Case Name: Commonwealth Trailer Sales, Inc., appellee, v. George Bradt et al., appellants
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1958-01-31
Citations: 166 Neb. 1
Docket Number: No. 34255
Parties: Commonwealth Trailer Sales, Inc., appellee, v. George Bradt et al., appellants.
Judges: Heard before Simmons, C. J., Carter, Messmore, Yeager, Chappell, Wenke, and Boslaugh, JJ.
Reporter: Nebraska Reports
Volume: 166
Pages: 1–19

Head Matter:
Commonwealth Trailer Sales, Inc., appellee, v. George Bradt et al., appellants.
87 N. W. 2d 705
Filed January 31, 1958.
No. 34255.
Thomas D. Brower and George P. Burke, for appellants.
Healey, Davies, Wilson & Barlow, Jack R. Knicely, and Patrick W. Healey, for appellee.
Heard before Simmons, C. J., Carter, Messmore, Yeager, Chappell, Wenke, and Boslaugh, JJ.

Opinion:
Wenke, J.
This is an appeal from the district court for Kimball County. It involves a replevin action commenced on September 12, 1956, by Commonwealth Trailer Sales, Inc., whereby it seeks to recover a 1951 Kit house trailer from George Bradt, the sheriff of Kimball County, and Guy Fleming. Plaintiff's right to the possession thereof is based on a chattel mortgage given it by Tommy and Maxine Williams. Trial was had to a jury. After both sides rested the trial court sustained plaintiff's motion for a directed verdict and rendered a judgment accordingly. Their motion for new trial having been overruled, the defendants perfected this appeal.
Appellee, Commonwealth Trailer Sales, Inc., is a Kansas corporation authorized to do business in the State of Nebraska. It engages in the selling of mobile homes, which includes house trailers. It has its principal place of business in Nebraska on U. S. Highway No. 30 near Sidney, in Cheyenne County. We will herein refer to this place of business as the Sidney office. Appellant George Bradt was, at all times herein material, the duly elected, qualified, and acting sheriff of Kimball County. We shall herein refer to him as the sheriff.
On September 10, 1955, appellee, through its Sidney office, sold to Tommy and Maxine Williams, husband and wife, of Kimball, Nebraska, a used 1951 Kit house trailer, serial No. 7917. We shall hereinafter refer to it as the house trailer and to Tommy and Maxine Williams as the Williams. The house trailer cost the Williams a total of $3,063.60. This total consisted of a cash price of $2,795; a time price differential of $88.85; an insurance premium of $170.75; and charges for credit investigation, filing, and title fees of $9. Of this total amount the Williams paid $200 in cash, thus leaving an unpaid balance of $2,863.60.
As evidence of owing this amount the Williams executed a note to appellee whereby they agreed to pay "$62.50 Dollars on the 22nd day of September, 1955 and a like amt. due on the 7th & 22nd days of each succeeding month thereafter for four months. $2301.10 due on the 25th day of Jan. 1956." The Williams paid all these installments except the balloon payment of $2,301.10 due on January 25, 1956. The installments paid thereon totalled $562.50. !
To secure this indebtedness the Williams, on September 10, 1955, executed to appellee a chattel mortgage on the house trailer. This chattel mortgage appellee caused to be filed in the office of the county clerk of Kimball County. Thereafter, on October 27, 1955, appellee assigned to the Williams a transfer of its certificate of title to the house trailer. On January 11, 1956, the Williams obtained a new certificate of title thereto in their own names from the county clerk of Kimball County on which was endorsed the lien thereon as evidenced by the chattel mortgage.
