Court Opinion

ID: 9566456
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:39:34.500783+00
Date Added: 2024-06-11T09:37:33.385039
License: Public Domain

DONALDSON, Justice.
The single issue before this Court is whether the three transactions between appellants, Garth and Jewel Buchanan, and respondent, Dairy Cows, a partnership, were credit sale transactions or loans in violation of the usury statutes.1
Appellants operate a dairy business and have done so for approximately thirty years in the Boise-Caldwell area. On three occasions, appellants increased the size of their dairy herd with the help of the respondents. Each transaction occurred, in the same way. Appellants selected the cows and ascertained the sellers’ prices. Respondents would then pay the seller the agreed price for the cows and brand them with the respondents’ Dairy Cows brand. Respondents then took pos*482session and title to the cows and executed a “cow lease agreement” with appellants. Under the lease agreement a down payment was required of appellants and appellants thereafter made monthly payments for 45 months. At the end of this period, appellants were given the option of buying the animals at $1.00 a head. Under the lease agreement the appellants were required to pay a “time price differential” amounting to 12% annually on the contract cash sale price. In each case, the parties’ contract price differed from the sales price as between respondents and the initial vendor by approximately 200%.
The lease agreements contained specific information regarding the financial aspects of the transactions, including the cash sale price, down payment, principal balance, and the time price differential and time sales price.
In addition, Dairy Cows agreed to cover 90% of the cost of replacing any cow which died during the term of the lease. Six cows under lease died and two were replaced by respondent under the death loss program; for the others appellants elected to receive credit against the final payments. Also Dairy Cows guaranteed that if a cow failed to freshen and produce milk from all four teats, Dairy Cows would replace the cow at no cost.
It is appellants’ contention that these lease agreements were simply disguised loans which respondents were using to circumvent the state usury laws.
It is settled law that the usury statutes have no application to bona fide sales transactions. The rationale for this position was stated in Bell v. Idaho Finance Co., 73 Idaho 560, 255 P.2d 715 (1953).
“The owner may prefer a dollar in hand to a promise to pay two dollars and accordingly may fix one price for cash and another and highly disproportionate, even exorbitant, price for sale on time or credit.” 73 Idaho at 565, 255 P.2d at 718.
See also Smith v. Sherwood & Roberts, Spokane, Inc., 92 Idaho 248, 441 P.2d 158 (1968); Peterson v. Philco Finance Corporation, 91 Idaho 644, 428 P.2d 961 (1967). While the Court will not hesitate to look beyond the face of the instruments to determine whether the transaction involved is merely a device to prevent application of the usury statutes, the burden is the appellants’ to show the instruments, valid on their face, are disguised loans, and this they have failed to do. Meridian Bowling Lanes, Inc., v. Brown, 90 Idaho 403, 412 P.2d 586 (1966).
Here, the facts show that appellants were not the necessitous debtors whom the usury statutes were designed to protect. Bethke v. Idaho Savings & Loan Association, 93 Idaho 410, 462 P.2d 503 (1969); Meridian Bowling Lanes, Inc. v. Brown, supra. Appellants’ only purpose in obtaining the cows was to expand the dairy operation and thereby increase the operation’s income. This was not a situation where appellants had no choice in the need to obtain financing, rather it was a calculated business decision to turn a thriving business operation into one of much greater proportions.
The burden of proof is on the party alleging usury and requires clear and convincing evidence. Bethke v. Idaho Savings & Loan Association, supra; Meridian Bowling Lanes, Inc. v. Brown, supra. The facts support the district court’s finding that these were credit sale agreements and not loans of money. The lease agreements specify a “cash sale price”, a “time sales price”, and the “time price differential.” Additionally, we note that respondent, as the owner-vendor of the cows, had the risk of covering 90% of the loss for the death of any cows during the term of the lease and to replace any cow which failed to give milk. To accept appellants’ contention that these transactions were loans we must accept the unlikely situation of a “lender” agreeing to bear the risk of loss of the collateral for the loans.
*483The judgment of the district court is affirmed. Costs to respondents.
SHEPARD, J., and SCOGGIN and NORRIS, District Judges, concur.

. “28-22-105. Maximum rate of interest.— Parties may agree in writing for the payment of any rate of interest, on money due or to become due on any contract, not to exceed the sum of ten per cent (10%) per annum * *