Case Name: GIBSON v. HICKS
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1932-03-03
Citations: 47 S.W.2d 691
Docket Number: No. 2596
Parties: GIBSON v. HICKS.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 47
Pages: 691–696

Head Matter:
GIBSON v. HICKS.
No. 2596.
Court of Civil Appeals of Texas. El Paso.
March 3, 1932.
Rehearing Denied March 24,1932.
Isaacks & Lattner, of El Paso, for appellant.
Wilchar & Worrell, of El Paso, for appel-lee.
Second motion £or rehearing denied April 7, 1932.

Opinion:
PELPHREY, C. J.
This suit was brought by H. E. Hicks, as-signee of his mother, Mrs. Catheryn Hicks, against M. P. Gibson, to recover the sum of $350, alleged to be the amount due as the statutory penalty paid as usury on a loan of $700.
Appellee alleged that in September, 1930, Mrs. Catheryn Hicks borrowed $700 from appellant, Gibson, said money to be due and payable on October 13, 1930; that appellant exacted of Mrs. Hicks, and she agreeing to pay him, the sum of $100 as interest for the use of said $700 for said time; that at the expiration of said time Mrs. Hicks requested of appellant the extension of the time of payment to November 20, 1930, which extension was granted upon the agreement of Mrs. Hicks to pay to appellant as interest on said loan as extended an additional sum of $75; that on the date of the extension of said loan appellant demanded of Mrs. Hicks a note for the amount of $700, together with the amount of said sums of interest, and that said note be secured by a chattel mortgage; and that, in compliance with said demand, Mrs. Hicks, on October 13, 1930, executed and delivered to appellant her note payable to appellant in the sum of $875, due and payable on November 20, 1930, and to secure said note executed and delivered to appellant on October 29, 1930, a chattel mortgage on certain household furniture and fixtures, together with two automobiles, which we designate as one Durant Inotor sedan and one Oakland sport coupé. Appellee alleged the assignment and transfer to him by Mrs. Hicks of all her rights in the cause of action herein alleged.
Appellee alleged that on February 17, 1931, appellant demanded payment of the said sum of $875, and threatened foreclosure of said mortgage; that on the last-mentioned date appellant received said two automobiles at an agreed price or value of $875 in full settlement of said loan and said interest. Ap-pellee alleges that said transactions, with the receipt and payment of $175, was usurious to appellee's damage in the sum of $350, for which he sues.
Appellant answered, so far as it is necessary to state, by general denial, and by special answer, denies that he ever loaned Mrs. Hicks $700 or any other amount at a usurious rate of interest; that in the fall of 1930 Mrs. Hicks was indebted to him, and insisted upon giving him a note secured by" a mortgage on two automobiles and household furniture and fixtures; that he wrote a hote for Mrs. Hicks to sign for the principal sum of $800, and that without solicitation on his part Mrs. Hicks insisted on and did execute said mortgage on said automobiles and household furniture therein described and specified, the indebtedness for which said mortgage was executed at $875, whereas she owed him only $800, and, upon learning of the indebtedness indicated in said mortgage, he, at her request, changed said note to correspond with the mortgage, but never at any time did he consider the $75 an indebtedness, nor claim same as an indebtedness, and changed said note only for the purpose to correspond with said mortgage; that Mrs. Hicks thereafter turned her affairs over to J. H. McBroom with a power of attorney to settle her affairs; that thereafter a controversy arose between Mc-Broom and appellant as to the amount due appellant by Mrs. Hicks, McBroom contending that appellant had received usurious interest from _ Mrs. Hicks, which was denied by appellant; that McBroom, for Mrs. Hicks, proposed to settle all matters between them by appellant accepting in full settlement of all demands the two automobiles, and thereby releasing the indebtedness of Mrs. Hicks; that appellant agreed to said proposition of settlement, and, in consideration of Mrs. Hicks' waiving all claims for usurious interest, accepted said two automobiles in full settlement, all in compromise of their differences and contentions, and alleged said automobiles to be of value not exceeding $500.
Appellee answered by general denial, and alleged that by a contract and agreement appellee delivered to appellant tbe two automobiles at an agreed value of $875 in full settlement of said loan to Mrs. Hicks.
On tbe trial, tbe case submitted to tbe jury on special issues, it was found: Mrs. Hicks, in September, 1930, borrowed $700 from appellant, to be returned on October 13, 1930, and agreed to pay appellant $100 as interest on tbe $700 for the time inquired about; that on October 13, 1930, Mrs. Hicks agreed to pay appellant $75 as interest on the loan of the $700 to October 13, 1930; that tbe market value of tbe Oakland sport coups was $400, and tbe market value of tbe Durant sedan was $575. "Question No. 8: Was there a settlement between Mrs. Catberyn Hicks, represented by J. H. McBroom, and the defendant, Gibson (appellant), in wbicb all matters in controversy between tbe defendant and the said Mrs. Hicks were settled? Answer 'yes' or 'no.' " Tbe jury answered, "No."
