Opinion ID: 1160989
Heading Depth: 1
Heading Rank: 7

Heading: penalties awarded to the plaintiffs

Text: K.S.A. 16-207(e) provides: Any person so contracting for a greater rate of interest than that authorized by this section shall forfeit all interest so contracted for in excess of the amount authorized under this section; and in addition thereto shall forfeit a sum of money, to be deducted from the amount due for principal and lawful interest, equal to the amount of interest contracted for in excess of the amount authorized by this section and such amounts may be set up as a defense or counterclaim in any action to enforce the collection of such obligation and the borrower shall also recover a reasonable attorney fee. In awarding damages, the trial court interpreted this section of the statute and stated: The Court interprets the plain language of the statute in question to mean that `shall forfeit all interest ... in excess' requires defendants to pay back or be credited for excess interest paid by the plaintiffs prior to this action. The Court interprets the rest of the statute which states that the Defendants shall `additionally' forfeit a sum of money to be deducted from the `amount due for lawful principal and interest' as merely rewriting the wrongful instrument to include in the future only that which is lawfully allowed. This is accomplished by the paragraph above with a new note showing a balance of $28,617.26 at 8.79% for 30 years at $252.66 per month. Based on this interpretation of the statute, the court did not deduct an additional sum of money from the principal and legal interest on the loan equal to the amount of illegal interest contracted for. Instead, the trial court reformed the note so that the plaintiffs only owed legal interest in the future and credited those future payments with the illegal excess interest amounts that the plaintiffs had already paid. The plaintiffs claim that the trial court misinterpreted this statute and that they were entitled to an additional deduction from their loan, equal to the amount of the excess interest, as a penalty against the defendants. On their cross-appeal, the plaintiffs ask this court to award them this additional damage, pursuant to K.S.A. 16-207, against the defendants. However, the plaintiffs did not bring a defensive statutory usury action pursuant to K.S.A. 16-207. Instead, they brought an offensive common-law usury action. Thus, under their common-law action, the plaintiffs are not entitled to the statutory damages listed in K.S.A. 16-207. Such penalty, if it even exists under the statute, is not provided for under the common-law usury claim. As such, the plaintiffs are not entitled to this damage award and the trial court properly denied it, although based on a different reason. This issue fails. Affirmed in part and reversed in part.