9,100 as interest in September and November of 1983 and caused that amount to be delivered to Colonial from the escrow account at the title company. If the $9,100 was interest, and no exception contained in the usury statute applies, then Colonial received $5,943.77 in usurious interest (total amount of interest received for 67 months —$54,692.77—less maximum legal amount stipulated to by the parties — $48,749.00), and is subject to the penalties for usury permitted by law.
We first must determine whether the $9,100 was in fact interest. Interest is the compensation allowed by law for the use, forbearance, or detention of money. Tex.Rev.Civ.Stat.Ann. art. 5069-1.01(a) (Vernon 1971). Through its attorney, Colonial demanded $9,100 as "back interest" due as a result of the Coppedges' alleged breach of the due-on-sale clause in the deed of trust that secured their loan from Colonial. Although the label "back interest" is not controlling, see Gonzales County Savings & Loan Association v. Freeman, 534 S.W.2d 903, 906 (Tex.1976), the factual basis for Colonial's claim to the $9,100 indicates that Colonial sought that sum as additional compensation for the Coppedges' use of its money. Moreover, the fact that the Coppedges repaid the loan before Colonial demanded and received the $9,100 does not change the nature of that sum as compensation demanded in connection with the original real estate loan. The fact that a loan has been repaid does not ipso facto preclude a lender from asserting a charge for delinquent, or "back," interest under that loan. We also reject Colonial's argument that the $9,100 charge was not interest to the extent that Colonial used a portion of it to pay its attorney's fees. Had Colonial's demand letter identified a part of the $9,100 as being for attorney's fees, a fact issue might have been raised. However, the letter unambiguously identified the entire sum as "back interest" and stated that an additional sum would be sought for "attorneys' fees and court costs, if any." Colonial's actual use of the $9,100 is irrelevant, and its belated attempt to show that part of the amount demanded was to pay attorney fees does not bring it within the "services rendered in connection with the loan" exception to the usury statutes. See Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046, 1048 (1937). Thus, we hold that the $9,100 that Colonial demanded and received from the Coppedges constituted interest within the statutory definition. Further, according to the parties' fact stipulations, the $9,100 interest was usurious in the amount of $5,943.77. S.W.2d 1046, 1048 (1937). Thus, we hold that the $9,100 that Colonial demanded and received from the Coppedges constituted interest within the statutory definition. Further, according to the parties' fact stipulations, the $9,100 interest was usurious in the amount of $5,943.77.
Our next question is whether the actions of Colonial and its attorney violated the statutory proscription against charging or receiving usurious interest. Under article 5069-1.06, the term "charges" means the unilateral act of placing on an account an amount due as interest. See Windhorst v. Adcock Pipe and Supply, 547 S.W.2d 260, 261 (Tex.1977). The unilateral act can be a debiting of an amount due or an act by the lender constituting a demand for payment, e.g., the inclusion of usurious interest in a statement of indebtedness submitted to the debtor. Concrete Construction Supply, Inc. v. M.F.C., Inc., 636 S.W.2d 475, 477 n. 1 (Tex.App.—Dallas 1982, no writ). Thus, the demand letter sent by Colonial's attorney constituted a "charge" of interest by Colonial. See Mecey v. Seggern, 596 S.W.2d 924, 927 (Tex.Civ.App.—Austin 1980, writ ref'd n.r.e.). Further, Colonial "received" usurious interest when it collected the $9,100 from the parties' escrow agent. Accordingly, we conclude that Colonial violated article 5069-1.06 by both charging and receiving usurious interest from the Coppedges.
Nevertheless, Colonial seeks protection from the statutory penalties under the first sentence of article 5069-1.07(a), which codifies the spreading doctrine set forth in Nevels v. Harris, 129 Tex. 190, 102 S.W.2d 1046 (1937). See Tanner Development Co. v. Ferguson, 561 S.W.2d 777, 786 (Tex.1977); see also Conte v. Greater Houston Bank, 641 S.W.2d 411, 415 (Tex.App.—Houston [14th Dist.] 1982, writ ref'd n.r.e.). Article 5069-1.07(a) provides as follows:
(a) On any loan or agreement to loan secured or to be secured, in whole or in part, by a lien, mortgage, security interest, or other interest in or with respect to any interest in real property, determina tion of the rate of interest for the purpose of determining whether the loan is usurious under all applicable Texas laws shall be made by amortizing, prorating, allocating, and spreading, in equal parts during the period of the full stated term of the loan, all interest at any time contracted for, charged, or received from the borrower in connection with the loan. However, in the event the loan is paid in full by the borrower prior to the end of the full stated term of the loan and the interest received for the actual period of the existence of the loan exceeds the maximum lawful rate, the lender contracting for, charging, or receiving all such interest shall refund to the borrower the amount of the excess or shall credit the amount of the excess against amounts owing under the loan and shall not be subject to any of the penalties provided by law for contracting for, charging, or receiving interest in excess of the maximum lawful rate.