We understand question 8 referred to tbe controvefsy as to whether tbe charge of usury for tbe loan of tbe $700 entered into tbe settlement.
On the finding of the jury, tbe court entered judgment in favor of appellant in the' stun of $350, being double tbe amount of tbe interest paid on tbe loan, and appellant prosecutes this appeal.
Opinion.
Appellant moved for an instructed verdict, and also for judgment after verdict, and assigns error to tbe trial court's overruling thereof.
In a consideration of this ease, tbe first question presented is: Can parties to a usurious transaction, by compromise or settlement, agree, in advance of payment of tbe usury, that tbe payer shall not assert any claim therefor against tbe party collecting it? There can be no doubt that, after usury has been collected, a compromise or settlement of the claim for a recovery of the usurious interest so collected and tbe statutory penalty may be entered into and be binding on tbe parties. This is well established in Gilliam v. Alford, 69 Tex. 271, 6 S. W. 757; Stout v. Ennis Nat. Bank, 69 Tex. 392, 8 S. W. 808; Cotton v. Beatty (Tex. Civ. App.) 162 S. W. 1007; Fontaine v. Davis & Powell (Tex. Civ. App.) 164 S. W. 386, but those decisions will not control tbe disposition of tbe question here. The only case wbicb seems to support tbe contention of appellant that a settlement may be entered into before tbe usury has been paid is that of Whitlow v. Culwell, 16 Tex. Civ. App. 266, 40 S. W. 642, 643. A study of that decision, however, reveals that tbe court held that a valuation of tbe property turned over bad not been agreed upon by tbe parties nor bad its value been proved in tbe case. The court said: "Tbe consideration of $7,000 recited in tbe deed was by virtue of an agreement between tbe parties, but no valuation of tbe property was in fact agreed upon, and tbe record does* not disclose its value. "
Tbe court then, after citing tbe article pro - viding for the collection of tbe penalty for usury, further said: "It devolved upon tbe plaintiff, suing to recover a penalty, to bring himself strictly within tbe terms of tbe statute."
Tbe court was evidently referring to tbe failure of plaintiff to prove that tbe property turned over to defendant was worth such an amount as showed that he bad collected usury or that such a value had been agreed upon by tbe parties. Therefore, tbe later bolding of tbe court to tbe effect that the compromise and settlement of tbe litigation in which usury bad been pleaded bad the effect of eliminating tbe usury feature from dealings between tbe parties in their inception was unnecessary and dicta.
It has not been disputed that tbe charge of usury in a transaction could be established by the acceptance of property instead of money, and, if here, the value of tbe property received by appellant exceeds tbe amount due him by Mrs. Hicks and lawful interest thereon, then appellant would be liable for tbe penalty the same as if he bad received tbe equivalent of such value in money.
If, however, appellant bad accepted tbe two cars in settlement of bis claim, and tbe value thereof bad not exceeded tbe amount due and lawful interest thereon,, then be would have collected no usury. On the other band, if there bad been an agreement between the parties that tbe two automobiles should be received at an agreed value, and that value bad not exceeded the amount due and lawful interest, appellee would be estopped, in our opinion, to later come in and show that tbe market value of tbe cars was greater than tbe amount agreed upon. This would, we think, be true by reason of tbe fact that the law will not permit a person who agrees to sell property at an agreed price to, in the absence of fraud or mistake, later dispute that price.
We are also of tbe opinion that, if there be a bona fide dispute as to whether a particular transaction is tainted with usury, tbe parties may settle such dispute and compromise their differences. For such a compromise to be effective, however, it must appear that there was a bona fide dispute as to tbe existence of usury, that tbe parties bad a doubt as to its existence, and tbe resolution of such doubt must have been a point in tbe settlement. Parker v. Fulton Loan & Building Ass'n, 46 Ga. 166.
In tlie ease of a usurious contract, tlie debtor always agrees to make tlie usurious payment, and we fail to see bow it can be said that a subsequent agreement of tbe debtor to pay usurious interest, even tbougb it be in the nature of a compromise or settlement, would preclude him from asserting a claim for the recovery of the usurious interest and the penalty after the usury has been collected by the creditor. Such an agreement would, in the first place, be founded on no'consideration, the debtor having received nothing for his so agreeing, and the creditor would merely be surrendering a part of a sum which he had no lawful right to collect.
Does the present ease come within the doctrine announced in Parker v. Puller Doan & Building Ass'n, supra, that is, do the facts ¡here show that there was a bona fide dispute between the parties as to the existence of usury in the original transaction between appellant and Mrs. Hicks?
