Court Opinion

ID: 9844187
Source: CourtListenerOpinion
Date Created: 2023-09-24 02:58:39.893345+00
Date Added: 2024-06-11T09:15:29.501243
License: Public Domain

DONALDSON, Justice
(concurring in the result).
For the reasons set out in the dissenting opinion, I believe that the face amount of a note should not be used in computing interest if, as a matter of fact, it is more than the amount actually loaned. “Interest” is not a special or technical term which may have one meaning to a layman, another to an accountant, yet another to a lawyer or a judge and still another to a legislator. It means the same to us all. Interest is the price which a debtor pays for the use of a fixed amount of money, that is the “principal.” In our decimal system, interest is generally stated as a percent, being a sum which is in the same ratio to the principal amount as another number is to 100. Thus, any school boy knows that six percent interest on $200 for one year is $12, because 12 is to 200 as 6 is to 100. It is as simple as that.
When interest is computed on a declining balance the computation becomes more difficult, but the meaning of the word “interest” does not change, it is still the price of money lent stated as a ratio to 100. Because the meaning of “interest” is so mathematically certain, mathematicians and accountants have long since established tables and formulas which are universally recognized as correctly stating the actual amount of interest chargeable at any rate, over any period, for any amount of principal and for any number of installments on a declining balance amortization. The amounts and the rates of interest which may be derived by simple calculations from these amortization tables by the use of these formulas comport exactly with what we all, accountant or not, understand to be interest. This court, nearly ten years before it blundered into the Eagle Rock Corp. v. Idamont Hotel Company, 59 Idaho 413, 85 P.2d 242 (1938), formula relied upon by the majority, declared that these tables were the correct soures for figures which should be used in usury cases. United States Building & Loan Ass’n v. Lanzarotti, 47 Idaho 287, 274 P. 630 (1929). I believe that we should adhere to that rule, and that we should use the formulas and tables which are standard in accounting practice in the determination of usury cases in Idaho. And, because interest is the price for the use of money actually loaned, I agree with the dissent that the amount of principal on which interest is to be figured. *416should be the amount actually loaned and not simply the face amount of the loan, when the two figures are not the same. In this case the court should have used recognized standard tables to determine the amount of interest chargeable on $10,800 at the maximum rate of interest 8%, over the term of the note, 20 years.
I cannot however agree with the dissent that the Eagle Rock case is distinguishable. The language used in the opinion in that case, on page 424 of 59 Idaho, on pages 245-246 of 85 P.2d, indicates that the court considered the trial court’s finding that the extra charges were not actually interest irrelevant as a matter of law. The court said quite clearly that even if it were interest, it was not usurious because it did not bring the total amount of interest charged to a sum in excess of the interest which could be lawfully charged on the face amount of the loan. As I read the case this seems to represent the holding in Eagle Rock on the usury qttestion. I would, therefore, overrule that case on this question. I would prefer that this court follow the authority cited by the dissent and use the actual and not merely the face amount of a loan to compute interest and I would follow the United States Building & Loan Ass’n case, supra, and use the tables and formulas of the accounting profession to make that computation.
The arguments which the majority make in favor of respecting the Eagle Rock case, which is over 30 years old, and the probable reliance of the banking fraternity on it are, however, most persuasive. But, as the majority points out we should “not follow incorrect decisions merely because they are there.” It is not impossible, however, to delete the Eagle Rock formula from our jurisprudence, while protecting the relationships which have been entered into in reliance on that mistaken ■decision. I would follow the well reasoned opinion of the Court of Appeals of Kentucky in Mutual Life Ins. Co. of New York v. Bryant, 296 Ky. 815, 177 S.W.2d 588, 153 A.L.R. 422 (1943), and overrule the formula announced in the Eagle Rock case prospectively only, as of today. If this were done this loan and all other loans presumably entered into in reliance on the Eagle Rock case would be left undisturbed, but we would place our law on the rational course from which it strayed over thirty years ago for all transactions arising hereafter.
For the reasons set out above I concur in the majority’s result.