Tex.Rev.Civ.Stat.Ann. art. 5069-1.07(a) (Vernon Supp.1986) (emphasis added). By enacting article 5069-1.07(a), the legislature adopted the spreading doctrine with respect to loans secured by a lien on any interest in real property. Thus, it applies in this action. The doctrine spreads "all interest at any time contracted for, charged, or received" in connection with the loan over the contractual term of the loan for the purpose of determining whether it is usurious. Tex.Rev.Civ.Stat.Ann. art. 509-1.07(a) (Vernon Supp.1986).
The stated term of Colonial's loan to the Coppedges was 359 months. When the total amount of interest contracted for, charged, or received by Colonial, including the $9,100 in dispute, is spread over the 359-month period, the transaction is not usurious under the first sentence of article 5069-1.07(a). However, the Coppedges repaid the loan to Colonial in full prior to the end of the full stated term of 359 months. Thus, Colonial was required to comply with the second sentence of article 5069-1.07(a) to avoid the statutory penalties.
The second sentence of article 5069-1.-07(a) provides that when the borrower pays the loan in full prior to the end of the stated term and the interest received for the actual period of the loan's existence exceeds the legal maximum, the lender must refund the excess to the borrower or credit the excess against the principal owed under the loan. Id. This provision limits the redemptive effect of the spreading doctrine when the borrower actually uses the loan for a shorter period than that stated in the contract. When prepayment is made, the interest received is spread over the term during which the borrower actually had use of the funds; the lender must refund or credit any excess interest to the borrower to avoid the statutory penalties.
The Coppedges repaid the loan after 67 months' actual use. The parties stipulated that the maximum legal amount of interest that Colonial could have received over the 67 months was $48,749.00. The total amount of interest that Colonial received, including the $9,100 "back interest," exceeded the legal maximum by $5,943.77. However, Colonial argues that because it "refund[ed] . the excess," as the statute requires, it is not subject to the statutory penalties for charging and receiving usurious interest. We disagree.
The cardinal rule of statutory construction is to ascertain the legislature's intent and to give effect to that intent. Knight v. International Harvester Credit Corp., 627 S.W.2d 382, 384 (Tex.1982). A reviewing court is not limited to the literal meaning of the words used, but must consider that which is implied as well as that which is express. McCulloch v. Fox & Jacobs, Inc., 696 S.W.2d 918, 921 (Tex.App.—Dallas 1985, writ ref'd n.r.e.). As stated above, the second sentence of article 5069-1.07(a) was designed to restrict the spreading doctrine's application in cases where the borrower repays the loan prior to the end of the full stated term. In that event, the amount of interest received in connection with the loan is spread over the period of the loan's actual existence to determine whether it exceeds the legal maximum.
The lender may avoid usury penalties if it refunds or credits any usurious amount. The statute implies that the "refund or credit" provision applies only to interest that would otherwise be usurious solely as a result of the borrower's prepayment. The provision was designed to permit lenders to avoid the penalties only when they inadvertently have received usurious interest as a result of the borrower's actions in prepaying an otherwise non-usurious loan. It is inconceivable that the legislature intended that the "refund or credit" provision be used by lenders as a bootstrap to escape the statutory penalties whenever their own unilateral actions cause them to receive usurious interest.
Here, Colonial's receipt of usurious interest did not result from the Coppedges' prepayment; it arose solely from Colonial's unilateral actions taken after the Coppedg-es prepaid the loan, viz., the charging and receipt of the $9,100. Thus, we hold that the "refund or credit" provision of article 5069-1.07(a) is inapplicable as a matter of law and that Colonial is subject to the statutory penalties for charging and receiving usurious interest.
Under article 5069-1.06, the Cop-pedges are entitled to receive from Colonial "three times the amount of usurious interest contracted for, charged, or received . and reasonable attorney fees_" Tex. Rev.Civ.Stat.Ann. art. 5069-1.06 (Vernon Supp.1986). Colonial charged and received $5,943.77 in usurious interest. The Cop-pedges are entitled to recover three times that amount, or $17,831.31, plus reasonable attorney's fees, under article 5069-1.06.