Mr. McBroom, who represented Mrs. Hicks in the settlement, testified relative to the negotiations:
"I had conversations with Mr. Gibson. He did not make any claim that this seven hundred dollars he let Mrs. Hicks have was for an investment. He told me on this individual matter that he had loaned her seven hundred dollars, and had taken a check, as I recollect, for eight hundred' and seventy-five dollars, and he learned that she was becoming involved and he asked for the chattel mortgage and it was given and he put it of record. There was no claim made by Mr. Gibson at all that it was any other than a straight loan to -her, that is right as far as this is concerned.
"As to whether, now in this, when this was done, when this was signed, when any settlement was made, I never signed any settlement in which I released Gibson from usurious interest which he charged in that transaction or any other transaction, well, I Just gave him those two cars in consideration in turning this over, that is all he got, he was to be free."
"It was understood between you and me, you as representative of Mr. Gibson, and me as representative of Mrs. Hicks, that this transfer of the cars to him and him transferring the note to whoever I said, together with the mortgage, was a settlement of all matters between him and Mrs. Hicks, Gib--son and Mrs. Hicks; that was my understanding; I thought I was settling Gibson's matters. As to whether I thought that I was settling the Gibsón matter, but was settling the mortgage, no, I was settling the Gibson matter. I can explain how that was, the court overruled it, and it was not admissible, I contended that Gibson didn't have that much money coming; I claimed that he owe'd Mrs. Hicks money on other transactions, and he should not collect the full eight hundred and seventy-five.
"You contended that he should collect all that and had a right to foreclose the mortgage; I also believed they were only contending that seven hundred dollars was loaned on this last transaction. I feel sure that is right. As to whether I didn't understand from Mr. Gibson and you as Mr. Gibson's representative, his contention was— and understand you don't know whether this was mentioned in my presence or not, you think it was — that at the time she got the money, whether it was a loan or investment, that he advanced seven hundred dollars and she gave him a check for eight hundred dollars, that when that check was not paid that he demanded of her a note and mortgage and she gave him a note for eight hundred dollars, and then executed a mortgage specifying the note at eight hundred and seventy-five dollars, and he never claimed the seventy-five dollars at all, well, no that was never mentioned."
After having been thus questioned as to just what was in dispute between himself and Judge Isaacks, he further testified: "I have called this a loan of seven hundred dollars, and there was never any contention whatever' by Mr. Gibson that it was anything else but a loan in this transaction."
It seems clear, that, if Gibson in the negotiation of the settlement was only claiming that the transaction was a loan of $700. and he was claiming the right to collect $875 by virtue of that loan, then there could have been no bona fide dispute as to the transaction being tainted with usury. On the other hand, if the transaction was as testified to by Gibson, there would be no usury, but, from MeBroom's testimony, no such contention was made to him.
Judge Isaacks, it is true, testified that "McBroom was contending there was an element of usury in the note and I was contending there was not and we finally agreed upon a settlement of the whole matter."
Prom what has been said there was a conflict in the testimony as to whether there was a bona fide dispute between Judge Isaacks and Mr. McBroom as to the existence of usury in the original transaction, and a question which the jury should have passed upon.
The proposition advanced by appellant that a verdict should have been instructed in his favor because of the evidence being uncon-troverted that all matters pertaining to the $700 loan, including the claim of penalty for usurious interest, was settled and compromised, thereby estopping appellee from recovering, is without merit.
Appellant's motion for judgment, however, should have been granted.
Appellee based Ms right of recovery upon the fact of an agreed value upon the automobiles, wbicb fact, we think, finds no support in the evidence.
There is nothing in the record to show that Judge Isaacks and Mr. McBroom ever agreed as to the value at which they were to be accepted by Gibson, and it is apparent that they are the ones who concluded the agreement. After they had reached their agreement, there was nothing to be done except a delivery of the cars to appellant, and that agreement did not require any receipt from him to terminate the transaction.
It clearly appears that appellee, merely acting as agent in the delivery of the cars, took it upon himself to request from appellant a receipt for the cars, inserting therein a statement that they were received at an agreed price of $875. In view of the fact that the settlement had been theretofore consummated, that appellee had nothing to do with the settlement, and that, under the facts here disclosed, appellant was not called on to execute any. receipt as his part of the settlement, we are of opinion that the receipt was not evidence of the fact that any price had been agreed upon in the settlement.
If there had been any dispute as to whether or not a value had in fact been agreed upon, then the receipt might have been admissible, but under the facts here we fail to see its probative force.
Because the findings of the jury were not upon the issues presented in the pleadings of appellee, the motion for judgment was erroneously overruled, and the judgment is therefore reversed and the cause remanded.
Justice WALTHALL concurs in the holding that the judgment should be reversed and the cause remanded, but does not concur in the reasons assigned.