Opinion ID: 361085
Heading Depth: 1
Heading Rank: 2

Heading: the usury defense.

Text: 12 The defendants asserted in their original answer that all of the notes show that interest included therein is illegal and usurious and therefore not collectible. This defense was undoubtedly based upon the following rationale: that, under the terms of the contracts sued upon each lot was Purchased by the Wagnons at the price listed as the cash price, See footnote 1, Supra ; that after a down payment of 10 percent there remained a balance of 90 percent of the purchase price for the deferred payment of which the buyer agreed to pay interest at an annual percentage rate of 12.15 percent; that this, when added to the balance of the cash price, represented the face amount of the notes sued upon; that this annual rate of 12.15 percent exceeded the lawful rate of interest in Georgia at the time, which was 8 percent per annum; and therefore all interest was forfeited, reducing the amount due on the notes to a figure that would represent the amount financed, as shown in footnote 1, Supra, instead of the figure represented by the item total of payments as shown in the footnote. 13 The Georgia Supreme Court has confronted the law of usury as it applies to contracts for the sale of land where there is a cash down payment coupled with a mortgage for the balance, payable monthly over a number of years. It has said in effect that if the parties bargain for a price which consists of an initial cash price and an amount added on for the right to pay overtime which might otherwise be considered interest, this added amount is not interest but merely a figure used to determine what is the ultimate price contracted for. On the other hand, the court reasons that if the parties in bargaining for the purchase of property adopt the figure that is in fact the sale price but then agree that the seller will permit deferred payments to be made with interest to be paid thereon, this is, in fact, interest, and if it exceeds the allowable rate, it is usurious interest. 14 The Georgia Supreme Court has defined usury in this way: 15 Code, § 57-102 provides: 'Usury is the reserving and taking, or contracting to reserve and take, either directly or by indirection, a greater sum for the use of money than the lawful interest.' Under § 57-112, any person violating the provisions of § 57-101, by charging more than the maximum rate of interest, forfeits the entire interest. Where land is Sold at a cash price, but on deferred payments with a greater rate of interest than allowed by law, the contract is usurious. Irvin v. Mathews, 75 Ga. 739(2); Bird v. Benton & Brother, 127 Ga. 371, 373(4), 56 S.E. 450; E. Tris Napier Co. v. Trawick, 164 Ga. 781, 139 S.E. 552. 16 Graham v. Lynch, 206 Ga. 301, 303, 57 S.E.2d 86, 88 (1950) (emphasis added). 4 17 While it would seem to require the services of a master of logomachy to apply this principle of law to a given transaction, the Georgia courts require that the fact finder make such determination. On this record, however, the issue is foreclosed. Although there is sufficient documentation in the record from which the defendants could argue that these transactions should be classed as Sales for a cash price for which the loan was extended at a usurious rate for the payment of the balance, 5 it is clear that the defendants waived the right to contest this factual issue in the trial court. 6 18 Although the defendants attempted to revive the issue of usury when it came to a computation of the interest, this partial defense is one that could be established only by proving the true nature of the purchase and deferred payment transaction. As to this, it seems clear that the defendants waived the opportunity to present this fact issue to the jury. In response to the court's inquiry after the jury's verdict on the issue of fraud: Are there any other possible issues besides failure of consideration and accord and satisfaction? counsel responded: I believe the others had been abandoned. Further, after the jury's verdicts were all in, but before the jury was discharged, the court stated: 19 The Court proposes to enter a judgment which is the face amount of the notes less payments at whatever the interest rate is. I gather from all three counsel that is computable, less $250 off the front end. Does anybody have a different idea? 20 To this, counsel for both parties assented. The court then asked: Nothing further from this jury then? and both counsel responded: No, Sir. 21 Since the appellants' claim of usury in the appellee's proposed computation of interest is based upon their contention that the original face amount of the notes represented a cash price plus an illegal rate of interest, and since to establish that proposition a jury trial would have been required, it is evident that the usury point was not preserved after the jury was discharged. We therefore conclude that there was no basis on which the entire interest or the added on amount used to compute the deferred payment price, whichever it is called, must be deducted from the face amount of the notes as constituting usurious interest. 22