When the $2,301.10 balloon payment became due on January 25, 1956, it was not paid but the time for the payment thereof was extended. A new note was taken therefor by appellee from the Williams on February 20, 1956. This renewal note was in the sum of $2,774.90 and payable as follows: "$77.50 Dollars on the 25th day of March, 1956 and each succeeding month thereafter for twenty months. $1234.90 due on the 25th day of the twenty first month (20 @ $77.50 & 1 @ $1234.90) ." The items included to arrive at this total are as follows: Balloon payment of $2,301.10 due January 25, 1956, under terms of the original note and which had not been paid; insurance premium of $100.14; and a handling charge, referred to as a "Time Price Diff." of $373.66. It is undisputed that this latter amount was the charge made by appellee for extending the indebtedness for the length of time and as hereinbefore set forth. To protect the indebtedness evidenced by the new note appellee secured from the Williams another chattel mortgage on the house trailer. It is dated February 20, 1956. The Williams paid $232.50 on this indebtedness and were given a credit of $67.80 thereon, being the amount due them as credit on life insurance coverage.
"The permissive provisions of sections 45-114 to 45-158, R. R. S. 1943, apply to licensees, but every inhibitory provision contained therein applies alike to licensees and nonlicensees and the officers and employees of either or both, ." State ex rel. Beck v. Associates Discount Corp., 162 Neb. 683, 77 N. W. 2d 215.
Section 45-138, R. S. Supp., 1955, provides, insofar as here material, as follows: "(1) No licensee shall directly or indirectly charge, contract for, or receive a greater rate of interest than nine per cent per annum upon any loan, or upon any part or all of any aggregate indebtedness of the same person, in excess of one thousand dollars. (3) Every loan contract shall provide for repayment of principal and charges in installments which shall be payable at approximately equal periodic intervals of time and so arranged that no installment is substantially greater in amount than any preceding installment."
Sometime in the summer of 1956 the Williams abandoned the house trailer. On August 22, 1956, the sheriff of Kimball County attached the house trailer. He did so under and pursuant to an order of attachment issued out of and by authority of the county court of Kimball County on /that date. The order of attachment was issued at the instance of Henri Johnson, administrator of the Kimball County Hospital, in an action which the hospital had instituted in the county court against the Williams on an indebtedness of $101.40 which they claim the Williams were owing it. The sheriff again attached the house trailer on September 4, 1956. He did so under and pursuant to an order of attachment issued out of and by authority of the county court of Kimball County on that date in an action therein wherein Kenneth C. Fritzler, doing business as Kimball Finance Company, was seeking to recover from Tommy Williams the sum of $944.90. It was after the house trailer had been attached by the sheriff and while he was holding it under such attachments that it was replevined by appellee. Under this situation the question is, can the sheriff, who has attached the house trailer for general creditors of the Williams, avail himself of the defense of usury as it applies to the installment loan of the Williams? We shall assume, for the purpose of discussing this question, that the transactions herein set forth between appellee and the Williams was in violation of the restrictive provisions of the Installment Loan Act hereinbefore set forth.
The general rule is that ¡the defense of usury is for the benefit of the borrower and is personal to him. See, 91 C. J. S., Usury, § 71, p. 648; 55 Am. Jur., Usury, § 121, p. 409.
As stated in 91 C. J. S., Usury, § 71, p. 648: "Since usury laws are enacted for the protection of needy borrowers, and not to punish extortion in money lenders, the. defense of usury is purely personal to the borrower, or those in privity with him, as discussed infra § 126, such as the debtor's sureties, guarantors, heirs, devisees, and personal representatives. This is true whether the statutes declare the contract void in whole or only to the extent of the usury, or whether a penalty is given for the taking. In order to question the validity of a usurious contract, the right must be based on the original debtor's right."
We held in Cheney v. Dunlap, 27 Neb. 401, 43 N. W. 178, 5 L. R. A. 465, that: "The plea of usury as a defense is personal to the borrower and his sureties and privies."
