Opinion ID: 1389352
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Heading: The framework

Text: The California Constitution, article XV, section 1, states No person, association, copartnership or corporation shall by charging any fee, bonus, commission, discount or other compensation receive from a borrower more than the interest authorized by this section upon any loan or forbearance of any money, goods or things in action. [2] (1) The essential elements of usury are: (1) The transaction must be a loan or forbearance; (2) the interest to be paid must exceed the statutory maximum; (3) the loan and interest must be absolutely repayable by the borrower; and (4) the lender must have a willful intent to enter into a usurious transaction. (See generally, 4 Miller & Starr, Cal. Real Estate Law (2d ed. 1989) § 10:2, p. 650 [hereafter Miller & Starr]; Comment, A Comprehensive View of California Usury Law (1974) 6 Sw.U. L.Rev. 166, 174.) The element of intent is narrow. [T]he intent sufficient to support the judgment [of usury] does not require a conscious attempt, with knowledge of the law, to evade it. The conscious and voluntary taking of more than the legal rate of interest constitutes usury and the only intent necessary on the part of the lender is to take the amount of interest which he receives; if that amount is more than the law allows, the offense is complete. ( Thomas v. Hunt Mfg. Co. (1954) 42 Cal.2d 734, 740 [269 P.2d 12].) Intent is relevant, however, in determining the true purpose of the transaction in question because ... the trier of fact must look to the substance of the transaction rather than to its form.... `[I]t is for the trier of the fact to determine whether the intent of the contracting parties was that disclosed by the form adopted, or whether such form was a mere sham and subterfuge to cover up a usurious transaction.' ( West Pico Furniture Co. v. Pacific Finance Loans (1970) 2 Cal.3d 594, 603 [86 Cal. Rptr. 793, 469 P.2d 665], quoting Janisse v. Winston Investment Co. (1957) 154 Cal. App.2d 580, 582 [317 P.2d 48, 67 A.L.R.2d 225].) A transaction is rebuttably presumed not to be usurious. ( Janisse v. Winston Investment Co., supra, 154 Cal. App.2d 580, 586; Rose v. Wheeler (1934) 140 Cal. App. 217, 220 [35 P.2d 220]; see generally, 4 Miller & Starr, supra, § 10:2, p. 650.) The borrower bears the burden of proving the essential elements of a usurious transaction. ( Terry Trading Corp. v. Barsky (1930) 210 Cal. 428, 433 [292 P. 474]; Sandell, Inc. v. Bailey (1963) 212 Cal. App.2d 920, 931-932 [28 Cal. Rptr. 413].)