Court Opinion

ID: 5004834
Source: CourtListenerOpinion
Date Created: 2021-10-01 01:51:02.538109+00
Date Added: 2024-06-11T08:17:13.980991
License: Public Domain

LOONEY, Justice
(dissenting).
After further consideration, I am convinced that the court erred in holding the loan contract, involved in this controversy, usurious, and in affirming the judgment below.
The contract consists of four parts: The principal note or bond for $3,000, with attached coupons, representing 7½ per cent, interest, and the deed of trust securing same; the second note for $709.15, payable in ten installments, representing 2½ per cent, interest, and the deed of trust (subordinate to the first) securing the latter note. Each note is fair upon its face, and, considered alone, no intention to collect unlawful interest can be found, and, if paid according to its terms, no usurious interest would have been collected; however, the majority construed certain language of the second deed of trust, securing the -2⅛ per cent, interest note, as furnishing a contingency permitting the exaction of unlawful interest, therefore held the contract usurious.
According to my view, the amount accrued on the interest note for $709.15 would mature on payment, or maturity for any reason, of the principal note, which provides: “That if any one of said annexed interest coupons (representing 7½ per cent, interest) shall remain unpaid for ten days after maturity thereof, or if any covenant or agreement contained in the deed of trust of even date (delivered herewith) be violated, then, at the option of said payee or holder of this bond, the whole principal and interest then accrued shall at once become due and payable. * * ⅜ ” While this language is broad enough to include and mature all interest accrued on the principal, yet its connection indicates that it refers alone to the accrued portion of the 7⅛ per cent, coupon notes attached to the bond; however, I am of opinion that the maturity of the principal, in the absence of an express agreement to the contrary, which does not exist in this case, would necessarily mature all accrued interest, without regard to the manner or form in which the same is evidenced, or whether so expressly provided or not. The Austin Court of Civil Appeals announced doctrine, to this effect, in Hughes v. Bryson, 29 S.AV.(2d) 898. The court there had under consideration a case where makers executed notes representing the principal with interest coupons attached, also other notes representing part of the interest. The court held that payment of the principal necessarily discharged the notes representing unpaid interest. There, as here, no rights of an innocent purchaser were involved, nor did either the trust deeds or notes contain any express agreement that the exercise of the option to pay principal notes would not cancel other notes. So, applying this rule, in the illustration given in the majority opinion, if the holder of the bond or principal note should have exercised the option to declare same due and payable, all accrued interest, however evidenced, would likewise become due and payable, whether expressly so provided or not; . further accrual of interest would then cease, and the contractual rights of the parties would proceed on a different basis; that is, under the terms of the contract, the amount due, principal and accrued interest, after being matured, would, in the future, hear 10 per cent, interest per annum. Under this view, which I believe correct, no taint of usury can be discovered in the loan contract under consideration.
But, aside from this view, I do not think a proper interpretation of' the language of the second deed of trust will condemn the contract as usurious. It does not state that, when accelerated, the entire unpaid balance of the interest note shall become due and payable; the language is “that the entire debt and obligation intended to be secured herein shall, at the option of the holder thereof * * * become due and payable.” To reach the conclusion arrived at by the majority, the intention to collect unlawful interest is necessarily imputed by construction. Such construction, in my opinion, is not the most reasonable or even a necessary one, but rather that we should hold the intention was simply to mature all interest then accrued on the second note. This construction is in harmony with the express provision of the principal note, providing that: “At the option of said payee or holder *1016of this bond, the whole principal and interest then accrued shall at once become due and payable.” Further indicia of an innocent intention is found in the first deed of trust, which, after obligating grantors to pay, when dire, all taxes and assessments against the property, and to maintain improvements in good state of repair, etc., uses this language: “Provided, however, that this clause shall not be construed so as to require us to pay interest on the said bond at a rate greater than ten per centum per annum, and should the rate of interest provided for herein on said taxes exceed said rate, then the holder hereof of the bond secured hereby shall pay such excess.”
An unlawful intent will not be imputed where a lawful one may just as consistently be imputed. To constitute usury, there must exist an agreement requiring the borrower to pay, and entitling the lender to receive, a higher rate of interest than that allowed by statute for the loan or forbearance. Starling v. Hamner, 185 Ark. 930, 50 S.W.(2d) 612. Making a loan with intent to take a rate of interest in excess of the statutory rate is an essential element of usury (Lorber v. Marshall, 124 Or. 272, 264 P. 438), and, where the contract is fair on its face, as I think the one under consideration is, an intention to take unlawful interest must clearly appear (Barnhart v. Richardson, 134 Okl. 19, 272 P. 418, 419). A rule of universal application is that, where a contract is capable of two interpretations, one rendering it void, the other valid, the latter will always be adopted. Texas Emp., etc., v. Tabor (Tex. Com. App.) 283 S. W. 779; City of Memphis v. Browder (Tex. Com. App.) 12 S.W.(2d) 160, 161; 6 R. C. L. p. 839, § 229. Gleaned from authorities throughout the country, the general rule is stated in 6 R. C. L. 839, as follows: “If a contract is of doubtful meaning, and one construction would make it legal and another illegal, the courts will adopt that construction which will not impute to the parties an intention to violate the law. Presumptions of the law are in favor of the good faith of all parties to a business transaction, and, if the language of a contract is fairly susceptible of a construction or explanation which renders it valid and enforcible, according to its terms, such construction .will be adopted in preference to one which brands it with illegality, and makes it possible for one to repudiate the performance of his promise while demanding full payment of the consideration to be given therefor. * * * ”
I do not believe this case can !be differentiated, in any material respect, from the case of Walker v. Temple Trust Company, 60 S.W.(2d) 826, decided April 19th, 1933, by the Austin Court of Civil Appeals, in which a similar loan contract was sustained, against the contention that it was usurious and void.
The contract being fair upon its face, for reasons first appearing herein, I think wd should hold, as a matter of law, that no contingency is provided therein authorizing appellants to exact unlawful interest; but, if the language employed be susceptible of that interpretation, it is in my opinion also susceptible of a construction that Will uphold the contract; hence under the authorities, the latter should prevail.
I am of opinion, therefore that the motion for rehearing should be granted, the judgment of the court below reversed, and judgment here rendered for appellants.