Finally, the Coppedges argue that, in addition to their statutory remedy, they are entitled to recover damages under the common-law action for usury. They further contend that the common-law theory permits their recovery of all the interest that they paid Colonial, including the interest paid within the legal maximum. We disagree.
Initially, we note that when the legislature creates a cause of action and a remedy for its enforcement, that legislation is regarded as cumulative of the common-law cause of action and remedy, unless the statute expressly or impliedly negatives the latter. Juneman v. Franklin, 67 Tex. 411, 3 S.W. 562, 563 (1887). Repeal of the common-law action and remedy by implication is disfavored and requires a clear repugnance between the common-law and statutory causes of action. Thouvenin v. Rodrigues, 24 Tex. 468, 479 (1859). The common-law action to recover usurious interest paid was established in Texas in Bexar Building & Loan Association v. Robinson, 78 Tex. 163, 14 S.W. 227 (1890). Although the legislature subsequently established a statutory scheme providing for the recovery of usurious interest contracted for, charged, or received, the legislature neither expressly declared nor necessarily implied an intention to abrogate the common-law remedy. We conclude that the statutory action for usury did not repeal the common-law action established in Robinson. Accord Commercial Credit Equipment Corp. v. West, 677 S.W.2d 669, 679 (Tex.App.—Amarillo 1984, writ ref'd n.r.e.). remedy for its enforcement, that legislation is regarded as cumulative of the common-law cause of action and remedy, unless the statute expressly or impliedly negatives the latter. Juneman v. Franklin, 67 Tex. 411, 3 S.W. 562, 563 (1887). Repeal of the common-law action and remedy by implication is disfavored and requires a clear repugnance between the common-law and statutory causes of action. Thouvenin v. Rodrigues, 24 Tex. 468, 479 (1859). The common-law action to recover usurious interest paid was established in Texas in Bexar Building & Loan Association v. Robinson, 78 Tex. 163, 14 S.W. 227 (1890). Although the legislature subsequently established a statutory scheme providing for the recovery of usurious interest contracted for, charged, or received, the legislature neither expressly declared nor necessarily implied an intention to abrogate the common-law remedy. We conclude that the statutory action for usury did not repeal the common-law action established in Robinson. Accord Commercial Credit Equipment Corp. v. West, 677 S.W.2d 669, 679 (Tex.App.—Amarillo 1984, writ ref'd n.r.e.).
However, the common-law action will not afford the Coppedges any relief beyond that which they have been granted under article 5069-1.06. Under the common law, a debtor who has paid usurious interest can recover the amount by which the interest paid exceeds the legal maximum, but not the amount of interest paid within the legal rate. Thompson v. Kansas City Life Insurance Co., 102 S.W.2d 285, 286 (Tex.Civ.App.—Waco 1937, writ ref'd). Article 5069-1.06 permits recovery of three times the amount by which the total interest contracted for, charged, or received exceeds the legal maximum, i.e., three times the amount permitted by the common law. Tex.Rev.Civ.Stat.Ann. art. 5069-1.06 (Vernon Supp.1986). These two remedies are independent, and we disagree with West to the extent that West requires the common-law remedy to "be viewed in light of the present provisions of article 5069-1.06." See West, 677 S.W.2d at 680.
Although the usury statutes did not repeal the common-law action, we hold that the Coppedges are not entitled to recover damages under both theories. It is well-established that an aggrieved party is entitled to only one recovery for the same loss, even when alternative remedies exist. Vick v. George, 671 S.W.2d 541, 551 (Tex.App.—San Antonio 1983), rev'd on other grounds, 686 S.W.2d 99 (Tex.1984). The damages that the Coppedges have sought under alternative causes of action are the result of one loss, viz., the usurious interest charged and received by Colonial. Thus, they are entitled to satisfaction under either the common law or article 5069-1.06, but not both.
Accordingly, we affirm the judgment of the trial court to the extent that it rendered judgment against the Coppedges on their common-law cause of action for usury, but reverse and render as to their claim for statutory usury penalties in the sum of $17,831.31 (3 X $5,943.77), plus reasonable attorney's fees. Tex.R.Civ.P. 434. Because reasonable attorney's fees have not been determined, we remand this case to the trial court for determination of reasonable attorney's fees due the Coppedges under article 5069-1.06.
DEVANY, J., files a dissenting opinion..