Opinion ID: 1837967
Heading Depth: 3
Heading Rank: 1

Heading: Did Watkins Evidence Unfitness to Practice Law by Entering into a Usurious Contract?

Text: It should first be noted that the record reflects no attorney-client relationship between Watkins and Carolyn Mullins. Since the conduct in question arose outside Watkins' professional capacity, discipline should be imposed only if the alleged misconduct is of a serious nature, and tends to show him to be an unfit person to be an attorney. Rhodes v. Rhodes, 420 So.2d 759, 761 (Miss. 1982). The Bar contends that Watkins engaged in such conduct by promising to repay the loan to Carolyn Mullins at a usurious rate of interest. The Bar relies upon the language of Miss. Code Ann. § 75-17-1 (Supp. 1988) which speaks of interest rate limits in terms of what a borrower or debtor may contract for and agree to pay. The Bar reasons thusly: Section 75-17-1 allows a borrower to agree to pay interest up to a certain percentage rate; as a corollary, therefore, a borrower may not agree to pay interest above the statutory ceiling; therefore, a borrower who agrees to pay interest above the statutory ceiling violates § 75-17-1. The Bar's interpretation of the statute has a certain logical appeal. By placing the onus on the borrower, however, it ignores the central purpose of usury law: protecting borrowers from overreaching creditors. See Consumers Credit Corporation of Mississippi v. Stanford, 194 So.2d 868, 871 (Miss. 1968) (usury statutes reflect effort to prevent certain class of moneylenders from exacting exorbitant and oppressive interest rates); Early v. Williams, 239 Miss. 320, 123 So.2d 446 (1960) (purpose of usury law is to hold moneylenders accountable for improvident contracts). According to 45 Am.Jur.2d Interest and Usury § 8 (1969): In construing a statute relating to interest or usury, the court ... should discover the legislative intent, and if such intent is determined, it controls general statements in the act... . The object of usury legislation being to protect borrowers from the outrageous demands often made and required by lenders, that view of the law should be adopted which will accomplish this purpose. The phrasing of § 75-17-1 is concededly ambiguous and facially amenable to the construction placed upon it by the Bar. But such a construction cannot be reconciled with the usury law's fundamental aim of providing a shield for vulnerable or imprudent debtors. The responsibility for complying with the usury law falls upon the lender, not the borrower. It is the creditor, not the debtor, who commits an illegal act upon entering a usurious contract. This view is supported by the rule that the commission of usury requires an intent to commit the act which results in the exaction of a usurious charge. Cortner v. Bennett, 230 Miss. 369, 376, 92 So.2d 559 (1957) (emphasis added); see also Jones v. Hernando Bank, 194 Miss. 474, 13 So.2d 31, 32 (1943) (To constitute usury, there must be an intent to commit the act which results in the exaction of a usurious charge). To exact means to press for or demand. Webster's New Collegiate Dictionary 397 (5th ed. 1977). Obviously, only the lender can possess the intent to exact. It is clear, therefore, that the liability for usury violations falls upon the lender and not the borrower. Accordingly, Watkins did not break the law when he agreed to repay Carolyn Mullins at a rate of interest exceeding that allowed by § 75-17-1. Whether or not Watkins qualifies as a vulnerable or improvident debtor is irrelevant. What is relevant is that Carolyn Mullins, as a lender, is not within the category of persons that the usury law is designed to protect. Watkins's promise to repay his debt to Carolyn Mullins at a usurious rate therefore offends neither the letter nor the spirit of § 75-17-1. Since the alleged illegality of Watkins' action in entering the subject contract underlies the Bar's claim that Watkins is unfit to practice law, the Bar's claim in this regard must fail as a matter of law.