Court Opinion

ID: 9775080
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:43:07.680606+00
Date Added: 2024-06-11T07:32:19.937959
License: Public Domain

Ward, Justice, concurring. I deem it appropriate to concur in this case chiefly for the purpose of commenting on the caveat contained ixx the case of Hare v. General Contract Purchase Corporation, 220 Ark. 601, 249 S. W. 2d 973, since the opinioxx indicates the caveat will be followed hereafter. By reference to the Hare case it will be found that the caveat is divided into three sections. I can see nothing wroxxg with sectioxx (1). Section (2), in my judgment, contaixxs dangerous implications. It is realized that this caveat was probably intended only as a general guide for future decisions, but at the same time its language is calculated to so disturb legitimate business practices as to justify pointing out inherent dangers before they are incorporated into the body of law by decisioxxs of this Court. For the sake of brevity section (2) will not be copied here, but will be referred to as it appears in the Hare case, supra. The objections I wish to point out can be made plainer by use of a simple, imaginary case which, it is submitted, is typical of many actual cases that might arise, and which comes within the framework of this section of the caveat. The imaginary case. A, a secondhand car dealer, sells B a used car for $500 and takes his note for that amouxxt due in one year, with interest at 10% per annum from date. Evidencing- the transaction is a bill of sale, signed by both A and B, showing the above facts. A then takes B’s xxote to C, a person or company engaged in buying (or discounting) commercial paper, and sells him the note for $490 cash. What happens. B reads the caveat in the Hare case axxd calls on his lawyer, L. Suit is filed by B to cancel his note for usury. At the trial there is no trouble proving that C had many times before discounted notes for A, and, of course, A was reasonably sure he would do so this time. If L has any trouble making this proof, he can get material assistance from caveat section (3). B swears A had a cash price of $495 but boosted it up to $500 for credit. A cannot deny this. C cannot deny, of course, that he will make $10 more than 10% interest on B’s note. The trial judge, having read section (2) of the caveat, perceives there is only one question of fact to determine, and so holds to this effect, that A, at the time he sold the car to B increased his cash price with the reasonable assurance that he could discount the paper [B’s note] to C, then finds for B. The realization of just what the jury might do in the above hypothetical case is enough to give the handlers of commercial paper a nightmare. Not only could C get hurt but so might anyone who purchased B’s note from C. The result. 1. In effect the caveat overrules numerous decisions of this Court [several cited in the opinion in this case] that a seller can fix his own price for his merchandise, and that he can [safely?] fix one price for cash and a different price for credit. 2. In effect the caveat makes usury depend on acts subsequent to the execution of the note. It must be concluded from the wording of the caveat itself that B’s note would never have become tainted with usury if: (1) A had kept the note; (2) A had sold the note to someone who was not “engaged in the business of purchasing” notes; or (3) A had no assurance in advance that C would discount B’s note. It is readily conceded that the intervention of some third party, on the theory of agency, might be so related to the payee as to indicate usury, but here C has done nothing more than let A know he is in the discounting business and was willing to handle his paper. Surely no one doubts that the discounting of commercial paper is a legitimate occupation. In Yol. 55 Am. Jur. at page 344 it is stated: “Bills and notes, like other property, may be bought and sold on such terms as may be agreed upon, and a discount at any rate,” etc., citing a long list of authorities. The apparent intent on the part of this Court to protect the public from usurious transactions is laudable, but it occurs to me that we should be very careful in our effort to act as guardian that we do not inadvertently endanger or unjustly impede the transaction of legitimate business, particularly in the important realm of the free and confident circulation of commercial paper. It appears to me also that many of the perplexing problems which arise out of usury charges could be met by the simple expedient of this Court requiring that every questionable charge be itemized or treated as interest. As long as credit prevails people are going to buy, and, as I see it, the only practical protection this Court can give is to guard them from being deceived. So, when a person desires to buy a car or any other article of merchandise, if he consents to pay the credit price and also to pay for an insurance policy, etc., he could not expect to be relieved of his assumed obligation where no deceit or fraud is involved and he knows full well what he has agreed to pay for. To say that, under such a rule, the public would be imposed on by unconscionable dealers and finance companies, is to admit that competition in business is no longer effective to keep prices reasonable. Under the application of the rule I have proposed the question of usury in any transaction would depend on the presence or absence of any kind of fraud or deception, and I would not object to a strict enforcement to protect the public. Under the caveat, however, certain specified acts which are legal per se can, by certain declared presumptions and relationships, culminate in usury. In answer to this it could be said that the caveat presupposes an element of deception. If so, let it be met on that basis as I have suggested. It appears to me, however, that the caveat attempts to deal with a deception it imputes to the dealer — a deception that exists only in the mind of the dealer and which cannot be reached by any practicable method yet devised by man. My prediction is that the further we attempt to pursue the process of judicial determination suggested in the caveat, the more confused our opinions and the public will become.