Opinion ID: 1627996
Heading Depth: 1
Heading Rank: 1

Heading: Voluntary Payments

Text: One of the grounds for the trial court's decision against Ferguson's claim of usury was its conclusion that the payment of interest in advance was voluntary and hence not usurious. On this point the trial court found that it was Ferguson who insisted upon prepayment of the first year's interest in advance and that the quarterly payments during the first three years be made as advance interest payments rather than principal so that he and his associates would receive the advantage of earlier income tax deductions. It found that Ferguson would not have made the purchase from Tanner without these provisions for advance first year and quarterly payments being designated for advance interest rather than principal. Ferguson admitted that for tax benefits he was the one who insisted on the first year's interest being payable in advance after learning that Tanner required more than $6,000 be paid at the time of closing. The trial court concluded, and Tanner insists, that this amounted to a voluntary prepayment of interest for the convenience of Ferguson. Tanner bases its argument on the holding of Vela v. Shacklett, 12 S.W.2d 1007 (Tex.Com.App.1929, jdgmt adopted), and the rule stated in 45 Am.Jur., Interest and Usury § 178 at 142 that interest is not usurious if voluntarily paid in advance by the borrower for his own personal convenience and not as a matter of contractual compulsion. See also 57 A.L. R.2d 630, 670-71. The Court of Civil Appeals correctly overruled Tanner's contention on this point. Negotiations of the parties may have some relevance in ascertaining the dominant purpose and intent of the parties embodied in the contract interpreted as a whole and in light of attending circumstances and of the governing rules of law that the parties are presumed to have intended to obey. Walker v. Temple Trust Company, 124 Tex. 575, 80 S.W.2d 935 (1935). However, once the agreed terms have been reduced to writing in the form of a compulsory contract, the test of alleged usury is not concerned with which party might have originated the alleged usurious provisions.