Court Opinion

ID: 9862620
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:34:45.182461+00
Date Added: 2024-06-11T11:26:59.846468
License: Public Domain

MCDONALD, J., Concurring.
I agree with the majority opinion that John Roes (Roes) may not in this case assert a claim of usury against the holder of the senior trust deeds to which Roes paid usurious interest to protect his subordinate trust deeds. However, I do not agree with the blanket statement of the majority opinion that a junior trust deed holder may never assert a usury claim against a senior trust deed holder.
As stated in 4 Miller and Starr, California Real Estate (2d ed. 1989) section 10:4, page 656: “The public policy of the Usury Law is to protect the necessitous, impecunious borrower who is unable to acquire credit from the usual sources and is forced by his economic circumstances to resort to excessively costly funds to meet his financial needs. [Fn. omitted.]” In this case Roes, as an investment, purchased at a discount the subordinate notes secured by second trust deeds. At the time of the purchase, he knew, or should have known, that the trust deeds he purchased were subordinate to senior trust deeds securing usurious notes. Under these circumstances, the discounted purchase price must be deemed to reflect his appreciation of the usurious interest he may have to pay the holder of the senior trust deeds to protect his equity in the second trust deeds.
Roes is not an impecunious borrower who needs the protection of the usury law and he therefore is not entitled to use the usury law as a sword to obtain treble the amount of interest paid on the senior notes. There may, however, be situations in which the junior trust deed holder is entitled to usury protection and we should not foreclose that protection in cases not before us.