That is, persons in privity with a borrower have the right to attack a transaction as usurious. 91 C. J. S., Usury, § 126, p. 714; 55 Am. Jur., Usury, § 122, p. 410. But strangers thereto may not take advantage thereof. 91 C. J. S., Usury, § 125, p. 713. As stated in 91 C. J. S., Usury, § 124, p. 712: " even though the taking of usury is prohibited and is made punishable as a misdemeanor, the usurious contract will not be void as to third persons."
However, (the courts are not all in accord as to just what status a person must have in relation to the borrower in order to be entitled to attack a transaction as usurious. As stated in 55 Am. Jur., Usury, § 121, p. 409: " the principal difficulty lies in determining who come within (the exception in favor of privies of the debtor."
The sheriff here stands in the shoes of the attaching creditors insofar as any rights may have been obtained by the attachment in and to the property attached.
As stated in 91 C. J. S., Usury, § 131, p. 723: "As a general rule, in the absence of an intent to defraud, general creditors are not allowed to set up usury exacted from a debtor in order to defeat or reduce liens on the debtor's assets." See, also, 55 Am. Jur., Usury, § 124, p. 411.
But in any event the sheriff could acquire no greater rights in and to the property attached than the debtor-owner thereof possessed. We have often held that a purchaser of the equity of redemption cannot avail himself of the usurius contract of his grantor. See, Cheney v. Dunlap, supra; Male v. Wink, 61 Neb. 748, 86 N. W. 472; Bolen v. Wright, 89 Neb. 116, 131 N. W. 185. As stated in Bolen v. Wright, supra: "In support of this claim defendants have cited a number of cases, commencing with Cheney v. Dunlap, 27 Neb. 401, and ending with People's Building, Loan & Savings Ass'n v. Pickard, 2 Neb. (Unof.) 144. From an examination of those cases, it appears that the controlling point in each of them was that the person seeking to interpose the plea of usury was a stranger to the usurious contract, and it was held: 'A mere purchaser of the equity of redemption, being neither surety nor privy, cannot avail himself of the usurious contract of his grantor to which he is a stranger and plead usury in such contract.' Cheney v. Dunlap, supra." The same is true of our holding in a case wherein a subsequent lienholder to a mortgage loan that was usurious sought to raise this issue. See First State Bank v. Niklasson, 116 Neb. 713, 218 N. W. 744. As therein stated: "The further contention of defendant that the note and mortgage of St. Edward bank was usurious cannot be sustained, for the reason that the defense of usury is personal to the debtor, his privies and sureties." In view of these, and other holdings of this court, we do not think the sheriff is in a position to raise the defense of usury. See, also, Fenby v. Hunt, 53 Wash. 127, 101 P. 492; Halsey v. Winant, 258 N. Y. 512, 180 N. E. 253. We think, as stated in 55 Am. Jur., Usury, § 122, p. 410; that: "The rule embraces the heirs, legal representatives, and devisees of the borrower or debtor and those who stand in the relation of sureties, guarantors, or accommodation indorsers, with respect to the tainted obligation." This classification would not include officers who attach the property of debtors for attaching creditors.
We realize there are cases to the contrary. See 55 Am. Jur., Usury, § 124, p. 411. Of these cases Marx v. Hart, 166 Mo. 503, 66 S. W. 260, 89 Am. S. R. 715, is an example. However, we do not think (they come to a correct conclusion on any proper legal reasoning or logic in view of our previous holdings. It is true that the Legislature has broadened the scope of the effect of usury, as it relates to installment loans, in comparison to what it was and now is in the case of ordinary loans. See § 45-105, R. R. S. 1943. But it does not appear that the Legislature, by the enactments relating to installment loans, has extended the scope thereof as to those to whom it is available as has been previously fixed and determined by this court. If the Legislature intended (to do so it could have easily done so by proper language. It is neither the privilege nor the desire of this court to do so in the absence thereof for what is usury, and the effect thereof, is a subject for the Legislature.
In view of the foregoing we find the trial court came . to the correct conclusion and therefore affirm its judgment for appellee.
Affirmed.